Back to “Nas” after the election?

In a speech at his party's parliamentary group meeting on November 17, 2021, President Erdoğan stated that they would lower interest rates and said the following:

“There is 'Nas' (a definitive religious decree) on this matter. So, what is it to you or me? We will look at the situation from this perspective and take our steps accordingly. Those among our colleagues walking this path with us who defend interest rates, I am sorry, but I will not be with anyone who defends interest rates on this path. Because interest equals high inflation! As long as I am in this position, I will continue my fight against interest rates and inflation to the end.”

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You know what happened next:

The Central Bank began to rapidly lower its benchmark interest rate.

As interest rates fell, the Turkish Lira melted against foreign currencies.

Inflation, contrary to Erdoğan's claim, exploded.

Millions of people became impoverished.

All of this happened just for the sake of stubbornness... The economy of this country, which was not very bright to begin with, reached the point of collapse because of this single “word”.

Hot money fled, and the Central Bank's foreign exchange reserves saw negative figures.

And…

Recep Tayyip Erdoğan, who said, “I will not be with anyone who defends interest rates,” was forced to take a step back.

Following the last presidential election, he brought Mehmet Şimşek to lead the economy and Hafize Gaye Erkan to head the Central Bank.

In other words, he forgot about Nas and the like.

For about eight months, the only thing this duo has done is to raise the Central Bank's benchmark interest rates again.

This operation pushed the Central Bank's foreign exchange reserves into positive territory, but it did not provide a remedy for the deeply impoverished public. Citizens have started to think twice even when buying bread and cheese.

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The only thing we know is that Erdoğan, who said “I will not be with anyone who defends interest rates” and insisted on “Nas,” is terribly uncomfortable with this contradictory situation he has fallen into…

It is even stated that this discomfort lies beneath the news about Central Bank Governor Hafize Gaye Erkan, which has occupied the top of the agenda in recent days.

Markets are worried that immediately after the election, the Central Bank Governor might be replaced by someone who will again support Erdoğan's “Nas” rhetoric. There is even talk that he might be willing to let go of Mehmet Şimşek if necessary.

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So, how would such a change reflect on the economy?

Taking advantage of being a former economy journalist, I have been talking to many businessmen and NGO leaders for days. Their answers are all the same:

“We would be ruined... We haven't even been able to replace what we lost due to the President's first Nas stubbornness. With things as they are, experiencing a new Nas crisis, meaning lowering the benchmark interest rates again, would result in the Turkish economy throwing in the towel. Let's say we somehow paid the short-term government debts; what will the private sector do? If a new currency crisis breaks out, how will we pay our foreign debts that will double or triple? Forget our banks and our industry, even our grocery stores would go bankrupt!”

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So… The situation is not caused by a disagreement between Hafize Gaye Erkan and Mehmet Şimşek, as some circles claim…

The real reason is the Nas issue, which remains a deep-seated obsession for Erdoğan…

He wants to get rid of the situation of having to eat his own words after the upcoming local elections, no matter what, and lower interest rates again at any cost!

Just for this reason, he could drag the country into a much more dangerous adventure…

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So; what am I trying to say with this article?

Times are bad, watch out…

For your bread, for your milk!