Zeitgeist Turkey | Episode 7: As Turkish lira weakens to beyond 7 against dollar Erdoğan faces a choice
Duvar English’s editor-in-chief Cansu Çamlıbel and pollster Can Selçuki are joined by political economist Esen Çağlar to discuss the underlying factors behind the accelerating loss of value of the Turkish lira against the dollar. They look for answers to how the Turkish government is caught between a rock and a hard place by rapidly selling the Central Bank reserves. They also discuss whether Ankara can secure a swap line from the U.S. without giving up Russian S-400s.
The U.S. Ambassador to Turkey, David Satterfield, has said that Ankara risks sanctions from Washington if it activates the Russian-made S-400s. "We made our position quite explicit to President Erdogan, to all the senior leadership of Turkey, and that is the operation of the S-400 system...exposes Turkey to the very significant possibility of Congressional sanctions, both those that invoke the CAATSA legislation, and additional freestanding legislative sanctions," he said on April 30.
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.
DEVA Party leader Ali Babacan has said that Turkey shouldn't rule out borrowing loans from the international institutions, saying that it should choose cheap IMF loans over high-cost borrowing from markets. "Turkey has the right to use them with unconditional 1 percent interest. Instead of going to the markets and paying 7 percent, we can get loans from these institutions with 1 percent," he said.
Turkey has held talks with the United States about possibly securing a swap line from the Federal Reserve and has discussed other funding options to mitigate fallout from the coronavirus outbreak, anonymous Turkish officials told Reuters on April 10. “Aside from the IMF, Turkey is looking at every kind of option for resources and is involved in various contacts,” one of the Turkish officials said.