President Erdogan’s party on 31st March 2019 suffered a set back of losing control of key mayoral races in the municipal polls in Turkey. While Erdogan’s party AKP won nationally with 15 point ahead over the opposition Republican’s People Party, it is on verge of loosing key races in Istanbul & Ankara; i.e. commercial as well as political nerve center of Turkey which is a major embarrassment for President Erdogan. Even the Kurdish parties in southern Turkey have gained back from the losses last time around. The most pressing issue hurting Turkey & Erdogan is recession in Turkish economy with inflation touching 10%, while Turkish Lira lost 28% of its value in 2018 and continues to fall as we write.
The Bank of Turkey watchdog BRSA launched probe into JP Morgan after one of its currency strategy report suggested shorting Lira. This is in aftermath of when Turkish Lira tumbled more than 4% against the US Dollar. President Erdogan reacted sharply stating that “these ‘Economic Terrorists’ will be dealt with and that they will pay a heavy price…”. A JP Morgan report in march mid said it saw a high risk that Lira would decline after local elections on 31st March. This lead to Lira’s sharp decline that has made Turkey blow away one third of its foreign reserves to prop up Lira & making it difficult for Turkish firms to pay loans taken in US Dollars. Cost of borrowing Lira has soared to 330% up from 22% highest since 2001 as Turkish banks stopped lending Lira to foreign counterparts.
Thus the JP Morgan’s speculative prophetically saw the results of polls in Turkey which lead to shorting of Turkish Lira, hampering foreign lending and making an already recession for Turkish economy more worse. The power play by Wall Street through financial markets is a time tested trick, ostensibly this time used as Turkey was increasingly getting cosy with Iran & Russia on Syria and Assad much to the ire of the Gulf Arab monarchies, Israel & United States. With Turkish efforts to extradite Gulen turning a cropper with US Establishment, Erdogan has doubled down on military deals with Russia like S-400 that has massively irked US MIC who is rethinking on giving F-35 jets to its NATO ally. Turkey is slowly beginning to ramp up ties with Pakistan & China notwithstanding the treatment to Uighur Muslims. The loss of Erdogan’s party in Turkish polls will further accelerate the formation of China-Pakistan-Turkey (CPT) Axis amid Wall Street’s power play as we had forecasted in our book “The New Global Order” in the year 2016.