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Download the pdf version
I was a teenager when Turkey’s last major currency devaluation struck in 2001.
A half-hour drive from the presidential palace—where a brawl in which the then president literally hurled a copy of the constitution at one of his ministers triggered calamity—the corridors of my secondary school were abuzz with excited chatter.
I vividly remember us all crowding around computer monitors in breaks between lessons, logging onto the creaky internet to watch the money we spent every day on our drinks, snacks and bus tickets tumble against the US dollar—5,000 hyperinflated liras at a time.
The rate was roughly 675,000 old lira to the dollar on the morning of 22 February, the day the government decided to let the lira float. It hit 830,000 by lunchtime and was pushing one million by the end of the day.
As we trooped off to an English literature class, our talk would have been familiar to anyone following Turkey’s plight that summer. Will the government survive? Will we suffer?
In my case, the answer was yes—in a matter of weeks. That is how people in Turkey will feel the squeeze this time too.
Scramble for cash
Desperate to keep money flowing in 2001, the government cast a wide net in its scramble for cash.
An entirely new kind of tax—an excise duty for broadly-defined luxuries ranging from jewellery to mobile phone calls—affected just about everyone.
Turkish citizens flying out of Istanbul were slapped with an exit fee that was set at $50 but collected in the capricious lira, making overseas travel even more expensive.
An annual duty on foreign-owned vehicles was multiplied so many times over that it was cheaper for my British father to hand the keys of his ageing Peugeot 405 over to the state: the tax was worth more than the car.
Meanwhile we were forced to renegotiate the rent on the family home, which was set in pound sterling and had become simply unaffordable.
And my international school—the kind of place where Ankara’s business elite, serving diplomats and less affluent but lucky parents like mine sent their children—ended its policy of paying staff exclusively in US dollars. The best foreign-born teachers simply chose to leave and the school suffered for it.
That crisis 17 years ago was cruel to my family, but my parents kept their jobs and we always had the ultimate fall-back of returning to the UK.
Most Turkish families did not have such safety nets. Jobs were lost and livelihoods destroyed, triggering the well-documented process that led to Recep Tayyip Erdogan's Justice and Development Party (AKP).
Many believe that this year, as the lira plummets once again, history could repeat itself. Economic strife begets political upheaval, so the narrative goes, and some are even whispering, foolishly, that this could quickly spell the end of Erdogan’s presidency.
But there is no-one in Turkey who better understands the political lessons of 2001 than the president himself—and there lies the reason behind his response.
That is why the country has been put on a war footing to wage what is described as an “economic conflict”. There is an enemy out there and it is to be found in banks, big companies and foreign leaders. The nation must unite to fight it.
Turkish nationalism runs so deep that even Erdogan’s detractors, people who never contemplate voting for him, will readily accept the narrative that ill-defined outside forces are hell-bent on Turkey’s destruction.
Even opposition parties subscribe to it. They don’t have much of a choice. Any interpretation that is mildly sympathetic to foreigners carries the risk of being seen as treasonous.
The question is how long this interpretation will hold sway.
One reason I associate the 2001 crisis with my school is because of that English literature class we filed into after tracking the lira’s decline.
The teacher was that rare example of a foreign national who had come to understand how Turkey ticks.
“I know you’re all worried about the dollar, but let me tell you that I have lived in Turkey for 25 years and I have seen three major economic crises,” she told us, counting them off on her fingers.
“It will be painful again, it always is, but the country always finds a way of picking itself up and carrying on.”
In 2001, the upheaval was caused not so much by the initial shock as the torturous slog that followed: savings rendered worthless, university graduates trapped in unskilled jobs, doctors’ prescriptions utterly unaffordable. That sense of lost dignity took many months to grow and manifested as anger at the political class.
It could happen again. The ingredients are frighteningly similar. But the storytellers are vastly different this time and there is nothing at this stage to suggest political upheaval in Turkey.
But of course, on 22 February 2001, no-one would have predicted the AKP either.
Michael Daventry is a journalist who runs the Turkish political analysis website JamesInTurkey.com
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