Turkey's currency begins to contract as tyranny takes hold

When we talk about currency collapsing in countries controlled by dysfunctional tyrants, most of the news lately has come out of Venezuela. (And rightly so since I think you currently need a pickup truck to haul around enough cash to buy a can of soup there.) But there are signs that the Turkish lira is beginning to suffer as the regime of President Tayyip Erdogan consolidates power. Reuters is reporting that the lira has lost almost one third of its value since last year and businesses – particularly those representing western interests – are closing up shop and leaving shopping malls looking increasingly like ghost towns.

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Turkish businessman Tekin Acar had contracts to open branches of his leading cosmetics chain in ten new shopping malls this year. A few days ago he canceled nine of them after sharp falls in the lira meant he would struggle to afford the rents.

Turkey’s currency has lost around a quarter of its value since the middle of last year, causing havoc for retailers selling imported goods or paying rent pegged to the U.S. dollar.

Many were already suffering from a sharp economic slowdown and dwindling tourism numbers after a spate of deadly bombings.

Foreign brands in Turkey are also suffering. Dutch clothing chain C&A, Britain’s Topshop, German cosmetics firm Douglas and U.S.-based dietary supplement retailer GNC (GNC.N) have disappeared from shopping centers in recent months.

Retail spaces in some of Istanbul’s biggest malls stand empty.

There’s a bit of wry, ironic humor in the fact that this news is coming out at the exact same time that Erdogan just succeeded in getting the constitutional changes he sought pushed through the Parliament. Not only will a vastly larger amount of power be vested in the executive branch, but Erdogan will be eligible to remain in office as President until 2029, at which time he will be 74 years old. (Of course, by that point getting an extension pushed through should be no trouble, assuming he’s still alive and interested in the job.) The office of the Prime Minister is being scrapped entirely and Erdogan will be able to appoint one or more vice presidents with no confirmation required by Parliament. He will also inherit the ability to declare a “state of emergency” at any time without consulting the legislative branch, giving him even more executive authority.

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It’s not as if this is happening without a whisper of protest from the opposition. In fact, one Turkish MP literally handcuffed herself to the lectern in protest as the changes were being considered. It’s tough sledding for them, however, considering that Erdogan has been locking up people by the tens of thousands. Communications among the opposition are a challenge as well. Facebook and Twitter are frequently shut down and the government recently launched an investigation into ten thousand social media users for “posts which support terrorism” on those networks. You probably won’t be hearing from them again any time soon.

And in the meantime, businesses are closing down while the strength of the nation’s currency is collapsing. Should this come as any surprise? They’re losing tourist dollars rapidly since Turkey is currently not exactly the safest place in the world to vacation. There are terrorist attacks taking place in a few spots to be sure, but the greater threat is probably the risk of being perceived as being an opponent of Erdogan’s regime and having your stay extended by several years in a room with limited exit options. Let’s not forget that they’ve already locked up one American and Erdogan doesn’t act as if he’s afraid to do it again. Also, foreign owned businesses are closing up shop, eliminating jobs and purchasing options for consumers. The risk of doing business there may simply be too high for many of them under these conditions.

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This is how tyranny progresses and it’s taking place in real time right before our eyes. For a nation which only twenty years ago had a growing, westernized system of capitalism in place and a thriving democracy, this is a tragic turn of events indeed.

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