• 05/04/2023
• By wizewebsite
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That's the economy! Well, Turkey | Penize.cz<

"How beautiful it is: the harvest harvested, the fields tilled, a joy to behold. That's the economy! Well, Turkey," sighs Cimrman's inspector Trachta, looking out the window of the express leaving Istanbul.

In this classic (Murder in a saloon coupe) the praise of the Turkish economy was heard as a joke. However, Turkey's economy used to be a symbol of economic and social decline, incompetent government, cronyism and corruption. In the past decades, however, the country opened up, dynamic capitalism prevailed in it, and the state managed to get rid of its bad reputation, at least in part.

But now Turkey seems to be turning to its history.

All the Sultan's Bankers

Unprecedented things are happening in Turkey. President Recep Tayyip Erdoğan began to remake the country in his own image, that is, a sultanate in which everything revolves around an all-powerful and omnipotent monarch.

Last week, he warned that bankers who refuse to provide cheap loans or insist on proper repayment after a coup attempt could be considered "traitors". (We remember a similar warning from Czech history: Kulaci, open the granaries!)

“Banks that refuse to lend under various pretexts show which side they stand on. They are not on the side of the people... We will not linger and deal with banks that have gone down the wrong path with their interest rates and loan terms. We will deal with whether they are traitors," Reuters quoted Erdoğan's speech before the Turkish Chamber of Exporters as saying.

The reaction was lightning fast. Fourteen Turkish banks cut mortgage interest rates overnight. No wonder.

Erdoğan's speech came less than two weeks after the head of state accused Mert Ulker, an analyst at brokerage Ak Investment, of insulting his majesty. Ulker, who wrote to investors about the ill effects of the concentration of power in Erdoğan's hands, had his license revoked in Turkey and his case will be heard by the Criminal Tribunal of the Istanbul Court. Ak Investment promptly fired him and assured Erdoğan that it did not share Ulker's views.

This is what Turkish-style "normalization" looks like.

Gift from Allah

Of course, it is not just the banks that Erdoğan has by his neck.

"This uprising is a blessing from Allah," the president declared shortly after the coup attempt was suppressed, expressing satisfaction that he could finally purge the army, state institutions, and private companies of "rebels." And he immediately went to work.

He had tens of thousands of people detained and interrogated, tens of thousands more fired from their jobs or put out of service. By decree, he ordered the closure of fifteen universities and a thousand private schools. The consequence of such purges is obvious: Incompetent but dedicated sycophants to the monarch and the regime will take the places of quality managers and educators.

Until July 15, when he suppressed the coup, the Turkish president had only the government and the police in full control. Today he rules over the army, judges, media, business captains and bankers. Who would dare to oppose him?

It is obvious that Erdoğan can now command the central bank as well as the commercial banks. Not to mention the state-owned Islamic bank Ziraat Participation, which is Erdoğan's baby and which lends without interest (profits and losses are shared between the borrower and the lender).

Survey

Did you ever believe that Turkey will become part of the European Union?

Kneeling before the Sultan

At the same time, a fearful Europe is still negotiating membership with Erdoğan's Sultanate. And some European politicians squirm before him like dancers in a harem. In June of this year, the European Commission pointed out in a statement that Turkey had made "remarkable progress" in rapprochement with the European Union and in building democratic institutions.

Only Austrian Prime Minister Christian Kern called on Brussels to end the hypocritical game and blow the whistle on the talks. It would be logical. Who would have believed that EU programs in which Turkey, as a candidate for membership, received billions of euros from the Union, helped bring the country closer to European rules of democracy, protection of rights and freedoms?

It is clear that the entry of the Islamic State (with a small "i") - theocracy, promoted by Erdoğan, in which the rules of politics are determined by the Sultan and the clerics, would be the end of Europe (not only the European Union) as we know it. For Europe, it would be too big and expensive a mouthful as well as a cultural and religious shock.

The dialogue with the oriental leader Erdoğan can be shocking. An interesting testimony of the arrogance with which Erdoğan negotiates was provided by the news portal euro2day.gr, which obtained a transcript of his meeting with EU President Donald Tusk and European Commission President Jean-Claude Juncker. When Juncker warned Erdoğan during the meeting that the commission would assess whether Turkey was fulfilling the terms of the visa-free regime agreement, the Turkish president cut him off. He called on the chairman of the commission to show him "due respect" because he was speaking to the leader of a state of eighty million people.

“Luxembourg? It's like a small town in Turkey," Erdoğan laughed at the former prime minister of the half-million-strong Grand Duchy.

Farewell and scarf

Erdoğan had bold goals for the country of the crescent moon. By 2023, he wanted to move the Turkish economy to the tenth place in the world, ahead of Canada. (In terms of GDP, Turkey now ranks 18th at $718 billion.)

Not long ago, the "Tiger of Anatolia" stepped on it. Its economy grew by five percent annually, and inflation was brought down to seven percent. However, in its analysis from the end of July, Commerzbank predicts growth of 2.1 percent for next year. This is desperately low for a developing economy.

Agency Standard & Poor's downgraded Turkey's credit rating from BB+ to BB. The country has thus moved lower into the speculative zone for investors. And it will probably sink even deeper next month.

Erdoğan reacted to it in his own way. “Who do they think they are? Who gave them the right to express themselves about Turkey?" he lashed out at the agency in parliament on Friday, answering the question: "They (S&P) are doing it because they are enemies of our country."

However, it is clear that he did not impress investors and part of the foreign capital will withdraw from the country. Some investment funds have already reduced their involvement there, and banks BNP Paribas, Citigroup, Morgan Stanley and Société Générale are considering leaving.

Nothing strange in a country where the wishes of the Sultan are enough and banks change interest rates.

Will they shoot the tiger in the foot?

Since the coup attempt, the Turkish lira has lost more than five percent against the dollar, while the country's main stock index has fallen nine percent. Consumption decreases, companies postpone investments.

How many lira per dollar

Erdoğan, meanwhile, is intoxicated with power, issuing decrees, looking for enemies and threatening anyone. (With the exception of Russian President Vladimir Putin, whom he began addressing as "dear friend".)

After the coup, the Turkish president said that he had saved the country's stability. But everything points to the fact that a leader obsessed with power and revenge is becoming a risk factor for the stability of Turkey and its economy.

He told Europe that he will open the gates to Europe for migrants if they do not cancel visas for Turks. And he threatened to terminate the customs union. Are they serious?

From EU countries, the most investments go to Turkey - together with the economic reforms of former Prime Minister Kemal Dervish, they played a significant role in the rise of the country. Well, the EU28 is the biggest market for Turks - 45 percent of Turkish exports go there. There is no doubt that the customs union helps this.

If the Turkish president was serious about his threats, he would shoot an Anatolian tiger in the leg. So he bids more like a seller in a Turkish bazaar, who ends up settling for a fraction of the amount he asks for.

Regardless of the political agreements with Europe, it is nevertheless evident that the Turkish economic miracle is coming to an end.

Introductory photo: thomas koch / Shutterstock.com