Tuesday, February 25, 2014

Turkey's Erdogan Caught On Tape Discussing How To Hide Illegal Cash


The Turkish soap opera is continuing, with the latest development being recordings of a conversation between PM Tayyip Erdoğan and his son Bilal discussing how to hide huge sums of cash on the day police raided houses as part of a corruption inquiry into Erdogan’s government on December 17, 2013.

The tapes, posted on YouTube, have Erdoğan asking his son Bilal to hide millions of euros in cash stashed at several houses and turn them into "zero". The clips went viral on YouTube, receiving over two million hits.

In one conversation, Erdoğan can be heard briefing Bilal about the raids, which ended in top businessmen and the sons of former cabinet ministers being arrested on charges of bribery, gold smuggling and illicit dealings with Iran.

Bilal at one point can be heard saying: "There is 30 million ($41 million) euros more."

Erdoğan, of course is denying that the tapes of the wiretapped conversations are real, calling them a “dirty immoral fabrication” and “completely false”, while Erdoğan's Justice Minister Bekir Bozdağ repeated the claim and said those responsible will be "brought to justice".

Meanwhile, Turkey’s main opposition Republican People’s Party (CHP), after an emergency meeting issued a statement saying that the government has lost its legitimacy and called on Erdoğan to step down.CHP leader Kemal Kilicdaroglu called the prime minister "prime thief".

And the leaders of the Nationalist Movement Party (MHP) also held a meeting under the leadership of chairman Devlet Bahçeli, after which Bahçeli said “the talks between the Prime Minister and his fugitive son are beyond our capacity of understanding.” Bahçeli also demanded that Erdoğan be brought to justice.

At this point of course, it doesn't really matter whether the tapes are faked or not. Too much has already come out about the vast corruption Erdoğan, his son, other members of his AKP party and their families and cronies were involved in for this to seem all too plausible, and Erdoğan's inept attempts to quash the investigation and his brute force against protesters and jailing of journalists and opposition figures and his mass purge of police and government prosecutors involved in investigating the scandal has already destroyed any credibility he and the AKP has, especially since they once made 'clean government' their slogan.

And more to the point, Erdoğan's other boast, a booming Turkish economy has also collapsed. This was always going to happen fairly soon because of Turkey's huge credit bubble, but the scandals have accelerated things.

Essentially, Erdoğan and the AKP tried to pull off what a lot of banana republics in South and Central America have already failed at - buying popularity through social programs paid for by massive debt accumulation while a corrupt government and its cronies fatten off the proceeds.

At this point, Turkey can't attract buyers for its debt without offering much higher interest rates..and that will explode the credit bubble that has passed for Turkey's 'booming economy' since Erdoğan and the AKP took over.

In fact, the meltdown is already in progress. In an effort to support the falling lira, Turkey's central bank(Türkiye Cumhuriyet Merkez Bankasi) raised interest rates last month after Erdoğan pledged to keep them low. Inflation is at 7.75% (at least) and rising, and the central bank's 10% rate isn't enough of a premium to attract buyers for its debt or strengthen the lira all that much. Since a lot of Turkey's debt is now in foreign currency, and the lira's decline continues, the interest on Turkey's debt is actually increasing, and will have to be covered by even higher local interest rates.And the cost of imports increases.

This is already being felt on the Turkish street,with higher prices and rising interest rates and increased payments on consumer and business loans. Unemployment is growing too, since a lot of that credit bubble fed construction projects which aren't being done anymore since the money isn't there to fund them. Turkey admits to a rate just under 10%. The growing economic distress along with the sordid details of AKP corruption and cronyism have melted away a great deal of Erdoğan's constituency.

Erdoğan himself is making a point of blaming what he calls 'the interest rate lobby', by which he means
'Jewish financiers' rather than his own government's mismanagement and kleptomania. That also is no great surprise in an Islamist leader who has demonstrated his hatred for Jews more than once and torpedoed what once was a fairly close relationship between Turkey and Israel.

Where this goes is anyone's guess. No real replacement for Erdoğan has surfaced, and because of his purge of the military they aren't going to be there to stop Turkey from going over the cliff. The chief opposition, Erdoğan's former allies the Gulen group have a lot of media influence, but no real  political forces  on the ground. The AKP's Ponzi scheme is going to continue to unravel, while Erdoğan is going to continue to try to double down by going even more paranoid and autocratic and trying to appeal to the hard core extreme of his followers.

This will not end well.

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