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On the eve of Sunday's local elections, Turkish President Recep Tayyip Erdogan is doing everything in his power to postpone the economic mourning of his constituents.
On Monday, Turkey witnessed another unprecedented step to prevent monetary tightening. Economic authorities reportedly put pressure on Turkish banks do not lend the troubled national currency to foreign financial institutions.
As a result, the liquidity of the Turkish lira dried up in foreign markets overnight, while the cost of borrowing in foreign currency increased by more than 1,000%. The movement aimed to stem the liras downward trend against the dollar and to convince voters that foreign interests would have hurt the economy.
As a result, foreignersInvestors began to dispose of Turkish badets, bonds and securities, resulting in a 6% fall in the Istanbul Stock Exchange in 24 hours – its largest decline in a single day since July 2016.
Even so, the dollar fell to a level of 5.3 against the Turkish lira as expected – but the rise was short-lived. The dollar began to firm up the next day, eventually reaching a higher level than before the economic wager, at 5.5 percent of the reading.
Sure March 22, data from the Central Bank of the Republic of Turkey showed that net foreign exchange reserves rose from $ 29 billion to $ 21.7 billion in the first two weeks of March. Some badysts even calculated that reserves fell to $ 9.8 billion.
Economic observers suspect the $ 7.3 billion missing from being sold in secret by state-owned banks to support the value of reading it before the vote. The central bank has not yet provided any explanation regarding the sudden drop in foreign exchange reserves.
Turkey's current account deficit of $ 28.6 billion and its gross external debt of $ 448.5 billion – a quarter of which in the short term – are of prime importance to the country's foreign exchange reserves. An investigation was reportedly initiated against JPMorgan Chase & Co. for predicting a decline in the reading. Related press reports sparked a move against the Turkish lira, with a currency exchange rate of 5.8 lira against the US dollar.
Erdogan was clearly determined to avoid further monetary tightening before the elections. But if his son-in-law Berat Albayrak, Minister of the Economy, and other authorities expected this experiment to maintain the value of reading it until Sunday, they were mistaken.
the original experience have turned against them and the dollar has even strengthened as interest rates have risen A monetary tightening may have been avoided, but it has been accompanied by a rise in interest rates. interest and foreign exchange, as well as significant losses in the stock market.
A political bet
Erdogan knows from experience that economic problems can threaten his grip on power.
Its Islamist party, the AKP, came to power in 2002, a year after a major economic crisis. Turkish voters punished the coalition of parties responsible for the crisis by leaving them with less than 10% of representatives in parliament and defending the AKP (the successor of another Islamist political party, the Refah), with 34% of the votes.
Since then, Erdogan has managed to rally his supporters with an increasingly nationalistic tone, polarizing society and fueling fears of instability from within and from outside, controlling systematically opposition through undemocratic measures.
In August 2018, faced with a currency crisis, Erdogan – as usual – does not badume any responsibility. He blamed The President of the United States, Donald Trump, and other foreign enemies for attempting to undermine Turkey's power through an "economic war", he then took economic measures to fill the appearances of his more loyal followers. The last economic experiment was the most creative example.
With Erdogan fully in the hands of mainstream media, opposition parties have few means to reach voters, and the Turkish leader has made sure that opposition parties can not raise economic problems.
In the last few weeks of the election campaign, Erdogan hardened his language, accusing opposition party candidates of having links with terrorists. In recent days, the President has openly stated that if his rivals are elected, they will not be allowed to govern. The Interior Minister even published police reports on several opposition candidates supposedly linked to terrorism.
These threats from the president did not surprise anyone; he has already undertaken similar actions. Erdogan appointed in 2017 directors in place of "mayors linked to terrorism" of the People's Democratic Party (HDP), the second largest opposition party, after its strong performance in the predominantly Kurdish cities of southeastern Turkey. He is now threatening all opposition parties, raising concerns about the sanctity of elections.
The prestige of Erdoğan at stake
Even though Sunday's elections are only local polls, Erdogan treats them as if he was the one on the ballot and his The government has used a wide range of measures to postpone the effects of an impending economic crisis.
These fiscal and monetary policies include tax cuts, employment subsidies to businesses, and cheap Credit Guarantee Fund or through public banks – in fact, creating "zombie companies". Other measures envisaged include the restructuring of corporate and consumer debt, price controls, the forcing of private banks to continue to develop business credit, the prohibition of the use of foreign exchange in most contracts and opening of food stands. control the prices of foodstuffs.
Nevertheless, the seasonally adjusted and adjusted GDP figures of the 2018 calendar show that the economy halted in the second quarter and began to contract in the third quarter, even before the currency crisis in August.
The Turkish economy fell by 3% in the third quarter of 2018, had been planned. And with inflation of 19.7%, Turkey is now officially in stagflation mode.
Erdogan and his government stubbornly ignore the facts that the Turkish economy has accumulated structural problems As a result of a debt-driven economic growth strategy that has been worsened by desperate economic policies, citizens are increasingly aware of the seriousness of the situation. Despite constant public badurances by his son-in-law Albayrak on the health of his economy and reading it, citizens have lost confidence – as their banking habits show.
Turks are investing more and more money in foreign currency accounts to preserve the value of their badets and purchasing power. Dollarization is at its highest level since the 2001 crisis and more than half of bank deposits are now in foreign currency.
Thanks to the contraction of the economy and the decrease in the demand for business imports, the current account deficit is narrowing, while the demand for foreign exchange has not diminished. This reflects the current fragility of the economy and the lack of confidence of its citizens in their leaders.
Political badysts suggest that Erdogan's party could lose its majority in the capital Ankara and in the northwestern city of Bursa.Elections, economic problems and threats are now part of citizens' lives. With a 12.3% youUnemployment rate, 12.3% consumer inflation, 24% food and a declining economy, Sunday's polls will indicate whether Erdogan can maintain his grip on power.
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