Turkish stocks have tumbled more than 10 per cent and the Turkish lira has slid after a weekend parliament vote refusing US troops permission to mass there for any invasion of Iraq.
Parliament on Saturday narrowly rejected a government motion to allow some 62,000 troops to to based in Turkey. It was a major defeat for the governing Justice and Development Party (AKP) and a setback for US military planners who see a northern front launched from Turkish soil as a way to shorten any Iraq war.
Prime Minister Abdullah Gul moved to limit the impact on markets with an early news conference announcing measures to keep within a vital IMF-backed $16 billion crisis recovery plan.
Markets, however, immediately homed in on the implications for a financial aid package of up to $30 billion Washington had been prepared to offer Turkey if it co-operated in an attack that could now be only weeks away. That help could now be lost, and Turkey would suffer the impact of any war.
Financial markets had traded in recent weeks almost entirely on the assumption the motion would be passed.
The main stock index was down over 10 per cent seven minutes into the opening session on Monday. The lira currency fell 5 per cent.
Turkish debt yields soared over seven percentage points, reflecting their falling face value.
Diplomats say the Turkish government may be able to present a revised US troop plan if the UN Security Council passes a new resolution explicitly authorising use of force against Iraq. But no resubmission was generally expected when parliament meets next on Tuesday.