Erdogan said ‘economic liberation war’… What has the LT become since then?
The Turkish lira lived this week one of the worst periods in its history. While the Turkish lira, which lost its value by 11.9 percent against the dollar and 12 percent against the euro in the 5 days that the markets were open, was losing value day by day, the president’s statements Recep Tayyip Erdogan in the past, who said “you know, I am an economist”, came to the fore again.
Erdogan, who said “we are fighting for economic liberation” after every currency crisis Turkey has been through, was silent on exchange rate attacks this week.
SAID FOR THE FIRST TIME IN 2018
Erdogan used the term “economic liberation war” for the first time on October 16, 2018. At that time, the exchange rate was at the 5.78 level.
At that time, there was a currency crisis with the insistence on low interest rates in the summer months and Pastor Brunson’s crisis with the US, then there was a U-turn and Pastor Brunson was evacuated and sent to The USA.
Erdogan used the phrase “economic liberation war” on October 31, 2020, at a time when there was a currency crisis and discussions about interest rates.
In his statement at the time, Erdoğan said: “We are giving our response to those who are trying to encircle our country in the field of economy with a new war of economic liberation. We are thwarting the exploiters’ tricks by closing the current account deficit, which has trapped this country in the devil’s triangle of interest, exchange rate and inflation for years, with high-cost borrowing.”
Meanwhile, there was another currency crisis in the country and the dollar/TL was around 8.30. Just a week after this statement, Erdoğan removed CBRT Chairman Murat Uysal and appointed Naci Ağbal, who led a drastic increase in interest rates.
Treasury and Finance Minister Berat Albayrak also resigned the day after Uysal’s dismissal.
NEW ECONOMIC PROGRAM
At the press conference, where he announced the new economy program on November 22, 2021, Erdoğan announced that he found interest rate cuts and TL depreciation positive, describing the events as an “economic liberation war”.
“Just as we got our country out of all these traps and calamities, we will be victorious in this war of economic liberation with the help of Allah and the support of our nation,” Erdogan said.
HE SAID ‘WE’LL CONTINUE SUCCESSFULLY’
The USD/TL exchange rate, which was around 11.20 before this announcement, started to rise very sharply after the announcement and a day later saw a new all-time high of 13.45 in the exchange rate. It has been announced that the Currency Protected Deposit Request (KKM) will come into effect on December 17, 2021, when the USD reaches 18 levels against TL in December.
When the exchange rate fell below 11 lira, Erdogan said a day later: “We really successfully continue our fight for the economic liberation war. Interest makes the rich richer and the poor poorer. We will not oppress our nation and citizens to interests. Hopefully, inflation will start to come down as soon as possible. Because interest is the cause, inflation is the result. This is my thesis, ”he said.
BURNED A BILLION DOLLARS, BUT…
Despite the implementation of KKM, which placed a huge burden on the budget, and the burning of the Central Bank’s reserves, the exchange rate rose again to 18 lira in 2022. By 2023, despite the loss of 25 billion dollars in reserves in 6 months, the exchange rate exceeded 19 lira before the elections.
After the elections, with the signal of a change in policy, the pressure on the dollar was lifted and the exchange rate reached the level of 24 lira in a short time. The Turkish lira has lost 304 percent of its value against the US dollar since the day Erdogan made the “economic liberation war” announcement. The government, which has used up all its ammunition, is forecast to change its interest policy.
NEW MINISTER WANTED PATIENCE
At this point, Mehmet Şimşek, who was appointed Minister of Finance and Finance, said when he took up the task: “Turkey has no choice but to return to a rational basis. A rule-based and predictable Turkish economy will be the key to achieving the desired prosperity”, was perceived as a change of policy in the new period.
Şimşek made an assessment on Twitter three days ago, the day he was sworn in and officially took office in Turkey’s Grand National Assembly: “I hope we will achieve our goals with everyone’s support. But we need a little patience and time, ”he said. President Erdogan had repeatedly asked citizens for patience in 2022, when the new economic program was put into practice.