German Chancellor Angela Merkel and Turkish President Recep Tayyip Erdogan have taken tentative steps towards rebuilding their countries’ strained relations.

The modest move forward in restoring the relationship between Ankara and Berlin, as well as signs that the Turkish economy has started rebalancing after a long stretch of overheating and progress made by key Turkish banks in securing financing renewals, appear to be factors in an ongoing slight recovery of the Turkish lira (TRY) amid Turkey’s economic turmoil. Previously mired at a level where it was around 40% weaker against the dollar in the year to date, the lira gained around 5% last week and by around 15:35 local time on October 1 it was trading 1.9% stronger day on day at TRY5.9534.

Erdogan arrived in Germany on September 27 for a three-day state visit during which he sought something of a reconciliation with Berlin, with Turkey badly in need of the economic superpower as an ally at a time when it is battling a currency meltdown that could turn into a banking crisis and struggling to overcome a multi-faceted rift with the US. However, Merkel was not about to give Erdogan a free ride on human rights. It was the massive crackdowns on Turkish society pursued by the Ankara regime during the two-year-long state of emergency in the wake of the failed July 2016 coup that threw German-Turkish relations badly off-track and during his visit Erdogan clashed with Merkel over Germans imprisoned in Turkey, Turks self-exiled in Germany to escape prison back home, democratic standards and press freedom.

Tensions were exposed as Erdogan demanded Germany extradite Can Dundar, a former editor-in-chief of Cumhuriyet newspaper who faces an almost six-year prison sentence in Turkey on an espionage conviction. Seconds before Erdogan made his demand, Merkel made it clear that she was opposed to the extradition.

Erdogan reportedly threatened to boycott a joint Berlin news conference with Merkel on September 28 if Dundar attended the event, saying: “This person has been convicted. He’s a spy. He has revealed state secrets.” It was Turkey’s “most natural right” to demand his extradition, he added.

Dundar, convicted for reporting on Turkish arms shipments to Syria, said in a video on his Twitter account that he’d opted not to attend the press conference after learning of Erdogan’s boycott threat.

Biggest trade partner 
Germany is Turkey’s biggest trade partner, there are an estimated 2.8mn residents of Turkish descent in Germany, almost 7,000 German companies are doing business in Turkey and Berlin is also reliant on Ankara when it comes to holding back further waves of Syrian and other refugees that want to make their way to the European continent.

But Merkel has to tread carefully in offering concessions to Erdogan given that so many Germans are unhappy with what they see in Turkey. In many Germans’ eyes Erdogan’s executive presidency, launched in July, amounts to little less than one-man rule. An FG Wahlen poll published last week suggested that about nine in 10 Germans saw democracy as under threat in Turkey.

“On the one hand, there’s a shared strategic interest in good relations,” Merkel said at a joint news conference after the two leaders met in Berlin on September 28. But “profound differences” remained over what is meant by “a free, democratic, open society”, she added.

"Germany has an interest in an economically stable Turkey," she also reiterated.

Erdogan also attempted to strike a conciliatory tone, pointing to "win-win" business projects on the horizon. Prior to meeting representatives of some of Germany's biggest companies and banks, he said that those who have invested in Turkey have always won with their investments and would continue to win, Turkish state-run news service Anadolu Agency reported.

Among the participants at the meeting with businesses and banks were Rifat Hisarcikhoglu, president of the Union of Chambers and Commodity Exchanges of Turkey; Eric Schweitzer, president of the Association of German Chambers of Commerce and Industry; Nail Olpak, head of Turkey’s Foreign Economic Relations Board (DEIK), and Markus Slevogt, head of the German-Turkish Chamber of Commerce and Industry.

Several German opposition leaders declined to attend a September 28 state banquet for Erdogan hosted by German President Frank-Walter Steinmeier, which Merkel also did not attend.

Lockdown
Much of central Berlin was in lockdown for the Erdogan visit, with over 4,000 extra police deployed, and a protester wearing a T-shirt with the slogan “Freedom for Journalists” was bustled out of the press conference when he tried to shout Erdogan down.

“It is a scandal in the history of this country that it rolls out the red carpet for dictators,” Left party politician Hakan Tas told a protest demonstration on a central square, according to Reuters. “The day will come when the mass murderer of the Bosphorus will sit behind bars.”

Merkel said she had pushed for the release of German citizens who were among the tens of thousands of people arrested after the coup attempt.

The botched putsch, according to Ankara, was the work of a network run by US-based cleric Fethullah Gulen. Gulen, a former ally of Erdogan, denies involvement. Merkel told the news conference that Berlin needed more evidence to declare Gulen’s movement an illegal group as Ankara demands. “We take very seriously the evidence Turkey provided,” she added.

During the visit, Erdogan said that Turkey aims to win easier access to the European Union for its citizens and would take action to meet the EU’s criteria for achieving visa liberalisation.

“Visa liberalisation, updating the customs union and reviving accession talks will benefit both Turkey and the EU,” Erdogan said.

More difficulties
The visit faced more difficulties on September 29 as Erdogan continued to Cologne, home to one of the largest Turkish communities outside Turkey. Authorities there refused permission for a 25,000-strong spillover crowd to gather outside a giant new mosque that he was due to open.

Meanwhile, the regional government had to rearrange a morning meeting between North Rhine Westphalia’s premier Armin Laschet and the Turkish leader after the ancestral owners of the castle that was to be the venue were granted an injunction preventing his visit.