Turkey: Economic Crisis or Conspiracy?

Sunday, 19 August, 2018 - 08:30 Issue Number [14509]

Six weeks after Recep Tayyip Erdogan’s re-election as president, the Turkish lira is witnessing an unprecedented and disastrous decline. The currency had lost more than 40 percent of its value since the beginning of the year. Couple that with US sanctions, while keeping in mind that the aluminum and steel tariffs are only part of the crisis rattling the Turkish economy.

Turkish officials, starting with Erdogan and his foreign minister, were quick to declare that a conspiracy was being plotted against their country and which left the economy in ruins. The economy is being weighed down by massive foreign debt and very high inflation, which is edging on 15 percent. Standards and Poor’s expected inflation to reach its peak, at 22 percent, over the next four months.

Of course, blaming everything on a conspiracy is easier for politicians than to acknowledge what was really happening in the country. It was difficult for them to admit the fragility of the Turkish economy, which could do without reckless political decisions that could lead the country towards the edge of the abyss.

Erdogan, who has since 2002 won five terms in parliament, three local elections and two presidential elections through popular votes, has completely based his successes on the major economic improvement. It is this improvement that allowed him to rise to the top of the country’s political scene. His rivals and allies within and outside the ruling party have come and gone, while he alone remains – as prime minister, head of the party and later as president. The position changes, but the leadership remains.

The time has come for the figure, who achieved economic growth and improved living conditions, to face the moment when the economic honeymoon ends. He chose to toss the ball in the famous “conspiracy” court, ridding himself of the economic burden, which he had a hand in exacerbating. Populist rhetoric appeals to the people and blaming problems on the imperialist West is as attractive. However, Turkey’s crisis remains unprecedented and monetary and financial authorities appear to have no solution. No one wants to confront the crisis with necessary economic solutions, such as austerity measures, raising interest rates or slightly curbing economic growth.

We must point out Qatar’s awakening and backing of Turkey in this crisis. Turkish newspapers had criticized Doha’s “ungratefulness” and silence over economic crisis, prompting Qatar to take immediate action to save its ally. The bad news is that the 15 billion dollars that it pledged to invest in Turkey will only do so much. The economy needs immediate support of nearly 150 billion dollars, while also taking into account that Turkish companies owe more than 340 billion in debt.

No country in the world, regardless of how powerful or rich it is, can immediately provide this massive financial support. Only the International Monetary Fund has these means and Ankara is, so far, rejecting this option because of its insistence and conviction that it is absolutely not facing an economic crisis, but a political conspiracy.