Wednesday, 14 November 2018

Is The Turkish Economy Strong Enough For A Marathon?






Over the past few years Turkey, like its neighbour Greece, has suffered a serious brain drain as thousands of talented young people—the kind of people Turkey can ill afford to lose -- left for a variety of political, social or economic reasons. Journalist Kadri Gursel, who had served a jail term for his sharp criticism of economic and political developments, revealed the extent of this problem in a recent column in Al-Monitor. One of those who left is a brilliant young financial analyst now working in Europe, and he offered these insights into the economic problems facing his homeland. For understandable reasons he prefers to remain anonymous.

          When I first started my career in finance 20 years ago,  my boss at the time gave me a book called “Warren Buffett’s Way”.  As a young Turk, who never heard of the great master before, I was impressed by the clarity of Buffett’s thinking and his simple explanations of quite complicated subjects.  One of the most striking examples was on how to approach macroeconomic analysis where he likened the U.S. economy to “a great athlete who runs sometimes fast and sometimes slow and we should not be worried about how fast he runs in the short run as eventually he will get to his destination”.  Later during the 2008 crisis, the great sage used the same analogy. This time he said that great athlete who should have been checking his blood pressure now had suffered a heart attack. What’s worse, he continued, is that the paramedics who arrived, instead of applying the resuscitator, started arguing about who was at fault. It doesn't help spending time worrying about who is to blame when the patient is having trouble breathing.


The economy is more than a 100 metre dash
            Borrowing Buffett’s analogy, we can liken Turkish economy to a typical Turkish athlete who likes to run a fast sprint just to get ahead. But then either he loses energy and leaves the race or relies on some supportive “substance” to finish the race, with the hope (and often confidence) that he is so smart that no one will find out about it.  Either way, the race ends in humiliation.  Beginning in 2002, the Turkish economy had run a great race with the help of a foreign trainer - the IMF --  who prepared a long term strategy and careful nutrition plan. The economy also had a technical adviser – the EU -- who promised Turkey the opportunity to compete with elite athletes, as long as it promised to learn and obey the rules of the game.  In addition, low global interest rates provided the perfect weather conditions for Turkey to shine by using foreign borrowing to import all the equipment and proper nutrition. Turkey, of course, promised to pay back all these loans after it had won the race.



Since 2013 a lot changed for our athlete. First, he fired his foreign trainer, stating that his own methods developed by the great leader Tayyip Erdoğan, are much better than the alien but scientific methods used by his old trainer.  Then, instead of trying to compete with elite athletes, he decided to join a new league in the Middle East – a league not known for having, let alone following, a lot of rules and where the concept of ‘fair play’ is considered just another Western intrusion into the region’s culture. However, lately our athlete realised that the competitors in the new Middle East are quite tough, and most of them (with the exception of one small runner – Qatar) have long memories and are not fond of the renewed Turkish activity.  Afraid of losing the race (and face) the trainer decided to push the athlete even faster.

This short-term tactic obviously needed more imported nutrients, equipment and even drugs (on credit), which resulted in Turkish economy growing over 7% in 2017, much faster than any of its competitors.  Given that the trainer’s strategy resulted in huge debts, around US$440 billion, it is understandable that foreign suppliers decided to ask for higher rates. They also stopped accepting IOUs in the name of Turkish Lira and more importantly showed some reluctance to extend or roll over maturing debt.   This obviously resulted in a sharp slowdown in the speed of our athlete or a complete halt to catch a breath in hopes of getting more foreign-supplied nutrients enabling him to continue with his fast run.  However, while he is catching a breath the trainer has started blaming everyone else, attacking other athletes, technical advisors and even some of the spectators who had nothing to do with the competition.  Moreover, once he started to feel the effects of his “cold Turkey”, he realised that he needs the drugs supplied by the others to continue with his performance. The trainer then began to approach some of these foreign suppliers for more supplies on credit.


What now?

However, this time it is different.  Given that our runner has completely run out of options he needs to readjust his speed or face the possibility of a major heart attack and leave the competition in disgrace.  Even in the best case where the foreign suppliers might agree to provide limited supplies enabling our athlete to continue running, the trainer needs to agree on a much slower pace. More importantly the trainer is told to stop his rhetoric against the suppliers and agree to make necessary changes to his current unhealthy diet of “using borrowed funds for construction of mega projects”.   The biggest problem in this case is that our tired athlete’s current manager, like any manager who believes he is smarter than everyone else, does not really understand the severity of the situation and is unwilling to change his game plan. 

He would rather to take the risk a risk of forcing his athlete to run even faster and force an even bigger catastrophe.  His management team has lost key members who have been replaced with family members and others whose priority is pleasing the manager rather than understanding the real rules of the game.  There is some small hope that a few of the family members understand the current situation. But there are doubts whether they can tell the manager to make key changes such as replacing the team doctor (Central Bank Governor) who has consistently been wrong in his diagnosis of what ails the athlete.

            To sum it up,  our Turkish athlete, once again is suffering from the effects of running much faster than his capacity and is completely exhausted. Our athlete now faces the choice of slowing to the pace of an overweight recreational jogger or forcing himself to run fast until his last breath – at which point he could probably only be saved by a foreign paramedic in the name of the IMF.   The decision is at hands of the manager and his team.

Monday, 1 October 2018

Is Britain Looking At A High Speed Run Straight Off A Cliff?


The only comparison I can make with the current inane Brexit discussions going on in Britain is the final scene from the 1991 classic Ridley Scott film Thelma & Louise where the two women happily run their convertible car at high speed off a cliff. In the current Brexit remake of that film we have fervent Brexiteers Boris Johnson – the man who will do anything to be prime minister – and his boon companion Jacob Rees-Mogg putting the pedal to the metal and hurtling Britain off the cliff and back into what they presume to be the glorious past of Rule Britannia.

Is this all he's promising?
Alas, a more likely outcome is to crash loudly on the rocks of reality at the bottom of the cliff. The truly discouraging point is that no one – not the government and certainly not the opposition Labour Party – has clue what will happen in six short months when whatever ‘deal’ is agreed is supposed to go into effect. The alternatives range from A -- as in Absurd – to Z – as in Zilch.

A major sticking point at the moment seems to be what do with the border between Northern Ireland, part of the UK, and the Republic of Ireland, a member in good standing of the EU. Will there be a ‘hard’ border with customs duties, etc. or a ‘soft’ border more or less replicating the ease of trade between the two parts of Ireland that exists today. The obvious answer – an answer regarded as the third rail in British politics – is the unification of Ireland. But, given the realities of the deep religious divide within Northern Ireland, that option looks Dead on Arrival at the moment.
 
Is this old border post in Ireland going to get re-opened?
Somewhere along the way, lost in all the raucous debate and fevered posturing, is the seemingly simple question of how the quality of real daily life for the average Brit will be affected by a rupture with the European Union. Without offering anything more than mere speculation the Brexiteers assure us that we are headed for the sunny uplands of a rejuvenated Britain freed from the snares of those wily foreigners.

They are a little light on explaining exactly what those sunny uplands will look like. What will replace the ease of trade and travel we now enjoy throughout the European Union? Trade that, among other things, keeps our supermarkets full and prices relatively low. It is important to remember just how much Britain relies of huge volumes of trade each and every day with the EU just to feed itself. Next time you go to the supermarket take a look at the country of origin of what you buy. Then ask yourself what would happen to those products once trade barriers and customs duties are imposed. It’s not a pretty picture.

How many of those trolleys are filled with EU products?
What about travel? Now we enjoy seamless travel throughout the EU. Go through passport controls quickly, enjoy the right of residence, and – very important – have access to health care through reciprocal arrangements between the NHS and other public health providers with the European Health Insurance Card. What is going to replace this convenience and peace of mind? More important is the right that all UK businesses – services and manufacturing – have to operate anywhere in the EU.

Ah, the Brexiteers say, those agreements can be replicated with a fresh new set of treaties when we are free from EU shackles. Right. And exactly who is going to negotiate those treaties? And, given that the much-touted trade model between Canada and the EU took seven years to negotiate, it could be a long, dry trip to those sunny uplands. Furthermore, that Canadian model does not begin to cover the extent of the existing trade between the EU and Britain.

But our sovereignty, the Brexiteers cry out. We will regain our sovereignty. What does that mean, precisely? Exactly how much is the daily life of the average Briton affected by this alleged lack of sovereignty. Does the Queen still sit on her throne? Do local councils continue to exist? Does parliament still exist? I admit this is a dubious point, but at least the building still exists. Do British courts still rule? European courts have some jurisdiction, but hardly total. Is not the Bank of England still free to implement whatever policy it wants? Is sterling not the legal tender throughout the UK?

The argument that Brexiteers fall back on when all else fails is ‘control of our borders.’ Again, this begs clarification. To a very large extent Britain already does control its borders. The fact that it has such difficulty in doing so is not the fault of the EU. But more to the point, official statistics show Britain is hardly flooded with EU immigrants. For example, for the year ended in March 2018 there were 226,000 immigrants from the EU (most of which were from the original EU countries) and 138,00 emigrants, i.e. a net immigration of 88,000. You can lose that many people in Harrod’s in any given day. So, what exactly is the problem that leaving the EU will solve?

The vast majority of immigrants in that time period came from non-EU countries, countries over which Britain has complete border control. There were 316,000 non-EU immigrants for that year, and the vast majority of those – 202,000 – came from Asia. It is worth noting that only 81,000 of the non-EU immigrants left Britain in that year, leaving a total immigration far outstripping those who came from within the EU.

It is well past the time to shed the hyperbolic rhetoric of the Brexiteers and focus instead on exactly how a rupture from the European Union is going to benefit – or hurt -- the daily lives of the proverbial man-in-the street.

Messrs. Johnson and Rees-Mogg have us headed at high speed straight off the cliff edge with absolutely no clarity on what we face in their brave new world. Is this a gamble the British people really want to take?

Tuesday, 14 August 2018

Time To Step Back From The Brink And Start Some Serious Negotiations


One of the amazing elements of the stormy debate over the collapse of the Turkish currency is just how much it is a dialogue of the deaf. On one side is the enraged, cornered Turkish president Tayyip Erdoğan whose only response the economic crisis enveloping his country is to cast the drama as yet another independence struggle against ravenous ‘imperialist’ powers determined to undermine Turkey’s emergence as a great power.

Currency speculators around the world smell blood in the water and are undoubtedly very active in Turkish Lira trades. But that is an effect, not the cause of the crisis. So far, the Turkish president has not uttered a word about the disastrous economic policies of the last several years that led to this collapse. But the speculators may have to wait a long time for the currency’s total collapse. One has to respect Erdoğan’s courage and resilience if not his economic acumen.

Like the Raging Bull  Erdogan may be battered but he is still standing
There is also not a word in the closely controlled Turkish media about the real crunch that local companies are facing because of the eroding currency. According to a report in The Financial Times some importers having trouble with shipments because suppliers are having difficulty pricing their goods. Prices of dollar-denominated Turkish bank bonds dropped like a stone sending their yields up sharply. And the debt repayment schedule looms larger and larger. In the next 12 months private non-financial institutions will have to repay or roll over $66 billion in foreign currency debt. For the banks alone that number is $76 billion. These repayments get even more difficult as hard-hit corporates struggle to repay their loans from Turkish banks. This could lead to a sharp increase in what’s politely called ‘non-performing loans’, i.e. loans that are not being repaid. The government will undoubtedly put pressure on the banks not to classify these loans as ‘non-performing’, but at a certain point the economic reality will disrupt that fantasy.

On the other side of the debate you have commentators in all the standard financial journals, social media, and television endlessly forecasting doom and gloom unless Turkey immediately adopts the typical IMF recipe of higher interest rates, curtailed lending, and sharply reduced government spending. Not a word from them about how demeaning this must seem to a country with great power pretensions like Turkey. Turkey is indeed a geo-politically significant country. And driving it into an embittered corner where it retreats into a sullen isolationist shell is to no one’s advantage. Suddenly the old saying ‘A Turk has no friends but a Turk’ looks more and more relevant to many Turks. I appreciate that Erdoğan is a hard person to sympathise with, but one has to realize that there are 80 million people in Turkey – about half of whom don’t like Erdoğan either. Whether they like Tayyip Erdoğan or not, however, they all deeply resent receiving lectures that are quickly interpreted as insults and infringement on their hard-won national sovereignty. The vast majority of Turks I know – no matter how ‘Western-oriented’ they may be --would rather suffer great economic pain and eat grass than submit to this type of behaviour.

And on top of this you have Donald Trump -- for whom the word nuanced simply does not exist. He much prefers the bludgeon to the scalpel, and doesn’t seem to care how much damage he causes – especially when there is a tricky election just over the horizon. Right now, he is using the power of the US dollar as the global reserve currency in an attempt to force people and countries to do what he wants. Yes, the dollar is a very powerful weapon. Yes, the vast majority of global trade is in dollars. Yes, most global commodities are priced in dollars. But, most important, perhaps, is ability of the United States to punish banks around the world by levying heavy fines for what the US Treasury deems inappropriate activity. Failure to pay the fines is essentially a death sentence for the banks because they can be shut out of the US financial system. Without access to the US financial system they could not any business in US dollars. Given the current dominance of the dollar in all aspects of global finance banks without access to the US financial system may as well shut their doors. Sooner or later some clever person will find a way around this dollar-domination, but at the moment it gives America a weapon more powerful than any nuclear bomb.

And this is precisely the weapon hanging over Turkey. One of Turkey’s major state banks – Halkbank – stands accused of violating the sanctions against Iran. The details of that sanctions busting were outlined in a colourful American trial involving one of the central characters in that scheme and an unfortunate executive of Halkbank who picked the wrong time to visit the United States. This executive was found guilty and now resides in a federal prison.

Testimony at this trial deeply implicated Halkbank in sanctions busting

No decision has been made yet on the amount of a fine that Halkbank could face. This is part of the negotiations involving the fate of an American evangelical pastor – and other Americans – held in Turkish prisons on unspecified charges of aiding an attempted coup in 2016.  The fine could be small and symbolic. Or it could be the multi-billons of dollars that other international banks have faced. A hefty fine of more than $5 billion would hurt Halkbank a great deal. What would be worse would be Erdoğan refusing to pay that fine because he considered it a violation of Turkish sovereignty. Then Halkbank could lose access to the US financial system. The knock-on effect of that is hard to predict – but it won’t be positive.

Will Trump pull this trigger? Will he sacrifice Turkey just to show how tough he is – or thinks he is? How would Erdoğan respond? Is there a chance that economic and political sanity might prevail? Unfortunately, it’s too early to tell.

Saturday, 11 August 2018

This Is A Very Old Turkish Film With Perhaps A Different Ending


The Turkish people should be familiar with the currency crisis now rocking their country. It is not as if they haven’t seen this film before – lots of times. During the un-lamented 1990s the country was plagued with serial economically illiterate and incompetent governments while inflation soared and the currency melted like ice cream in July. After each bout of near-100% inflation whatever government was in charge – and there were many -- would sheepishly head for the IMF to arrange a bail-out. After pledging absolute obedience to the IMF rules the government would take the money, quickly forget its earlier pledges, and the merry-go-round would start again.

            Turkish merchants and businessmen are very clever indeed, and they quickly adapted their operations to the economic realities they faced. Many merchants and hotels simply gave up on the Turkish Lira and began pricing in dollars and Euros. This is still true. The standing joke was that the busiest person in a supermarket was the employee who had to run around the aisles adjusting prices.  Tourists used to marvel at becoming instant millionaires when they exchanged their hard currency for the pillow-soft Turkish Lira.

            This merry-go-round ended abruptly in 2001 when the currency and interest rates exploded out of control. By this time the people were well and truly fed up with the situation.  As soon as they got the chance they voted overwhelmingly for the Justice and Development Party (AKP) by itself to replace the hapless coalition governments that had disastrously mismanaged the economy.

Unfortunately, this chart of the USD/TL tells a very old story
             Now, after almost 17 years of relative stability under a single-party government the country finds itself paying the price for economic follies that had been covered up for years by the global environment of ultra-low interest rates and generous liquidity. Turkish companies loaded up on what was then cheap foreign currency debt, the country benefitted from low oil prices, and relatively cheaper imports began to replace domestic goods. Despite worries about a widening current account deficit the country did not have much trouble rolling over the roughly $250 billion in annual debt re-payments.

            That has all changed within the last year. Suddenly cracks appeared in what once seemed like Turkey’s strong economic foundation. Voices of concern about the country’s debt load grew louder, the current account deficit increased, oil prices began to rise (bad news for a country that has to import every drop of oil and every cubic meter of natural gas), inflation crept back into double digits, foreign direct investment dried up. The once-stable currency began to weaken, and those voices of concern grew louder. Finally, the hapless Central Bank screwed up the courage to raise interest rates. But not enough to support the currency.

            Just like the 1990s you say. Surely the IMF will ride to the rescue and save Turkey from the consequences of its government’s policies. Not at all. This time is truly different. Foreign commentators regularly opine on what the Turkish government should or must do to stem the rout of the currency. Using those words should or must - dripping with righteous condescension – with this particular Turkish government is like waving a red flag in front of a bull. What, you ask, is so different this time? Plenty.

            For openers, the structure of the Turkish government has changed from a parliamentary democracy to a presidential system where the president has supreme – and I mean supreme power. He alone makes all decisions. Ministers may have the power to order their own lunch, but that’s about all. And this president, Tayyip Erdoğan, is a supremely stubborn man with deep-seated – if very bizarre – views about the economy. For one thing, he hates interest rates and only very reluctantly allows the Central Bank to increase them. He has convinced himself – if no one else – that high interest rates create inflation. So much for classical economic theory. It’s also true that higher interest rates would hurt his heavily indebted economic allies in the construction business. But that’s another topic.

The son-in-law, and Finance Minister, tries to explain the unexplainable
            Furthermore, because Erdoğan or his henchmen control virtually every media outlet in Turkey there is very little – if anything -- in the local media about the seriousness of the economic crisis. Erdoğan has successfully changed the narrative from his economic incompetence to the insidious attempts by foreign interests, a.k.a. Americans and ‘Zionists’, to undermine Turkey. Local media love to report how their glorious leader is standing up to American pressure to release the unfortunate American pastor now incarcerated on unspecified, unverified charges of helping the 2016 coup plotters. Trump has played right into Erdoğan’s narrative by slapping additional sanctions on Turkey for failure to release Pastor Brunson who – not incidentally – belongs to the same evangelical wing of the church as Vice President Pence. Furthermore, Trump needs the evangelicals to stay with him for the upcoming mid-term elections.

Whatever happened to this once-cozy relationship?
            In short, it is inconceivable that Erdoğan would resort to the IMF for help in this crisis. To do so would mean admitting his earlier policy errors and undermine his narrative about foreign plots against Turkey. This would amount to an unbearable humiliation. In addition, the IMF would undoubtedly impose conditions that are an anathema to Erdoğan’s  ‘unique’ economic theories.

            So what happens now? First, he will thrash around and plead with the Russians, Chinese, Qatar and anyone else who will listen for assistance. The Russians can’t – or won’t -- do anything. The Chinese are much too intelligent to get caught in that mess. And I’m not sure that even Qatar wants to get that deeply entangled. Then he could print money and ignore the ensuing inflation. Or he could impose capital controls and/or force conversion of the foreign currency bank accounts into Turkish Lira. Both of these steps would cripple the economy and send it back to pre-1980s when the Turkish economy was essentially closed. But Erdoğan could justify these moves by saying the country is in an ‘economic war’ and he has to impose these measures for national defence. Enough people would buy that rationale to keep him in power. Just look at how long Maduro has remained in power in Venezuela despite the economic disaster there.

            Unlike 2001 there is not even the glimmer of political opposition to Erdoğan. The main opposition party CHP is busy eviscerating itself with internal feuds, and the nationalists are rallying around the flag. That leaves the Kurds, who are torn in several different directions. So Erdoğan is pretty much free to do what he wants. Unfortunately, the main losers will be the Turkish people who will suffer severe declines in income. But as long as Erdoğan can maintain the ‘evil foreigners’ narrative national pride will trump (as it were) economic realities.

Tuesday, 26 June 2018

How Much Will Erdoğan's Victory Cost The Country?


Turkish voters have just made their country the model for every dictator and the envy of every wanna-be dictator in the world. President Tayyip Erdoğan convinced 52% of the voters to give him unprecedented powers to run the country exactly as he sees fit. Separation of powers? Forget it. Independent journalism? Independent judiciary? Forget it. Parliamentary checks and balances? Forget it.

Erdoğan now has the power to rule by decree, appoint cabinet ministers and senior officials answerable only to him, and appoint senior judges. In short, Erdoğan is free to impose his 19th century vision on Turkey. I was going to say 16th century, but there were some very enlightened Ottoman rulers during that period.
With his absolute power where will he take Turkey?
The opposition put up a spirited fight, but in the end they were no match for the sheer organizational skills of the ruling Justice and Development Party (AKP) and the charismatic power of a ‘strong man’ who said the dictatorial rule was necessary to restore Turkey to its rightful place in the world – wherever that might be. He has the typical autocrat’s disdain for the necessary, messy compromises or checks and balances of real democracy. Why bother with other people’s opinions when your own ideas are so good? Waste of time, really.

One sure thing was Erdoğan’s determination to use every means – fair or foul -- at his disposal to win this election. And after 16 years of near absolute control it is fair to say he has many more weapons at his command than the opposition to control the outcome of an election.

While the physical act of voting may have been more or less free, it would be a serious mistake to call these elections ‘free and democratic’ in the true sense of the phrase. All Erdoğan’s opponents faced severe restrictions on media exposure during the campaign. In addition to the media outlets owned by Erdoğan’s henchmen or by people intimidated by him, even the state TV station found reasons to keep the opponents off the air. The campaign of Meral Akşener, leader of the IYI Party, also faced frequent assaults and attempts by local Erdoğan supporters to prevent her election rallies. Selahattin Demirtaş, leader of the Kurdish-based HDP party, had to run his campaign from the prison where he has been kept for a couple of years on unspecified charges. In these circumstances it’s a minor miracle that the opponents performed as well as they did. A cynic would say it was all part of Erdogan's game plan. Let Ince run relatively free, but inhibit and intimidate the other two so their vote total won't challenge Erdogan. Crude, but effective.
Ince did well, but got no help from the other opposition parties

Other than Erdoğan’s personal victory there were a few interesting election results:

1.     Erdoğan’s main opponent, Muharrem Ince, performed exactly as he predicted, winning just under 31% of the presidential vote. He ran well ahead of his party, the CHP, raising the expectation that he may assume leadership of the party and inject some much-needed vitality. His problem was that Akşener and Demirtaş combined did not get enough votes to help force the presidential election into the second round. But, given the restrictions their campaigns faced, that is no surprise.

2.     HDP, the Kurdish party, secured enough votes (11.7%) to enter parliament with 67 MPs, making them the third largest group. HDP’s vote was undoubtedly helped by voters from other parties who voted tactically just to make sure HDP passed the 10% threshold. 
Selahattin Demirtas: Tough to run a campaign from behind bars


                       

3.     Erdoğan ran way ahead of his AKP that received just over 42% of the vote, down from previous elections. This reconfirms the president’s star power while demonstrating that at least some of the party’s former voters are beginning to lose faith with the party.  AKP now has 293 MPs, below the 300 required to give them total control of parliament. They will have to rely on the 50 MPs from the ultra-nationalist party MHP to exercise what little authority left to the parliament. Look for Turkish policy to become even more anti-Kurdish and bellicose.

4.     The two rival nationalist parties, MHP and the newly-formed, IYI party combined received more than 20% of the vote, far above the usual result for the nationalists. Perhaps the government’s strident anti-Kurdish rhetoric and military incursions into Syria and Iraq inspired this burst of nationalist fervour. Things don't look good for Demirtaş's early release.


Assaults and boycott by most media hurt her campaign

It remains to be seen just what Erdoğan will do with his sharply enhanced powers. One would like to think he might use them to help unite a badly fractured country and society. Nice, but, given past performance, not too likely. He might also move aggressively to counter the country’s mounting economic problems. Unfortunately, he has shown absolutely no sign that he even understands the gravity of the situation, let alone have any idea how to solve the problems.

During the campaign he re-iterated his plan to force the Central Bank to reduce interest rates as the best way to fight the increasing inflation and depreciating currency. This will not have a happy ending.

He also stressed his commitment to huge, budget-busting public works projects that will do little except feed his fervent contractor allies while putting great stress on an already weakened budget. One of his pet projects is the so-called Kanal Istanbul, a canal rivalling the Suez Canal to run from the Black Sea to the Sea of Marmara bypassing the Bosphorus Straits. It’s not clear where the $20 billion or so funding will come from, but the hapless and overstretched state banks will undoubtedly be called upon to provide the funds.

While he is touting grandiose projects, the real problems of inflation, unemployment, mounting current account deficit, depreciating currency and a tattered education system designed more for quill pens and rote memory than computers are only getting worse. On top of this the once-strong agriculture sector is reeling, forcing Turkey to import more and more basic food products like onions and potatoes.

At some point, these problems will snowball into a real economic and social crisis. But for the moment Erdoğan is free to delude himself that they are all the fault of the usual suspects – ‘foreign interests’ that are afraid of Turkey. This plays well in domestic elections, but doesn’t do much to convince those same ‘foreign interests’ to lend you a hand when you desperately need it.