World

Turkish lira collapses aft er Trump doubles trade tariffs. Joko Widodo names running mate. Youth protests in Bangladesh. Trump chides Harley-Davidson. By Hamish McDonald.

Trump pulls the rug from under Erdoğan

Turkish businessmen bring US dollars to a currency exchange in Ankara this week after President Recep Tayyip Erdoğan called for them to sell savings to support the lira.
Credit: Reuters / Umit Bektas

It was no doubt just a sop to the evangelical right supporters who, despite everything, somehow stay loyal, but Donald Trump’s latest shot against a US ally, in this case Turkey, has reverberated around the world.

After a Turkish court extended the detention of an American protestant pastor accused of spying for both Kurdish separatists and the exiled Turkish reformist imam Fethullah Gülen – the two bugbears of President Recep Tayyip Erdoğan – Trump announced he was doubling tariffs on imports of Turkish steel. He also blocked deliveries of the new F-35 fighter jets to Turkey’s air force.

Turkish steel sales to the US are not a big deal to either country, he might have calculated. But as it turned out, the move kicked the last blocks of support from under Turkey’s economy. Its currency, the lira, went into freefall. Given that Turkish companies have been liberally borrowing in foreign currencies, this threatens a wave of bankruptcies.

It was made worse by Erdoğan still not appearing to understand economics and popular psychology. He continues to resist measures long-urged by knowledgeable advisers: a big (5 percentage point) jump in interest rates, budget cuts and reversal of political appointments at the top of the bureaucracy. Sacking his son-in-law, Berat Albayrak, as finance minister would also help.

Instead, he talks wildly of conspiracies, promises an action plan to beat Trump, and appeals to citizens to bring out any foreign currency or gold they may have under the mattress and convert it to lira – advice most are smart enough to reject. Albayrak’s measures consist of an import ban on US-made electronics, which not many Turks will be able to afford anyway for a while.

Unintended consequences extended further to currency falls in many other emerging economies – South Africa, Mexico, Argentina, Russia, India – and even Australia. Worries emerged about banks in France, Italy and Spain with exposure to Turkish debt. It turned out that Turkish factories supply a number of key components for the F-35, and that European technical support for the aircraft is at a Turkish air base.

The Turkish autocrat’s vulnerability also looked like an invitation for Russia and China to move in and detach a strategic ally from the North Atlantic alliance. Russian foreign minister Sergei Lavrov was in Ankara, amid talk of some new trade settlement arrangement with Turkey involving oil-rich Russia and Iran, avoiding use of the US dollar. Both of these other powers are themselves reeling under new US sanctions.

Jokowi courts Islam

Bringing a potential enemy into your tent is an old and sometimes wise political strategy, but the Indonesian president’s choice of a running mate for next April’s election is causing much nervousness.

Joko Widodo, popularly known as Jokowi, sprung a surprise by announcing a 75-year-old Muslim cleric, Ma’ruf Amin, as candidate for vice-president on his team. “I think we complement each other – nationalists and religious,” Jokowi said.

Amin heads the Indonesian Ulema Council, a state-recognised body of imams that pronounces on contentious issues about Islam. It gained prominence in the disappointing second term of the previous president, Susilo Bambang Yudhoyono, who deferred to its rulings that many saw as limiting Indonesia’s religious tolerance.

In Jokowi’s current term, the council has promoted the use of blasphemy laws, most notably against the former Jakarta governor Basuki Tjahaja Purnama, a Christian of Chinese descent known as Ahok, who got a two-year jail term over a reference to the Koran in a campaign speech.

The council’s fatwas range high and low. It has supported the 18-month jail term demanded for an ethnic-Chinese Buddhist in North Sumatra who was heard complaining about the loudness of an amplified call to prayer from a mosque near her house. The 19 people charged over the ensuing anti-Chinese riot face sentences of one to four months. Elsewhere, a tiny mystical sect in Java is under council investigation for saying Muhammad was a woman.

Jokowi’s thinking is clear. In the 2014 election, whispering campaigns accused him of Chinese ancestry, secret Christianity, and even membership of the Indonesian Communist Party, wiped out by the army in the 1960s. As inheritor of the Sukarno mantle of inclusive nationalism through his membership of the Indonesian Democratic Party of Struggle, led by Sukarno’s daughter Megawati, he is trying to inoculate himself against Islamist attack.

His main rival next year will be the loser of 2014, the former special forces general Prabowo Subianto, who also runs a secular-nationalist party, Gerindra, with a Mussolini style of leadership. He, too, is having to deftly manage the Islamists in his camp. Their grassroots support could be crucial, but the problem is Gerindra doesn’t have the vast amounts of cash needed for an election campaign. Prabowo’s rich younger brother, Hashim Djojohadikusumo, may not be willing to stump up much money this time, with Jokowi still highly popular.

Prabowo has compromised by choosing Forbes-listed tycoon Sandiaga Uno, 49, as running mate. Sandiaga, who has an American MBA and built his huge fortune in alliance with the ethnic-Chinese family behind the big Astra group, joined the Islamists running against Ahok and got elected vice-governor of Jakarta, a post he now says he’s resigning for bigger things.

Almost immediately, an aide to former president Yudhoyono, who’d hoped to place his son as running mate, said big money was involved: specifically, that Sandiaga had put up 500 billion rupiah ($A47 million) for Prabowo to buy the acquiescence of two Islamist parties in his coalition. Denials have been made.

Begum battle

The politics of Bangladesh for decades have been a puzzling clash between the “battling begums” of Sheikh Hasina and Khaleda Zia nursing the martyr legacies of father and husband, respectively, who were murdered in army rebellions.

But something is different in the wave of youth protest that’s gripped Bangladesh since an incident that seemed to have no political context: the death of two students hit by a speeding bus in crowded Dhaka three weeks ago. It grew into a demand for jobs by the educated young. With the economy growing strongly (7.65 per cent in the year to June), thanks to thriving garment sweatshops and remittances from the 10 million in the Bangladeshi diaspora, current prime minister Hasina faces tough questions about the equity of growth as elections approach in December.

Her Awami League may be counting on another shoe-in, with the opposition Bangladesh Nationalist Party likely to repeat its 2014 election boycott after its leader Khaleda was sentenced to five years for corruption in February this year. But widespread youth protest, in the tradition of those that broke the ties with Pakistan, could be something else. This country of 166 million, half aged under 25, could be heading for a kind of revolution.

Trump feeds hogs

Trump’s week included base tweets and legal moves against a black female former White House staffer who is giving her account of internal goings-on, the creation of a US Space Force, and stripping the critical ex-CIA director John Brennan of his security clearance.

Most bizarrely, Trump issued a call for American bikers to boycott Harley-Davidson. Hit by tariff retaliation from the EU over US tariffs on steel and aluminium imports, the company is investing in overseas production and consolidating its US factories. It says a new factory in Thailand, announced after Trump pulled out of the Trans-Pacific Partnership pact in 2017, is now crucial to staying cost-competitive.

The presidential tweets have come fast and furious: “I’ve done so much for you, and then this. Other companies are coming back where they belong! We won’t forget, and neither will your customers or your now very HAPPY competitors!” … “Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great! Most other companies are coming in our direction, including Harley competitors. A really bad move!”

Does the president expect all-American Harley enthusiasts to switch to Japanese and German motorbikes?

 

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This article was first published in the print edition of The Saturday Paper on Aug 18, 2018 as "Trump pulls the rug from under Erdoğan". Subscribe here.

Hamish McDonald
is The Saturday Paper’s world editor.  

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