Turkey: The lira staggers – but who is to blame?

Turkey The lira staggers – but who is to blame?

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  • Recep Tayyip Erdoğan is of the opinion that Turkey has been “stabbed in the back and feet” as a NATO partner.
  • He sees the blame for the currency crashes and for the crisis in the country with others – and even speaks of “economic terror”.
  • Financial analysts see the situation with a little more distance: they do not believe that the Turkish crisis can trigger a “conflagration”.

Markus Zydra writes as a finance correspondent in Frankfurt and reports mainly on the European Central Bank. He previously worked as an economics editor at the Financial Times Deutschland and FAZ. In the 1990s he was a Scandinavian correspondent for the Süddeutsche Zeitung in Stockholm.

On Monday, Recep Tayyip Erdoğan gathered Turkish ambassadors from all over the world in his palace in Ankara, and then off to lunch. He spoke of the “champion of the global system,” but did not name the United States directly, but everyone knew who was meant. Like US President Donald Trump, Erdoğan likes to use personal du in international diplomacy. “You can not just wake up and say, ‘I introduce these duties on steel and aluminum.’ You can not say that, ‘Erdoğan scolded, and it was clear that he was talking about Trump. Turkey had been “stabbed in the back and feet” as a NATO partner, Erdoğan said, getting into gear. He even hinted that Turkey was ready for a war. States that wanted peace had to be ready for war, he said. “We are ready with everything we have.”

The reactions of the Turkish diplomatic corps are not known. In the morning, the Turkish central bank was still trying to slow down the decline of the lira and limit the impact on the local economy. She announced that she would provide Turkish banks with enough money to stabilize them. Finance Minister Berat Albayrak also pledged an “action plan” to help small and medium-sized companies that are particularly affected by the collapse of the currency, without giving details.

The crisis has worsened considerably as a result of a dispute with the USA

Image result for turkey dispute with usOn fears, currency accounts in Turkey could be blocked, which also spread via social media, the presidential office responded with a tweet. “A confiscation of bank accounts is out of the question,” tweeted Fahrrettin Altun, the head of communications for the president. Altun criticized some people “fabricating” such messages. The pro-government newspaper Sabah reported on Turks who followed Erdoğan’s call and exchanged dollars, euros and gold for lira: The mayor of the Black Sea town of Rize, Reşat Kasap, sold his wife’s gold jewelery; In Erzincan there was free tea for 100 exchanged dollars, in West Anatolian Düzce a free haircut.

The well-known Turkish economist Güven Sak reminded that the value of the lira had fallen by 70 percent in the past decade, even before the recent crisis with the US. The decline began when Turkey left its reform course in 2007, but the biggest losses have been since 2014.

The crisis has worsened considerably as a result of a dispute with the USA. Trump demands the release of US pastor Andrew Brunson, who has been detained in Turkey for 20 months. The Turkish judiciary refers to him as a terrorist helper, the 50-year-old denies the allegations. Turkey in turn demands the extradition of the preacher Fethullah Gülen, who lives since 1999 in Pennsylvania. Erdoğan accuses him of being the mastermind of the 2016 coup attempt. Erdoğan and Gülen were once allies, today they share a deep mutual antipathy. Many Erdoğan critics in Turkey believe that Gülen’s network was behind the coup attempt. This burdens the relationship with the US beyond the government camp. There is also a dispute over the Syrian policy and the US Iran sanctions.