Turkey has been on the global agenda concerning various matters ranging from the July 15th failed coup attempt to the country’s being in a state of emergency, from Operation Euphrates Shield in Syria to the proposed constitutional changes due to the AKP’s wish to shift to a presidential system. However, recently the current situation in the Turkish economy hit something of a peak. The reason for this is that Turkish currency rankings showed that the value of the US dollar skyrocketed to 3.60 versus the Turkish lira last Friday marking the highest exchange rate of all times. Yet, a few days later the value of the dollar showed a sharp decline touching a rate lower than 3.35.
Local economic analysts and politicians first analyzed this sharp rise and then fall of the dollar exchange rate that occurred within a short span of time. Many stated that the primary causes of the rise of the dollar rate were Trump’s election as the new US president and the US Federal Reserves increasing of interest rates. They also noted that Turkey was not the only country being affected from this situation but a reflection of the current global economic condition.
Additionally, Turkey has its own economic challenges not only based on the tumbling of the national currency but due to its geopolitical status. It should be noted that economics is not a branch of science, like physics, which is based on facts even though it must be noted that economists make their analyses based on mathematical data. There are dozens of variables affecting the outcome of monetary and fiscal policy decisions such as politics, environmental conditions and other social factors. For instance, when we take into consideration the ongoing situation in the neighboring countries, it is hard to see a positive platform;
- a serious PKK threat in the southeastern region of Turkey,
- long-time conflict inside Syria and Iraq
- an unsolved crisis in Ukraine
- Bulgaria being in a very bad economic situation
- Greece trying to survive only with the support of the EU
Additionally, Turkey hosts more than three million Syrian refugees fleeing from an active warzone despite the fact that it has limited economic sources compared to more rich countries that have thus far refused to provide shelter to them in their homelands. Turkey has welcomed them as family members and has spent approximately 27 billion US dollars
for them so far. In March 2016, the EU member states and Turkey came to a mutual agreement concerning the refugees. Consequently, the EU decided
to give a six billion Euro fund to Turkey for spending on the refugees for the next three years. In accordance with this agreement, Turkish FM Cavusoglu held a meeting with the EU member states to lift visa requirements for Turkish citizens in the Schengen Zone on December 7th
. This visa contract, which is considered a very positive outcome for both Turkish politics and its economy, will likely be finalized by the end of this year.
Among all the difficulties going on around Turkey, economists are working on some solutions to protect Turkey from spiraling into financial distress. These are necessary and the government will take the suitable measures to improve the situation. In addition to these technical regulations, a very surprising and at the same time pleasing situation occurred, President Erdogan made a public call and invited Turkish citizens to lend a hand to increase the value of the Turkish lira by exchanging their saved dollars into the national currency. Some government ministries followed this initiative, as well; the Ministry of Religion will collect the hajj and umrah fees in Turkish liras
, the Energy Market Regulatory Authority agreed to convert gas tender prices
in Turkish lira and the Ministry of Defense exchanged the Defense Industry Support fund of 262.2 million dollars and 31.3 million Euro
into Turkish lira. President Erdogan has even started discussions with China, Iran and Russia to conduct trade deals in their own local currencies. This step is considered as an initiative to remove Turkey’s dependency on US dollars. American think thank Stratfor stated its unrest as follows
: “Turkey's currency strategy is not only coming to a meaningful fruition in itself, but also through adoption by a sufficient number of other countries to change the global picture.”
The intense contribution of the Turkish citizens to the President’s call once again proved their exemplary attitude of unity and solidarity just like they did during the coup attempt in July 15th. They used every opportunity to mobilize the economy, which has been recently in dire straits. Citizens headed the call to exchange their “under the mattress savings” by exchanging the dollars into Turkish liras. What matters most for the citizens is to feel they are secure in the country and in addition to this countrywide grassroots movement, PM Yildirim declared the new economic reforms, which will be effective by 2017
. According to these extraordinary economic measures, there will be a new fund to accelerate credit volume and create 600,000 new jobs. Yildirim also iterated that in return for the favor the citizens did for their country, next year will be a “saving year” for the public sector refraining from excessive purchases
. Turkey is one of a few countries that paid off its IMF debt in 2008 and it is a remarkable success since Turkey pulled through a very serious economic crisis, both in 1994 and 2001. Turkey has had rough days in the past and its people always found a way to unite and to overcome hardships. They will be able to rise anew with zeal and endeavor of its beautiful people.
Adnan Oktar's piece in Tehran Times