In the video: Erdogan in a speech condemns the murder of Israelis, but says that Israel is committing a massacre in Gaza/Photo: Reuters
After Egypt, another bankrupt that most of you knew from the fun ultimate vacation period, which has no equal, "all inclusive", is Turkey, where elections for local authorities will be held this coming Sunday, March 31.
The economic crisis in Turkey is so acute that the Central Bank of Turkey, following the word of President Recep Tayyip Erdogan, who has ruled Turkey continuously as prime minister and now as president since March 2003, had to agree to raise interest rates last week by another 5% points to 50% , yes, fifty percent. The increase in interest just ten days before the elections, by the new governor, Fatih Karahan, who was appointed to the position in early February and was previously the deputy governor who resigned, came as a complete surprise to the capital markets.
It is possible that the results of the elections for the local authorities in Turkey, for the mayors of the cities, for the heads of the 81 provinces of Turkey, with 64 million eligible voters, will be a turning point in Turkish national politics in the future, an opening for a change of direction from the intense grip that Erdogan has held for over two decades. The chance of change is not that high because Erdogan weakened and changed the administrative body responsible for the elections that originally allowed him to take power.
The crisis is so severe that even the jewel in the crown of Turkish culture, the restaurants and the fine and fresh food they serve, in my opinion the finest in the world, has become difficult to obtain for the Turks going to the decisive elections.
Erdogan. The crisis is so acute that the interest rate increased last week by another 5%, to the unbelievable figure of 50%/Reuters
The restaurants also became more expensive
The price of meals in restaurants has increased by 95% in the last year. The inflation rate in the 12 months to February reached 67%. Please note that education, which is so important for those seeking to climb the Turkish social ladder, has become more expensive within a year by 92%. The price of food has increased in the last year by 71%.
Erdogan claims that these are the last elections under his leadership, it is possible that he will fly from power even earlier even though he actually controls the electoral commission systems which does not approve all the contestants to participate in the democratic process, certainly not the Kurdish minority. Erdogan continuously attacks Israel and Prime Minister Binyamin Netanyahu at every opportunity. As his economic situation worsens, the attacks on Israel increase, including a new threat to the threat of trade with Israel.
At such inflation rates, there is no chance to restore the Turkish economy without a sharp change in the economic and economic concept and a social change in favor of women. Maybe those who are employed can manage somehow, what about the unemployed who also have the right to vote for local authorities? The number of unemployed in Turkey, among those aged 15 and over, increased in January by 85,000 to 3.214 million, the unemployment rate increased by two tenths of a percent to 9.1%. The unemployment rate in the broad definition of those aged 15 and over reached 26.5%.
The unemployment rate among women is 11.7% and among men 7.7%. The employment rate among men is 66% and among women 32.4%. The labor force participation rate in Turkey was 53.9% in January this year, 71.5% for men and 36.6% for women. More and more women are educated in the Turkish population, their education rate in 2022 is equal to 0.84 of men's education compared to 0.78 in 2011. Still in January of this year the unemployment rate among women was 11.7% compared to 7.7% among men.
Turkey's problem is the patriarchal structure that does not allow women, especially outside the big cities, in the rural areas, to enter the labor market. About 12 million Turkish women do not go to work and are left behind or busy with housework or casual, unregistered jobs, which does not allow them a decent income not to mention their health, pension and old age needs. The proportion of women in Turkey in the labor force is only half of the average of the OECD countries, of which, ironically, Turkey is a member.
The sadness of the economy and the future means that the proportion of women who are unhappy in Turkey reaches 60.4% and among men the proportion of those who are unhappy is 49.2%, according to the Metropol polling institute based in Ankara. What's the wonder that 48.2% of women in Turkey need psychological counseling and only 36.8% of the men say they need psychological support.
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Women's protest in Turkey, 2018. About 12 million Turkish women do not go to work/Reuters
Change governors like socks
It is clear that Turkey is on borrowed time. Please note, the two-year Turkish bond yield is over 48%, five-year 32%, ten-year 26.5%. It is clear that a modern economy in the twenty-first century cannot function with such inflation rates and interest payments. The international rating agency Fitch has just raised the credit rating of Turkey from "B" to "B+", both grades are in the "highly speculative" category.
Now after the upgrade, Turkey is four notches below "investment grade". The credit rating upgrade came after Turkey began a few months ago to make a change in economic policy, Not before President Erdoğan secured his victory in the national elections in May of last year. The policy change announced is to raise interest rates, in contrast to Turkey's ridiculous and unique way of curbing inflation by reducing interest rates.
Turkish President Recep Tayyip Erdoğan bribed his voters for years, reducing interest rates to reduce the burden The interest payments and the cost of living, a theory and a method that are not found in any "textbook" in the world, except in the feverish mind of Erdogan, who changed the governors of the central bank for years as if they were useful socks for the time required to please the audience of his flock in the Muslim Movement Party "Justice and Development", AKP Furthermore
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after the national elections, the government announced an increase in taxes as well as liberalization in the capital market to strengthen the financial and credit market and thereby strengthen investor confidence. The budget deficit of Turkey in 2023 was seven times that of 2022, if we convert the pounds in average dollar terms for the periods it reached a budget deficit of 59 billion dollars compared to 8.6 billion dollars in 2022. The Central Bank of Turkey announced that it will increase the balances Its currency.
It should be fair to Turkey, which has almost no way out. Turkey's main problem is that it has no sources of energy, no gas or oil fields that could satisfy its needs, so in recent years it has acted aggressively in the field of oil exploration and declaring ownership with territories economic in the Mediterranean against Greece and Cyprus.
A second disease of Turkey is the incessant importation of gold which harms the balance of payments, increases the external debt unnecessarily and finally leads to the devaluation of the pound and from there seeps into inflation. Thus in January of this year there was a deficit in the current account of 2.56 billion dollars, but with the exception of imports Gold, as well as the import of vital energy products such as breathing air, had a surplus in the current account of 3.59 billion dollars. There is no proof of this. It is
very possible that part of the gold imported to Turkey is intended for resale at a profit to Iran, which is under American sanctions that do not allow it to accumulate monetary foreign exchange, and therefore the solution that Found as a replacement for the dollar, like other leper countries for example Russia, is gold. It is possible that Turkey will reduce gold imports to improve its deficit in the balance of payments this year, at least that is what the International Monetary Fund hinted at.
A third problem for Turkey is the renewed increase in commodity prices in recent months, including the price of oil, which will make it difficult for it to implement a plan to reduce the current account deficit and curb inflation. Without an improvement in the current account, the decline in the value of the Turkish lira will continue. The pound has decreased in value against the dollar in the last year by 41%. In ten years, the dollar rose by 1,365% against the Turkish lira. The International Monetary Fund expects the pound to stabilize after the recent interest rate hikes.
Election day in Turkey. Erdogan bribed his voters for years/Reuters
Europe's weakness
A fourth problem for the Turkish economy is the weakness of Europe, its immediate market. Europe is in a severe economic slowdown that it has not known for many years, growth this year of 0.8% in the European Union. Europe's engine and Turkey's most important trading country on the continent, Germany, entered recession in the first quarter of 2024.
Trouble comes in bunches. In the noise of the earthquake in Turkey in February of last year, 7.8 on the Richter scale, about 50,000-55,000 people were killed, millions of families were left homeless, almost completely damaged and destroyed 11 of the 81 districts. He forced the government, naturally, to raise wages for the rescue workers and to spend another budget for reconstruction, a budget that was lacking in the worst way, which increased the planned budget deficit. Some, or almost all, of the revenue from the tax increases was swallowed up by the noise expenses.
The International Monetary Fund predicts that Turkey's growth this year will be 3.25% after 4% last year as measures are required to curb the economic chaos, growth per capita of about 2.2%. The current account deficit will be 3% and inflation for the year 2024 will drop to 46%. Therefore, in order to improve the balance in the current account, it is better for Turkey to increase trade and sales to Israel, not to threaten to sever trade ties.
In the first two months of this year, imports from Turkey decreased by $121 million compared to the first two months of 2023 to $730 million, Israel's exports decreased slightly by $14 million to $291 million. In the entire year 2023, imports from Turkey decreased by 1.1 billion dollars to 4.6 billion dollars, exports decreased by 0.77 billion dollars to 1.57 billion dollars. Another loser is Turkey, which needs foreign exchange from the huge revenues of its airlines, Turkish Airlines and Pegasus.
The earthquake in Turkey, 2023. About 50 thousand dead, millions left homeless/Reuters
look for alternatives to imports
Not only did Turkey benefit from the hundreds of millions of dollars that the Israeli tourists poured into its shores, but Istanbul also served as a kind of father, a crossing point, for the Israelis. Turkish announced that it will return to flying in October.
Even if you don't fly, the Israelis get along well with the airlines that have returned to operating in Israel. Trade with Turkey is more problematic, imports from Turkey are important not only to Turkey but to Israel, quality Turkish products of the best Turkish industry at a reasonable and relatively cheap price and everything is close and immediate to Israel.
Israel must look for alternatives to imports that our industry has enjoyed for years, this will not be an easy task. The Israeli consumer will also have to pay more. Many are not aware of the consumption of various commodities from Turkey. The importers, hopefully, are looking for alternatives in other countries in the Mediterranean basin and Eastern Europe. Of course, there is also room for hope that the days of Erdogan will be behind us, if he is defeated in the elections to the authorities and administrative regions of Turkey, and thus a process of reversing the trend will begin after the years that were missed during the Erdogan era.
The opposition should win mainly in Istanbul with the Republican People's Party, CHP, whose candidate Akram Imoglu can get support for mayor, not for the city council, also from the supporters of the National Party, IYI, the party that supports the Kurds, the Democratic Party for Equality, DEM. With his hands tied Akram has to face Erdogan's candidate from the ruling AKP party, Mort Kurum.
It is not easy for the opposition because 90% of the media is controlled by Erdogan. Istanbul, with 15.7 million inhabitants, is important and can be a sign of change, as Erdogan began his rise when he was elected the head of the economic and financial center of Turkey in 1994. An important victory is also in the capital Ankara with 5.5 million inhabitants. From there will the good for Israel be opened?
Another victory for Erdogan next week, which is a loss for Israel, will also be the final defeat of secularism in Turkey, which Erdogan intends to eliminate in legislation after the current municipal elections. It will be his victory over the spirit of the father of the modern Turkish nation founded in 1923, the father of the Turks, Mustafa Kemal Ata Turk whose image is still emblazoned on the devalued Turkish banknotes.
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