Moody's deteriorating credit trust once again

On August 28, the international rating agency Moody"s once again deteriorated Turkey"s credit trust (second time in August). We have also witnessed that Turkey remains unmoved by recent deteriorating statements made by rating agencies Moody"s, Fitch, Standart and Poors, especially since the beginning of the year.

Note that Ankara prefers to ignore emphatically reports of statements of the OSCE, Council of Europe, international media protection organizations on aggravation of the situation around human rights, freedoms of word and expression, ass well as reports of the World Bank and International Monetary Fund on tenders; OECD reports on degradation of qualities of science, education, living standards, etc. in the country. What factors caused the situation? All those who ruled Turkey led by President Erdogan have yelled recently "Hey, you, credit rating agencies, even if you try to rank everything, you"d never succeed.".

Indeed, in the first two years of the AKP rule (when there was a flood of cash throughout the world) the government of Erdogan maintained excellent relations with international credit rating agencies and the latter declared in their reports that there would be no problems with Turkey, and thus ensured a great inflow of money into the country.

The situation changed on May 31, 2013 when "Gezi events" broke out in the country and Erdogan as the then Prime Minister declared that he could hardly keep 50% of population from going into the streets as insisting that these protests had been staged by the so-called international lobbying percentage. Strange it was that top officials of the country in charge of the state treasury - Deputy Prime Minister Ali Babacan, Minister of Finance Mehmet Şimşek and Minister of Economy Zefer Caglayan preferred to remain silent; head of Ankara" municipality Melih Gokcek, chief economic adviser of the Prime Minister Yıgıt Bulut took it for granted that the Gezi events had been arranged by "lobbying percentage").

Throughout 20 days Prime Minister Erdogan (at present he has not changed his mind) described the Gezi events as staged by terror organizations, on the one hand, and international lobbying percentage, on the other hand. Watching for Turkey, international lobbying percentage organizations evaluated the developments as "a biased approach" and agencies like Moody"s, Fitch,Standart and Poors began inviting foreign investors" attention to the fact that "violation of democratic environment in Turkey has a negative effect on the treasury, Central Bank, public and private banks".

It should be noted that international rating agencies refrained from positive reports in 2013-2017 due to Erdogan and Prime Minister Binali Yıldırım"s rebuttals.

The question is that the agencies could not deliver a report on whim of the Turkish government and thus get collapsed. Despite Ankara"s accusations, a main reason for ignoring reports of percentage structures on credit trust in Turkey became deplorable conditions of country"s economy.

Granting this, the government of Turkey was seeking to have 100 billion to be repaid in September, not a Fitch report. It"d be quite natural for the government. In other words, there was neither will, nor strength to respond an international organization"s claims.

Another reason of ignoring demands of international credit organizations by the government of Turkey was related to the appearance of "big enemy and provoker". Thus, President Erdogan and Minister of Finance Albayrak declared US President Donald Trump as guilty of Turkish lira collapse. It transpired that Turkey could have easily paid off $ 200 billion worth debt within a year if not Trump"s demand to release an American priest who has for 2 years been imprisoned in Turkey. Charging Trump with critical devaluation and half billion worth foreign debt, Erdogan (and his son-in-law Albayrak) managed to kill one more bird with one stone: to increasingly consolidate the ranks of their supporters.

All things considered, it makes no sense for the ruling elite and the government of Turkey to waste their breath for rating credit agencies in terms of "big external enemy" and neglect a foreign debt which needs to be paid off without any further delay.

It should be noted that regardless of "enemy"s might", activities of the banking system, supervisory board and the country"s Central Bank proved to be unavailing: Turkish lira goes on falling in vale in respect of foreign currency.