Weak lira a wake-up call for Erdogan’s Turkey

An off-duty Turkish cop killed Andrey Karlov, Russia’s ambassador to Ankara. If this killing had happened few months back, the repercussion would have been unimaginable. The murder of Andrey Karlov, the first Moscow envoy to be killed in his post in almost 90 years, was an open provocation aimed at derailing the normalisation of Russian-Turkish relations and Syria peace process.
Russian President Vladimir Putin and Turkish leader Recep Tayyip Erdogan insisted the killing won’t undermine the restoration of bilateral ties. Both leaders have vowed a stronger assault on terrorism. Investigators from both countries are jointly probing the attack, which won’t be allowed to disrupt a collaboration that’s crucial for the region.
Moscow and Ankara signalled that they don’t want the attack on the ambassador to turn into another flashpoint between countries that are engaged on opposite sides of the Syrian war, a recurring risk in a conflict with multiple armed parties and outside backers. Turkey is going through a turbulent phase. And this is evident from the report that the country’s economy has failed to maintain the growth momentum for the first time in seven years. Tourism was hit badly when Turkey’s relationship with Russia soured after Ankara brought down Russian warplane, which was carrying out bombing campaign in Syria.
And then there was a coup attempt, which was blamed on Fethullah Gulen and his supporters. Turkey cracked down on Gulen supporters. Thousands of people have been arrested so far in a move to purge country of ‘terrorists’. Erdogan shut down around 100 media outlets. Hundreds of business establishments, accused of having links with Gulen, have been closed down. Many people have lost jobs.
But Ankara has different take on its ongoing crackdown on Gulen supporters. They say that purging Gulenists will benefit the economy over time, saying the control they once had over key institutions, from the courts and police to unions and universities, constituted a ‘parallel state’ that corrupted the bureaucracy and undermined the rule of law.
At the same time, country is reeling under almost daily terror attacks. In the past 10 days, more than 50 people were killed in two bomb attacks in Istanbul and central Turkey that targeted security forces and were claimed by Kurdish militants. The instability in the country has sapped business and consumer confidence. It has deterred tourists from planning trips to Turkey.
Turkey is enmeshed in many wars. Ankara is fighting against PKK insurgency at home. It is carrying out military campaign against IS and Kurds in Syria and bombing PKK targets in Iraq.
And all of these have taken a toll on Turkey’s economic health. And the Turkish leadership is trying to stall lira’s free fall. Erdogan, whose approval rating jumped to a record 68 percent in August, has responded by pressuring the central bank and commercial lenders to cut rates and boost loans, appealing to their sense of patriotism. He’s also urging all Turks to convert their dollars into liras to arrest the currency’s historic fall. Ankara needs to tread carefully. It must not look for the military and diplomatic victories only. The country needs to maintain the growth momentum to win support of its people. And so Ankara must do everything to stop its economic swagger turning into stagger.