Is Turkey's new story 'elevated geopolitical risks'?

Turkey's agenda since the election has been dominated by escalating geopolitical risks. 

Two hot examples are the recent downing of the Russian jet on the border and the shipment of Turkish troops and armored vehicles to Iraq. The reaction to the first one has come in the form of economic sanctions from Russia, and this has sounded the alarm in international finance circles. Coming after the jet incident, the news about the shipment of Turkish troops to Iraq will probably increase the geopolitical risk perception to an even higher level.  

As the consequences of these incidents reflect on economic figures, the new story of fragility will become more concrete. The first sign of this came from an international credit rating agency: Moody's kept Turkey in the "Baa3" investment level, highlighting the geopolitical risks.

In the Moody's statement, three themes stand out in particular: One is the mention of how there is a lack of economic reforms on the horizon. Another is that the negative turn, once defined as a "rise in political uncertainties," has been replaced by "elevated geopolitical risks." Another is its discussion of erosion in what is defined as "institutional strength."   

In the statement issued on Dev. 4, Moody's affirmed Turkey's "Baa3" government debt and issuer ratings and maintained the negative outlook. It said slowing growth and diminishing external confidence could only be improved with political stability and a broad economic reform program.

However, it also said Turkey continues to operate in a fragile financial and geopolitical environment, and its high external financing needs expose it to the risk of a shock. 

Like me, Moody's is uncertain about economic reforms. It is not sure whether the new...