Lira Strengthens After Erdogan Says Turkish Court Will Decide Pastor’s Fate

Despite President Recep Tayyip Erdogan’s promises that another economic boom is just around the corner, Turkey’s people have continued to struggle with the fallout from a rapidly deteriorating economy that has sent rates of inflation above 18% as international investors have scrambled to move their money out of the country.

And while investors have sent the lira higher this week following comments from US Secretary of State Mike Pompeo that Turkey might soon release an imprisoned US pastor, as well as assurances from Erdogan that the Turkish central bank would remain independent, the strongman insisted during an interview with Reuters published Thursday that a Turkish Court would decide the pastor’s fate, walking back his earlier comments.

“This is a judiciary matter. Brunson has been detained on terrorism charges…On Oct. 12 there will be another hearing and we don’t know what the court will decide and politicians will have no say on the verdict,” Erdogan said.

“As the president, I don’t have the right to order his release. Our judiciary is independent. Let’s wait and see what the court will decide.”

Evangelical Pastor Andrew Brunson, who was recently moved to house arrest after being jailed since July, is facing up to 35 years in a Turkish prison on charges that he was working on behalf of exiled cleric Fethullah Gulen. Erdogan has accused more than 100,000 Turks of having illicit ties to Gulen during a purge that has continued since a failed coup attempt more than two years ago.

Erdogan

President Trump helped accelerate Turkey’s economic decline in August when he doubled tariffs on aluminum and steel imports from Turkey, triggering a drop in the Turkish lira that has mostly persisted. Turkey, meanwhile, retaliated by hiking levies on US-made tobacco products, alcohol and cars. The two leaders shared an icy greeting at the UN General Assembly on Tuesday.

Still, Erdogan’s claim that he would abide by the CBRT’s decision to hike its benchmark interest rate by 625 basis points has helped ease investor anxieties that he would seek to intervene with the country’s monetary policy. This helped support the lira in early trade.

Lira

“This was a decision made by the central bank…I hope and pray that their expectations will be met because high rates lead to high inflation. I hope the other way around will happen this time.”

In another effort to bolster Turkey’s flagging economy, Erdogan said he would travel to Germany later this week to try and repair ties with the German government.

In an effort to boost the economy and attract investors, Erdogan will travel on Sept. 28 to Germany, a country that is home to millions of Turks.

“We want to completely leave behind all the problems and to create a warm environment between Turkey and Germany just like it used to be,” Erdogan said, adding that he will meet Chancellor Angela Merkel during his visit.

The two NATO members have differed over Turkey’s crackdown on suspected opponents of Erdogan after a failed coup in 2016 and over its detention of German citizens.

Moving on to other issues, Erdogan reiterated his view that Syrian President Bashar al-Assad must leave power if Syria ever wants to know peace. He said it would be impossible for Syrian peace efforts to continue with al-Assad in power.

Earlier this month, Turkey and Russia reached an agreement to enforce a new demilitarized zone in Syria’s Idlib region from which “radical” rebels will be required to withdraw by the middle of next month.

But Erdogan said the withdrawal of “radical groups” had already started.

“This part of Syria will be free of weapons which is the expectation of the people of Idlib…who welcomed this step,” he said. The demilitarized zone will be patrolled by Turkish and Russian forces.

Close to 3 million people live in Idlib, around half of them displaced by the war from other parts of Syria.

He also reiterated that Turkey would continue buying oil from Iran in defiance of US sanctions. “We need to be realistic…Am I supposed to let people freeze in winter?… Nobody should be offended. How can I heat my people’s homes if we stop purchasing Iran’s natural gas?.”