The Turkish Prime Minister, Recep Tayyip Erdogan, is dealing with a corruption investigation that has highlighted the nation’s economic vulnerabilities.

On December 28 the Finance Minister Simsek sought to reassure investors. He wrote to his 736,000 followers on Twitter and told them that the markets had largely priced in risk, according to Bloomberg News. Finance Minister Simsek has also stated that, “public support for the ruling party remained strong, so “political stability isn’t at stake.” The country remains heavily dependent on capital inflows, and thus on foreign investors’ confidence.

However, domestic political unrest, recession in the euro zone which is still Turkey’s biggest export market and turmoil in Syria and the region could easily dent that confidence.

“One of Turkey’s prized commodities over the past decade — political stability — has been severely undermined at a particularly inopportune time for emerging markets,” stated Nicholas Spiro, managing director at Spiro Sovereign Strategy, in a report that was emailed in. Mehmet Simsek, the finance minister, insists the economy is more robust than it was a decade ago. Still, the Turkish lira has fallen to its lowest level in 18 months according to Business week.

In an emerging economy, political unrest can have a long-term economic impact. Turkey, the world’s 17th largest economy, has structural economic weaknesses which include an overregulated labor market, high minimum wages, a big unproductive informal sector, low female participation in the workforce and poor education.

Anthony Skinner. who is the head of analysis at Maplecroft – a global risk and strategic consultancy in the UK, reported in an email interview that, “The Turkish economy is vulnerable due to its dependency on borrowed money from abroad and the size of the current-account deficit. There is little to suggest that this crisis will be resolved quickly,” and “investors will continue to seek to sell the Turkish lira,” reported Skinner.

Summary:

Turkish insisted and party calm investors over loss of value in Turkish lira. Analysts see further devaluation and currency fluctuation. Finance ministry supports lira and considers stable Turkish government.

Image Credit: www.businessweek.com

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What happens when Western forms of media hit governments like China’s or Turkey’s that hold different values about free speech? In the case of Turkey, they expect companies like Twitter and Facebook to expose people who insult state officials — despite the privacy policies upheld by such companies.

Specifically, Prime Minister Recep Tayyip Erdogan is responding to the heavy demonstrations Turkey has endured this June by aiming to prosecute those who incited it using Twitter and Facebook. It is against the law to insult state officials in Turkey, and an Aksam newspaper says a list of 35 people from Facebook and Twitter has been produced by police to prosecute such people, a list deputy prime minister Bekir Bozdag acknowledged.

“Crimes determined as such by the law don’t change if they are carried out through Facebook, Twitter, or through other electronic means,” said Bozdag, and then added, rather tautologically, “No one has the right to commit crimes under the rule of law.”

Facebook doesn’t want to balk on divulging personal information. “We will be meeting with representatives of the Turkish government when they visit Silicon Valley this week, and we intend to communicate our strong concerns about these proposals directly at that time,” said Facebook, as reported by the Associated Press.

Erdogan has been regarded as increasingly draconian, despite his reputation for being a fighter for democracy, after weakening the overly powerful military of Turkey, which has staged three coups against the government over the years. Nevertheless, their insistence that social media venues such as Twitter are a “menace” and the governments’ claim that the protests are being led by foreign bankers in a conspiracy sounds ominous, to say the least. Their media has also downplayed the protests, which were sparked after peaceful activists were violently attacked on May 31.

Whether their democracy is strong and worthy of joining the EU is still up for debate, but dismissing or attempting to dominate free-speech outlets such as Facebook and Twitter would be a step in the wrong direction.

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