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ISTANBUL (Reuters) - President Tayyip Erdogan said on Tuesday that Turkey would boycott electronic products from the United States, retaliating in a row with Washington that has helped drive the lira to record lows.

The lira has lost more than 40 percent this year and crashed to an all-time low of 7.24 to the dollar on Monday, hit by worries over Erdogans calls for lower borrowing costs and by worsening ties with the United States, a major NATO ally.

The liras weakness has rippled through global markets. Its drop of as much as 18 percent on Friday hit European and U.S. stocks as investors fretted about banks exposure to Turkey.

On Tuesday the lira recovered some ground, trading at 6.3300 to the dollar at 1947 GMT, up some 9 percent from the previous days close and having earlier touched 6.2995.

It was supported by news of a planned conference call on Thursday in which the finance minister will seek to reassure investors concerned by Erdogans influence over the economy and his resistance to interest rate hikes to tackle double-digit inflation.

Erdogan says Turkey is the target of an economic war, and has made repeated calls for Turks to sell their dollars and euros to shore up the national currency.

Together with our people, we will stand decisively against the dollar, forex prices, inflation and interest rates. We will protect our economic independence by being tight knit together, he told members of his AK Party in a speech.

The United States imposed sanctions on two Turkish government ministers over the trial on terrorism charges of U.S. evangelical pastor Andrew Brunson in Turkey, and last week Washington raised tariffs on Turkish metal exports.

State Department spokeswoman Heather Nauert said Turkeys economic woes were not started by U.S. sanctions.

Economists would certainly tell you that what is happening in Turkey goes far beyond the United States recent policies and imposition of various policies, Nauert told a press briefing.

The White House said on Tuesday President Donald Trump was frustrated that Turkey had not released Brunson.

The president has a great deal of frustration on the fact that Pastor Brunson has not been released as well as the fact that other U.S. citizens and employees of diplomatic facilities have not been released, White House Press Secretary Sarah Sanders told a briefing.

A White House official said the United States was warning more economic pressures may be in store for Turkey if it refuses to release Brunson.

It was unclear whether Erdogans call for Turks to sell dollars would be widely heeded, but a Turkish news agency said traders in Istanbuls historic Eminonu district converted $100,000 into lira on Tuesday.

Chanting Damn America, they unfurled a banner saying we will win the economic war, the Demiroren agency said. Amid calls to burn the dollars, the group headed to a bank branch where they converted the money, it said.

Erdogan also said Turkey was boycotting U.S. electronic products. If they have iPhones, there is Samsung on the other side, and we have our own Vestel here, he said, referring to the Turkish electronics company, whose shares rose 5 percent.

His call met a mixed response on Istanbul streets.

We supported him with our lives on July 15, shopkeeper Arif Simsek said, referring to a failed 2016 military coup. And now we will support him with our goods. We will support him until the end.

But shopkeeper Umit Yilmaz scoffed. I have a 16-year-old daughter. See if you can take her iPhone away ... All these people are supposed to not buy iPhones now? This cant be.

Erdogan said his government would offer further incentives to companies planning to invest in Turkey and said firms should not be put off by economic uncertainty.

If we postpone our investments, if we convert our currency to foreign exchange because theres danger, then we will have given in to the enemy, he said.

Although the lira gained some respite on Tuesday, investors say measures taken by the central bank on Monday to ensure liquidity failed to address the root cause of lira weakness.

What you want to see is tight monetary policy, a tight fiscal policy and a recognition that there might be some short-term economic pain - but without it theres just no credibility of promises to restabilize things, said Craig Botham, Emerging Markets Economist at Schroders.

Dollar-denominated bonds issued by selected Turkish banks continued to fall on Tuesday, although sovereign bonds steadied.

U.S.-Turkish relations have been hurt by a series of issues from diverging interests in Syria, Ankaras plan to buy Russian defense systems and the detention of pastor Brunson.

U.S. national security adviser John Bolton on Monday met Turkeys ambassador to the United States to discuss Brunsons detention. Following the meeting, U.S. officials have given no indication that the United States has been prepared to give ground in the standoff between the two countries leaders.

Ankara has repeatedly said the case is up to the courts and a Turkish judge moved Brunson from jail to house arrest in July.

Brunsons lawyer said on Tuesday he had launched a fresh appeal to a Turkish court for the pastors release.

Additional reporting by Ece Toksabay in Ankara, Ezgi Erkoyun in Istanbul and Steve Holland and Lesley Wroughton in Washington; writing by Humeyra Pamuk and Dominic Evans; editing by Gareth Jones and James Dalgleish

See original here:
Erdogan says Turkey will boycott U.S. electronics, lira ...

President Recep Tayyip Erdogan vowed to boycott iPhones in a demonstration of defiance as the U.S. held firm to its demand that Turkey release an evangelical pastor and Turkish executives called for action to bolster the lira.

Erdogan said the nation of 80 million people would stop buying American electronics, condemning the "explicit economic attack" against his country. The lira lost a quarter of its value this month as Donald Trump doubled tariffs on Turkish steel and aluminum imports and slapped sanctions on two ministers. It rebounded on Tuesday as Turks sold dollars.

"There is a cost for those who are plotting the operation against Turkey, Erdogan said in the first of two speeches in Ankara, without specifying when the boycott would start or how it would be enforced. Singling out the iPhone, he suggested Turks buy Samsung Electronics Co. or locally made Venus Vestel smartphones instead.

While even a widespread Turkish boycott would do little to dent U.S. economic interests, it shows Erdogan refusing to give in to market turmoil thats pushed borrowing costs to record highs and threatens to descend the nation into a financial crisis.

Erdogans boycott is reminiscent of the decision by President Vladimir Putin to ban food imports from countries that slapped sanctions on Russia in 2014 over its annexation of Crimea. The difference is that unlike Russia, the U.S. and Turkey are NATO members. Erdogan warned that the U.S. is putting decades-old alliances at risk and pushing Turkey to seek allies elsewhere.

While diplomatic tensions rage, the currency rallied for the first time in a week as Turks cashed in dollar savings to take advantage of the huge slump in the local currency. Speculation is also growing that Turkish policy makers will heed calls from corporate and banking executives to raise interest rates to stem the rout. The lira jumped 5.9 percent to 6.5028 per dollar by 6:03 p.m. in Istanbul.

Bonds also recovered, with the yield on 10-year notes falling 132 basis points to 21.37 percent. The cost of insuring the nations debt against default fell off 10-year highs.

The latest attack on the economy showed that the dollar is no longer a "trustworthy" currency and is instead being used as a tool for political punishment, Finance Minister Berat Albayrak said at a conference in Ankara he as attending alongside Erdogan. "Were going to continue to take steps to protect the lira," he said.

Tensions between the two NATO allies have intensified amid a dispute over the detention of Andrew Brunson, whom Turkey accuses of aiding a failed coup. Trumps top national security aide warned Turkeys ambassador on Monday that the U.S. has nothing further to negotiate until Brunson is freed, according to two people familiar with the matter.

Policy makers need to adopt a series of measures so that the situation doesnt make permanent damage to the real economy," the Union of Chambers and Commodities Exchanges of Turkey and the Turkish Industry and Business Association said in a joint statement.

They called on the government to cut spending, improve ties with the European Union, bring to an end the spat with the U.S. and chart out a clear plan to bring inflation -- which soared to a 15-year high of almost 16 percent in July -- back to single digits permanently.

A similar plea came from the nations banks, including the second-largest by assets, Turkiye Garanti Bankasi AS. While Turkeys central bank has raised lending rates by 500 basis points this year to 17.75 percent, it hasnt acted since the latest turmoil began with U.S. sanctions on the interior and justice ministers on Aug. 1.

Something has to be done about interest rates, Ali Fuat Erbil, Turkiye Garantis chief executive officer, said in an interview aired by NTV. Besides fiscal discipline, monetary tightening is the remedy. Is there need for that? Yes there is.

While Erdogan didnt address their concerns in his speeches on Tuesday, he suggested Turks have already begun responding to his call to convert foreign exchange into lira because it would be tantamount to "surrendering" if they did otherwise.

Citizens tend to have bank accounts in various currencies so how they move their money does have a meaningful impact on the liras trajectory. Local individuals and businesses sold an estimated $50 million to $60 million of foreign exchange on Tuesday morning, according to an Istanbul-based currency trader who declined to be named as they were not authorized to speak to the media.

With assistance by Asli Kandemir, and Constantine Courcoulas

(Updates with finance minister comment in eighth paragraph.)

Original post:
Erdogan to Boycott iPhones as Turkeys Feud With U.S ...

Aug. 13, 2018 3:30 p.m. ET

ISTANBULTurkish authorities are blaming fake news for the recent plunge in the national currencys value, with President Recep Tayyip Erdogan condemning terrorists haunting social networks and disseminating alleged disinformation.

The lira shed as much as 10% on Monday and is down more than 40% this year on heightening concerns that the country wont be able to cope with rising borrowing costs and has yet to resolve a protracted dispute with its longtime military ally, the U.S.

Mr. Erdogan, who gained vastly expanded executive powers when he won re-election in June, has largely pinned the blame on the U.S., accusing Washington of engineering an economic war on Turkey.

But on Monday, though, he redirected his ire.

There are economic terrorists on social media, Mr. Erdogan told an audience of Turkish ambassadors gathered in Ankaras presidential palace. They are a genuine network of treason.

The president said spiteful social-network posts had been spread in a bid to cause panic by saying authorities were preparing to limit bank withdrawals. The government said it had no plan to introduce capital controls.

Also on Monday, Turkeys Interior Ministry said it would take legal action against owners of 346 social-media accounts identified as having been used to express views that had harmed the lira, the state-run news service, Anadolu Agency, reported.

Free-speech activists said Mr. Erdogans accusations had reinforced their fear that the government aimed at stifling dissent.

We are concerned that the legitimate role of critical journalism is being targeted, said Erol Onderoglu, the representative of Reporters Without Borders in Turkey.

Some economists and analysts said part of Turkeys woes stem from widespread and growing investor aversion to emerging markets. But they say the country has problems of its own, notably a central bank they no longer deem capable of acting independently.

With the bulk of Turkish media in the hands of owners loyal to Mr. Erdogan, Turkish people have been exposed to few explanations other than Mr. Erdogans for the countrys financial difficulties .

On Monday, pro-government daily newspaper Star ran a banner headline saying: We saw what game was at play and we challenged it.

Write to David Gauthier-Villars at David.Gauthier-Villars@wsj.com

Read more:
Erdogan Shifts Blame for Turkey's Woes to Social Media

But a new election is needed to trigger those powers, and if Erdogan wins, Turkey will see an even more muscular strongman at its helm.

Pretty good. Erdogan is leading in the polls -- but in Turkish politics, nothing is a sure bet. Erdogan has some clear advantages. A government crackdown on the media following an attempted coup in 2016 has meant that Erdogan and his ruling Justice and Development Party (AKP) dominate the airwaves and get the most ink. Vocal critics have been imprisoned, and the President has appointed pro-government officials to the election commission.

What are the key issues?

The economy: Erdogan has long relied on his economic achievements to win elections, but that won't be so easy this time around. The Turkish lira has hit all-time lows, inflation is on the rise and the robust growth of recent years is expected to slow dramatically.

The Kurds: The Turkish army has been fighting the separatist Kurdistan Workers' Party (PKK), deemed a terrorist organization, for nearly four decades. Erdogan's AKP has ruled out returning to a peace process that collapsed in 2015, and the Turkish military, meanwhile, has intensified assaults on PKK strongholds in Iraq's Qandil Mountains ahead of the vote.

At the same time, Turkey's Kurdish population, particularly in the southeast, is a vital constituency for Erdogan. Their vote tends to split between his AKP and the pro-Kurdish HDP. But the AKP's recent alliance with the nationalist MHP, which takes a hard line against the Kurds, could alienate this key base. If the HDP gains at least 10% of the vote, it will pass the threshold needed to give it a presence in parliament, and that could mean it deprives the AKP of its parliamentary majority.

Syria: The large number of Syrian refugees living in Turkey has also become an election issue. Several parties have said they hope to send Syrians back to their country, though they are careful to say they will do it only after the war is over and they emphasize the importance of peace-building there. Turkey's involvement in the Syrian war, as well as its continued fight with the PKK, has inspired acts of terrorism in the country in recent years, another concern for voters.

Who's in the running for president?

Turkey's story for more than a decade now has centered around Erdogan and his unwavering popularity. Unlike previous elections, this time there are more candidates to choose from, most of whom are promising to preserve Turkey's parliamentary system.

Muharrem Ince

Leading the pack against Erdogan is Muharrem Ince, candidate for the main opposition, center-left Republican People's Party (CHP). He is promising a more independent judiciary, greater personal freedoms and an end to excessive government spending.

He is known for his fiery speeches and for being tough on Erdogan's AKP, bringing a charisma that had been sorely lacking in the CHP for years. His campaign rallies have been colorful -- he is often seen singing and dancing to traditional songs, and he once rode a bicycle on stage as a jibe against Erdogan's excessive spending.

Meral Aksener

Her campaign has been about countering what she has described as AKP's mismanagement of the economy. If she won, Aksener would be the first female president, but not Turkey's first female head of state -- Tansu Ciller was elected Turkey's first prime minister in 1993.

The HDP's Selahattin Demirtas is leading his campaign from prison, where he has been remanded since November 2016 following the failed coup, for what his party calls politically-motivated terror allegations. He is accused of supporting the outlawed PKK. Members of parliament from Demirtas' party have also been jailed or removed from their posts due to alleged terror affiliations.

Demirtas' campaign has focused on improving quality and diversity, and his only public appearance in the campaign period was a 10-minute pre-recorded speech on Turkish state broadcaster TRT, which every candidate technically has the legal right to use. In his speech, a visibly skinnier Demirtas called on Turkish voters to unite against Erdogan, and also criticized the President for threatening to bring back capital punishment after the failed coup.

After the vote, the position of prime minister will be dissolved and all its powers transferred to the president, a role that had traditionally been ceremonial.

One key change is that the president will have the power to issue decrees -- in other words, create laws unilaterally. Erdogan has been able to issue decrees over the past two years only because his government placed the country in a state of emergency following the failed coup. But he may not be able to keep the country in that state for much longer, so the new system would give him a way to retain that power, should he be reelected.

Turkey's executive government will look a lot like the United States'. The president, for example, will have the power to appoint cabinet ministers directly. In the past, only members of parliament were allowed to hold cabinet positions.

The president will also be able to appoint a number of officials to a supreme court board, which is in charge of selecting judges and prosecutors. Controlling that body could mean influence over the courts.

Excerpt from:
Turkey elections explained: Could Erdogan really lose? - CNN

Unilateral actions against Turkey by the United States will undermine American interests and force Turkey to look for other friends and allies.

By Recep Tayyip Erdogan

Mr. Erdogan is the president of Turkey.

ANKARA, Turkey For the past six decades, Turkey and the United States have been strategic partners and NATO allies. Our two countries stood shoulder to shoulder against common challenges during the Cold War and in its aftermath.

Over the years, Turkey rushed to Americas help whenever necessary. Our military servicemen and servicewomen shed blood together in Korea. In 1962, the Kennedy administration was able to get the Soviets to remove missiles from Cuba by removing Jupiter missiles from Italy and Turkey. In the wake of the Sept. 11 terror attacks, when Washington counted on its friends and allies to strike back against evil, we sent our troops to Afghanistan to help accomplish the NATO mission there.

Yet the United States has repeatedly and consistently failed to understand and respect the Turkish peoples concerns. And in recent years, our partnership has been tested by disagreements. Unfortunately, our efforts to reverse this dangerous trend proved futile. Unless the United States starts respecting Turkeys sovereignty and proves that it understands the dangers that our nation faces, our partnership could be in jeopardy.

On July 15, 2016, Turkey came under attack by members of a shadowy group led by Fethullah Gulen, who leads his organization, officially described by my government as Fethullah Terrorist Organization, from a compound in rural Pennsylvania. The Gulenists tried to stage a bloody coup against my government. On that night, millions of ordinary citizens rushed to the streets out of a sense of patriotism, similar to what the American people undoubtedly experienced after Pearl Harbor and the Sept. 11 attacks.

Two hundred and fifty one innocent people, including Erol Olcok, my longtime campaign manager and dear friend, and his son, Abdullah Tayyip Olcok, paid the ultimate price for our nations freedom. Had the death squad, which came after me and my family, been successful, I would have joined them.

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The Turkish people expected the United States to unequivocally condemn the attack and express solidarity with Turkeys elected leadership. It did not. The United States reaction was far from satisfactory. Instead of siding with Turkish democracy, United States officials cautiously called for stability and peace and continuity within Turkey. To make matters worse, there has been no progress regarding Turkeys request for the extradition of Fethullah Gulen under a bilateral treaty.

Another source of frustration relates to the partnership between the United States and the P.Y.D./Y.P.G., the Syrian branch of the P.K.K., an armed group that is responsible for the deaths of thousands of Turkish citizens since 1984 and that is designated a terrorist group by the United States. According to estimates by the Turkish authorities, Washington used 5,000 trucks and 2,000 cargo planes to deliver weapons to the P.Y.D./Y.P.G in recent years.

My government has repeatedly shared our concerns with American officials about their decision to train and equip the P.K.K.s allies in Syria. Unfortunately, our words have fallen on deaf ears, and American weapons ended up being used to target civilians and members of our security forces in Syria, Iraq and Turkey.

In recent weeks, the United States has taken a series of steps to escalate tensions with Turkey, citing the arrest by the Turkish police of an American citizen, Andrew Brunson, on charges of aiding a terrorist organization. Instead of respecting the judicial process, as I urged President Trump to do in our many meetings and conversations, the United States issued blatant threats against a friendly nation and proceeded to impose sanctions on several members of my cabinet. This decision was unacceptable, irrational and ultimately detrimental to our longstanding friendship.

To convey that Turkey does not respond to threats, we retaliated by sanctioning multiple American officials. Moving forward, we will abide by the same principle: Attempting to force my government to intervene in the judicial process is not in line with our Constitution or our shared democratic values.

Turkey has established time and again that it will take care of its own business if the United States refuses to listen. In the 1970s, the Turkish government stepped in to prevent massacres of ethnic Turks by the Greek Cypriots despite Washingtons objections. More recently, Washingtons failure to grasp the seriousness of our concerns regarding national security threats emanating from Northern Syria resulted in two military incursions that cut off the so-called Islamic States access to NATOs borders and removed the Y.P.G. militants from the city of Afrin. As in those cases, we will take necessary steps to protect our national interests.

At a time when evil continues to lurk around the world, unilateral actions against Turkey by the United States, our ally of decades, will only serve to undermine American interests and security. Before it is too late, Washington must give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives. Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies.

Recep Tayyip Erdogan is the president of Turkey.

An earlier version of this article misstated details on the placement of Jupiter missiles in Turkey. In 1962, the Kennedy administration negotiated the removal of Soviet missiles from Cuba by removing Jupiter missiles already based in Italy and Turkey. It is not true that during the Cuban missile crisis, Turkey agreed to the initial placement of the Jupiter missiles.

Link:
Opinion | Erdogan: How Turkey Sees the Crisis With the U.S ...