Tuesday, 11 December, 2018

Turkey is a 'target of economic war,' Erdogan says

At midday: Turkey turmoil rocks world stock markets Trump's announcement doubling tariffs on Turkey comes after failure to free American pastor
Jeannette Daniel | 12 August, 2018, 17:00

But on Friday, there was another distinct element that made things worse: a tweet from President Trump. Import taxes for aluminum will be 20 percent.

This is double the level the president imposed on a range of countries earlier this year, including European Union member states.

The United States is the biggest destination for Turkish steel exports with 11% of the Turkish export volume.

In an opinion piece in the New York Times, he warned the USA that Ankara had other alternatives as allies.

In his Twitter message, the USA president noted specifically how the Turkish lira was sliding "rapidly downward against our very strong Dollar".

The lira tumbled 14 per cent Friday, to 6.51 per US dollar, a massive move for a currency that will make Turkish residents poorer and further erode global investors' confidence in the country. "Turkey has been trending towards authoritarianism & becoming more anti-American". As the lira falls in value, the debt becomes harder to pay.

Exchange-rate volatility not only complicates loan repayments, it also drives inflation higher and erodes the value of existing loans in the local currency.

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The slump is attributed to the tensions with the U.S. and concerns about President Recep Tayyip Erdogan's control of monetary policy.

Speaking in the northeastern province of Rize, President Recep Tayyip Erdogan said that dollars, euros and gold were now "the bullets, cannonballs and missiles of the economic war being waged against our country".

He has said Turkey's economy remains strong, noting a 7.4 percent growth rate in the first three months of this year.

Meanwhile, markets are deeply concerned over the direction of economic policy under President Recep Tayyip Erdogan, with inflation at almost 16%, but the central bank reluctant to raise rates in response. But experts argue that the central bank should instead raise interest rates to ease inflation and to support the currency. "We will not lose the economic war", he said.

It could impose capital controls on forex transfers or even call on the International Monetary Fund for bailout help, although economists regard the former an extreme measure with only marginal probability and the latter unlikely given one of Erdogan's proudest achievements was paying off all of Turkey's International Monetary Fund debt in 2013. Following the tweet, Turkey responded by imposing duties on $1.8 billion in USA goods including coal and paper. "We wouldn't read too much into a relatively small move that occurred in just one day, but if this continued it might be an alarming sign that the interbank market is freezing up", Jackson noted. -Turkish relations is a dispute over an American clergyman who has been jailed in Turkey since December 2016. Brunson is on trial and faces up to 35 years in prison if he is found guilty.

Last week, the United States implemented punitive sanctions on two members of the Turkish cabinet and warned of further measures to come. The White House thought that Turkey had agreed to release the pastor in exchange for Israel's release of a Turkish woman that had allegedly given funding to Hamas. "It is wrong to dare bring Turkey to its knees through threats over a pastor", Erdogan said. "Relations with countries who behave like this have reached a point beyond salvaging". It has stepped up sanctions against countries such as North Korea, Iran and Russian Federation, among others.

On Friday, Erdogan spoke by telephone with Russian President Vladimir Putin. Mario Ritter was the editor.

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