Who is Uğur Gürses?
He graduated from Ankara University, Department of Economics at Faculty of Political Sciences in 1985. He started his professional career at Central Bank of the Republic of Turkey at Foreign Exchange Transactions Division in 1986. He worked at various divisions on reserve management, foreign exchange transactions and open market operations. Uğur Gürses moved to private sector in 1994. He worked for banks as executive manager. His main responsibility was on treasury activities. After leaving banking sector in September 2000, Gürses started to make TV programs on business and financial markets at CNN TÜRK. Gürses had been regularly writing articles on business and economics for Radikal Daily between 2001-2014 and Hürriyet Daily between May 2014-July 2018. After July 2018, Gürses started to share his views at his personel blog, “Ekonomi Alla Turca” – www.ugurses.net
The effort of “trivializing the issues” demonstrates the stance of Turkey's economy administration of “intervening on the symptoms and not on the issues.” It is the effort to sooth the society, to narcotize them by saying, “If you do not know, have not heard of it, if you do not care, then you are happy.”
Our economy administration wasted billions of cash foreign currency of the Central Bank and public banks just to maintain a self-styled economy policy and to keep the foreign exchange rate at a certain level. It is a pity that now, this economy management, with its collapsed economy policy, is resorting to the monetary tightening of the Central Bank.
Unlike what those in Ankara who are managing the economy believe, 51 percent of the economy is not psychological perception, it is trust. Empires of fear do not generate trust.
Those who are ruling the country are spending so much energy on blaming vague foreign powers for all the wrong and bad management. If they could have channeled this energy to understanding the problems of the country, then we would have gone a long way and truly would have made these “foreign powers” envious of ourselves.
Turkish Treasury is “printing” forex bonds to create additional foreign currency for its own operations. Public banks, on the other hand, are spending their cash foreign currencies and replacing them with forex bonds the Treasury is printing.
For a long time, Ankara had eroded foreign currency reserves worth near 100 billion to hold the rate. Now, it has come to the end of the road. It has spent its last penny and left the rate to the markets. Thus, the “unheard of” invented exchange rate regime has collapsed.
Can the forex loss in Turkey be recovered without sending the bill to the public? If first signs of the establishment of political normalization, democratization and rule of law emerge in a powerful way in Turkey, then the “shrunken” foreign currencies will come back to the system.
If the ruling Justice and Development Party (AKP) sees an increase in erosion of their votes and the increased possibility of losing power in a possible election then it would "use all the ammunition till it is finished" for their own political continuity. But this would indeed mean leaving a “gigantic wreckage” for the citizens of the country.
The trend in that started just before the presidential elections in 2018 and accelerated after the elections changed the chemistry of the economy in Turkey. Private sector in Turkey was restricted in every aspect. From pricing to sourcing, to investment licenses, all regulatory higher bodies worked to make the entrepreneurs feel that ‘the party state’ was watching them at every step.
A currency, that is losing value and is not the good money to its own citizens, cannot be the good money of another country. Most probably those who declared they have switched to the Turkish Lira in Syria will be doing their payments in Turkish Liras and - even if it may be only a few pennies - they will keep dollars to store the value of their accumulation.
No matter how long or short the COVID-19 crisis lasts, a broad range of working masses, but especially the unskilled labor force will be the ones exceedingly affected. They will lose income and their jobs. As a result, inequality will spread on a mass scale and poverty will soar.
Ankara thinks it can obtain stability through the sale of foreign currency from the “back door,” which erodes reserves. Ankara has also resorted to bans and restrictions on foreign currency, but these are actually very old tools from the 70s.
The economy management in Ankara may have this thought of stopping the devaluation of the Turkish Lira by wounding the lira’s convertibility but actually it also damages the debt capacity of the Treasury.
What would we have included if we wanted to write a guideline for those who have the wish to intervene in foreign exchange rates but who do not have the adequate experience, but at the same time want to do it right? Taking into consideration today’s circumstances in Turkey, here is a list.
In those countries where it is presented as they have a “floating exchange rate regime,” if their central banks are intervening at the exchange rate, the name of this in economy literature is “fear of floating.”
Since the COVID-19 crisis erupted, Turkish Central Bank’s reserves fell nearly 20 billion dollars. Now, the thought of “Can there be a swap line opened from the U.S. Central Bank Fedreserve ?” is in question.
Turkey was caught with the coronavirus outbreak at a time when it was weak structurally. Just like in the COVID-19 epidemic, the underlying disease story is the story of those problems in economy which were “swept under the carpet” for a long time. Turkish government's economy policies after 2018 were based on bans, limitations and covering up of the symptoms rather than resorting to necessary steps to solve the problems.
Ali Babacan's unfulfilled desire, the “fiscal rule” theme features in the program of the newly established Democracy and Progress Party’s (DEVA) . Babacan had made preparations to start the practice of fiscal rule in 2010, until Prime Minister Erdoğan shelved this.
Even though its name is “floating exchange rate regime,” the current one in Turkey can only be called “commanded foreign exchange regime.” Some may object to that and suggest “managed floating rate regime.” If it was the latter, then the Central Bank would have openly done it. Everybody would have been informed of a rate regime which has targets, a framework and a system. But we do not know anything about this “dystopian regime.”
Talking about Turkey’s economy is like a stand-up show. Turkey’s Central Bank is as independent as the Fed, says the Finance Minister. This comparison can be uttered because of the mood created in Ankara where the government commands the economy. But even in regimes of command economic, there is interdict and logic.
Politicians may have an inclination to regard the Central Bank as a “cow of the government to be milked.” But it is logic blowing that those who have undertaken CB jobs have rolled up their sleeves and personally worked for that.
In the last two years, the economic policy team governing in Ankara that has been intervening on prices, interest and exchange rates with an iron fist has cost banking executives their jobs for making their own trade decisions in an open market. Turkey is supposedly an open market economy, but Ankara has been nudging market players under the table to the point that the market is “open” only in theory.
Both the consumption and investment data in the third quarter show a tendency toward “exhausted growth” in the private sector. I wrote at the end of October that this is the picture of weak, anemic growth. The economy is out of energy. With the economy in this weak and feeble state, Ankara cannot carry the country politically to 2023.
The "orchestrated" issue on the agenda last week was an effort to form public opinion about punishing comments on economy by jail sentences and monetary fines. Stories in newspapers were followed by a speech by Economy Minister Berat Albayrak the next day, who wanted to lay "thought infrastructure" for this.
Russia's strategy is quite clever; it continues to accumulate reserves by using dollar and euro for its exports while using ruble for one third of imports. By receiving 7-8 percent of its net foreign trade in ruble, it creates demand for its currency at the same time.More so, Russia is trying to recruit Turkey as a customer for its Russian made SWIFT alternative SPFS and again homemade credit card system MIR.
The three-way wheel of the Turkish economy, which depended on the flow of foreign capital, domestic credit growth, and household consumption, has stopped. It seems like the politicians running the country in Ankara couldn't find the answer to "What awaits the Turkish economy in 2020?"—since they undertook a military operation in Syria to get back the votes they lost due to the economic crisis.
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Duvar English’s editor-in-chief Cansu Çamlıbel and pollster Can Selçuki discuss whether the recent crackdown on the Peoples’ Democratic Party (HDP) portends a possible closure case against the party. They attempt to analyze who in the Turkish political landscape would benefit from antagonizing Kurdish voters; President Erdoğan or his alliance partner Mr. Bahçeli or both?
Politics
Turkey's Presidential Symphony Orchestra will thrive thanks to the completion of its long-awaited music hall, Conductor Cemi'i Can Deliorman said. Having been in the works for 25 years, the music hall's large auditorium can seat more than two thousand viewers.
A committee of main opposition CHP politicians said that the construction of a visitors' center on southeast Turkey's iconic Mount Nemrut was a betrayal to nature. The CHP committee noted that the site was pending assignment as a UNESCO geopark and that the construction was putting it in jeopardy.
The NATO has criticized a possible test by Turkey of its Russian-made S-400 missile launcher and stepped up calls on Ankara to opt for a different defense system. “Any test of the S-400 air defense system by Turkey, if confirmed, would be regrettable. It is important Turkey continues to work with other allies to find alternative solutions," it said in a statement.
CHP leader Kemal Kılıçdaroğlu and Istanbul Mayor Ekrem İmamoğlu sent congratulatory messages to HDP co-chairs Mithat Sancar and Pervin Buldan on the party's eighth foundation anniversary. "I underline once again that we will never give up on building peace and fraternity," İmamoğlu said.
Five health workers have died of COVID-19 in just one day, the Turkish Medical Association (TTB) said on Oct. 18, as it criticized the government for not being able to manage the pandemic properly. The names of the health workers were revealed as Dr. Salih Kanlı, Dr. Turan Yıldırım, Ferhat Gencer, Harun Dönmez and Yasemin Çolak. The number of health workers who died of COVID-19 in the past eight days rose to 13.
German Foreign Minister Heiko Maas has cancelled his planned visit to Turkey after Ankara said it was restarting operations of a survey ship that it withdrew last month. Maas said that Ankara's renewed push "severely damaged" the atmosphere of trust and said that Turkey can't have any interest in the long-term continuation of the conflicts that it's involved in.
Denizli Governor Ali Fuat Atik has prompted fury for ordering a restaurant to be closed because a waiter working there didn't recognize him. Following criticism on social media, Atik apologized, saying that he was saddened by his approach to the man. Interior Minister Süleyman Soylu also commented on the incident, saying that he found it appropriate for the governor to apologize.
Some 2,500 academics worldwide, including famed international scholars Judith Butler, Noam Chomsky, Silvia Federici, Etienne Balibar and Enzo Traverso, have signed a petition for Turkey to release Cihan Erdal, a PhD candidate and researcher at Carleton University in Canada and an LGBT activist, who was detained in Istanbul on Sept. 25.
A show owner in Denizli has told the governor of the province that he wants to die because of the worsening economy when asked why he was not wearing a mask. "I've had enough. I want to die. Look at the economy. I gained 15 liras on Tuesday and 100 liras on Wednesday. What use does it have even if that 100 liras is all profit?" the shop owner said.
In the government's latest attempt to criminalize the pro-Kurdish Peoples' Democratic Party (HDP), summary of proceedings have been prepared against 18 of its deputies, bringing charges against them for attending demonstrations and for making statements including the word "Kurdistan."
Osman Kavala remains behind bars as one of Turkey's most high-profile political prisoners, while President Erdoğan appointed the prosecutor who prepared Kavala's indictment to the post of Deputy Justice Minister. The appointment came within seven days of the indictment's preparation, and removed the prior appointee by presidential decree.
Hale Gönültaş reports: Turkey's financial crimes unit has determined that Afghan criminals engaged in drug smuggling and in the funding of terror operations are exploiting Afghan refugees in Turkey via bank transfers. As migrants are unable to transport large sums of money and often cannot open bank accounts in Turkey, they rely on moneychangers who transfer cash for a fee, and this is usually the only option.
A missile was fired into the sky on Oct. 16 on Turkey's Black Sea coast where the military was expected to test its Russian-made S-400 defense systems, according to local video obtained by Reuters. "If confirmed, we would condemn in the strongest terms the S-400 test missile launch as incompatible with Turkey’s responsibilities as a NATO  Ally and strategic partner of the United States," State Department spokeswoman Morgan Ortagus said.
Health Ministry failed to deliver an Oct. 15 data release that was designed to offset the repercussions of the revelation that Ankara's official COVID-19 numbers had been excluding asymptomatic patients. The ministry said that Fahrettin Koca's promise to release all data starting on Oct. 15 had been "misunderstood," and that they would only share certain numbers with the WHO.
Former President Abdullah Gül said that he was "appalled" by the attacks on Turkey's Constitutional Court, the most recent of which accused a member of threatening a military coup. The coup debate closely followed discussions on overhauling the Constitutional Court, which many members of the governing bloc in Ankara voiced support for.
Alterations on Istanbul's iconic Hagia Sophia reportedly violated guidelines mandated under the site's "UNESCO World Heritage" status. Converted within two weeks of the legal ruling that allowed Muslim worship, the ancient structure's mosaics were unlawfully covered up, and any work on it was deemed practically impossible, architectural publication Mimarlık Magazine reported.
Economy
President Erdoğan on Oct. 17 announced the discovery of an additional 85 billion cubic meters of natural gas in the Black Sea, following a similar find in August. As a result of testing, analysis and detailed engineering work, another 85 billion cubic meters were added to the reserves we had discovered. The total amount of natural gas reserves in the TUNA-1 well of the Sakarya Gas Field reached 405 billion cubic meters," Erdoğan said.
Turkish exporters are struggling with shrinking markets as Morocco appears to have joined the countries that are effectively boycotting all products made in Turkey. Sources from the Moroccan Ministry of Trade indicate that measures have been put in place to prevent unfair competition from Turkish textile producers who are dominating the local market.
Data from the Turkish Statistical Institute (TÜİK) revealed a dip in real estate sales vis-a-vis last year in September, dropping by 6.9 percent for some 136,744 residences sold. Meanwhile, the total volume of sales between January and September was larger than the number in 2019.
Urban Beat
Kurdish artist Zehra Doğan's work that she created during her two prison sentences between 2016 and 2019 are on display in Turkey for the first time. The artist was jailed on terrorism charges and gained international fame after finishing her second sentence and holding a show at London's Tate Modern.
CHP deputy Mustafa Adıgüzel has found a lost letter penned by Mustafa Kemal Atatürk, Turkey's founding father, to a U.S. child called Curtis La France. "My advice to the intelligent and hardworking children of the U.S. is to not perceive everything they hear about Turks as true and attach importance to basing their opinions on scientific and sound examinations. I wish you success and happiness," Atatürk said in the letter.
The 39th Istanbul Film Festival will offer viewings both online and in-person, the Istanbul Foundation for Culture and Arts (IKSV) noted. While tickets will become available on Oct. 2, showings will start a week later and last for 10 days.