Turkey’s media has closely watched the advancement of the Islamic State of Iraq and the Levant (ISIS) in Iraq, while following the developments regarding the upcoming presidential elections. The Constitutional Court’s verdict regarding the Balyoz (Sledgehammer) court case convicts has received wide media coverage. The Central Bank’s Monetary Policy Committee’s announcement is the dominant topic in the economic agenda as well as the AKP officials’ statements regarding the independence of the Central Bank.
Turkey’s economic agenda is dominated by the developments in Iraq and the pressures on Turkey’s central bank, especially the announcements of the Monetary Policy Committee on Tuesday. For a brief explanation of the economic relations between Iraq and Turkey, click here.
The advancement of ISIS in Iraq has disrupted oil transportation and perceptions of risk to oil supply of Iraq. This has led to an increase in oil prices, increasing risks for inflation and a higher current account deficit for Turkey.
Meanwhile, Iraqi petrol is now being exported via Turkey. As stated by the Energy Minister Taner Yıldız;
- Three sets of cargo carrying petroleum have left Turkey to Iraq, while the fourth one is being prepared.
- Halkbank has received USD$ 93 million dollars for the first package.
- Turkey has no control over where the oil is sold, since the oil is owned and sold by Iraq. Turkey is merely transporting the oil.
- In this regard, Turkey was expecting an income of 500 million dollars, but Iraqi capacity is not allowing for this. Turkey now has an income of USD$1 per barrel.
- Oil prices, which had gone down to USD107, have now increased to around USD115, and expectations exist regarding further increases in oil prices.
- The increase of USD against the Turkish lira has meant a 3% increase in costs and 5-5.5% increase in oil costs specifically. The total energy costs of Turkey have increased by 5-5.5%.
Iraq has become in need of oil from Turkey after ISIS has taken control of the Baji Petrol Refinery, the largest in the country. Iraq thus now needs 4000 tons of petroleum, which it has asked for Turkey to provide.
Meanwhile, the Energy Market Regulatory Authority (EPDK) has signalled a possible intervention into the energy market. With an increase in international oil prices, Turkey experienced an increase in petrol prices of TRY 0.10 and in diesel of TRY 0.12. The EPDK has stated that if petroleum providing companies do not decrease their prices, the institution can implement a ceiling price for oil.
Meanwhile, the iron and steel industry is experiencing the negative effects of losing Iraq as an export market. Between 2009 and 2013, Iraq’s share in Turkey’s iron and steel exports had increased from 7% to 14%. However, the sector’s exports to Iraq have fallen in the past two months. Compared to last year, the exports have fallen by 8%.
Not only iron and steel but also many other sectors experience a slowdown in trade relations with Iraq. The fruit and vegetable exporters are concerned that they might lose their export partner and possibly their goods due to the developments in Iraq.
The Monetary Policy of the Central Bank is to make its announcements regarding the interest rates in Turkey on Tuesday. The markets are widely expecting a decrease in the interest rates.
The central bank is facing the challenge of aiming to control inflation while also not limiting consumer demand.
While the independence of the Central Bank is a crucial requirement of capitalist economies in the world, the AKP government has been increasing its pressures on the bank to lower the interest rates, in order to facilitate more spending.
The Deputy Chair of the AKP, Numan Kurtulmuş, has made a controversial statement that might threaten independence of the Central Bank in the future. Mr. Kurtulmuş said that the tutelage of the military has been removed by the AKP and now it is time to remove the tutelage of the Central Bank, the higher council and the judiciary. He stated that “we are now entering a period of fight against the invisible sources of tutelage. The necessary legal changes might be made”.
All convicts in the Balyoz coup plot case have been released.
The Constitutional Court ruled that the rights of 231 convicts to a free trial had been violated. They are currently waiting for a retrial. It is alleged that this case is closed in practice although the released convicts remain to be suspects of this case. The Balyoz case received criticism for failures of providing justice due to fabricated evidence against suspects and irregularities in and politicisation of the case.
The People’s Democratic Party (HDP) has chosen its co-chairs as Selahattin Demirtas and Figen Yuksekdag.
Jailed leader of the Kurdistan Workers’ Party (PKK), Abdullah Ocalan, sent a message to the HDP’s 2nd extraordinary congress. Ocalan stated that the HDP represents the workers’ movement in the parliament and that the HDP, with internationalist values, is the unity of the Kurdish people against the institutionalised fascism in the state.
Sebahat Tuncel HDP MP expressed that the incumbent government should not any longer blame the opposition parties for not having implemented legal framework for the continuation of the ‘peace process’.
Debates over Presidential Election in August continue.
Although the Republican People’s Party (CHP) and the Nationalist Movement Party (MHP) announced their joint candidate, the Justice and Development Party (AKP) will formally announce their candidate on 3 July 2014, which is the official deadline. PM Tayyip Erdogan stated that the AKP might make unexpected moves signalling that Erdogan might not be the AKP’s candidate.
The HDP declared that they will not support the CHP-MHP’s candidates, but they will appoint their own candidate.
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Prime Minister Tayyip Erdogan went to France for a political rally where thousands of expatriates attended whilst hundreds of others gathered to demonstrate against PM.
The European leaders were anxious before Erdogan’s speech, however anticipated that the Prime Minister would promote unity with Europe rather than incite distinctiveness. In this regard, PM Erdogan encouraged the Turks in France to gain French citizenship alongside their Turkish one.
PM Erdogan on the plane from France to Turkey announced that the December 17 corruption probe, which he strictly calls a coup attempt, is not over and that once the necessary legal reforms are made, the government will initiate thousands of cases against those that have attempted the coup.
The crisis that has begun with invasion of Mosul by ISIS continue to threaten lives of civilians and create further instability in the region.
The Turkish Ministry of Foreign Affairs has re-iterated its warning regarding the situation in Iraq. The ministry advised Turkish citizens to leave the area. Travel warnings have been made against Baghdad, Mosul, Kirkuk, Selahaddin, Basra, Najaf, and Karbala. Efforts have been increased to bring back Turkish citizens from the region back to Turkey.
The ministry also announced that 1150 food packages have been sent to Kirkuk for the Turkmens who fled to the city due to the advancement of ISIS. One package has enough food for 10 days for a family of five.
The Turkmen leader from Iraq, the leader of the Iraq Turkmen Front Ershad Salihi, is visiting Turkey. He is expected to request more than humanitarian aid from Turkey, in order to help the Turkmen population that has been suffering from the advancements of ISIS.
The Turkish hostages in Iraq have not yet been freed. ISIS has taken more cities, including those at the border between Syria and Iraq, and continues to threaten stability in the region. There is no news regarding the current fate of the hostages in Iraq.
The families who were protesting for over a month in Diyarbakır and demanding the PKK to release their sons have also been asking the government to be proactive about forcing the PKK for their children’s release.
The families demanded a meeting with PM Erdogan. Without waiting his response, they are travelling to Ankara on Monday evening.
Meanwhile, the 15 year old son of one of the protesting families was returned by the PKK. The boy was kidnapped three months ago. The PKK had announced last week that 16-18 year olds would be freed.
After his coup attempt in Libya, the retired General Haftar gave 48 hours to Qatari and Turkish communities in the east of Libya to leave the country.
After 48 hours, the Qataris and Turks are said to be taken under custody. They are accused of engaging in activities of intelligence gathering in Libya.
The 5th Pride Walk of the Lesbian Gay Bisexual and Transgender (LGBT) took place in Istanbul on 22 June.
The grand theme of the walk this year was “unsolved/unidentified government”. This refers to the Turkish phrase “faili meçhul cinayetler”, murders whose perpetrators have never been identified in Turkey. The LGBT accused the government of being one of those perpetrators of violence against the LGBT, which remain unpunished. The police did not allow the protestors to reach Taksim Square. According to their statement, 49 trans-women were murdered in the last two years and 70 trans-women in total were murdered since 2002.
On a different note…
CEFTUS Insights Editors