Last month, Turkey made it onto the grey list of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog headquartered in Paris. Turkey now joins its close ally Pakistan in FATF’s crosshairs. Surprisingly, Turkey becomes the largest economy to be included on the list.

The FATF listing for Ankara comes on the back of a faltering economy made worse by the pandemic. Turkey has been further weakened by pursuing a “punch above one’s weight” foreign policy. Recep Tayyip Erdogan’s dream of reviving the Ottoman Empire has largely fallen flat. To achieve this over-ambitious dream, Erdogan has undertaken huge geopolitical risks. In the process, Turkey has alienated the United States, France, other European powers, and major Arab countries like Saudi Arabia, the UAE, and Egypt. Turkey is more isolated than at any point in the last few decades.

The Erdogan government’s financial mismanagement has prompted significant financial outflows. Diminishing foreign direct investment has also significantly affected Turkey. For Erdogan, Turkey’s inclusion on the grey list of FATF is deeply embarrassing.

Despite the fact that Turkey failed to comply with FATF’s advice to check money laundering and terror funding, arguably it is Turkey’s aggressive foreign policy that is at the core regarding the FATF listing. Under Erdogan, Turkey has embarked on an expansive quest to position itself as a global Islamic power, and a regional superpower. To achieve this, Ankara has ended up opening multiple fronts instead of managing regional geopolitics in a realistic and reasonable manner.

Erdogan has also severely damaged his relations with the U.S. despite being a major NATO ally while also developing multiple points of friction with Russia over the crisis in Syria and Libya. On the other geographic front, Turkey also had run-ins with Greece and Europe over access to hydrocarbons in the Mediterranean. Also, involvement in the Syrian and Azerbaijan-Armenia wars has also not helped Turkey. Rather, Turkey got punched back for attempting to punch above its own weight.

Because of all these disastrous blunders of Erdogan, Turks are paying a very high price. The Turkish economy over the years has faced severe challenges led by economic overheating, a currency crisis, shaky morale of foreign investors, and lack of transparency and autonomy. Amid high inflation, widespread youth unemployment, and deepening poverty, the country’s economic situation is looking increasingly grim. On the other hand, the continuous fall of the Turkish lira is also fuelling the current economic crisis. The lira has lost 20% of its value against the U.S. dollar since the start of this year. Even some experts believe that the country is on the verge of a potentially devastating recession.

Aykan Erdemir, senior director of the Turkey program at the Foundation for Defense of Democracies, a Washington-based think tank, says “FATF’s grey listing of Turkey will further tarnish the country’s image as a permissive jurisdiction for illicit financial activity.” Also, speaking to Al-Monitor, Erdemir says “This decision will exacerbate capital flight from an economy that has experienced net capital outflows over the last few years.” In addition to this, the World Bank estimates more than 1.5 million Turks have fallen below the poverty line. For Turkish citizens, the prices of essential commodities keep rising. Inflation neared 20% in September. According to Turkey’s largest trade union, more than 7 million minimum wage earners face food insecurity. Polls show that almost two-thirds of Turks are struggling to make ends meet.

With each passing day, the Turkish people are realizing that these economic hardships are not only happening because of economic mismanagement but also due to the exorbitant cost of the expansionist policies of the current government. President Erdogan’s early years in power were marked by solid growth and a development boom. But now he is becoming an economic disaster caused by his interference in economic policy and liability for the country. The nation will lose a great deal if it allows Erdogan to carry on with his misadventures and destroy the military, political and economic links of Turkey.