America cannot be trusted to run global economy

Turkey’s President Erdoğan has been copping plenty of flak from opposition at home and abroad recently. So what’s new? He’s been dealing with negativity, black propaganda, outright lies, a period of imprisonment and at least one attempted military coup for more than twenty years – so I guess for him it’s just business as usual.

Recep+Tayyip+Erdogan+G20+Nations+Hold+Hamburg+oF8eiMsk5dWl

Interestingly, Frau Merkel and M. Macron seem to be offering support these days!

After being re-elected as president, with increased powers under the new constitution, Mr Erdoğan appointed a new cabinet, as he is now entitled to do. Most of his appointments were relatively uncontroversial – but one has aroused considerable criticism and mockery: the choice of his son-in-law, Berat Albayrak, as Treasury and Finance Minister.

Well, certainly, it’s not a good look, especially since the gentleman concerned is only 37 years old; but I’m withholding judgment at this stage. For sure, young Mr Albayrak has a difficult road ahead. His age, for a start. He’ll be dealing with much older, more experienced, hard-headed businessmen (and women) all too ready to latch on to any sign of weakness. His father-in-law, for seconds. He has to live down the perception that he only got the job because of Baba Tayyip. Worst of all, though, is the fact that Turkey’s economy is going through a particularly hard time, with the Turkish Lira dropping to scary lows against the world’s big currencies – with an inevitable flow-on effect to internal prices.

Whatever you may think about President Erdoğan, I am sure few would deny that he is a very astute politician. His party came to power in 2003 after decades of hyper-inflation, regular military coups, and outrageous corruption in business and politics. They have won election after election – and Mr Erdoğan makes no secret of his desire to be at the country’s helm in 2023 when the Republic of Turkey celebrates its centenary. He wants to go down in history as the best thing to happen to his young nation since Mustafa Kemal Atatürk.

So, in my opinion, he’s not going to pick a dodo as Finance Minister at this critical time. He knows that much of his reputation in future will depend on his last years in office, maybe more than the earlier years; and his success (or failure) in bringing his country through the current financial crisis could be the crucial factor in determining how the history books will view his achievements.

So, what has the new Finance Minister got to say for himself? This report appeared the other day in Hürriyet Daily News:

America cannot be trusted to run global economy: Albayrak

Albayrak

After all, he’s about the same age as the President of France, and the Prime Ministers of Canada and New Zealand – and father-in-law’s got his back

The assault on Turkey’s economy must be viewed as an example of how the senseless use of economic pressure as a political weapon poses serious global risks, Turkey’s treasury and finance minister has said.

“By acting together with Turkey now, other countries can also help it create a common strategy to avoid artificial crises in the future,” Berat Albayrak wrote in an article titled ‘America Can’t Be Trusted to Run the Global Economy’ for the American news magazine Foreign Policy published on Sept. 7.

“This August, Turkey’s economy became the main topic in global news coverage. The reason was a systematic attack on the Turkish economy by the biggest player in the global economic system, the United States. It was one of the most disappointing moments in the history of the alliance between Turkey and America,” Albayrak said, accusing the Trump administration of overtly attacking the economy of a fellow NATO member through sanctions and tariffs.

Albayrak underlined that while the scale of the attack resulted in exchange rate fluctuations, the incident ultimately demonstrated the strong fundamentals of the Turkish economy.

“In the face of all the negative propaganda, and the attacks on its financial system, the Turkish economy has demonstrated its strength. It is important to reiterate that no economic indicators or macroeconomic data can account for the devaluation of the Turkish lira over the past month. Turkey’s financial structure and banking system have not experienced any fundamental changes during this time,” he said.

Turkish Central Bank’s independence 

Albayrak pointed to Turkey’s commitment to create an investor-friendly environment in an effort to take steps to address several economic weaknesses to prevent potential future vulnerabilities. He said the Turkish Central Bank’s independence, effectiveness and leading role in monetary policy would remain a priority for the government as it has been for the last 16 years. Albayrak said contrary to what some suggested, “it is not on our agenda to go to the International Monetary Fund”.

“Turkey will continue to secure foreign currency reserves from international markets as it has until now. Our goal is to ensure that Turkey continues to attract foreign direct investment and become a center for innovation and research and development for the global economy,” he added.

Albayrak said the U.S. attack on the Turkish economy also increased Turkey’s determination to strengthen its economy through structural reforms, new trade partnerships and the attraction of foreign investments and to take steps to rebalance the structure of the international economy so that powerful countries like the U.S. no longer would have the power to unilaterally disrupt the economic life of others.

Underlining the fact that Turkey never implemented rules that run counter to market principles, Albayrak said: “No crisis or financial assault can weaken Turkey’s commitment to those principles.”

‘Turkey not only country targeted by U.S.’ 

Albayrak pointed out that Turkey was not the only country that the U.S. recently targeted with sanctions under political pretexts.

“The single-handed exercise of tariffs by the United States against its trade partners in Europe, Russia and China proved that international trade, cooperation and stability should be secured by a stronger alliance among nations around the world and may necessitate taking countersteps to prevent catastrophic damage to the global financial system and international trade.”

Albayrak said the world faces incredibly complex challenges and Washington’s economic threats were a significant subset of those challenges.

“Unilateral sanctions, incitement of trade wars and haphazard use of economic weapons could potentially trigger another global economic crisis. At this critical juncture, developed and developing economies around the world need to promote strong and institutionalized cooperation to handle potential crises and financial attacks.

‘Cooperation, solidarity between Turkey, EU revived’ 

Albayrak said the Turkish government has been pleased to see promising new opportunities for the future of the international economy amid this artificial crisis created by the United States.

“Our European friends, including German Chancellor Angela Merkel and French President Emmanuel Macron, have made statements that clearly indicate they understand that Washington’s approach was dangerous and mistaken. The spirit of cooperation and solidarity between Turkey and the European Union has thus been revived, having proved critical for the political and economic well-being of both sides,” he added.

Albayrak highlighted that Turkey has been at the forefront of dealing with significant threats against Western countries for more than six decades.

“In recent years, this has included the fight against terrorist organizations such as al-Qaeda and the so-called Islamic State. During this period, Turkey has become a hope for millions of refugees running away from the brutal regime in Syria and the target of terrorist organizations that want to expand the war in that country to the West,” Albayrak said, adding that Turkey became an island of stability in one of the most unstable regions of the world.

In adopting sanctions against Turkey, the Trump administration invoked the flimsy pretext of an ongoing legal case involving a U.S. citizen with strong links to terrorist activities targeting Turkey’s peace and stability. The effects of the U.S. decision were nevertheless dramatic, with the Turkish economy experiencing immediate fluctuations. Referring to Andrew Craig Brunson, a U.S. pastor who is under house arrest in Turkey over terrorism charges, Albayrak said, “Washington’s brazen use of economic weapons served as a wakeup call for many countries and investors around the world. It was recognized as risky not only for the future of the alliance between Turkey and the United States but also for global markets.”

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