Downhill

The Turkish lira dropped below ten to the dollar for the first time last month. Since then the currency’s decline has been precipitous, prompting a macabre online parlour game of historical allusions. On Friday it breached 16.83 to the dollar, which recalls the date of the Battle of Vienna, a turning point for Ottoman fortunes in Europe. Only a few hours earlier it had ripped past 15.89, the date of a major revolt in response to Murat III’s devaluing of the coinage. People were joking last week about what would happen if it reached 17.89. It has now plummeted past 18.00.

President Erdoğan is making good on his long-standing enmity towards interest rates, defying economic consensus by demanding cuts when the more usual strategy for taming inflation would be to raise them. Having fired the last three central bank governors to pursue that course, he can now put the nation’s money where his mouth is.

The symbolism of dates holds a particular sting for a government that likes to make policy by them. Just before COP26, Turkey announced a net-zero goal of 2053, the 600th anniversary of the Ottoman conquest of Istanbul – an occasion the losing side knows as the Fall of Constantinople. The Erdoğan government used to tout its ambition to be one of the world’s top ten economies by 2023, a hundred years since the founding of the Turkish Republic.

No one speaks much about that target any more. But now there is more than geopolitical hubris at stake. Participants in the Turkish economy are hurting. Has the president been in power for so long that no one dares advise him to retreat? Erdoğan’s stance on interest rates is not new, but policymakers’ willingness to act on it seems to be. The last finance minister excused himself from office a few weeks ago. Whatever qualities his replacement possesses, tact is not among them: at a recent press conference he said that working people stood to lose merely their incomes, while his entire personal fortune was at risk. ‘What happens if the strategy doesn’t work?’ one reporter asked. ‘If it doesn’t work I’ll be sad,’ the minister said. By doing the same thing over and over and expecting different results, the central bank has pioneered a new definition of sadness. Last Thursday the central bank delivered a fourth consecutive monthly cut, leaving those with lira savings 50 per cent poorer since the easing cycle began.

A weaker lira has the potential to help people who make their money from exports – including tourism, if there weren’t a pandemic – but it hurts everyone who relies on imports, which is everyone who moves. In the hope of reverse-engineering confidence in the lira, the government has been selling huge piles of dollar reserves. But the markets have long been wise to this gimmick, and all these expensive interventions have done is squander foreign currency reserves on brief intraday rallies, a scratch on a chart which later losses erase.

The president has taken to calling for ordinary Turks to join him in this endeavour by cashing in their savings, a demand that seems bound to impoverish true believers. It’s an unusual misstep from a leader long famed for his electoral savvy. His party came to power twenty years ago on the back of an economic crisis that swept away the old guard – an economic crisis that taught Turks to convert their spare cash, where they have it, into the foreign currency they’re now being told to cough up.

All this misery has emboldened the opposition, though it’s unclear if they will be able to gain traction in a media landscape wholly captured by the government. Citizens struggle to inform themselves about the economic crisis from the news. Turning to one of the main economic channels as the lira smashed new records on Friday they would have found only a programme on downhill skiing; an oblique metaphor at best. But they can see what’s happening in the price of bread, which has risen to a height too dear for many.

A new exhibition at the president’s palace features more than eight hundred pairs of the scissors he’s used to inaugurate events over the years, each one meticulously labelled with a short length of ribbon still attached. Its unofficial title is death by a thousand cuts.