Recent news of a sinking Turkish Lira has led to many in the wider world to reach dramatically false conclusions about the current state of the Turkish economy. The reality is that the Turkish economy continues to boom with overall growth, productivity, employment and wages rising. The recent volatility of the Lira has indeed been partly due to the classical Keynesian growth formula whereby inflation naturally rises in line with an expanding economy and healthy employment figures.
Turkey continues to follow this Keynesian growth pattern, but in the last several weeks, western currency speculators including in organisations under the leadership or influence of George Soros have been speculating against the Lira in what the Turkish President saw as a clear attempt to meddle in Turkey’s electoral process prior to Turks going to the polls in a Presidential and parliamentary election on the 24th of June.
President Recep Tayyip Erdogan gave a speech during the last week of May where he directly threw down the gauntlet to Soros, stating that Turkey’s economy will not be so easily manipulated by his notorious practices. The Turkish President said,
“Our economy grew by 7.4 last year and we are not slaves of Soros or anyone else but Allah”.
The Turkish leader who faces the first Presidential election since last year’s referendum in which votes opted to give the Turkish President more political power, also stated:
“Hey finance sector, if you play these types of games with our investors, know that you will pay a heavy price. My brothers who have dollars or euros under their pillows, go and invest your money in the lira. We will foil this plan all together”.
Several weeks later and a rise in interest rates along with the more important factor of streamlining different interest rates throughout the banking sector have generally stabilised the Lira against the Dollar. Even more importantly, the figures for Turkey’s economy growth in the first quarter of 2018 indicate that Turkey’s economy will continue to look bullish throughout 2018 and well into next year.
Erdogan has spoken of the good economic news, telling supporters,
“Turkey’s economy grew 7.4 percent in the first quarter of 2018. We are the first among OECD [Organization for Economic Cooperation and Development] countries and second among G20 countries. We continue to be one of the fastest growing countries in the world.
Despite all the attacks on the economy and games played [on Turkey], [we will] continue to grow strongly on the steady macro basis”.
The growth rate of 7.4% in the first quarter of 2018 versus the same time last year fits in with Turkey’s plan to continue sustainable growth throughout the next three years and beyond. In terms of electoral politics, Erdogan has a strong record to run on, not only because of the transformative role that his socio-economic policies as Prime Minister played in the early 2000s, but because recent years have seen President Erdogan weather many potential economic storms without amending the long-term trajectory of his policies to any substantial degree.
While inflation remains an issue for Turkey as it historically has been for most Mediterranean economies, the healthy Turkish economic growth rates and strong employment figures when measured against Turkey’s recent past and the present realities of many of the EU’s Mediterranean economies looks to keep a lid on any inflationary spirals, especially since the Central Bank of the Republic of Turkey took measures in respect of interest rate hikes to stave off the worst of a would-be inflation crisis.
However, the characteristic of the modern Turkish economy that frightens Soros and his western speculators the most is that which is non-quantifiable but is nevertheless self-evident. Under Erdogan, Turkey has expanded its economic partnerships with China, Russia, Iran and into Africa where in countries like Sudan, Turkey is engaged in long-term development projects that will be mutually beneficial for all parties. With Turkey and Pakistan both on the verge of historic elections, it ought to be the goal of the leaders in Islamabad and Ankara to harness historically good ties and transform them into an intensified economic partnership. Had Turkey remained a junior partner of a European Union which even in the early 2000s did not sincerely seek Turkey as a full member of the bloc, Ankara would be largely beholden to a single set of economic partners who except for Germany, are not in the best of economic shape themselves.
By embracing new trading partnerships with the rising powers of Eurasia, Africa and the Chinese economic colossus, Erdogan has guaranteed Turkey both new opportunities by working cooperatively with the world’s most dynamic economies while also gaining much needed leverage against Europe in future negotiations.
Modern Turkey’s economic policy, much like its foreign policy is one that ‘looks both ways’ from a position of strength. Thus, Erdogan has created a systematic resilience in the Turkish economy even at a time when Soros and his fellow western speculators were trying to create an inflation crisis on the eve of Turkey’s most important elections in decades.
The western financial speculators are certainly not done with their attempts to meddle in Turkey’s sovereign affairs, but at this stage, in the battle to control Turkey’s destiny, President Erdogan has slapped down George Soros and his fellow speculation gangsters in what amounts to a victory not just for Ankara but the wider global east.