What happened that night? The answer lies in the statements of Turkish party leaders and economic experts, with real data and numbers.
After the article published on December 20 under the title ‘2021 in its Last Quarter, the End of the Erdogan Miracle’, in which the reality of the economy and money in Turkey was discussed, the Turkish President Recep Tayyip Erdogan surprised us hours later with his dramatic decisions that his supporters and followers considered ‘a victory for him over the dollar and the enemies of the nation and the Turkish state.’
What happened that night?
The answer lies in the statements of the leaders of all political parties and economic experts, with real data and numbers. The leader of the Republican People’s Party, Kemal Kilicdaroglu, said, “The central bank and government banks sold 19.1 billion dollars that night, which contributed to reducing the value of the dollar from 18.4 Liras to 10.5 Liras.”
The leader of the ‘Democracy and Progress’ party and former Economy Minister (in Erdogan’s governments) Ali Babacan described the program announced by Erdogan as ‘a failure’, and said: “The central bank’s reserves have reached a very dangerous level, after they declined from minus 47.9 billion dollars at the end of November to minus $64.6 billion on December 22.”
The leader of the “Good Party”, Maral Aksanar, appealed to the Finance Minister to reveal the names of all those who sold their dollars at 18.4 Liras, before Erdogan announced his financial decisions on the night of December 20 or in the early hours of the decision.
Minister of Finance and Treasury Nureddin Nebati described the recent decisions as “a new Turkish model,” and said, “The big investors know very well that the dollar cannot continue at 18 Liras, so they sold their dollars at the last moments, and the simple citizen was the victim, and he is now regretting what he did.”
The minister’s statements provoked wide political and popular reactions, and the leaders of the political parties accused the state of “conspiring against its citizens in the service of the big businessmen of Erdogan’s followers. Journalist Yilmaz Özdil asked: “Who is the person who sold 1.5 billion dollars at 18.2 Liras, and then bought the same amount again at 10.5 Liras?”
Economic experts considered the recent financial measures a “fake fantasy,” and they predicted its failure in advance, which prompted the Public Prosecution to file a lawsuit against them, accusing them of questioning official data. After Erdogan confirmed more than once his “determination and insistence to cut interest rates, this is what is required by religious texts (the Qur’an and hadiths).” He found himself compelled to retract this position, forgetting the aforementioned texts, and he changed the governor of the Central Bank 3 times.
After the interest fell to 14% under pressure from President Erdogan, the Central Bank, in its recent procedures, suggested that the citizen converts his dollars into Turkish Lira and deposit them in banks, in return for an annual interest ranging between 14-16% annually, provided that the citizen bank compensates for his loss in the event of an increase, the bank would compensate the citizen for his loss in the event of an increase in the dollar exchange rate at the end of the year.
The (Central) Bank also recommended citizens to sell their gold savings, and deposit their value in Turkish Lira in banks with the same interest, provided that they are compensated at the end of the year in case the price of gold rose above its price on the day the account was opened in the bank.
The Turkish citizen was not convinced by the new complex program, because he no longer trusted the government and its decisions, which explains that the volume of amounts deposited in banks in Turkish Lira after December 21 did not exceed 7 billion dollars out of 170 billion dollars; the size of individual deposits. The reason for this is that economic experts expect a new collapse of the Turkish Lira, after the central bank reached a state of bankruptcy, and experts do not hide their concern about a similar fate to the public treasury, which will bear the burden of compensating citizens who opened accounts in Turkish Lira in the event of an increase in the price of the dollar.
This explains the government’s decision to increase the prices of public sector products and services, such as highways and suspension bridges (60%), electricity (52-130%), household gas (25%), for the third time in 8 months, and the price of gasoline (when the dollar was 18 Liras) of one liter was 11 Liras, and now, the dollar is 13.5 Liras, and the liter is 13 Liras).
To all this is added a series of taxes on government transactions, at very high rates, and it also explains why exporters are forced to sell 25% of the value of their exports in dollars to the Central Bank, at the rate determined by the bank on that day, at a time when private banks (about 50% of them with foreign capital) lost its confidence in the financial measures of the government, which prompted it to raise the interest on loans to 28-30, with the banks, in turn, paying annual interest ranging from 22-24% to citizens who open accounts in Turkish Lira, but without compensating them for the loss of the dollar.
All of this explains the fears of the financial markets, which no longer trust the government’s programs and financial measures that have proven their failure, especially after the announcement (Monday) of the annual inflation rate, which reached 38.08%, which raised the price of the dollar to reach 13.7 Liras, then it declined to 13.2 due to the intervention of the Central Bank.
The leader of the Republican People’s Party, Kilicdar, and the leader of the Democratic and Progress Party, Babacan, accused President Erdogan of “lying to the people about the issue of inflation,” and said, “The reality is that this percentage is not less than 80%. The famous American economist Steve Hank estimated it at 90.88 percent,” at the time, the Turkish Lira lost 87% of its purchasing value during the 19 years of the “Justice and Development” rule, which began in December 2002.
These contradictions made the economy lose all its components, due to the failed policies that Erdogan and his followers wanted to cover by accusing foreign countries and forces, forgetting that Erdogan raised the value of the dollar before last December 20, and he was proud that he lowered its price to 10.5 Liras in one night, without responding to the accusations of his opponents regarding the fate of the 150 billion dollars that evaporated from the reserves of the Central Bank, and he has not yet responded to any question or inquiry from the opposition regarding corruption issues that have burdened the entire economy. 5 construction companies, whose owners are close to Erdogan, have obtained $200 billion (not in Turkish Lira) from state projects during 18 years of the rule of “Justice and Development”.
The story of Al-Nasr Airport in the city of Kutahya was the funniest of its kind because the state pledged to the company that implemented the project that the airport would receive 1207902 passengers annually, but this number did not exceed 9966, which forced the treasury to compensate the company, in dollars, and according to the current exchange rate.
Erdogan and his media do not want the citizen to talk about these stories, but rather they want him to forget them, and as Finance Minister Nebati said: “I wish I could sleep now and wake up after 6 months.” The most interesting was Interior Minister Suleiman Soylu’s defense of the government’s policies, he said: “We did not do anything of our own free will. Everything that we have done and are doing is because God Almighty commanded us to do it.”
Abd al-Rahman Daily Pack, an Islamist journalist, put an end to this discussion when he said: “It is God Almighty who raised the value of the dollar, and it was he who lowered it, not America, Israel, China or Elon Musk,” whom Erdogan’s supporters accuse of enmity against the Turkish nation and the state, and that they are manipulating the price of the dollar. On January 3, 2021, the dollar was 7.3 Liras, and today it is 13.3 Liras, with a difference of interest that Erdogan forbade, then made it permissible in another form, after some religious scholars issued a fatwa for him!
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