Good riddance! We finally got through this one too. Problem in real sector however remain unchanged. There are more and more companies going bankrupt or requesting debt restructuring. Those who were expecting that exchange rates would start falling sharply turned out to be utterly wrong. I will say it again this one warning I have been giving for years: “Those having foreign currency debt or repayment should grab the opportunity whenever exchange rates go down…” Although some believe that the US-Turkey relations will start to going back to normal after today, I happen to disagree with this particular expectation. Let me tell you why.
US-Saudi relations used to be great until Trump has started disputes and now with this Khashoggi incident, in which Saudi Crown Prince might be involved to, it is just a matter of time that Trump start applying economic sanctions against Saudi Arabia. The Saudis made a big mistake. They got involved in an evident crime while the whole world is watching. However, it is quite interesting that the US overlooked a number of wrong things the Crown Prince has done so far but chose to speak when this Khashoggi incident happened.
Never fully trust in America to the degree that you will lose control. Similarly, it would just be unrealistic to think that the US government will suddenly change its ways after the release of the pastor Brunson who has been doing all the wrong things since Obama came to power and made his hostility ver clear during the nefarious failed coup attempt of July 15. Both parties have violated diplomatic rules and made some regrettable statements. US Vice President threatened the Turkish Government and its members on live broadcast. This sort of thing do not get easily forgotten. Besides, it is very well known that Turkey has been imposing higher tariffs on many global brands, particularly the American ones, since August 2014. In the meantime, US antidumping actions against Turkish steel are still in effect. Neither party has given any sign to soften strict customs practices. In short, we all are curious to see what the US will do now about the Halkbank trial and Feto on the eve of a possible reconciliation between the two countries.
“Can the release of pastor Brunson help things get better?”
My answer is clear: No. Because Turkish real sector is still struggling with problems. More and more companies are going bankrupt each day. Business groups, that we never would think of, are asking for debt restructuring while some of them are just being opportunist since they request for short term debt restructuring even though they are not financially struggling. It is now too little too late to tip the scales although USD/TRY starts sharply falling. Banks need to collect debt to have fresh money. However, debt restructuring and government-led debt relief are sabotaging banks’ efforts for collecting debt. As far as I understand, there are no news about this so-called fund that the Administration would bring in from abroad. I guess we will have to continue to paddle our own canoe. We are about to enter a period where asset prices will decline and inflation debates will be everywhere.
Turkey will never be able to overcome these problems unless the Government comes up with efficient and effective ideas for cost-reduction in manufacturing and help the manufacturers offer value-added goods and services. Besides, only those who can think outside the box can come up with extraordinary, groundbreaking solutions. In order to do that, people must be given the chance to think and create freely. We shall never overcome major challenges unless we quit telling people what to do.