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possibly set to experience a double-dip recession. The economic collapse is, however, the main factor behind Erdogan’s worsening woes, and he won’t want things to deteriorate any further. Thus, it’s possible that finance minister Albayrak could find himself out of the saddle, despite his family connections, as Erdogan tries to signal that he is at last going to take the economic bull by the horns. But there’s no sign of a real bailout plan for the economy in the works. Known as a “bitter recipe” by Turks, who are accustomed to paying the price of the damage wrought by idiot politicians, such a plan would make Erdogan more vulnerable to those sharpening the knives, hoping he meets a wretched end.
Market talk and market drivel. How is it, some observers ask, that despite its truly dire economic state, debt-loaded Turkey stays afloat on the global capital markets? It’s a peculiarity of the Erdogan administration that while it spends so much time scapegoating foreign media for many of its woes, the fact that Turkey manages to breathe relatively freely on those markets is very much down to the international financial press maintaining coverage founded on the erroneous idea that the financial markets in Turkey are functioning normally. There were reports on June 24, for instance, suggesting a “Turkish assets rally” was upon us because the election uncertainty caused by the revote was now out of the way. Rally? Turkish assets? The lira gained 1%, the BIST-100 was up 1.5%, eurobonds gained a cent... and this is a rally in Turkish assets? Aren’t these figures rather, and merely, daily volatilities in Turkish assets? That’s not a rally. That’s a spurt. There is nothing there which can yet be seen as sustained. If you are a trader dealing with thousands of financial instruments, you may jump on such heady headlines. But the reporters behind the articles must be entirely aware that they are talking out of their hat, drawing in some readers, perhaps pointing to a short-term market play profitable for some, but in the end offering nothing more than sensationalism. The Turkish lira fell from the 5.78s against the USD to the 5.71s and was trading at weaker than 5.80 as of 22:15 local time on June 23. Fine. But if you are aware that it weakened into the 6.23s in May from the 5.17s seen at the end of January— despite all the manipulative interventions orchestrated by officials, the burning up of central bank reserves, the audacious, but in the end self-defeating, attempt of the Erdogan administration to shut down the offshore lira swap market in London prior to the local elections, and so forth—then you should know full well that the global financial media, day by day, is providing a flawed picture. And that’s putting it politely. “The rerun of the Istanbul mayoral elections yesterday has lifted major uncertainty, with consequent appreciation of the TRY, and we may observe reactionary buying and a slightly positive opening at the BIST today. Market participants will this week focus on President Erdogan and his US counterpart’s meeting on the sidelines of the G- 20 summit,” Seker Invest said on June 24 in its rather more sober daily bulletin. Seker expected trading on the Borsa Istanbul to remain cautious ahead of that meeting in Japan, with further upturns in the index at times there to be utilised for profit taking. “That said, the world’s leading central banks’ resumption of accommodative monetary policies is expected to reflect positively on the performance of TRY-based assets. Duly, as long as global risk appetite remains elevated, any downturn at the index could also be exploited as a buying opportunity. SUPPORT: 93,600-92,600 - RESISTANCE: 94,400 – 95,400.” Until Erdogan, Bahceli, the CHP and other key actors make it clear how they’re going to play their new hands, let’s leave it at that.
Why it’s tempting to think the Istanbul revote will bring about the end of Erdogan. On the eve of the end-of-March Turkish local elections, bne IntelliNews asked whether President Recep Tayyip Erdogan could actually emerge the loser from the contest, even though by rights such an outcome should have been a dead certainty when one thinks of how badly his administration has botched Turkey’s economy. But given the democratic deconstruction of the country during Erdogan’s 17 years at the top, our reporting team has had too much experience of strange goings-on at the Turkish ballot box to think that logical assessments necessarily hold sway. Two days before election day we came to the conclusion that the disappointment with Erdogan had grown to such an extent that his Justice and Development
8 TURKEY Country Report July 2019 www.intellinews.com