Last week the public agenda in Turkey has been busy with three main topics.
First was the normalization process that began between Turkey and Armenia.
Second were the Vatan Party Chairman Dogu Perincek’s statements regarding the possible membership of some other Eurasian countries such as Iran, Russia, China or Tajikistan in the Organization of Turkic States.
Third were the sharp fluctuations of Turkish Lira’s exchange rates, and the government decision to raise the national minimum wage.
Turkish-Armenian normalization process
Turkey and Armenia will appoint special envoys soon to discuss steps to normalize relations, Turkish Foreign Minister Mevlut Cavusoglu said Monday.
Speaking to lawmakers in parliament, Cavusoglu noted that Turkey would also move in coordination with Azerbaijan on the normalization steps with Armenia.
“In the Caucasus, we are making intense diplomatic efforts to build regional peace and prosperity with Azerbaijan,” Cavusoglu said.
“In the coming period, we will start charter flights between Yerevan and Istanbul,” he added.
“We and Armenia will soon appoint special envoys to take steps toward the normalization” of bilateral relations, Turkish Foreign Minister Mevlut Cavusoglu said on December 13th.
Vahan Hunanyan, spokesman for Armenia’s Foreign Ministry, confirmed Cavusoglu’s announcement.
“In this regard, we positively assess the statement of the Turkish Foreign Minister on the appointment of a special representative for the normalization of relations, and confirm that the Armenian side will appoint a special representative for this dialogue,” Hunanyan said in a December 14 statement.
Cavusoglu also said that Turkey will take each step jointly with Azerbaijan, which has given signals that it intends to try to get some of its interests taken into account as its allies in Ankara pursue a deal with Yerevan.
Hunanyan, for his part, mentioned that Armenia is ready for normalization “without preconditions.”
The appointment of envoys would be the most concrete step taken so far to restore relations between the two neighboring states.
Formal ties were severed in 1993, during the first war between Armenia and Azerbaijan, when Turkey unilaterally closed the border in response to Armenians’ capture of territory surrounding Nagorno-Karabakh. The two countries made their most serious attempt to restore ties in 2009, with American and Swiss intermediation, but the effort broke down due to Azerbaijan’s intransigence.
But the results of last year’s war, in which Armenia lost control of the territories it had controlled around Nagorno-Karabakh, provided a new impetus to restore ties.
Various international partners have been encouraging the efforts. In November, Russian Foreign Ministry spokesperson Maria Zakharova said that Moscow was ready to mediate between Ankara and Yerevan and that normalization “would undoubtedly contribute to the improvement of the general situation in the region.”
The United States also has been pushing the effort. During an October meeting in Rome, President Joe Biden urged his Turkish counterpart, Recep Tayyip Erdogan, to open the border with Armenia, Bloomberg reported, citing an unnamed “senior Turkish official.”
Yerevan has long been in favor of reopening ties, particularly given the economic losses it suffers from the closed border with its large neighbor. But following the defeat in last year’s war, in which Turkey provided substantial aid to Azerbaijan, many in Armenia are wary of any overtures toward Ankara.
Government officials have stressed the positive that restoring relations could bring.
“It is about starting diplomatic relations between Armenia and Turkey. This doesn’t mean that Armenia is giving up its key state interests,” said Eduard Aghajanyan, a member of parliament from the ruling Civil Contract party, told journalists.“On the contrary, we are convinced that Armenia’s state interest is to establish diplomatic relations with Turkey. (…) There is simply no alternative but to establish good neighborly relations with neighboring countries.”
Despite the high-level steps toward rapprochement, ties have remained mostly frosty. Armenia’s parliament is currently considering another extension to a ban on Turkish imports instituted after last year’s war. And Turkish airspace remains closed to Armenian flights after Ankara blocked it in August 2020.
Dogu Perincek’s statements on the potential membership of Eurasian countries to the Turkic Council
The Chairman of the Vatan Party, Dogu Perincek presented a 10-point proposals for the Organization of Turkic States, formerly known as the “Turkic Council”, during a conference organized by the journal “Theory”. Participants of the conference have also made some important recommendations for the Organization, while calling for friendly and neighboring countries to join it.
Stating that the Organization of Turkic States is an opportunity against US aggression, Moscow University Professor and United World International expert Dr. Mehmet Perincek stated that the Organization should also strengthen its fight against the FETO terrorist organization, which is still operating among the member states. Mehmet Perincek also stressed the importance of the Turkish Republic of the Northern Cyprus for the organization.
“TRNC is at the frontlines of the Organization of Turkic States. The security of the TRNC means the security of Uzbekistan, Turkmenistan, Kyrgyzstan and Azerbaijan. We also need to be more active on the issue of Zengezur Corridor. Crimean Tatars and Turkic communities in China can also be invited to this organization under observer status. This can help address the many questions we have in mind.”
Vatan Party Representative in China Adnan Akfirat stressed the importance of the relationship between the members of the Organization of Turkic States with the Shanghai Cooperation Organization and stated:
“All members have close relations with the Shanghai Cooperation Organization. They are also all part of the Belt and Road Initiative. There is a huge gap between the relationship established by the other members of the Organization, and relations between Turkey with China and Russia. Therefore, mistakes should be corrected with these countries. It is necessary to include Iran in the organization as well. Iran’s membership will have incredible positive impacts in the development of the Organization of Turkic States.”
Finally in his speech, Vatan Party Leader Doğu Perinçek presented 10 proposals for the Organization of Turkic States:
1- Our unity is directed against the United States and the Western imperialism. It will also serve the multipolar world order, while weakening the grasp of imperialism.
2- This unification should serve the unity of Eurasia. The goal must not be to divide the Eurasian geography. It should not target our neighbors. We must also take the security and stability of states such as Russia, China, Afghanistan, Iran, and Tajikistan into account. This organization is not based on ethnic borders and our allies can participate. Founding charter clearly states that. Russia, China, Afghanistan, Iran, Tajikistan should also be included in this union in one way or another.
3- Organization of Turkic States must be decisive against separatist and fundamentalist terrorism. FETO is especially important in this regard since FETO has direct ties to the US government. The Vatan Party must also spend more efforts to clean up the remnants of FETO within the Organization of Turkic States.
4- We must encourage the Organization of Turkic States for full membership in the SCO. Turkey should also be a member of it.
5- We must intensify our efforts for the diplomatic recognition of the TRNC. It is necessary to complete the Eastern Mediterranean policy by combining it with the policy of recognizing Crimea and Abkhazia. I believe that the TRNC will eventually unite with Turkey. I do not think that the TRNC will stand on its own feet economically. It needs to be united with Turkey.
6- Hungary must obtain full membership in the Organization of Turkic States.
7- The safety of the energy pipelines is important. These lines pass both Europe and Africa. Our policies should align with that.
8- There is a territorial continuity between the Organization of Turkish States, only a small bottleneck remains between Turkey and Azerbaijan. That continuity must be maintained.
9- The emphasis on a common language is important, but it is also important to develop the individual languages. Turkic languages such as Kyrgyz or Kazakh should also be developed.
10- Turkey has a leading role in this organization. All members have old state traditions, but Turkey has the biggest heritage among them. This also puts Turkey in a different role Turkey is a country that has been in a revolution in the last 200 years. Therefore, Turkey’s traditions provide it with an important role as well. But of course we should not come up with these claims to the common platforms. This brotherhood should not be a game of superiority. We need to have policies that condemn such claims of superiority, too.
Fluctuations of the Turkish Lira and the raise of minimum wage
After continuous decreases on interest rates in Turkey, its currency has been de-pricing in a record value.
President Erdogan has been clearly against high interest rates, and has repeatedly stated that it is against their both economic beliefs and against the moral-religious values.
The Turkish Lira was highly volatile on Tuesday as traders digested measures proposed by President Tayyip Erdogan and the Turkish central bank to guard local currency savings against precisely such swings.
The lira fell as much as 8.6% on Tuesday and rose as much as 18.5% on its second-largest daily range, behind Monday’s record swings. It closed the session up 6% at 12.4 per dollar.
One-month implied volatility on the lira, or expected price swings, jumped to the highest on record, reflecting uncertainty about the scheme.
On Tuesday, the Turkish central bank said it would support the conversion of foreign currency deposit accounts into lira deposit accounts to further encourage reverse dollarization.
“In the event that resident real persons, who already had an FX deposit account … convert their accounts into Turkish lira time deposit accounts will be eligible to benefit from the incentive,” the central bank said.
More than half of locals’ savings is in foreign currencies and gold, according to central bank data, due to a loss of confidence in the lira after years of depreciation. At its low, the lira was down some 60% on the year.
Erdogan introduced a series of steps on Monday that would shift the burden of a weakened currency to the Treasury and encourage Turks to hold lira rather than dollars.
The government’s initial support for the currency sent the lira soaring some 25% on Monday, albeit in the lowest volume of trading for any day so far this year.
Analysts and bankers warned that if the lira’s rally reverses it could further stoke already high inflation and weigh on the deficit. read more
Finance Minister Nureddin Nebati said on Tuesday that legal proceedings against speculative market comments made on social media were initiated after the recent currency volatility.
“We will never allow such treason,” he said.
Presidential adviser Cemil Ertem told Reuters the moves had removed the need for individual investors’ dollar demand, adding it was “a very important paradigm shift” for Turkey’s economy.
While the government called the lira’s rebound on Monday a major win on policy, economists have said Erdogan’s economic program based on low interest rates is reckless and expect inflation, currently above 21%, to blow through 30% next year.
Turkey’s main BIST 100 stock index (.XU100) fell 8% on Tuesday.
“Turkey will no longer be a country dependent on imports,” Erdogan said in a statement earlier on Monday.
Speaking at a press conference after the Cabinet meeting at Ankara’s Presidential Complex, the president underlined that Turkey is adamant on its new economic model that prioritizes lower interest rates, high employment numbers and more investments.
Erdogan also emphasized that Turkey is committed to the free market economy.
“Turkey neither has any intention nor need to step back from the free market economy and exchange regime,” he said.
Turkey will also continue keeping its promise of protecting the Turkish public from the high cost of living, Erdogan also said.
No Turkish citizen will have to move their savings from the Turkish lira to a foreign currency, the president further declared.
Erdogan also said that the Turkish government is presenting a new financial alternative for citizens’ savings to soothe their worries over exchange rates-which have reached record highs in recent days.
“For exporting companies that find it difficult to present prices due to fluctuations in foreign exchange rates, they will be given an exchange rate future through the central bank,” he explained.
He also said stoppage (deductions) on companies’ dividend payments will be lowered to 10%.
The state subsidy rate on the personal pension system will be raised significantly from 5% to 30% in order to boost its appeal, he underlined.
“With lower interest rates, we will see inflation go down in a couple of months,” he added.
Recently, Erdoğan also said that he lowered Turkey’s inflation to 4% before and pledged to do it again, as the country grapples with 21% inflation and soaring prices amid the lira’s fall against the dollar.
On Thursday President Erdogan also announced Turkey is raising the minimum wage by 50.4% as of January 1st 2022.
The net minimum monthly wage will be 4,250 Turkish liras ($375), the president said in a televised address in Ankara. “The increase in the minimum wage is 50%, the highest raise in the last 50 years.”
The monthly minimum wage for 2021 was TL 2,826.
He added: “I believe that, with this increase, we have shown our determination not to crush our employees in the face of price hikes.”
Erdogan also announced that starting next year, Turkey will abolish the income and stamp tax collected on the minimum wage.