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Turkey Letter: 17 April 2017

Foreign Policy

  • Trump calls Erdogan to congratulate him on contested referendum
  • Erdogan’s Referendum Victory Puts Turkey on Collision Course with Europe
  • Turkish President Erdogan Rules Out Extradition of German-Turkish Journalist
  • Turkey Deserves a Better EU Trade Deal

Economy & Energy

  • ‘Yes’ Vote Gives Lira Assets Rare Break from Political Pressure
  • One in four Turkish youth unemployed as unemployment rate rises to 13%
  • Turkey runs nearly $4-bln budget deficit in first quarter amid tax cuts
  • Turkey Central Bank’s Net Reserves Drop Below $30 Billion
  • Top Flour Exporter Faces Bigger Wheat Bill If Trade Spat Endures
  • Turkey’s Plan to Spur Lending Is Paying Off Ahead of Referendum

Domestic Politics

  • TÜSİAD Calls for Reforms
  • Erdogan follows referendum win with extension of state of emergency
  • What Erdogan’s narrow referendum victory means for Turkey
  • Turkey’s Erdogan Declares Victory in Referendum to Expand Presidential Powers
  • No Plans for Early Elections After Turkey Referendum

Foreign Policy

 

Trump calls Erdogan to congratulate him on contested referendum

President Trump called to congratulate Turkish President ­Recep Tayyip Erdogan on Monday after a referendum greatly expanding his powers, despite a more circumspect State Department response to Sunday’s vote, which international election observers declared unfair.

Washington Post, Trump calls Erdogan to congratulate him on contested referendum April 17, 2017


Erdogan’s Referendum Victory Puts Turkey on Collision Course with Europe

Turkish President Recep Tayyip Erdogan’s victory in Sunday’s referendum could pave the way for pragmatic cooperation with the U.S. while setting him on a collision course with Europe, officials said. Voters narrowly approved constitutional amendments that will vastly expand Mr. Erdogan’s power, giving him license to politically transform a North Atlantic Treaty Organization member that the U.S. and Europe have come to rely as a partner in the fight against Islamic State, the Syrian war and efforts to curb the flow of migrants from the Middle East to the European Union.

Wall Street Journal, Erdogan’s Referendum Victory Puts Turkey on Collision Course with Europe April 17, 2017


Turkish President Erdogan rules out extradition of German-Turkish journalist

Turkish President Tayyip Erdogan ruled out on Friday extraditing German-Turkish journalist Deniz Yucel to Germany while he is in office, repeating his assertion that Yucel is a “terrorist agent”. Yucel, a national of both countries, was arrested two months ago on charges of making propaganda in support of a terrorist organization and inciting the public to violence.

Reuters, Turkish President Erdogan Rules Out Extradition of German-Turkish Journalist April 14, 2017


Turkey Deserves a Better EU Trade Deal

With European roots reaching back to the mid-19th century, Turkey clearly sees its future in Europe. But ever since the European Union and Turkey signed an association agreement in 1963, progress has come at a snail’s pace. Now even the linchpin of that relationship — the customs union that took effect in 1996 — is no longer fit for purpose.

Bloomberg, Turkey Deserves a Better EU Trade Deal April 12, 2017


Economy & Energy

 

‘Yes’ Vote Gives Lira Assets Rare Break From Political Pressure

The lira soared as much as 2.5 percent and bonds jumped with stocks after Erdogan’s referendum victory on Sunday, even after his win was branded unfair by critics at home and abroad. The currency has since pared its advanced by about 1 percentage point, but its one-week implied volatility, which was the highest in the world before the vote, fell the most since January on a net basis, and its one-week implied yield was one of the steepest in emerging markets.

Bloomberg, ‘Yes’ Vote Gives Lira Assets Rare Break From Political Pressure April 16, 2017


One in four Turkish youth unemployed as unemployment rate rises to 13%

Close to a quarter of Turkey’s youth did not have a job in January, according to data from the Turkish Statistics Institute (TÜİK) that was released on April 17. Youth unemployment jumped 5.3 percentage points year on year in January to 24.5 percent overall, according to TÜİK.

Hurriyet, One in four Turkish youth unemployed as unemployment rate rises to 13% April 17, 2017


Turkey runs nearly $4-bln budget deficit in first quarter amid tax cuts, economic measures

The Turkish government ran a budget deficit of 19.5 billion Turkish Liras ($5.32 billion) in March and 14.9 billion liras ($3.7 billion) in the first quarter, mainly due to temporary measures and tax cuts to boost the economy, Finance Minister Naci Ağbal stated on April 17.

Hurriyet, Turkey runs nearly $4-bln budget deficit in first quarter amid tax cuts April 17, 2017


Turkey Central Bank’s Net Reserves Drop Below $30 Billion

Turkey’s net foreign exchange reserves fell to $29.99 billion last week, an 11-month low. Central bank actions such as new swap auctions have been effective in helping to boost the currency from record lows, but they also contributed to the 21 percent decline in reserves from their peak earlier this year, according to Haluk Burumcekci, the founder of Burumcekci Research and Consulting.

Bloomberg, Turkey Central Bank’s Net Reserves Drop Below $30 Billion April 14, 2017


Top Flour Exporter Faces Bigger Wheat Bill If Trade Spat Endures

Turkey, the world’s biggest flour exporter, may have to pay more for wheat if a food-trade spat with Russia isn’t soon resolved. Turkey depends on Russian wheat to supply millers, but has slapped restrictions on some agriculture imports in retaliation for a similar Russian ban. To replace Russian wheat, Turkey will have to look elsewhere and end up paying higher prices, said Ivan Vikoulov, a partner at Gibraltar-based grain trader Quorum Capital Ltd.

Bloomberg, Top Flour Exporter Faces Bigger Wheat Bill If Trade Spat Endures April 13, 2017


Turkey’s Plan to Spur Lending Is Paying Off Ahead of Referendum

Annual loan growth quickened to 21.2 percent at the end of March, matching levels achieved in January that marked the fastest pace in 14 months, according to the banking regulator, known as the BDDK. The acceleration comes after the government introduced incentives including state-guaranteed loans, tax cuts and looser banking provisions to help revive the nation’s economy after a failed coup attempt in July.

Bloomberg, Turkey’s Plan to Spur Lending Is Paying Off Ahead of Referendum April 12, 2017


Domestic Politics

 

TÜSİAD Calls for Reforms

The Board of Directors of the Turkish Industry and Business Association (TÜSİAD) issued a statement yesterday after the polls closed urging authorities to pursue critical democratic and structural reforms and steps to reinvigorate EU accession negotiations. From the perspective of the Turkish business world, the following reforms need to be prioritized

TÜSİAD Calls for Reforms April 17, 2017


Erdogan follows referendum win with extension of state of emergency

Turkish president Recep Tayyip Erdogan put the extension of a state of emergency at the top of his government’s agenda the day after claiming victory at a bitterly contested referendum on a new constitution that dramatically enhances his powers. The move to prolong it, passed at a cabinet meeting on Monday will underline fears among critics that Mr Erdogan will continue a crackdown on his opponents, taking Turkey down an increasingly autocratic path and dimming hopes of improved relations with the EU and other western allies.

Financial Times, Erdogan follows referendum win with extension of state of emergency April 17, 2017


What Erdogan’s narrow referendum victory means for Turkey

On Sunday evening in Ankara, Turkish Prime Minister Binali Yildirim stood on the balcony at the headquarters of his Justice and Development Party, or AKP, and hailed an election victory that will put him out of a job. The “Yes” camp in Turkey’s referendum, led by Yildirim’s boss, President Recep Tayyip Erdogan, appeared to win a slender victory over the “No” vote, getting about 51 percent of the vote. Turks approved constitutional amendments that would scrap the country’s parliamentary system, including the office of the prime minister, in favor of a presidency with expanded powers.

Washington Post, What Erdogan’s narrow referendum victory means for Turkey April 17, 2017


Turkey’s Recep Tayyip Erdogan Declares Victory in Referendum to Expand Presidential Powers

Turkey’s President Recep Tayyip Erdogan declared victory in a close vote on constitutional changes that would concentrate more power in his office and usher in some of the most radical changes since the 1923 founding of the republic.

Wall Street Journal, Turkey’s Erdogan Declares Victory in Referendum to Expand Presidential Powers, April 17, 2017


No Plans for Early Elections After Turkey Referendum

Turkish President Tayyip Erdogan has made it very clear that there are no plans to dissolve parliament and call for an early election before the 2019 vote, Deputy Prime Minister Mehmet Simsek told Reuters in an interview on Monday.

New York Times, No Plans for Early Elections After Turkey Referendum April 17, 2017