Turkey seeks to soothe markets over tensions with US

Some 3,000 investors from the US, Europe and Asia registered to join a conference call with Turkey’s finance minister Berat Albayrak. (AFP)
Updated 16 August 2018
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Turkey seeks to soothe markets over tensions with US

  • The Turkish currency is being pummeled as a result of a diplomatic standoff with its NATO ally the US
  • Turkey has also in recent days shown appetite to repair ties with Europe after a crisis sparked by Ankara’s crackdown on alleged plotters of the 2016 failed coup

ISTANBUL: Turkey’s finance minister Berat Albayrak will on Thursday seek to soothe the markets over the lira’s dramatic fall in the wake of escalating tensions with the US.
Some 3,000 investors from the US, Europe and Asia registered to join a conference call with Albayrak at 1300 GMT, the state-run Anadolu news agency reported.
Albayrak, President Recep Tayyip Erdogan’s son-in-law, was appointed last month and faces a tough task in getting the economy in order.
He will be hoping to make a stronger impression than last Friday when he made a long-planned presentation on Turkey’s growth strategy at the very moment the lira was in freefall.
“This is Albayrak’s last chance to prove three things: that he understands what is happening, that he can react accordingly and that he has influence over Erdogan,” a European diplomatic source said on condition of anonymity.
The Turkish currency is being pummeled as a result of a diplomatic standoff with its NATO ally the US — over the detention by Ankara of an American pastor — which has snowballed into one of the worst crisis in bilateral ties in years.
The lira was being traded at 5.7 against the dollar and 6.5 against euro — after it lost nearly a quarter of its value on Friday and Monday.
The slight rebound comes after the Turkish central bank took a raft of measures to keep financial stability and ensure Turkish banks have sufficient liquidity.
However, analysts say such measures are far from satisfactory and call for a sharp hike in interest rates — strongly opposed by Erdogan’s government which sees economic growth as its top priority.
“So far, Turkey does not seem to be changing its policies fast enough,” Berenberg economist Holger Schmieding commented.
“As a result, the risk is mounting that the Turkish economy may contract for a while in the absence of a credible policy change fast.”
Tensions between Ankara and Washington have risen after Turkey refused to free US pastor Andrew Brunson detained in October 2016 on charges of terror and espionage and who is currently under house arrest.
US President Donald Trump tweeted last Friday that Washington was doubling aluminum and steel tariffs for Ankara, a move that sent the lira into a tailspin.
In response, Erdogan has called for a boycott of US electronic goods such as the iPhone and Ankara has sharply hiked tariffs on some US products, in a move called “regrettable” by the White House.
Erdogan has shown no little willingness to compromise with the US and vowed to emerge victorious from the “economic attack” while slamming the lira crash as a “political plot.”
He has also warned Ankara could start looking for new allies, new markets after its partnership with Washington may be in jeopardy.
Qatar, backed by Erdogan during the Saudi-led embargoes on the emirate in 2017, on Wednesday pledged to channel $15 billion direct investment into Turkey, a sign of burgeoning ties between the two countries.
Turkey has also in recent days shown appetite to repair ties with Europe after a crisis sparked by Ankara’s crackdown on alleged plotters of the 2016 failed coup.
Erdogan is due to hold a phone call with French President Emmanuel Macron on Thursday a day after speaking with German Chancellor Angela Merkel.
An Istanbul court ordered the release of Amnesty International’s Turkey chair Taner Kilic Wednesday who has spent more than a year in jail over alleged links to the 2016 coup bid.


Tunisia’s premier unlikely to push reform as polls loom

Chahed has gathered enough support in Parliament to stave off a possible vote of no confidence. (Reuters)
Updated 22 September 2018
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Tunisia’s premier unlikely to push reform as polls loom

  • By surviving for more than two years, Chahed has become the longest-serving of Tunisia’s nine prime ministers since the Arab Spring in 2011
  • Western partners see him as the best guarantee of stability in an infant democracy that they are desperate to shore up

Tunisian Prime Minister Youssef Chahed has survived attempts by his own party and unions to force him out but, with elections looming, looks less and less able to enact the economic reforms that have so far secured IMF support for an ailing economy.

Last week, the Nidaa Tounes party suspended Chahed after a campaign by the party chairman, who is the son of President Beji Caid Essebsi.

Chahed has gathered enough support in Parliament to stave off a possible vote of no confidence by working with the co-ruling Islamist Ennahda party and a number of other lawmakers including 10 Nidaa Tounes rebels. But his political capital is now badly depleted.

By surviving for more than two years, Chahed has become the longest-serving of Tunisia’s nine prime ministers since the Arab Spring in 2011.

In that time, he has pushed through austerity measures and structural reforms such as cutting fuel subsidies that have helped to underpin a $2.8 billion loan from the International Monetary Fund (IMF) and other financial support.

Western partners see him as the best guarantee of stability in an infant democracy that they are desperate to shore up, not least as a bulwark against extremism.

Yet the economy, and living standards, continue to suffer: inflation and unemployment are at record levels, and goods such as medicines or even staples such as milk are often in short supply, or simply unaffordable to many.

And in recent months, the 43-year old former agronomist’s main focus has been to hold on to his job as his party starts to look to its ratings ahead of presidential and parliamentary polls in a year’s time.

The breathing space he has won is at best temporary; while propping him up for now, Ennahda says it will not back him to be prime minister again after the elections.

And, more pressingly, the powerful UGTT labor union on Thursday called a public sector strike for Oct. 24 to protest against Chahed’s privatization plans.

This month, the government once more raised petrol and electricity prices to secure the next tranche of loans, worth $250 million, which the IMF is expected to approve next week.

But the IMF also wants it to cut a public wage bill that takes up 15 percent of GDP, one of the world’s highest rates.