Erdogan’s statements cause the Τurkish lira to plummet

Erdogan’s statements cause the Τurkish lira to plummet

Ankara, March 5, 2015/ Independent Balkan News Agency

By Manolis Kostidis

The attacks of the Turkish President against the Central Bank cause fear to the markets

Serious problems are beginning to emerge from the dispute between  Recep Tayyip Erdogan and the President of the Central Bank of Turkey.

For the seventh consecutive day, the Turkish lira lost ground against the dollar and reached 2.6 lira on the dollars, while in only one day it was devaluated by 1.7%. Last month the devaluation of the Turkish lira exceeded 11.5%. Analysts fear for the continuation of this situation, and emphasise that Turkey’s monetary policy, set by the Central Bank of Turkey which is an independent authority, should be made clear.

Turkey’s central banker Erdem Başçı, in the last few months has expressed fears about the rising inflation and has announced small and cautious reductions in interest rates.

Turkish president however has a different opinion from Basci and has repeatedly requested the increase of interest rates to boost economic activity. In various speeches in the past, Erdogan had accused Basci’s policy.

But last week, Erdogan went even further and claimed that the president of the Central Bank may not work for the country’s interests but for other, foreign interests! “Do not turn against us using the guise of independence, if you do, we might ask ourselves whether someone is influencing you…”, Erdogan had stated.

One hour after this statement, Basci and Deputy Prime Minister Ali Babacan, who is considered the “captain” of Turkey’s economic policy, hastened to Prime Minister Ahmet Davutoglu. Rumors said they submitted their resignations as the two men do not accept interventions from Erdogan on an issue that is not of his competence.

According to sources in Ankara, Davutoglu asked both men remain to their positions so as to not cause disruption in the economy.

But this whole scene was enough to increase the pressure on the Turkish currency, which despite interventions by the central bank, it was unable to stop its devaluation trend.

Theoretically, in a country like Turkey, the devaluation would help increase exports and tourism, but what concerns the economic team are the huge loans Turkish construction companies have acquired in foreign currencies, which in combination with the devaluation of the lira increases their debt . Moreover, Turkey spends each year USD 50 billion on natural gas imports alone, so the decline of the turkish currency creates inflationary pressures and increases the trade deficit.

Erdogan, however, persists and continues his attacks on Basci. The markets, however, consider as serious economic policy stability factors Babacan, Basci and Finance Minister Mehmet Şimşek. The interventions of the Turkish president makes markets fearful, with some analysts arguing that the turkish economy could be derailed if Erdogan’s views prevail and the person’s responsible for the successful economic policy of recent years are left out of the decision process.

Erdogan to pay compensation for his statements!

Turkish president will pay compensation of 10,000 TL (3500 Euro) to a Turkish artist for statements he made against his work in 2011.

Erdogan was at the time visiting the city of Kars in eastern Turkey when he demanded the removal of a work of art that was titled “Monument to Humanity”, calling it a “monstrosity”!

The specific work of art, which had a height of 35 meters, was removed following Erdogan’s statements on the grounds that it was built in a protected area! The artist Mehmet Aksu, however, did not cowed and went to court seeking moral damages. Erdogan’s lawyers argued that the president’s statements were not an insult but criticism. They did not however explain why he had requested the immediate removal of the artwork.

The court ruled in favour of the artist and decided the immediate payment of compensation. Newspaper Sözcü says this is a moral justification for Turkish citizens, who almost on a daily basis receive lawsuits from Erdogan’s lawyers with the excuse of “insulting” the President’s personality.

Last week, the prosecutor of Istanbul called for the exemplary punishment to two years imprisonment of 27-year old beauty Merve Büyüksaraç on charges of insulting a public official.

The beautiful Turkish woman had uploaded on Instagram a variation of the national anthem of Turkey, which was titled “the poem of the master”, which lampooned Erdogan. In the neighboring country the fans of the Turkish President refer to him as the “master”.