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With his call for a boycott of French products due to the country’s stance on the Mohammed cartoons, Turkish President Erdogan is causing unrest. Are you trying to divert attention from your own financial weakness?
By Uwe Lueb, ARD Studio Istanbul
Turkey’s President Recep Tayyip Erdogan is outraged. His anger was stoked by French President Emmanuel Macron, who announced more checks on mosques and other Muslim institutions after the murder of a French teacher on Islamist grounds. Erdogan sees this as a hostile act against Muslims in Europe.
It is time to fight back, he thinks, and asks his compatriots to put France in its place: “Now I appeal to my citizens: as in France, people call for a boycott of products ‘made in Turkey’, I urge to my own citizens not to buy French products! “Erdogan joins the call for a boycott of protesters in some Arab countries over the weekend.
Who is Erdogan hurting: France or Turkey?
Such an economic attack is very likely to harm him, or his country, itself, because Turkey’s problems are significant, especially the ever-declining national currency, the lira. Economist Baris Soydan sees here a connection to Erdogan’s politics. He cites two reasons for the Turkish president’s statements: on the one hand, economic, and on the other, foreign policy.
“Last weekend, President Erdogan spoke harsh words to French President Macron and the United States,” recalls Soydan. “He identified Macron as a candidate for psychological treatment, a response to Macron’s harsh comments against Turkey.” The United States, in turn, has asked Erdogan not to wait any longer with threats of sanctions: “Because of the S400 issue,” says Soydan, referring to the Russian missile defense system that Turkey has bought. NATO partners reject this system and the United States has even threatened sanctions. Erdogan is unimpressed and even provokes the United States to calmly impose its sanctions. Investors are deterred by this policy, to the detriment of the local currency, the Turkish lira.
“Politically motivated” interest rate policy?
But there is another reason for this, says economist Soydan: “The second reason is the fact that the Turkish National Bank decided not to raise the key interest rate last week.” However, the opposite was expected because: “In Turkey we have inflation of 11.75 percent, with the National Bank’s political interest rate of 10.25 percent, well below the inflation rate.”
Soydan says it is poison for confidence in the lyre. Because not only investors, but also ordinary people, prefer to invest their money in US dollars and euros with such a high loss in value of the lira. On the other hand, if key interest rates were to rise, that would also be another hurdle for investors. The National Bank experts could have raised interest rates anyway, but Soydan’s opinion is that they are not doing anything against Erdogan’s will.
“Monetary policy in Turkey is largely determined not by the National Bank, but by the Erdogan government. The National Bank is not independent,” says Soydan. Erdogan’s anger could be a bad advisor, such as seeing the cause of Turkish problems exclusively abroad.
