Last night there was an interview with one of the local newspapers Hurriyet
by the new finance and economics minister, that of course is President
Erdogan son-in-law, he was originally promoted from energy minister to that
new role not so long ago and he said that there would be dramatic measures taken
this morning, they'd be unveiling their plans to try and use Turkey's institutions
to try and stem this crisis, he'd given another presentation back on Friday,
focused very much on the macroeconomic situation
without really mentioning this, which is why investors got incredibly concerned
about what the government was going to or what isn't not going to do to try and
combat this free fall we've seen with the Turkish lira. In terms of the action that's been
taking [inaudible] of outline that they're a little bit the context
for this is really key because president Erdogan has repeatedly said he is an
enemy of increasing interest rates, the benchmark rate currently at 7.5%
percent some analysts calling for it to increase as much as three or 400 basis
points as part of an emergency hike. In terms of the action, the president
Erdogan has prepared to ask citizens here in Turkey to take it's very much
focused on propping up the lira with their own foreign currency holdings take
a listen to what he said to an audience of supporters on Saturday on the coastal
town of Unye, talking to party members there, he talked about the need for people
to take action in their own lives, take a listen.
If you have dollars under your pillow, take these out, if you have euros, take
these out, if you have gold, take this out, I'm talking to those who have them
immediately give these to the banks and convert to Turkish lira and by doing
this we fight this war of independence and for the future.
He gave a number of these speeches at rallies for his political supporters, he traveled a couple
of hours along the coast of the Black Sea to the town of Trabzon where he also
addressed supporters on Sunday and talked about the difficulty in the
relationship between the U.S. and Turkey, he seemingly feels quite betrayed by Donald
Trump's decision on Friday to institute fresh tariffs on steel,
aluminium exports from Turkey, take a listen to how he talked about that
souring relationship.
I, as your strategic partner, was there in Somalia, Afghanistan, we were together
in Bosnia, in Kabul we guard the airport, how can you the U.S. put aside such
a strategic partner in favor of terror organizations such as the PYD and
the YPG? You are attempting to sacrifice your relationship with 81 million people
for a pastor with ties to terror organizations, but we will do as the law dictates, you cannot
simply make Turkey bow down by ordering it around.
Once you rewind a few days and there was a Turkish delegation in Washington D.C.
trying to resolve some of these outstanding challenges between
the two countries when it comes to that bilateral relationship, they didn't seemingly
make a huge amount of headway, the Turks have implied that the U.S. set
a deadline for the release of the U.S. pastor, the American pastor Andrew Brunson
who's been held here in detention first, in prison now, in house arrest since
that failed 2016 coup, they do not seem to have bowed down in Erdogan's words
to that demand and that may be why President Trump instituted that fresh
set of tariffs on Friday, that of course triggered the latest downfall
in the lira and unless the central bank hikes interest rates and in the very near
future according to a lot of the analysts we've been talking about,
the concerns about confidence, about sentiment in the Turkish economy
will continue and the challenges for both banks despite the fresh measures
announced this morning and businesses here when it comes to servicing foreign
denominated debt will no doubt only worsen.
Willem, the playbook here for this kind of situations you try turn to its
external factors, and we're seeing a lot of that today, it's it's the speculators
it's a foreign conspiracy, it's the United States as well we're gonna cut
back on dollar transaction, dollar ownership, what have you as well, but how
is that playing out with a domestic audience which up until now has given
not much "carte blanche", but a real rubber stamping of the Erdogan's resent to some
old, semi old autocratic position as well, is there any sign that we think
we're gonna see dissent on the streets of Istanbul which from Taksim
Square and other places we've seen over the years can have quite extreme reactions
on the ground?
Well it's worth pointing out, you know, since 2002 this man has had key
positions in government here, first as Prime Minister, now as
President, he had that landslide election win just a couple of months ago, a lot of
questions about the veracity of some of those vote counts, but those have all
been papered over by his administration, so there are questions amongst those who
criticize him, especially in larger cities like Istanbul as to whether these
kinds of nationalist sentiments that he's expressing are particularly useful,
people I've spoken to here so far in Istanbul saying they don't really believe
it's anything to do with the United States, this is a domestic problem, this is to do
with the need to increase interest rates and unless that's addressed by the Central
Bank, unless it can act independently despite Mr. Erdogan's opposition
to the increase in interest rates, then they don't see that there's going to be any easy
resolution to what's been happening here.
In terms of social unrest I think that's a bit speculative at this stage, but certainly,
a lot of his critics continue to be very upset by this course of action.