Erdogan appoints Hafize Gaye Erkan as governor of Turkiye’s central bank

US-based Hafize Gaye Erkan, 41, is Turkiye’s fifth central bank chief in four years. (AP)
US-based Hafize Gaye Erkan, 41, is Turkiye’s fifth central bank chief in four years. (AP)
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Updated 09 June 2023
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Erdogan appoints Hafize Gaye Erkan as governor of Turkiye’s central bank

Erdogan appoints Hafize Gaye Erkan as governor of Turkiye’s central bank
  • Experts skeptical about whether appointment signals change of economic policy

ANKARA: As part of recently re-elected Turkish President Recep Tayyip Erdogan’s attempts to overhaul his economic team, the country’s central bank will be governed by a female executive for the first time.

US-based Hafize Gaye Erkan, 41, is Turkiye’s fifth central bank chief in four years, replacing Sahap Kavcioglu, who followed a policy of slashing interest rates despite rising inflation of around 40 percent. Kavcioglu has now been appointed head of the Banking Regulatory and Supervision Agency (BDDK).

Erdogan has always been opposed to interest rate hikes and has focused on economic growth, investment and exports.

Erkan was the first woman under the age of 40 to hold the title of president or CEO at one of America’s 100 largest banks. She has a doctorate in financial engineering from Princeton, and previously worked as First Republic’s co-chief executive officer. She abruptly resigned from that position in December 2021 before the bank was sold. She also worked at Goldman Sachs for almost a decade as a managing director, and was a director at Marsh McLennan. Last year, she was appointed CEO of the real estate finance and investment firm Greystone, a post she resigned in December.

Following her new appointment, there are now 23 female central bank governors around the world.

On Monday, Erkan reportedly met Turkiye’s newly appointed Treasury and Finance Minister, Mehmet Simsek, a former Merrill Lynch economist, in Ankara to discuss her new role.

Simsek told media on Wednesday that Turkiye would now return to economic “rationality” with a “credible program” to address the cost-of-living crisis. However, he also warned there would be “no shortcuts or quick fixes” and asked the public to be patient.

Brad W. Setser, senior fellow at the Washington-based Council on Foreign Relations, recently calculated that, apart from Turkey’s swap and deposit deals with foreign countries including Saudi Arabia, the central bank has only $30 billion in actual foreign reserves.

Economists believe that Erkan’s appointment may indicate that Turkiye will now follow orthodox economic policies, including interest rate hikes.

The new governor’s policy preferences are unclear, however, as she has previously worked only in the private sector. It also remains to be seen how much independence she will be granted, especially with local elections approaching. In March 2021, former central bank governor Naci Agbal was fired after just five months in the job after he decided to raise interest rates.

Erik Meyersson, chief emerging markets strategist at the European financial services group SEB, said the appointment of Erkan “provides valuable synergies” to Simsek’s attempts to shift policy.

“But, at the same time, the experience of Agbal — and the manner in which his efforts to push policy in a similar direction ended prematurely — does hang like a shadow over the current initiative,” he told Arab News. “The continued presence of Kavcioglu — a figurehead of the devastating policy mistakes of recent years — as head of the BDDK does not provide similar synergies and instead could be a sign of a limited commitment on behalf of Erdogan to the new policy direction.”

The retention of Kavcioglu, he added, “risks becoming an unwanted deadweight to what could otherwise have signaled fresh and significant policy momentum.”
According to Meyersson, one interpretation is that the old economic model that caused so much damage is “more dormant than dead” and is a reminder that “arbitrary rule implies arbitrary and often sudden changes.”

Meyersson believes that markets will likely look to test the extent of the new mandate from the presidential palace, and said that front-loaded rate hikes would be a good start.

“The gap between the policy rate and current inflation is minus 30 percent, and given the low credibility ascribed to the central bank, the real policy rate should increase toward positive territory soon. But that amount of policy tightening is unlikely to have been approved by President Erdogan, setting up Turkish financial markets for further volatility during the year,” he said.

The central bank’s monetary policy committee will have its first meeting under the new governor on June 22, and an increase in interest rates is expected.

Ehsan Khoman, head of emerging markets, ESG and commodities research at MUFG Bank in Dubai, said Erkan’s appointment, coupled with Simsek’s pledges to restore credibility, was a clear signal of a return toward rules-based monetary policymaking to re-anchor inflation expectations.

“Our base case is for a supersized rates hike from 8.5 percent to 20 percent on 22 June — with a likely pre-meeting statement to prepare markets for the start of the hiking cycle — to reach levels that imply positive real rates by year-end,” he told Arab News.

Critically, given Turkey’s past experience with relatively short-lived U-turns in policy regarding interest rates, Khoman said that (gaining) credibility will require patience, though these latest market-friendly appointments should rule out risks related to reliance on less-orthodox measures, including stricter regulations on foreign exchange transactions, to sustain acutely negative real rates.

Wolfango Piccoli, co-president of London-based Teneo Intelligence, thinks that “an outright and fast pivot toward a conventional policy set, especially in terms of monetary policy, remains unlikely.”

He told Arab News: “Erkan’s appointment seems designed to regain credibility in the eyes of foreign investors. But how she will adapt to Ankara’s working culture, where obedience matters, remains to be seen. Also, Erkan has no formal monetary policy experience.

“The appointments are important, but the next crucial step should be the decisions,” he continued.

He also noted that a shift towards orthodox economic policy requires the support of the banking regulator, which is now headed by a loyalist, suggesting a likely return to previous economic policies.

“Turkey’s domestic banks — private and state-owned — are under close political scrutiny and command,” he said.


Iran says it puts imaging satellite sucessfully into orbit amid tensions with West

Iran says it puts imaging satellite sucessfully into orbit amid tensions with West
Updated 55 min 17 sec ago
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Iran says it puts imaging satellite sucessfully into orbit amid tensions with West

Iran says it puts imaging satellite sucessfully into orbit amid tensions with West
  • here was no immediate acknowledgment from Western officials of the launch

DUBAI: Iran claimed on Wednesday that it has successfully put an imaging satellite into space.
The state-run IRNA news agency, quoting the country’s Communication Minister Isa Zarepour, said the Noor-3 satellite had been put in an orbit 450 kilometers (280 miles) above the Earth’s surface.
There was no immediate acknowledgment from Western officials of the launch or of the satellite being put into orbit. Iran has had a series of failed launches in recent years.
Zarepour said the aerospace arm of Iran’s paramilitary Revolutionary Guard launched the satellite carrier, which has had success in launching satellites from its previously secret launch program. Authorities did not immediately release images of the launch.
The United States has alleged that Iran’s satellite launches defy a UN Security Council resolution and has called on Tehran to undertake no activity related to ballistic missiles capable of delivering nuclear weapons. The US intelligence community’s 2022 threat assessment claims such a satellite launch vehicle “shortens the timeline” to an intercontinental ballistic missile for Iran as it uses “similar technologies.”
Iran, which has long said it does not seek nuclear weapons, previously maintained that its satellite launches and rocket tests do not have a military component. US intelligence agencies and the International Atomic Energy Agency say Iran abandoned an organized military nuclear program in 2003. Iran has maintained its program is for peaceful purposes.


Qatar Airways executive says invasive gynecological examinations of passengers won’t be repeated

Qatar Airways executive says invasive gynecological examinations of passengers won’t be repeated
Updated 27 September 2023
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Qatar Airways executive says invasive gynecological examinations of passengers won’t be repeated

Qatar Airways executive says invasive gynecological examinations of passengers won’t be repeated
  • Qatar Airways Senior Vice President for Global Sales Matt Raos described the incident as “a one-off incident, a very extreme incident.”

CANBERRA, Australia: A senior Qatar Airways executive told an Australian Senate inquiry on Wednesday there would be no repeat of an incident at Doha’s international airport in 2020 in which female passengers were subjected to invasive gynecological examinations.
Australian Transport Minister Catherine King said three weeks ago that the examinations of 13 Australian women who had boarded a Qatar Airways plane to Sydney were a factor in her decision in July to refuse the Qatar government-owned airline additional flights to Australia.
Qatar Airways Senior Vice President for Global Sales Matt Raos described the incident, which occurred when authorities were looking for the mother of a newborn baby found abandoned in a Hamad International Airport trash can, as “a one-off incident, a very extreme incident.”
“We’ve had nothing like it previously in our history and we’re completely committed to ensuring nothing like this ever happens again,” Raos told the committee.
Raos was responding to government Sen. Tony Sheldon, who had asked for a guarantee on behalf of female passengers who feared they would be subjected to such treatment.
The Doha-based executive declined to detail the incident because five women are suing the airline in Australian Federal Court.
“We are participating in that process. We think it’s a very important process and we need to honor it and respect it. It does preclude us from going further into this topic today,” Raos said.
“The outcome of that Federal Court case is something that we will honor and abide,” Raos added.
The five Australian women, whose names are suppressed by a court gag order, say they were taken off the flight to Sydney at Doha at gunpoint by guards and were searched without consent.
Qatar Airways provided no response to their complaints and offered no apology, the women said.
They wrote to Catherine King through their lawyer in June urging that Qatar Airways not be allowed to double its number of Australian services from the current 28 flights per week.
“It is our strong belief that Qatar Airways is not fit to carry passengers around the globe let alone to major Australian airports,” they wrote.
“When you are considering Qatar Airways’ bid for extra landing rights, we beg you to consider its insensitive and irresponsible treatment of us and its failure to ensure the safety and dignity of its passengers,” they said.
Raos said Qatar was “surprised and shocked” that Australia had rejected without explanation its application for additional services to Sydney, Melbourne, Brisbane and Perth which was made on Aug. 22, 2022.
Qatar Senior Vice President Fathi Atti told the inquiry that the airline learned of the decision through the news media on July 10 and did not receive official notification from the Australian government until 10 days later.
The airline said it calculated that the additional services would have provided Australia with 3 billion Australian dollars ($1.9 billion) in economic benefits over five years.
Earlier this month, King said her decision was made in the “context” of women’s complaints about their treatment.
“There is no one factor that I would point to that swayed my decision one way or the other,” King told reporters.
The committee is examining a number of Australia’s bilateral air service agreements.


Small fire at Baghdad’s Al-Rasheed hotel extinguished; occupants have returned to rooms - official

Small fire at Baghdad’s Al-Rasheed hotel extinguished; occupants have returned to rooms - official
Updated 27 September 2023
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Small fire at Baghdad’s Al-Rasheed hotel extinguished; occupants have returned to rooms - official

Small fire at Baghdad’s Al-Rasheed hotel extinguished; occupants have returned to rooms - official

BAGHDAD: A small fire that led to guests and diplomatic personnel being evacuated from Baghdad’s Al-Rasheed hotel has been brought under control, an official at the hotel told Reuters via phone early on Wednesday.

The hotel houses several envoys from Gulf states.

The small fire occurred in kitchen, and an official described the evacuation as a routine precautionary measure, saying guests had safely returned to their rooms.

The hotel is in Iraq’s highly fortified Green Zone which hosts parliament, many government buildings and foreign embassies.


Iraq wants to overcome dispute with Kuwait over maritime waterway, PM says

Iraq wants to overcome dispute with Kuwait over maritime waterway, PM says
Updated 27 September 2023
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Iraq wants to overcome dispute with Kuwait over maritime waterway, PM says

Iraq wants to overcome dispute with Kuwait over maritime waterway, PM says
  • Kuwait’s prime minister has described the Iraqi court ruling on the waterway as containing “historical fallacies,” calling on Iraq to take “concrete, decisive and urgent measures” to address it

Iraq is keen to overcome a dispute with Kuwait on maritime navigation in the Khor Abdullah waterway between the two countries, Iraq’s prime minister said on Tuesday.
In comments carried by Iraq’s state news agency, Prime Minister Mohammed Shia Al-Sudani said the country wants a solution that does not conflict with its constitution or with international law.
Iraq respects the sovereignty and territorial integrity of Kuwait and is committed to all its bilateral agreements with countries and to the resolutions of the United Nations Security Council, a statement from the prime minister’s media office said on Tuesday after Al-Sudani’s meeting with the state’s administration coalition.
“Such crises are resolved through understanding and reliance on rationality, away from the language of emotion and convulsive populist statements that only produce more crises and tension,” Al-Sudani was quoted as telling his cabinet.
Iraq’s Federal Supreme Court ruled this month that a bilateral agreement regulating navigation in the waterway was unconstitutional. The court said the law ratifying the accord should have been approved by two-thirds of parliament.
The countries’ shared land border was demarcated by the United Nations in 1993 after Iraq’s invasion of Kuwait, but it did not cover the length of their maritime boundaries. This was left for the two oil producers to resolve.
A maritime border agreement between the two nations was reached in 2012 and ratified by each of their legislative bodies in 2013.
Kuwait’s prime minister has described the Iraqi court ruling on the waterway as containing “historical fallacies,” calling on Iraq to take “concrete, decisive and urgent measures” to address it.


More than 100 dead, scores more injured in Iraq wedding inferno

More than 100 dead, scores more injured in Iraq wedding inferno
Updated 27 September 2023
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More than 100 dead, scores more injured in Iraq wedding inferno

More than 100 dead, scores more injured in Iraq wedding inferno
  • The fire ripped through a large events hall after fireworks were lit during the celebration

Qaraqosh, Iraq: At least 100 people were killed and more than 150 injured when a fire broke out during a wedding at an event hall in the northern Iraqi town of Qaraqosh, officials said early Wednesday.
At the main hospital in the predominantly Christian town east of Mosul, an AFP photographer saw ambulances arriving with sirens blaring and dozens of people gathering in the courtyard to donate blood.
Others could be seen gathering in front of the open doors of a refrigerated truck loaded with black body bags.
Citing a “preliminary tally,” Iraq’s official INA news agency reported that health authorities in Nineveh province had “counted 100 dead and more than 150 injured in the fire at a marriage hall in Hamdaniyah,” as the town is also known.
The casualty toll was confirmed to AFP by health ministry spokesman Saif Al-Badr.
Badr said most of the injured were being treated for burns or oxygen deprivation, adding that there had also been crowd crushes at the scene.
In a statement, civil defense authorities reported the presence of prefabricated panels inside the event hall that were “highly flammable and contravened safety standards.”
The danger was compounded by the “release of toxic gases linked to the combustion of the panels,” which contained plastic.
“The fire caused some parts of the ceiling to fall due to the use of highly flammable, low-cost construction materials,” the statement said, with “preliminary information” suggesting fireworks were to blame for the blaze.
Wedding guest Rania Waad, who sustained a burn to her hand, said that as the bride and groom “were slow dancing, the fireworks started to climb to the ceiling (and) the whole hall went up in flames.”
“We couldn’t see anything,” the 17-year-old said, choking back sobs. “We were suffocating, we didn’t know how to get out.”
Emergency crews were seen sifting through the charred remains of the event hall early Wednesday, inspecting the scene by flashlight.

The couple were having their first slow dance when the fire started. (AFP)


In a brief statement, Prime Minister Mohamed Shia Al-Sudani called on the health and interior ministers to “mobilize all rescue efforts” to help the victims of the fire.
The health ministry said “medical aid trucks” had been dispatched to the area from Baghdad and other provinces, adding that its teams in Nineveh had been mobilized to care for the injured.
Safety standards in Iraq’s construction sector are often disregarded, and the country, whose infrastructure is in disrepair after decades of conflict, is often the scene of fatal fires and accidents.
In July 2021, a fire in the Covid unit of a hospital in southern Iraq killed more than 60 people.
And in April of the same year, exploding oxygen tanks triggered a fire at a hospital in Baghdad — also dedicated to Covid patients — that killed more than 80 people.
Like many Christian towns in the Nineveh Plains, northeast of Mosul, Qaraqosh was ransacked by jihadists of the Daesh group after they entered the town in 2014.
Qaraqosh and its churches were slowly rebuilt after the group’s ouster in 2017, and Pope Francis visited the town in March 2021.