Heads up: Rumors of Babacan’s resignation

TURKEY - In Brief 25 Feb 2015 by Atilla Yesilada

---

CBRT’s 50 basis point cut of the O/N lending rate didn’t please the AKP government. The chorus of objecting voices which began with Premier Davutoglu was soon joined by President Erdogan who accused CBRT to be in collusion with “foreign powers” to hold Turkey back. Afterwards Economy czar Babacan and PM Davutoglu held a 2.5 long “scheduled” meeting where the official agenda was for Babacan to brief the premier on the economy before the latter’s trip to NYC. Yet according to mainstream daily Hurriyet, Babacan protested the interference by Erdogan against CBRT and offered his resignation. This account of events has been refuted by Energy Minister Taner Yildiz, though Babacan is yet to comment officially. This is a very serious matter, because to the extent we discover from our client meetings Babacan and Simsek are considered the only remaining anchors of economic sanity in the administration. The former’s departure is very likely to trigger Basci’s resignation as well, to be replaced by a person who fully shares Erdogan’s “very low rates” vision. We refuse to speculate on a matter so important to our readers’ investment decisions in Turkey, but felt obliged to issue a heads-up. We feel that if Erdogan continues with its CBRT bashing Babacan may seriously entertain the idea of a resignation. We urge our readers to closely monitor Turkish developments today. We shall update our readers as the situation unfolds.