The United States of America and Turkey are in the midst of a diplomatic crisis. Both countries reportedly suspended Visa services in the newest rift between the NATO allies.

Metin Topuz, a Turkish citizen working for the U.S. embassy in Istanbul, has been arrested last Wednesday by Turkish authorities over alleged links to Fethullah Gulen (FETO).

Several days after the arrest, the U.S. Mission in Ankara suspended all non-immigrant visa services at all U.S. diplomatic facilities in Turkey. Their statement emphasized the fact that the U.S. government had been forced to reassess the commitment of the Turkish government to the security of the U.S. mission and staff. Hours after the visas were withhold, Turkey replied with visa suspension and shut down its online visa portal for the U.S. citizens.

 Tourism in Turkey is declining

The above comes as another strike for the declining Turkish economy.

As well as being an international airport hub, Istanbul attracts people from all around the world, who want to experience its culture, breathtaking views, historical sites and bazaars. The city has been rocked by terrorist attacks causing a significant fall in foreign visitors. This comes at the heels of the diplomatic spat with Russia in 2016 when the Turkish Air force shot down a Russian jet, with the immediate repercussions of Russians visiting Turkey dropping by 92% and bilateral trade falling by 25%.

Terrorism has a strong impact on new vacationers. The sector reports a lack of foreign visitors, affecting the overall GDP. The lingering concerns force tourists to choose other European holiday destinations, such as Bulgaria and Greece. Both economies are benefiting from the critical diplomatic circumstances between the two NATO allies, reporting significant growth in foreign visitors. Local experts account a notable growth in tourism and foreign investments, positioning Bulgaria as a highly attractive and expanding economy. Local tourism sector is blooming. It’s expected to continue to thrive in the next few years. The Land of Roses has proved to be a symbol of culture and stored antique customs, quality of service and exclusive resorts, attracting tourists all-year-round. The country provides convenient fast-track citizenship alternatives, presenting benefits such as visa-free travel and endless business opportunities to non-EU parties.

Reasons for Turkish economy woes

The Turkish economy is contracting for the first time since 2009, showing negative growth figures. The reasons for the downfall could be a mixture of Erdogan’s perceived dictatorship and frequent terror warnings. Reasonably, financial experts reported a “worse-than-expected” GDP for the third quarter of 2016.

Furthermore, Ankara’s difficulties are compounded by the refugee flow into Europe. Turkey has hosted more than 3 million Syrian refugees. This also contributes to the deterioration between Turkey and its European allies.

The diplomatic ties worsened after the coup attempt last year. Since then, Erdogan has attempted to take control over all levers of power and use it to silence the opposition. As a result, his actions have begun to alarm investors with negative effects on the economy.

The U.S. have blocked all non-immigrant assistance provided to Turks, following the arrest of the U.S. councilor’s employee Metin Topuz. Ambassador John Bass said in a written statement that America is not being able to determine what, if any, evidence exists against the employee.

Hours later, the Turkish embassy in Washington responded with a suspension of any new American visa applications in an official written statement. Recep Erdogan commented on the crisis, describing it as “upsetting”.

How is this affecting Turkey?

Turkish tourism may be permanently affected. Monarch Airlines recently filed for bankruptcy, after holiday companies reduced their exposure to Turkey, Egypt and Tunisia due to the terrorist attacks. This may force competitor airlines and tourist operators to lower their bundles for Turkey to avoid revenue downturn.

With the new tourist restriction in place, airline companies will have to change or cancel flights and generally avoid Turkey and reroute to other international airports nearby. This respectively will detain the organic flow of tourists.

Turkey is already losing money from the fall in the sector, which accounts for 12% of the GDP and in turn affected both foreign and domestic businesses. The Head of the Tourism Investor Association, Ms. Oya Narin, commented that tourism was at an all-time low in 2016. It appears that losses could exceed $30 billion in the next 3 years.

As another nail is hammered into the Turkish coffin, which of the nearby countries will more likely gain new tourists?