Will the USD hit under 1.92 TL by the end of the year?
Fatih Özatay, PhD
29 August 2013
Chairing a central bank is a craft, to be executed with wisdom, not algorithms. “Don’t be surprised if the US dollar hits under 1.92 TL by the end of 2013” said Central Bank governor Erdem Başçı in his speech broadcasted live by economy news channels Tuesday morning.
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Turkey: Willing for the coalition
Nihat Ali Özcan, PhD
29 August 2013
The chemical weapon attack in Syria caught the world’s attention. Experts who see this as a turning point are debating how to respond to Bashar al-Assad. The most likely option is seen as a military operation that would force al-Assad to start negotiating. The operation will most probably be conducted by a coalition of the willing.Interestingly, although a clear political objective concerning a possible operation is lacking, the Foreign Minister Ahmet Davutoğlu stated that Turkey would participate in such a coalition. This hasty statement is understandable. It is good news for Davutoğlu that the prolonged civil war in Syria has entered a new phase. He considers a military response an opportunity to break the Syrian deadlock in relation to the following aspects:First of all, althoug
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Why does Turkey have such a short horizon?
Güven Sak, PhD
27 August 2013
Making things even harder for entrepreneurs, Turkey is now at the dawn of a new process that will further reduce its horizon. Last week I noted that Turkey is in contact with only a small part of the world. Let me continue from there. Lately, I have been curious about the diameter of the area in which different countries are active. From this perspective, it seems that Turkey is the country with the shortest average export reach. It is sort of the country with the shallowest breath in the world, if you ask me. Figures reveal that Turkey is not very active outside of its borders. This is indeed what I meant when I said that Turkey is in contact with only a small part of the world. But the story does not end there. Turkey is not only the country with the shallowest breath in the world; this
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Overpraising (once again)
Fatih Özatay, PhD
27 August 2013
The problem is that, Turkey already has been close to the seventeenth place in the world’s ranking of largest economies. Stephen Grosz is a psychoanalyst. His first book The examined life: How we lose and find ourselves? was published this year and made it to the best sellers. In chapter three, the book proves that unbounded praises can give way to undesired outcomes.
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Is ideological foreign policy a curse to the economy?
Fatih Özatay, PhD
24 August 2013
If you were a foreign fund manager, would you be willing to invest your funds into a country which is in bad terms with almost all of its neighbors and is “strongly condemned” by the US? On Thursday lira depreciated against euro and dollar. The interest on ten-year Treasury bill reached 10 percent, and that on two-year bill exceeded 9.5 percent. The stocks exchange dropped sharply. As of Friday morning, the rise in exchange rate and interest rates stopped, but did not drop back again while the stocks index was floating slightly. Such sharp movements are not new in Turkey. It happened in 2001, 2004, 2006, and also more recently. But this time, there is an irritating detail. I would like to share that hoping that I am wrong. I am citing from Murat Yetkin’s commentary from Thursday: “When
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Last chance in Palestine?
Güven Sak, PhD
24 August 2013
Mahmoud Abbas, the President of the Palestinian Authority (PA), was 58 when the Oslo Accords between Israel and Palestine were signed. That was 20 years ago. The PA at the time was created as a waning state body for an interim period of about five years. The final status talks were supposed to start no later than 1996. That was the Accord signed by Yaser Arafat and Yitzhak Rabin, both warrior leaders. Ariel Sharon, another warrior leader, made an attempt to revive the process in 2003, in its tenth anniversary. Look at where we are now. No final status. Still the interim PA body stays intact. No Arafat, Rabin or Sharon. Mahmoud Abbas is now 78, as the Kerry process for a negotiated settlement of the Israel-Palestine conflict is starting.I was in Ramallah the other day. I heard many
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Why does no one have confidence in Turkey?
Güven Sak, PhD
23 August 2013
Turkey found relief due to the recent actions of the Federal Reserve Bank. Today’s troubles, in the same way, will be because the Bank will alter its course of action. The other day I had an hour-long conversation with a fund manager. He wanted to talk about the Turkish economy. But it did not turn out to be a full-fledged talk on economics. He had one simple question: “Would Turkey prefer a sharp depreciation in lira or a sharp increase in interest rates?” Choosing between a rock and a hard place. He did not ask what the Central Bank would do. He knew the score. Rather he asked what the government would do. That was his only question. Would you quietly watch the depreciation of the lira, or wimp out and immediately raise interest rates? He did not understand Turkey’s sensitivity about a r
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Would it be better if the CB did not increase the rate?
Fatih Özatay, PhD
22 August 2013
Raising interest rate might prevent an excessive increase in the exchange rate. But at the end of the day, you cannot escape your fate. The Central Bank Monetary Policy Committee’s (MPC) decisions in its yesterday meeting and the previous meeting are closely related to Turkey’s low savings rate. Since the domestic savings rate is extremely low, you have to borrow from abroad so as to achieve a certain level of investment. Turkey’s savings rate is low for a long time; this is not a recent phenomenon. It is only that the savings rate has decreased further to a lowest-low recently.
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The PKK and the problem of disarmament
Nihat Ali Özcan, PhD
22 August 2013
The goal of the Prime Minister Recep Tayyip Erdoğan government in negotiations with the outlawed Kurdistan Workers’ Party (PKK) was to disarm the organization and integrate it into the political system. The process would start with a cease-fire and continue with the militants’ exit from Turkey. The government would respond with legal and constitutional reforms. Then, the PKK would bid a farewell to arms. The process would end with a minimal form of “power sharing,” though the government would not acknowledge this publicly. The recent statements on both sides point to difficulties in this plan. The most accurate assessment of the current situation seemed to have come from Deputy Prime Minister Bülent Arınç: “We got into this process, the outcome of which we are not 100 percent sure
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Why is Turkey such a lonely country?
Güven Sak, PhD
20 August 2013
On top of this contented solitude, the world is at the dawn of a new era that will exacerbate the isolation of Turkish companies. Are you aware that Turkey is in direct contact with only a small part of the world? If we divide the world into four main trade zones, Turkey is barely active in one and a half of them. All there is for Turkey in the rest of them is a deep solitude. No one cares about us there. And we act like our Ottoman ancestors, who refused to learn foreign languages during the enlargement of the empire. We are not aware that the times have changed. We do not even heed the saying, “if the time doesn’t suit you, you suit the time.”
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