Turkey has recently faced a series of numerous economic and financial challenges which the AKP government appears unable to successfully handle: the external debt of the private sector has reached US $210,5 billion, amounting to 30% of the country’s GDP; by the end of 2016, the lira will have depreciated against the dollar by 60% since 2013; and the foreign currency reserves of the country are also in decline.
According to many economists
, the primary problem of the Turkish economy is the uncertainty over the political and economic perspectives of the country. The wide-ranging crackdown on allies and supporters of the Gulen movement, ongoing discussions over a shifting political system towards presidentialism, growing controversies with the West and the victory of Donald Trump in the US presidential elections that might drastically affect global economic policies have complicated the economic situation of the country and brought it to the verge of an economic crisis.
The counter-crisis initiatives of the Turkish leadership have paradoxically furthered the severity of the situation. President Erdogan recently called Turkish citizens and companies to convert their U.S. dollars to lira, a move,
experts argue that
, “may help to shore up the Turkish currency, but it does not make a great deal of purely commercial sense.”
Moreover, President Erdogan has also announced that Turkey should switch into local currencies in trade with countries that are willing to do so. He mentioned Russia, Iran, and China as the major candidates to whom Turkey would propose this suggestion.
This week, Barak Albayrak, Minister of Energy and Natural Resources, stated that Turkey has already started negotiations with energy-exporting countries on paying in local currency for the import of natural gas. As Azerbaijan is one of three countries (along with Russia and Iran) from which Ankara imports natural gas, a heated debate has already begun on this possibility amongst experts and politicians in Azeraibaijan which annually exports 6 billion cubic meters of natural gas to Turkey.
Although it is not known yet if the Azerbaijan government has received such an offer from the Turkish authorities, Azerbaijani politicians have already voiced their concerns about Turkey’s plans. The MP Fazil Mustafa on a
facebook post
pointed out the serious risks that selling natural gas in local currency might bring about:
“90% of Azerbaijan’s exports are tied with oil and gas products. Therefore, distancing from the euro and dollar in any way could turn out very problematic for the country.”
Nor are Azerbaijani experts optimistic about this possibility. Caspian Barrel, an analytical agency,
pointed out
the unlikelihood of Erdogan’s plan:
“Oil and gas exports are the only source of inflow of foreign currencies into Azerbaijan. This was exactly why the decline in the prices of these goods dramatically depreciated the Azerbaijani national currency. Under these circumstances, to what extent would it be reasonable to switch into lira in energy trade with Turkey?”
Experts
argue that
escaping from the dollar in trade does not have the potential to help the Turkish economy, unless this trend gains momentum on a global scale. Under the existing circumstances, however, this would appear more to be a populist, political maneuver of the AKP government amidst an increasingly threatening economic quandary.
