Ahead of the second round of presidential elections in Turkiye, the main goal of the so-called collective West has been to the undermine confidence of Turkish citizens in the current incumbent, President Recep Tayyip Erdogan, by weakening the country’s economy, Agazade Mirmehdi Mirkamil oglu told Sputnik. Turkiye's local currency, the lira, was targeted for this purpose.
The unprecedented attack on the lira, which drove it to slide past 20 against the dollar on May 22, weakening by as much as 4.1%, incorporated tools like generating volatility by spreading unfavorable forecasts. Analysts at Western banks such as JPMorgan and HSBC Holdings predicted that Turkiye's lira might decline in value to reach 24-25 against the greenback. This scenario, ostensibly rooted in Erdogan's "strong commitment to orthodox macroeconomic policies," was seized upon and eagerly spread in mainstream media. Bouts of short selling were also resorted to by Western financial market players. The costs to protect against lira declines in the coming six months closed at a high of 19 percentage points on May 22, according to risk reversals. To shore up the lira, Turkiye's Central Bank had to sell from its foreign exchange reserves. As a result, the bank's net forex reserves dropped into negative territory, standing at $-151.3 million on May 19.
"It is blatantly manifest that the so-called collective West is irked by the independent foreign policy of the Turkish authorities headed by incumbent President Recep Tayyip Erdogan," the senior lecturer at the Department of Theory and History of International Relations of Patrice Lumumba Peoples’ Friendship University of Russia, also known as RUDN University, said.
Weighing in on the fact that the current Turkish authorities maintain good neighborly relations with Russia, while also refusing to join Western sanctions against Moscow, Agazade Mirmehdi Mirkamil oglu said:
"Back in 2020, Joe Biden publicly stated that it was necessary to support the Turkish opposition in order to see Erdogan lose the elections. In this connection, it is no coincidence that after Biden became US president, the Turkish economy found itself targeted by Western financial institutions.”
Former Yugoslav Ambassador to Ankara and ex-Foreign Minister of the Federal Republic of Yugoslavia Vladislav Jovanovic recalled that back in 2016, the US tried to get rid of Erdogan with a military coup and install a pro-American government that would continue the policy of "constructive obedience" characteristic of Turkiye in the old days.
"Obviously, any dissonant or dissident voice in its alliance is highly undesirable for today's America, especially for a country that is an foremost NATO member on the border with Russia, the Middle East, and therefore a country of metropolitan geopolitical significance for the United States and its further goals," Jovanovic told Sputnik.
He believes that Washington's intention - if at all possible - is to finally return Turkiye to its original semi-vassal position, because, being a large country, it is difficult to impose a position of complete subjugation on it.
"So today's elections are also taking place in conditions of heightened uncertainty," Jovanovic underscored.
The May 14 presidential election in Turkiye headed into a runoff after incumbent President Recep Tayyip Erdogan of the governing Justice and Development Party (AKP) obtained 49.52% of the vote, while his main challenger, Kemal Kilicdaroglu, from the opposition Republican People's Party (CHP), received 44.88%.
Targeted Financial Market Manipulations
Amid deliberately spread rumors about the weakening of the lira, market traders had ramped up bets for a steeper decline, hoping to witness the Turkish currency quoted at around 24-25 per dollar, a senior source in the governing party told Sputnik. Leery citizens sought to withdraw Turkish liras from credit cards to acquire currency. Interest on loans in Turkish lira soared, the source said. However, the bank was forced to take measures to restrict cash access to the lira, the high-ranking source said. The interest spike on obtaining loans in Turkish lira "was a temporary one," it was underscored. The source emphasized that as the Turkish lira could not be obtained in the desired volumes, the market actors had "failed to raise the dollar’s exchange rate against the local currency" to the desired level.
The best backdrop for any such targeted manipulations on the financial market is turbulent political situations, such as elections, Serbian financial analyst Branko Pavlovic agreed.
"Major players, secretly agreeing among themselves, deliberately disseminate an avalanche of forecasts, staking a lot of money on the implementation of these predictions, which they themselves tweak. And they make a lot of money from it... Players who are not in cahoots with them are more likely to believe in inflated predictions, in this case - the plummeting of the Turkish lira,” Pavlovic stated.
As for gold and foreign exchange reserves, Pavlovic says that Turkiye is in a difficult economic situation, albeit still managing to provide economic growth.
“Turkiye has been forced to dip into its gold reserves because it does not have other foreign exchange reserves of this size immediately available. Hence, it went for gold,” the Serbian financial analyst added.
The value of Turkiye's gold reserves was $44.3bn on May 12, Central Bank data shows, after the Turkish bank was forced to turn seller in March.