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Turkish lira bounces back

31 December 2013

Turkey’s beleaguered financial markets sprang back on Monday after the country’s central bank stepped in to prop up the currency and political tensions eased.

The lira rallied to 2.1396 against the US dollar in morning trading after it touched a record low of 2.17 last week as Erdogan, who has towered over Turkish politics for the past 11 years, faced mass protests and increasing calls to resign.

The Istanbul stock exchange jumped 3.22 percent to reach 65,944.10.

A bullish Erdogan vowed, on Sunday, that he would survive the scandal triggered by the corruption investigation, which has put several close allies in the spotlight over allegations of bribery for construction projects as well as illicit money transfers to sanctions-hit Iran. Now, however, analysts believe sympathisers in the judiciary and police of cleric, Fetullah Gulen, have launched a series of corruption investigations threatening to overwhelm Prime Minister Erdogan.

Speaking at a rally on Sunday, Erdogan rousted his supporters saying:

“This campaign is neither against Tayyip Erdogan’s personality, nor against AK Party rule.

“You should know it is targeting the national will. It is a campaign against the Turkish nation,” he declared.

Turkey, which had been viewed as a model democratic country in the Muslim world, has seen a series of upheaval, which began with the Gezi park protests against the building of a shopping mall planned at the expense of one of the last green areas of Istanbul. The world looked on in dismay at the brutal police actions against, by and large, peaceful protests. Now, just ahead of critical elections, prefaced next March, by local elections, a massive corruption scandal became public, putting the Prime Minister on the defensive and seeing the Turkish lira plummet.

Erdogan pointed a finger at “dark forces” playing a “dirty game”, accusing international conspirators and their Turkish collaborators of fomenting a political plot to undermine the government and destroy the country’s economic growth.

The newly-formed Turkish cabinet’s met on Monday after Erdogan, who originally supported the ministers who resigned, replaced 10 ministers; almost half the cabinet. The massive reshuffle was seen as an attempt to camouflage the fact that his interior, economy and environment ministers stepped down last week, following the detention of their sons in the graft investigation.

The corruption scandal threw into sharp relief, the power struggle between Erdogan’s former ally, the influential US-based Muslim cleric, Fethullah Gulen (pictured right) whose supporters have significant influence in key spheres of the Turkish administration such as the police and the judiciary.

“This operation is an assassination attempt ahead of elections,” new Interior Minister Efkan Ala was quoted as saying by pro-government Turkish daily ‘Sabah’ on Monday, in remarks directed at Gulen.

“Why have you waited for two years to act?” he asked. “This is almost a coup to topple the government.”

Gulen, who has been living in self-imposed exile in Pennsylvania since 1999 after being accused by the then-government of plotting to form an Islamic state, has denied involvement in the corruption probe.

However Erdogan’s government has ordered the sacking of dozens of police chiefs believed to be linked to Gulen and who oversaw sweeping raids on 17th December that resulted in the detention of dozens of people including the ministers’ sons and high-profile businessmen.

Turkey’s once powerful military, and self-declared guardians of the secular state, has said it would not get involved in the latest political crisis, which follows mass anti-government demonstrations that created upheaval in the country in June.

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