Erdogan economics

Erdogan's unorthodox economic policy [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( The United Arab Emirates’ de facto ruler heads to Turkey today on the highest level visit in years. It’s a welcome distraction for President Recep Tayyip Erdogan as he surveys the wreckage of his unorthodox economic policy. The Turkish lira is suffering its longest losing streak in 20 years, prompting the central bank to say the currency’s slide was “completely detached from economic fundamentals.” Erdogan’s detractors would say that’s a good way to describe the president himself. Key Reading - [Erdogan’s Lira Experiment Tests His Grip on Turkey]( - [How Erdogan’s Unorthodox Views Rattle Turkish Markets: QuickTake]( - [Rich Cash In as Erdogan’s War on Interest Rates Hits Supporters]( - [UAE’s De Facto Ruler to Visit Turkey as Business Ties Grow]( A self-styled “enemy of interest rates,” Erdogan clings to the belief that high borrowing costs are the cause of inflation rather than a brake, and has evoked Islamic teachings prohibiting usury to justify his stance. He’s betting on lower rates to turbo-boost growth and revive his flagging popularity ahead of 2023 elections. But his defense of a policy that defies mainstream economics propelled the lira into free-fall yesterday. Central bank veterans and Erdogan’s political rivals warn that inflation — already running at 20% — is bound to spiral higher. While credit-fueled growth before elections has worked for Erdogan in the past, the accumulating impact of that policy, plus the damage wrought by the pandemic, means the potential social costs are much higher this time. Yes, improved relations with the UAE could unlock billions of dollars in trade and investment for Turkey. But that’s a longer term prospect. Runaway food inflation and skyrocketing rents are squeezing those at the bottom right now — including Erdogan’s traditional base. Polling groups say the latest tumult will push undecided voters into the hands of the opposition, even to the point of no return for Erdogan’s AK Party. — [Sylvia Westall]( An employee hands 100 Turkish lira banknotes to a customer at a foreign currency exchange bureau in Istanbul. Photographer: Kerem Uzel/Bloomberg [Click here]( to see our Bloomberg Politics website and share this newsletter with others too. They can sign up [here]( Global Headlines Berlin breakthrough | Olaf Scholz is set to succeed Angela Merkel as German chancellor after agreeing on a platform for government with the Greens and the liberal Free Democrats. Read [here]( how the three-way tie-up with the Social Democrats is unprecedented at the national level. Details of their shared policy program will be released later today, putting Scholz on course to be sworn in on Dec. 6. Risky quip | JPMorgan Chase CEO Jamie Dimon is in the news after [joking]( his bank is likely to outlast China’s Communist Party. You can read here how much [exposure]( the U.S. bank has to the world’s second-largest economy — with ambitions to expand further. - China is [preventing]( public access to shipping location signals because of national security concerns, the Financial Times reported. - The White House included Taiwan among the 110 invitees to its upcoming democracy summit, a move intended to show [solidarity]( with a key regional partner but which also risks angering China. - [Read]( how China’s top movie ever is a war epic about a U.S. defeat. Bloomberg’s Covid Resilience Ranking has [tracked]( the best and worst places to be during the pandemic for a year now and one thing is clear: Past performance is no guarantee of future success — or failure. The winners and losers each month have fluctuated, with the onset of vaccines, the emergence of the delta variant and the recent reopening push being key moments in the journey. First woman | Sweden approved its [first]( female prime minister today, 100 years after women in the country known for its egalitarian foundations were first able to exercise full voting rights. Magdalena Andersson, who has been finance minister since 2014, won a narrow vote in parliament following a last-minute deal with the ex-communist Left Party. Magdalena Andersson. Photographer: Mikael Sjoberg/Bloomberg Best of Bloomberg Opinion - [Winter Is Coming for Europe’s Pandemic Optimists: Lionel Laurent]( - [Team Biden Is Talking Itself Into a Hole With China: Hal Brands]( - [Billions of Dollars Won’t Fix All the Shortages: Anjani Trivedi]( Appeal for calm | Read [here]( why Britain’s biggest business lobby group is urging Boris Johnson’s government to back down in its dispute with the European Union over Northern Ireland, amid tensions after the U.K. threatened to suspend parts of the Brexit divorce deal the prime minister signed with the bloc. - A Bloomberg News [review]( of almost half of the loans granted under the U.K. government’s Coronavirus Business Interruption Loan Scheme shows that more than 130 million pounds went to companies with questionable claims. Dark days | South Africa’s energy crisis looks set to persist for at least two more years, with operational problems at the monolithic state power utility showing no signs of easing. [Paul Burkhardt]( explains [here]( how plans to add new generation capacity are ensnared in legal wrangling and red tape after years of corruption left Eskom with billions of dollars of debt and decrepit coal-fired plants. News to Note - The top U.S. and Russian military officers [spoke]( yesterday as tensions remain high over Moscow’s deployment of as many as 100,000 troops on the border with Ukraine. - Mexican President Andres Manuel Lopez Obrador performed a [U-turn]( and revoked his nomination of Arturo Herrera, the former finance minister, as governor of the central bank. - An Indian parliamentary panel recommended setting up a new [regulator]( to oversee social media platforms like Twitter and Facebook. - Meanwhile, Indian Prime Minister Narendra Modi’s government is preparing a bill to regulate [cryptocurrencies](. And finally … Much like a Bollywood potboiler, a bitter family feud threatens to [unravel]( a century-old British-Indian business empire. For decades the family-run Hinduja group stuck to the motto: “Everything belongs to everyone and nothing belongs to anyone.” But, as [Hugo Miller]( and [Jonathan Browning]( report, cases are now piling up in courts in London and Switzerland as one part of the family fights for what it claims is its share amid suggestions of misogyny. The London mansion belonging to the Hinduja brothers where they hold their annual star-studded Diwali bash. Photographer: Chris Ratcliffe/Bloomberg Like Balance of Power? [Get unlimited access to Bloomberg.com](, where you'll find trusted, data-based journalism in 120 countries around the world and expert analysis from exclusive daily newsletters. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022