Across Europe there are fears the Turkish crisis may endanger the controversial EU refugee agreement signed between Brussels and Ankara in March 2016.
Under the arrangement, Brussels promised to handover €6 billion in financial aid, to be used by the Turkish government to finance projects for Syrian refugees.
Turkish lira has lost almost a third of its value against the dollar since January, sparking a potential economic meltdown across Europe. However, it also puts the EU’s migration deal with Ankara on an unsteady footing.
Turkey may have agreed to share the burden of hosting millions of refugees but its leaders also leveraged the deal to extract maximum concessions from the EU, an attempt to heal waining relations between both parties.
While their agreement has curbed illegal migration into the EU, Turkey has threatened repeatedly to abandon the deal because Brussels has not held up its side of the bargain.
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The Turkish government has complained that Brussels has not sent enough financial assistance across the border and another promise, visa freedom for Turkish citizens, has not yet been implemented.
With his economy sitting on unsteady ground, the tough negotiating Turkish president Recep Tayyip Erdogan has decisions to make in order to prevent a financial meltdown.
Lira’s crash sparked global fears for an international crisis. But, Mr Erdogan handled the issues with an iron fist waging “economic war” against his country and its currency.
There has been no run on Turkish banks and despite concerns about the private sector’s dependence on foreign currency loans, the streets and businesses around Istanbul and Ankara remain bustling with people going about their daily lives.
However, Brussels is still watching closely over its shoulder at Mr Erdogan’s need for hard cash and could possibly leverage the threat of pulling out of his EU refugee deal to achieve that.
The EU’s powerful executive, the Commission, has kept its cards close refusing to involve itself in the Turkish lira crisis.
A Commission spokesman said: “We are aware of potential impacts on European banks of the development of the Turkish lira.
“As usual, we do not comment on the market movements. As is regular practice, the Commission is closely following developments in the global markets.”
He refused to engage in speculation surrounding the EU-Turkey migration deal, knocking back questions on whether the financial situation in Ankara puts the agreement at risk.
If economists’ predictions come true and Turkey requires a bailout, Brussels’ own rescue mechanisms are only usable for its membership base of 28 countries.
But, Mr Erdogan has that stored up leverage he secured when negotiating the EU-Turkey deal back in 2016.
In a political game of chess, the Turkish leader can use the threat of pulling out of the agreement to ensure a steady flow of cash from Brussels.