Why is the Turkish lira plunging?
For Turkey's President Erdoğan there is no room for doubt: Donald Trump and the US are responsible for the lira's plunge. Its dramatic decline on the currency markets since the end of last week has indeed been a result of the row over the imprisonment of US Pastor Andrew Brunson and the US tariffs. But this is by no means the only reason for the currency crisis, commentators explain.
Erdoğan has botched things up
Erdoğan bears the greatest responsibility for the current lira crisis, Helsingin Sanomat is convinced:
“The way Turkey is tackling this crisis is a perfect example of how crises should not be resolved: too late, and without shouldering responsibility. At the same time the crisis makes clear how problematic a system in which power is concentrated in one hand can be. If you monopolise power, you also bear the whole responsibility when things go wrong. As is typical in autocratic systems, the government and those responsible for monetary policy don't dare contradict the ruler and administer effective remedies: honesty, self-criticism, and corrective measures.”
Government pouring oil on the fire
Erdoğan's authoritarian and ignorant policies will only escalate the crisis, the oppositional daily Cumhuriyet believes:
“Looked at objectively, the biggest threat to national interests comes not from outside the country, but from within, from the centre of Erdoğanism. ... The ruffian who leads the US and his political and economic sanctions are not the only factors accelerating the spiral of foreign currency financing. A major crisis lies ahead, which has regional and national causes and is being fuelled by political and economic factors in turn. ... The developments since the measures announced yesterday show that this crisis has now reached the point where it is getting out of control. And the government's crisis management is only adding fuel to the fire.”
Incompetence is scaring away investors
Erdoğan transformed years of economic growth into personal power and that was fatal for Turkey, writes economics professor Konstantin Sonin in a Facebook post republished by newsru.com:
“Ten years of growth and popularity, the step-by-step abolishment of the separation of powers, consolidation of state power in his hands, stagnation, and the loss of everything achieved over a decade. In this second stage naturally 'America' - that is to say, a foreign enemy at all costs - is always to blame. . ... That said, neither America nor anyone else is responsible for the fact that the Turkish president has a stone age view of monetary policy, which he put his son-in-law in charge of. Investors couldn't care less what kind of relationship Erdoğan has with the US and the dollar, what interests them is profits. And an incompetent financial policy is the signal to investors that it's time to leave.”
US monetary policy has dire consequences
The crisis in Turkey is a consequence of expansive monetary policy, warns Federico Rampini, La Repubblica's US correspondent:
“The origins of Ankara's extreme vulnerability lie in the monetary policy with which America overcame the finance crisis in 2008 and 2009. The Federal Reserve's policy of quantitative easing based on the purchase of bonds and other mechanisms led to excessive liquidity, facilitating borrowing in dollars. As the Asia crisis of 1997 showed, as soon as the US interest rates rise again and the dollar regains its strength, a classic mechanism cuts in that sparks panic on the financial markets: many foreign countries are no longer able to repay the loans taken out in US dollars. That's what's happening today in Turkey.”