The operations against Gulen associated media outlets have increased concerns of the utilisation of the rule of law by the Turkish government. Discussions have focused on the rule of law in Turkey; the undemocratic proliferation of the Gulen movement and the arbitrary use of law by the ruling government. Amidst the rhetoric of ‘parallel state’ discussions, the slowdown in the economy which has been increasingly concerning for the country have lost priority in the headlines. The economy slowed to 1.7% growth in the third quarter of 2014, feeding unemployment to reach 10.5%.
[tabby title=”Domestic Developments”]
Istanbul police raided the offices of the Zaman media group on Sunday morning. Protestors were in front of the building as news of the raid had been leaked anonymously on Twitter several days earlier. Ekrem Dumanli, the Editor-in-Chief of Zaman, one of Turkey’s largest, was arrested. Simultaneous raids occurred in the offices of Samanyolu Media Group, where the chief of this organisation was arrested. The Istanbul Prosectuor’s Office acknowledged the raids were connected and said that 32 people had been detained to face charges of forgery, slander, and terrorism. Both Samanyolu Media Group and the Zaman Group are considered core components of the US based Islamic Preacher Fettullah Gulen affiliated Hizmet Movement, which the government has accused of fomenting chaos in the country and attempting to overthrow the government. President Recep Tayyip Erdogan had indicated on Friday that the government would continue cracking down on Hizmet-affiliated groups.
CHP leader Kemal Kılıçdaroglu publicly denounced Sunday’s raid on Zaman newspaper and other Gulen movement affiliated media organisations, describing the actions as a “coup” aimed at silencing criticism of the ruling AKP.
Member of the pro-Kurdish Ertugrul Kurkçu stated that these journalists shall be released immediately. He added that the party will not ask for vengeance of illegal treatment of Ahmet Sik and Nedim Sener at this moment, but will rather stand against the government’s undemocratic practices against journalists.
The Turkish Journalists’ Association and the Turkish Journalists’ Labour Union both condemned the Sunday raids of the Zaman and Samanyolu Media Groups, characterising the raids as politically motivated attempts to silence critics of the AKP.
CHP Deputy Head Haluk Koc released a second list detailing individuals that he claims have been inappropriately given government positions despite not having passed the required civil service examinations. Koc and other opposition parties blame nepotism inside the Justice and Development Party (AKP) for these appointments. Koc had previously released a list on 7 December, detailing the cases of individuals such as a friend of President Erdogan’s son who became a Turkish Radio and Television executive despite not having passed a required exam, Koc’s second list, which he said was based on numerous whistleblowers who came forward after the publication of the first list on December 7th, detailed 85 people in government positions requiring high scores on the Public Personnel Selection Exam (KPSS), who either lacked the required scores or had not taken the test at all.
Parliament has passed a new law allowing men aged 27 or older to pay a fine of 18,000 TL as an alternative to mandatory military service. Military service is compulsory for all males, and conscientious objection is a crime for which civilians can be tried in military courts. The Turkish Armed Forces had objected to the bill, and others have criticised it as giving unfair advantages to wealthier families.
[tabby title=”Foreign Relations”]
This week, the souring EU – Turkey relations have dominated the foreign policy headlines.
Numerous foreign and international organisations criticized the December 14th raids on newspapers and journalists in Turkey. European Union Foreign affairs chief Federica Mogherini and EU Enlargement Commissioner Johannes Hahn both characterised the raids as opposed to European values of respect for the rule of law and freedom of the press.
Frederica Mogherini, the EU’s High Representative for Foreign Affairs, has also announced 10 million euros in additional humanitarian aid aimed at Syrian refugees in Turkey. This is part of a 70 million euro package that has been extended to Turkey. The EU has, since the beginning of the crisis, contributed 187.5 million euros to support refugees in Turkey.
Turkish Prime Minister Ahmet Davutoglu has announced that Turkey would lift visa requirements for Polish nationals during a private meeting and working dinner with the Polish Prime Minister in Warsaw. Ewa Kopacz, the Polish PM, in turn pledged to increase the frequency of flights between both countries and to support Turkey for the Schengen visa liberalisation.
After meeting with Turkish Prime Minister Ahmet Davutoglu, British PM David Cameron announced that closer cooperation will be taking place between both countries in order to prevent foreign fighters from using Turkey as a transit corridor to reach ISIS.
[tabby title=”Economic Developments”]
Busy flow of data determined the course of the markets last week. The third quarter growth rate, industrial production and unemployment have been at disappointing levels. The only good news came from the balance of payments figures and yet improvement in balance of payments is at the expense of growth.
Turkish Statistical Institute (TURKSTAT) released third quarter growth data. Accordingly, Turkey’s third quarter growth in 2014 was 1.7%, which is considerably worse than market expectations of 3%. The record low growth rate has been the weakest performance since the last quarter of 2012. Exports, again, contributed the most to the GDP growth while the weak outlook in the contribution of domestic consumption to the GDP growth was maintained. It seems that regulations by Banking, Regulations and Supervision Agency (BRSA) to curb the growth in consumer loans along with the interest rate increase by the Central Bank of the Republic of Turkey (CBRT) still have downward effects on private consumption.
Industrial production, in addition, for October confirms the weak economic performance and poses questions on the sustainability of growth by the year end. Seasonally adjusted industrial production in October decreased 1.8%.
Unemployment data was announced by TURKSTAT today. Unemployment in September increased to 10.5%, up from the previous month’s 10.1%. Seasonally adjusted unemployment increased even further to 10.7%. The unemployment observed among youth increased to 19.2%, which implies an upsurge in jobless rate rather than increase in labour participation. The loss of momentum in economic growth, production capacity, investment, economic problems in EU and geopolitical tensions in addition to draught in agriculture were blamed for the rise in unemployment.
The governor of the CBRT presented the monetary policy for 2015. The CBRT expects a gradual decrease in inflation, and will keep tight monetary stance until inflation is under control. Erdem Basci, Governor of the CBRT, identified two potential risks for Turkish economy for next year in his presentation: first is the normalisation of Federal Reserve of the United States, meaning that the commencement of interest rate increases, and second the course of food prices; both of which are outside the CBRT’s control. The governor also commented on the banking sector and external financing. Short-term debt stock mainly belongs to banking sector and new reserve ratios may set in order to encourage long-term borrowing by adjusting the composition and the pace of it.
Further, due to volatilities in the currency, the CBRT had increased the amount of daily FX sale auction to USD 40 million. Today, the bank increased further USD 20 million to USD 60 million after the Turkish lira bottomed down to 2.39.
The CBRT also announced balance of payments statistics. The current account deficit in October was USD 2 billion in line with market expectations. This amounts to USD 33.1 billion in the first 10 months, which is 36.8% less than last year. Relatively better improvement is induced by the improvement in trade deficit (less imports vs. more exports). It is expected that the depression in oil prices might even advance this improvement as Turkey is heavily dependent on energy imports.
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