Ugur Gurses: Why is Ankara’s economy narrative losing credibility?
In the last two years, the economic policy team governing in Ankara that has been intervening on prices, interest and exchange rates with an iron fist has cost banking executives their jobs for making their own trade decisions in an open market. Turkey is supposedly an open market economy, but Ankara has been nudging market players under the table to the point that the market is “open” only in theory.
Turkish Finance Minister Berat Albayrak said during a speech he gave in Ağrı that “we are leaving behind a period when those who cried out about the crisis were met with disappointment.” Does anyone disagree? According to the minister’s Samsun speech, “only 20 people disagree”: those who have nothing to do with Ankara, and those who are outside the circle of authority.
All that aside, we’re leaving behind an era where even those who questioned the economic status quo lost their jobs. Economic policy team, led by the minister, has been to ‘mow down’ anyone who speaks outside “official propaganda.” So that era is now over, and officially there is no “economic crisis.” Even though all the issues we’re sweeping under the rug will only deepen and will cost even more in the future.
Ankara, around which the entire media revolves, has not been pleased with any players who criticize the economy and who point out errors and wrongdoings. So much so that the idea of a new imprisonment law concerning this behavior was brought up by Minister Albayrak’s brother’s newspaper.
We have also seen, however, a most violent usage of the power of the public. Bankers and financial professionals have also been under great duress.
In the past two years, many high-level executives of banks were dismissed as pointed to the shareholders by Ankara. Those dismissed even include some board chairs. None of these dismissals were done in official correspondence. That is, the dismissals were not prompted due to any kind of illegal behavior.
A story from a month ago is that the executive vice president of a bank was called into the president’s office and was told that they’re being laid off. The excuse was that “Ankara wanted this.” The former EVP asked around about what happened, and it turns out the his meeting with IMF was involved in.
When the IMF staff team visited Turkey for the Article IV Mission in September, they had talks with a wide array of people from businessmen to bankers and professional associations to political party representatives. During these scheduled talks, the anonymous bank EVP met with the visiting representatives, and not even in secret.
Per the format of these meetings held by the IMF representatives, two representatives from the Turkish Treasury joined in and witnessed the talks.
As the issue of bad loans was the most critical for the economists and bankers, and of course the IMF, the representatives asked the former bank EVP about them. They asked about the Banking Supervision and Regulation Agency (BDDK) data about non-performing loans and what a possible solution would be. The former EVP predicted a rise in the percentage of non-performing loans to total loans, which was then at a 4.5 percent, due to “stage 2 accounts” that were also delinquent but were not being prosecuted.
It’s understood that the conversation and predictions made by the former EVP were noted by Treasury representatives in meeting, and were reported to his superiors.
The authorities in Ankara, who have no tolerance for any criticism beyond the story they tell, decided on the “professional execution” of this former EVP and notified the banks’ shareholders.
However, the biggest secret in town that even analysts cannot pinpoint is the percentage of bad loans beyond the official story.
In the last two years, the economic policy team governing in Ankara that has been intervening on prices, interest and exchange rates with an iron fist has cost banking executives their jobs for making their own trade decisions in an open market. The story of the former EVP that I talked about just adds another line to the list of “big brother” incidents that have been occuring.
Turkey is supposedly an open market economy, but Ankara has been nudging market players under the table to the point that the market is “open” only in theory.
Any angle other than the “official story” told by Ankara is unwelcome. No professional that in any way interacts with the official authorities can give talks or write pieces themed with a “What if?” theme. Furthermore, any opinions on loans or interest rates that reflect a personal stance on commercial choises are unwelcome.
This is why the research departments in banks never include any other points of view in their reports.
President Erdoğan said in a meeting the other day that they “offer all the support, both emotionally and materially, to increase investments in our country.”
He said this, but forgot the fact that his government was keeping repressive stance on free speech and access to information, which are crucial for investment, under lock and key.
This causes a quick decline in credibility for the data that Ankara has in their possession and shares with the public. The fact that some institutions have been keeping previously-released data secret only adds to this situation.