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Photographer: Ibrahim Erikan/Anadolu Agency via Getty Images Photographer: Ibrahim Erikan/Anadolu Agency via Getty Images

President Recep Tayyip Erdogan threatened to close two critical NATO installations if the U.S. imposes sanctions over Turkey’s purchase of a Russian missile system, escalating a row that’s roiling the military alliance.

The lira dropped the most in almost two months, the biggest decline among emerging-market currencies, as Erdogan’s high-stakes warning of possible retaliation sparked market concern.

“If it is necessary to shut it down, we would shut down Incirlik,” he told AHaber television on Sunday. “If it is necessary to shut it down, we would shut down Kurecik, too.”

Incirlik Air Base Photographer: Ibrahim Erikan/Anadolu Agency via Getty Images

Erdogan’s threat is the clearest sign yet that Turkey’s standoff with the U.S. risks spreading. An early-warning radar at Kurecik is a critical part of NATO’s ballistic-missile defense capabilities. Incirlik Air Base, close to Syria, is used by the Pentagon to store tactical nuclear weapons and conduct strikes against Islamic State.

Decades earlier, it was the main operating location for the American U-2 spy plane -- until American pilot Francis Gary Powers was shot down over the Soviet Union in 1960.

Turkey is pushing ahead with its deal for the Russian-made S-400 batteries, and plans to sign an agreement with Moscow to jointly produce missiles. NATO members say the purchase is incompatible with Ankara’s membership of the bloc. The U.S. Senate Foreign Relations Committee has voted to advance sanctions that could plunge Turkey into renewed economic turmoil, and the Pentagon has said it’s phasing out Turkey’s participation in buying Lockheed Martin Corp.’s F-35 fight jets and helping to build them.

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“If they put measures such as sanctions in force, then we would respond based on reciprocity,” Erdogan said. “It is very important for both sides that the U.S. should not take irreparable steps in our relations.”

Asked about Erdogan’s warnings, a U.S. Defense Department official said the presence of U.S. forces at Turkish bases, including Incirlik, symbolizes a decades-long commitment to work with and defend Turkey. It’s a relationship the department wants to preserve while encouraging Turkey to take more constructive positions on differences including the S-400 and Syria, according to the official, who asked not to be identified discussing the sensitive issue.

The accord with Moscow highlights both Turkey’s aspirations for an increasingly independent role in regional policies and the mutual erosion of trust with Washington. Bilateral ties have been strained for months over Turkey’s military offensive in northern Syria against a U.S.-backed Kurdish militia and other issues.

Over the weekend, Turkey decided to deploy drones in the breakaway Turkish Cypriot state in a growing dispute over energy in the eastern Mediterranean, with the first of the unmmaned aircraft arriving Monday. Erdogan also met Libyan Prime Minister Fayez al-Sarraj after expressing readiness to deploy Turkish troops in the North African country, if asked. Erdogan’s government submitted a separate military cooperation deal with Libya to parliament for approval.

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Turkey’s assertiveness as a regional power makes it less willing to compromise in its dispute with its chief NATO ally. Erdogan is chafing at the idea that the U.S. would consider penalties against a fellow NATO member.

‘Sit Down and Think’

“Does this comply with a strategic partnership?” he said. “How can you do such a thing? They have to sit down and think about it. If they keep acting in a different way -- then of course, we would respond to them.”

Chief among U.S. concerns is that the Russian missile defense system could be used to collect intelligence on the stealth capabilities of the F-35.

Erdogan also warned the U.S. against recognizing as “genocide” the mass killing of Armenians during the final years of the Ottoman Empire a century ago. He said Turkey’s parliament could investigate whether the U.S. carried out a policy of systematic genocide of native Americans.

— With assistance by Tugce Ozsoy, and Glen Carey

( Updates with Pentagon reaction in eighth paragraph )