Playing economic hitman against Turkey

Published 25.10.2017 02:05

In recent days, lots of fabricated news, speculation and negative expectations about the Turkish economy have been disclosed to the media as part of a malicious perception manipulation. In fact, this unfounded news that disrupts market operation and misleads investors is a crime, but no one ever claims responsibility because its real perpetrators are always behind the scenes.

Before the EU Leaders' Summit, they leaked to the media that the suspension of Turkey's accession talks was a high probability. However, the EU leaders could not make such a decision. Although they acknowledged that they would not, they issued statements and projections before the summit as if such a decision would be made. Obviously, they aimed to create distrust and fragility toward Turkey, and especially its economy.

At the same time, the U.S. introduced a visa ban on Turkish citizens. It was an unfair decision that does not fit in with any diplomatic practices. It has had almost no negative impacts on the markets because it is estimated to last a short time.

We started this week with negative and fabricated news as well. It does not matter what such news is about, but it has disruptive effects on the markets and it creates unease and distrust for investors even if it is for a short period of time. The purpose of those who spread negative news and expectations about Turkey is to escalate economic siege, reawaken monetary and fiscal policies that will reduce growth, and ensure that Turkey will start 2018 with a new "austerity." The neo-liberal austerity policies are now based on a disproved understanding of economics, and this is a generally accepted view. Even the International Monetary Fund (IMF), which was the hardline practitioner of these policies at one time, is still unable to defend them today.

Neo-liberal austerity policies always start with the pretext of reducing inflation, ensuring financial stability, and bringing the effectiveness of public fiscal discipline, but it could not achieve any of this. On the contrary, tax revenues in the contractionary economy fall, budget revenues decline, the public sector cannot keep up with this rapid deterioration, and budget deficits further increase. Tight monetary policies and high interest rates do not ensure currency stability, on the contrary, the rapidly appreciating Turkish lira increases imports, destroys the intermediary industry and prevents competition in exports.

While importing and borrowing becomes advantageous, producing and exporting becomes disadvantageous for a short time. While borrowing foreign currency becomes beneficial, borrowing Turkish liras becomes very costly. Thus, the foreign exchange gap in the key industry grows, while intermediary industrial enterprises defeated by imports are eliminated from the markets. The elimination of small enterprises from the market highlights oligopoly (the market jointly determined by monopolistic companies of certain sizes) and prices come to be determined by a monopolistic approach. This pulls prices up quickly. Small enterprises will have to adjust to these monopolistic prices in order to endure high interest costs and survive. And as opposed to promises, inflation does not fall and leaps along with unemployment in a rapidly shrinking economy. As a result, the economy faces stagflation in a short time where high unemployment and inflation are together.

At the same time, this is a situation where high foreign exchange debts cannot be paid both in finance and real sectors, and so the exchange rates increase rapidly.

As the crisis is deep, it is inevitable to quickly reset all the things in politics, foreign policy, and all the investments in the economy and to expect that the country will be left to the political will of the lenders to overcome it.

As you can imagine, this is an economic operation that produces political outcomes equivalent to a coup, and Turkey has experienced such operations many times, and as a result, all the coups were brought forward with such economic operation processes or the possible political consequences of coups were produced without the need to stage a coup.

It is blatantly obvious that, through such economic siege operations, they are striving to do what they could not in the July 15 fascist coup attempt. Turkey knows that the ones who produce these fabricated news are economic hitmen and for what purpose they do it. They are the global oligarchs in our region and in the world, who want to protect their own interests by war, and they are condemned by mankind after all wars.

It appears that playing an economic hitman and economic perception manipulations will persist as the continuation of the July 15 coup attempt. But there is something they forget: Turkey is no longer the old Turkey with both its politics and economy. Today, Turkey is a country that provides more employment on its own than 24 EU countries, it transfers the most social assistance to the world, directs regional dynamics, and is eyed by Eastern Europe to grow and invest in that region. For this very reason, EU leaders could not suspend negotiations with Turkey and they know they very well they can't do it.

These days, all trade and energy routes reaching Europe from China have to pass through Russia in the north and through Turkey in the middle and south. The Baku-Tbilisi-Kars Railway will open soon as a historic project that makes the Beijing-London line uninterrupted. While southern energy transitions are provided by the Trans Anatolian Natural Gas Pipeline Project (TANAP), northern transfers are provided by the TurkStream. All these hot spots, from Turkmenistan to Afghanistan and to Iraq and Syria, which are now on fire, can attain welfare and peace with these trade and energy routes.

That is why it would be the best choice for the U.S. to approach Turkey itself in a more careful manner and in accordance with mutual interests.

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