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Turkey's buying power goes down.

ySTANBUL (CyHAN)- The decline in value of the Turkish lira by around 25 percent against the US dollar since the beginning of last year means that Turkey is going to pay more dollars than it did a year ago in return for whatever it buys based on this currency.

In the case of the euro, the situation is worse. The value of the euro against the Turkish lira has more than doubled since last year, reaching over TL 3 from TL 2.3 since the beginning of last year. This high decline in the value of the lira against major foreign currencies cuts down the buying power of Turkey. This is a situation that Turkey should be worried about.

Yet, as if the supply of Turkish money seems to be endless, Turkish Prime Minister Recep Tayyip Erdoy-an reiterated in his speech on Feb. 19 that massive projects including those in the defense sector are to be further implemented by 2023, the 100th anniversary of the establishment of the Turkish Republic.

It is true that this government has put its stamp on major infrastructure projects, including highways and railways in addition to social projects such as easy access to the health care system, hence raising the Turks' standard of living.

But the Turkish economy has already been giving alarming signals while the lira will not buy as much as it used to due to the decline in its value against the dollar and euro.

The tourism sector, in the meantime, may emerge as a savior in preventing a possible dramatic downward trend in the Turkish economy as the government has been making a real drive in this sector.

Erdoy-an emphasized in his speech on Feb. 19 the importance attached to the tourism sector, which has currently brought $22 billion in revenue, up from $20.8 billion in 2010, into Turkey.

In the same speech, Erdoy-an described a roadmap that he said will take shape and prepare Turkey for 2023 and he declared his party's election manifesto for next month's local elections as well as the presidential elections in August and the national elections in 2015.

His major speech came against a backdrop of government-initiated measures to bring the judiciary under the executive organ's control while thousands of policemen have been purged to impede a high-profile corruption and bribery scandal that hit Erdoy-an's close allies.

The government's retaliation for the graft probe, which included purges within the police organization as well as the judiciary, has already raised serious question marks over the credibility of the Justice and Development Party (AK Party), which has been in power for around 12 years. In addition to that, increased human rights violations and restrictions imposed on freedom of speech have further hit the AK Party's democratic credentials, irking foreign investors.

In fact, the lira has seen about a 13-percent decline in value against the US dollar since the graft probe due to the government's policy of preventing the judiciary from going ahead with the investigations and reducing market confidence in Turkey.

Yet opinion polls indicate that the AK Party will be the winner of the upcoming elections.

And Prime Minister Erdoy-an's plans to introduce huge projects, including those in the defense sector, which require big budgets and sometimes foreign capital inflow, continue unabated.

This is despite the fact that Turkey has to pay 25 percent more dollars or euros, for instance, for military contracts that it is going to sign.

"Turkey's first fighter based on a local design will be finished in 2023," the prime minister said, reiterating the Turkish policy of owning high technology, hence becoming a production center for medium and high technology products of the Eurasia region in 2023.

Local production of main battle tanks code-named Altay for which design work for its manufacture has been completed, rifles and Anka unmanned aerial vehicles (UAVs) are among military projects that Erdoy-an cited as examples that Turkey has been producing locally with foreign help, and hence reducing its dependence abroad on military technologies to 50 percent from an estimated 80 percent.

"Our government targets a Turkey in 2023 that can design and produce its tanks, guns, rifles, helicopters, fighters, satellites and UAVs," Erdoy-an said proudly, in his speech at the Arena conference hall in Ankara.

"A powerful Turkey is a Turkey which owns technology," he said.

It is fair to say that Turkey has boosted its domestic defense industry by manufacturing certain products in the country since its reversal of policies in 2004 from buying arms off the shelf to locally producing them, reducing its heavy dependence on other countries for critical military technology.

Yet, the Turkish defense industry policy that Ankara has been pursuing since 2004 also carries a danger of turning the country into a graveyard of military products that may neither be exportable nor of any use for the Turkish military.

Erdoy-an's remarks that imply that "Turkey will produce everything in the defense sector" have resonated with many Turks, regardless of whether they will cost a fortune to them.

Instead, Ankara has to focus on areas in defense that it can do best in a cost-effective manner at a time when the lira's decline in value against major currencies has cut down the country's buying power.

LALE KEMAL (Cihan/Today's Zaman) CyHAN

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Publication:Cihan News Agency (CNA)
Date:Feb 21, 2014
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