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Baraaat Albayrak
Barat Albayrak, the son-in-law of Turkish President Recep Tayyip Erdogan and the country’s finance minister, surprisingly resigned a day after the removal of the central bank governor. The value of the Turkish lira, which is among the world’s worst performing currencies, rose about 5 percent against the dollar on Monday after Al-Bairaq announced it.
What are the reasons for your resignation?؟
Albayrak, 42, justified in his account on the social network site Instagram the reason for his resignation for health reasons, without giving details, saying: “After serving in ministerial positions for almost five years, I made the decision to not continue with my position as Minister of Finance for health reasons ”. .
However, the Turkish media said the reason was their opposition to the appointment of Naji Aghbal, who strongly opposes Albayrak’s economic policy.
His announcement came a day after Erdogan replaced Central Bank Governor Murat Uysal with former Finance Minister Naji Aghbal.
The new central bank governor said the bank’s main goal is to stabilize and maintain the lira exchange rate. “The central bank will decisively use all policy tools in pursuit of the objective of price stability,” adding that current interest rates will be reviewed before the next Monetary Policy Committee meeting on November 19.
Erdogan’s decision to exchange Uysal was the result of turmoil in the Turkish economy and the fall in the value of the national currency by 30 percent against the dollar since the beginning of this year. During the two years that Albayrak was Minister of Finance and Finance, Turkey suffered from economic stagnation and high unemployment rates.
The name Albayrak has often been associated with futile efforts to preserve the value of the Turkish currency without resorting to raising interest rates, in line with Erdogan’s position that high interest rates lead to higher inflation. Most economists believe the opposite is true.
Albayrak has gained popularity among Erdogan supporters due to family ties to the president, but also many opponents among politicians and investors due to his administration, leading to the continued devaluation of the national currency.
If Erdogan accepts the resignation, that could pave the way for a fundamental change in the country’s economic policy.
As soon as Albayrak announced his resignation, the value of the Turkish lira rose against the dollar by about 5 percent, the biggest jump for the lira in 20 months. Investors are optimistic that these changes may usher in a new economic era.
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Informed sources, who preferred to remain anonymous due to the sensitivity of the matter, told Bloomberg that Erdogan met Aghbal and former Deputy Prime Minister Nurettin Janikli on Monday night in Istanbul to discuss central bank policy, few hours after Albayrak announced his resignation.
The Turkish president’s office and Janekli declined to comment on the matter.
A continuous collapsefrustration
Albayrak held the position of Minister of Energy for three years before taking over the treasury and finance portfolios in 2018. He has been married to Israa, Erdogan’s eldest daughter, since 2004.
According to several officials familiar with the matter, the Turkish president’s decision to remove the head of the Central Bank was due to Erdogan’s disappointment in using tens of billions of dollars in a failed attempt to support the Turkish lira. Officials said the central bank followed the policy with strong support from Albuquerque.
After Albayrak took over as the country’s “economic czar” in July 2018, the Turkish authorities began to spend heavily on national foreign exchange reserves when the lira exchange rate fluctuated.
Goldman Sachs economists estimate that these futile attempts have cost the central bank around $ 100 billion this year.
The rate at which the country’s currency exchange is eroding has made it more vulnerable to the influence of external factors.
Unusual resignation
A Treasury and Finance spokesperson confirmed to Bloomberg the validity of Albayrak’s statement on Instagram, but the unusual method of resignation caused upset among some of Albayrak’s aides, who said his phone was turned off when they tried to contact him and also closed his account. from Twitter.
Aghbal, the new governor of the banking bank, has often criticized Alabairaq’s intervention in the foreign exchange market.
Your appointment may indicate an approaching rate hike, but that depends on your independence.
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Recep Tayyip Erdogan presents a shield to his son-in-law, Finance and Treasury Minister Albayrak, at the inauguration ceremony of the Revenue Administration Building of the Ministry of Finance and Finance in Atasehir, Istanbul. July 4, 2020
To buy Petroleum From the “Islamic State”
WikiLeaks published a large collection of Barat emails, spanning the period from 2000 to the end of 2016.
The British newspaper The Independent said in December 2016 that there is strong evidence of an acquittal relationship with a Turkish company accused of buying oil from the so-called Islamic State organization that controlled a large number of oil wells in Syria and Iraq during 2015 and 2016, which the Turkish government denied. .
Russia accused the Erdogan family of trading in oil produced in the areas controlled by the “Islamic State”. Russian Deputy Defense Minister Anatoly Antonov said in late 2016 that Erdogan’s son Bilal and his son-in-law exchanged oil sold by the “Islamic State” to intermediaries that eventually ended up in Turkey.
Similar positions
Both Albayrak and Erdogan have a position on interest rates, as they both call for a drastic reduction in interest rates and believe that it is the main cause of the Turkish economic crises, while international financial institutions believe that the Central Bank of Turkey should maintain its independence and raise the interest rate to curb inflation.
Observers believe that Erdogan controls all the governing boards in the country, and continues to implement his plan to rebuild Turkey in accordance with his vision and impose more restrictions and restrictions on his opponents. The only thing that could make Erdogan hesitate to continue on this path is the exacerbation of the economic crisis that Turkey is currently going through, which ultimately means a decline in his popularity among the Turkish community, which until now remains loyal to him.
Accumulated debts
“We expect the new governor of the Turkish central bank to take immediate steps to tighten monetary policy to stabilize the value of the lira and slowly rebuild reserves,” said Pierre Hammarlund, senior analyst for emerging markets at SEB AB in Stockholm, in a report. .
Turkey’s net foreign exchange reserves have been cut in half during the current year and currently stand at $ 18.4 billion.
The central bank borrowed tens of billions of dollars during Uysal’s tenure through swap deals with commercial lenders.
According to an official, who requested anonymity, before his removal, Uysal received numerous warnings about the rapid depletion of foreign exchange reserves, as well as pleas from officials to discuss it with Albayrak or the Turkish president.
For months, Uysal was hesitant to challenge Alabayrak or Erdogan, and people familiar with the matter said that in the end the bank shared its growing concerns about the risks entering the market by selling more currency.
