Ankara’s Futile War on Hoarders Threatens Free Market Economy #TurkeyEconomy
Berat Albayrak declared war on inflation, which is to be applauded.
But he refuses to adhere to the tried-and-true recipe of tight fiscal and monetary policy coupled with restraining civil service salaries. Instead, Ankara is raiding warehouses presumably used by “hoarders” and “profiteers” to stock goods in an effort to limit supply and drive up prices, as well pushing a “voluntary” discount campaign on retailers to suppress inflation. These efforts are very likely to backfire, as well as undermine Turkey’s reputation as free market economy.
Onion and potatoes warehouses raided
Turkey’s president Mr. Recep Tayyip Erdogan is known for his eccentric economic ideas. He firmly believes that Turkey’s economic slump is caused by foreign conspirators staging black ops in the foreign currency market. Last week, he shifted his gaze to domestic markets, where he claims “hoarders”, “profiteers “and “manipulators” are stocking goods to create a false sense of shortages to drive up the prices. He is now fixated on skyrocketing onion and potato prices, main staples of low-income Turkish families. Prices are indeed up, because of crop failure and disease, but who is listening?
Albayrak orders crack-down
Treasury and Finance Minister Berat Albayrak ordered inspectors to the agricultural region of Çorum on Tuesday, northeast of the capital Ankara, to comb through storage depots and count onions. The increase in the price of onions is three times higher than overall inflation, government figures show.
President Recep Tayyip Erdogan repeated on Thursday that the government planned to inspect warehouses that were suspected of stockpiling vegetables.
“Everyone now sees that the attacks against Turkey also have an economic dimension,” he said. “There is no difference between a terrorist who has a gun or a bomb and a terrorist who has dollars, euros, and interest rates,” Erdogan said during a speech at the presidential palace to local administrative officers, known as muhtars, from across the country.
The metropolitan municipality of the western province of Bursa announced on Friday that police seized 35 tons of potatoes during an inspection. It said that inspectors would continue action against storage depots responsible for increasing fruit and vegetable prices via hoarding, reports Ahval News.
Meanwhile, security forces in the southeastern Turkish province of Mardin have seized 30 tons of onions after raiding a warehouse where they said large amounts of the staple food had been stockpiled by traders seeking to exploit high prices, Turkish pro-government newspaper Star reported late on Thursday.
Turkey’s annual onion consumption amounts to around 2 million tons, so the size of the stocks seized in the raids are far too small to affect supply or prices, Turkish journalist and presenter Mirgün Cabas said in a tweet.
Market forces disrupted, small businesses intimidated
September retail, services and construction sales data revealed a massive margin squeeze on and retailers, which is being compounded by the government’s ruthless crack-down on “profiteering”. Soon, many small businesses will have to shut down as cash runs out. Interfering with the agricultural supply chain is almost certain to negatively affect planting decisions by farmers and discourage the much-maligned middlemen, who actually finance small farmers and provide storage services to smooth price fluctuations in perennial crops.
Ankara is truly fighting fire with fire, with many a thousand innocent by-standers getting third-degree burns.