(ZH) Hours after Turkish President Erdogan demanded that Saudi Arabia disclose the whereabouts of journalist Jamal Khashoggi’s remains, body parts reportedly belonging to Khashoggi have been found, according to Sky sources, though the exact location wasn’t revealed. According to anonymous sources cited by Sky News, the writer had been “cut up” and his face “disfigured.”
One source suggested that Khashoggi’s remains had been discovered in the garden of the Saudi consul general’s home. “Why has the body of someone who was officially said to be killed not been found yet?” Erdogan asked during his speech at Turkey’s parliament on Tuesday.
He added that all 18 of the Saudi nationals arrested in connection with the killing should stand trial in Istanbul.
The circumstances surrounding the discovery of Khashoggi’s body parts both contradict Saudi Arabia’s explanation for his death. According to the Saudis, Khashoggi’s body was handed off to a local fixer after being wrapped in a rug. Though Erdogan didn’t mention Crown Prince Mohammad bin Salman in his speech, the kingdom and the prince have denied his involvement.
If accurate, the discovery of Khashoggi’s remains will likely unleash a new round of international pressure on the Saudis, who have seen foreign investors pull money from their stock market while Wall Street CEOs and a handful of industrialists and tech titans have pulled out of the kingdom’s “Davos in the Desert.”
(ZH) In the latest bombshell report involving the Khashoggi murder, Saudi Crown Prince Mohammed bin Salman reportedly spoke on the phone with journalist Jamal Khashoggi moments before he was murdered in the Saudi consulate in Istanbul. Turkish pro-government daily Yeni Safak disclosed the new alleged details of the case in a report on Sunday, contradicting claims by Saudi authorities that Prince Mohammed played no part in Khashoggi’s murder.
“Khashoggi was detained by the Saudi team inside the consulate building. Then Prince Mohammed contacted Khashoggi by phone and tried to convince him to return to Riyadh,” the report said.
“Khashoggi refused Prince Mohammed’s offer out of fear he would be arrested and killed if he returned. The assassination team then killed Khashoggi after the conversation ended,” it added.
While the report is so far unconfirmed, the New Arab reports that so far Turkish pro-government media have been receiving a steady stream of leaks many of which turned out to be accurate, including pictures of the hit team as they entered Turkey and reports of audio recordings of the murder said to be in the possession of Turkish authorities.
Meanwhile, the Saudi version of events has been changing significantly over the past two weeks with authorities conceded Saturday that Khashoggi, the Washington Post columnist and a Riyadh critic, was killed inside the kingdom’s Istanbul diplomatic compound following a “brawl”. The admission came after a fortnight of denials with the insistence that the journalist left the consulate alive, starting on October 5, when Crown Prince MBS told Bloomberg that Khashoggi was not inside the consulate and “we are ready to welcome the Turkish government to go and search our premises”.
On Saturday, the kingdom announced it had fired five top officials and arrested 18 others in an investigation into the killing – a move that has widely been viewed as an attempt to cover up the crown prince’s role in the murder.
The shifting Saudi narrative of the killing has been met with scepticism and condemnation from the international community, and has left the U.S. and other allies struggling for a response on Sunday. As Bloomberg reports, France demanded more information, Germany put arms sales to Riyadh on hold and the Trump administration stressed the vital importance of the kingdom and its economy to the U.S.
In Sunday radio and TV interviews, Dominic Raab, the U.K. politician in charge of negotiating Britain’s exit from the European Union, described the latest Saudi account as not credible; French Finance Minister Bruno Le Maire called for “the truth’’; and Germany’s Foreign Minister Heiko Maas said his government would approve no arms sales so long as the investigation was ongoing.
Earlier on Sunday, Saudi Foreign Minister Adel al-Jubeir acknowledged a cover-up attempt. The dramatic reversal, after Saudi officials had previously said the columnist left the building alive, has only complicated the issue for allies.
Saudi Arabia’s al-Jubeir told Fox News on Sunday that the journalist’s death was an “aberration.”
“There obviously was a tremendous mistake made and what compounded the mistake was the attempt to cover up,” he said, promising that “those responsible will be punished for it.”
More importantly, he said that Prince Mohammed had no knowledge of the events, although if the Turkish report is confirmed, it will be yet another major flaw with the official narrative.
Several senior members of US President Donald Trump’s Republican Party said they believed Prince Mohammed was linked to the killing, and one called for a “collective” Western response if a link is proved. In an interview with The Washington Post, President Trump, too, said the Saudi narrative had been marked by “deception and lies.’’ Yet he also defended Crown Prince Mohammed bin Salman as a “strong person,’’ and said there was no proof of his involvement in Khashoggi’s death. Some members of Congress have questioned his willingness to exonerate the prince.
“Obviously there’s been deception and there’s been lies,” Trump said on the shifting accounts offered by Riyadh.
On Sunday, Turkish President Recep Tayyip Erdogan promised to disclose details about the case at a meeting of his AK Party’s parliamentary faction on Tuesday, Haberturk newspaper reported.
Meanwhile, as Western firms and high-ranked officials scramble to avoid any Saudi involvement, Russia is more than happy to step in and fill the power vacuum void left by the US. As a result, Russian businesses are flocking to attend the investment forum in Saudi Arabia, as Western counterparts pull out.
Russian President Vladimir Putin has had considerable success boosting Moscow’s influence in the Middle East at U.S. expense, by standing by regimes that fall afoul of the West, including in Syria and Iran. Last week Putin signed a strategic and partnership agreement with Egypt’s President Abdel-Fattah El-Sisi, backed by $25 billion in loans to build nuclear reactors. Until El-Sisi came to power, Egypt had been closely allied to the U.S.
Meanwhile, all eyes are fixed squarely on the Crown Prince whose position of power is looking increasingly perilous. Congressional leaders on Sunday dismissed the story proffered earlier by the Saudis, with Republican Senators Lindsey Graham of South Carolina and Bob Corker of Tennessee saying they believed the crown prince was likely involved in Khashoggi’s death.
Lawmakers said they believe the U.S. must impose sanctions on Saudi Arabia or take other action if the crown prince is shown to have been involved. Speaking on NBC’s “Meet the Press,” Senator Dick Durbin of Illinois, the chamber’s No. 2 Democrat, said the Saudi ambassador to the U.S. should be formally expelled until a third-party investigation is done. He said the U.S. should call on its allies to do the same.
“Unless the Saudi kingdom understands that civilized countries around the world are going to reject this conduct and make sure that they pay a price for it, they’ll continue doing it,”’ Durbin said.
The obvious question is what happens and how the Saudi royal family will respond if it is pushed too far, and whether the worst case scenario, a sharp cut in oil exports, could be on the table if MBS feels like he has little to lose from escalating the situation beyond a point of no return.
(ZH) Update (12 pm ET): Speaking again on the subject of Khashoggi, President Trump emphasized the importance of maintaining the US’s business relationship with the Saudis, and added that the public would hear the full story of what happened by “the end of the week.” Trump added that the US “needs Saudi Arabia’s help” in the fight against terrorism. Trump also said he has requested the audio tapes that the Turkish government claims to have which should prove that Khashoggi was murdered “if they exist.”
Meanwhile, after his meeting with Turkish officials in Ankara, Secretary of State Mike Pompeo refused to speculate about whether Khashoggi was alive or dead.
“I don’t want to talk about any of the facts. They didn’t want to either,” Pompeo said.
* * *
Update (8 am ET): Speaking with reporters during his trip to Turkey, Secretary of State Mike Pompeo repeated his comments about the Saudis promising a “thorough, transparent” investigation that will be conducted “in a timely fashion.”
“They told me they were going to conduct a thorough, complete, transparent investigation”and made a commitment to holding anyone connected to any wrongdoing accountable, Pompeo told reporters Wednesday as he headed to Turkey, where the journalist was last seen entering the kingdom’s consulate in Istanbul.
Nobody from the Trump administration has responded to the latest explosive allegations about Khashoggi’s death, though it’s worth noting that Turkish officials who have spurred claims about Saudi’s role in Khashoggi’s disappearance haven’t produced any tangible evidence – though Turkish President Recep Tayyip Erdogan has promised a “thorough” investigation.
* * *
While President Trump would love it if the Western media, along with prominent executives in tech and finance, would buy Saudi Crown Prince Mohammad bin Salman’s claims that he had “no knowledge” of the confrontation at the Saudis’ consulate in Istanbul that’s believed to have precipitated the killing of insider-turned-Washington Post columnist Jamal Khashoggi, yet more evidence has emerged this morning to contradict the official Saudi narrative.
Trial balloons floated by the kingdom in the Western press, as well as Trump’s own suggestions, point to “rogue operatives”, but in a story published last night, the New York Times managed to corroborate Turkish officials’ claims that several suspected members of the 15-man ‘hit squad’ have been directly linked with MbS.
And now, in what has been billed as the first glimpse of the grisly circumstances of Khashoggi’s murder, the Middle East Eye and the Wall Street Journal have reported that “it took seven minutes for Khashoggi to die.”
But in what was probably the most gruesome details from the report, MEM reported that Dr. Salah Muhammad al-Tubaigy, who was identified by the Times and other media outlets as an “autopsy expert” whose presence cuts against Saudis’ suggestions that the killing wasn’t premeditated, started cutting Khashoggi’s body into pieces while the journalist was unconscious, but still breathing. Previously, Khashoggi had been knocked unconscious after being injected with a mysterious substance.
MEM attributed its information to a person who had listened to the Turkish government’s recording of the murder (its agents had apparently bugged the Saudi consulate, which is unsurprising given the tense relations between the two Muslim powers that only deteriorated during last year’s Qatari crisis). That recording, which hasn’t been publicly shared, has served as the basis for dozens of media reports about Khashoggi’s death. According to this source, after arriving at the consulate, Khashoggi was dragged from the consul-general’s office at the Saudi consulate in Istanbul into his study next door, before being pinned down on the table and injected with an unknown substance. During the attack, horrifying screams were heard by witnesses.
After Khashoggi had been knocked unconscious (never to awaken again), al-Tubaigy put on his headphones and started the grim process of dismembering the body with a bone saw.
Tubaigy began to cut Khashoggi’s body up on a table in the study while he was still alive,the Turkish source said. The killing took seven minutes, the source said.
As he started to dismember the body, Tubaigy put on earphones and listened to music. He advised other members of the squad to do the same.
“When I do this job, I listen to music. You should do [that] too,” Tubaigy was recorded as saying, the source told MEE.
A three-minute version of the audio tape has been given to Turkish newspaper Sabah, but they have yet to release it.
A Turkish source told the New York Times that Tubaigy was equipped with a bone saw. He is listed as the president of the Saudi Fellowship of Forensic Pathology and a member of the Saudi Association for Forensic Pathology.
Later, the NYT reported that the hit squad cut off Khashoggi’s fingers while he was still conscious during an interrogation where he was also beaten and tortured before being dragged into another room where they finished butchering him.
According to WSJ, voices on the tapes can be heard asking the Saudi consul to leave his office before the hit squad murdered Khashoggi. The consul, Mohammad al-Otaibi, departed Turkey for Riyadh Tuesday afternoon after the Saudis, in a sudden reversal, denied Turkey’s requests to search Otaibi’s residence, saying his home was off limits to investigators.
When Otaibi objected to the killing happening in his office, he was told to shut up “if he wanted to live.”
“Do this outside. You will put me in trouble,” Mr. al-Otaibi, the consul, told them, according to the Turkish official and the report in Yeni Safak, both citing audio recordings said to have been obtained by Turkish intelligence.
“If you want to live when you come back to Arabia, shut up,” one of the agents replied, according to both the official and the newspaper.
“Horrendous tortures were committed on Khashoggi, who came to the consulate for documents,” the Yeni Safak account said.
Should other media organizations confirm these reports (which has become a pattern since Khashoggi disappeared into the consulate on Oct. 2 after being asked to return to pick up a marriage license), calls for sanctions, an arms sales ban – or even the deposing of Crown Prince Mohammad bin Salman could grow louder.
But while MbS remains ensconced in his protective shield of power, those directly involved in the killing have good reason to be afraid. The United Nations human rights chief Michelle Bachelet has called for the lifting of diplomatic immunity for any facilities and persons tied to the killing, which means that, even if Saudi Arabia gives its nominal “rogue operatives” a pass, extradition requests from Turkey or another UN member would greatly increase their chances of arrest.
Sitting in the Oval Office with Brunson, Trump congratulated the pastor repeatedly and thanked Turkish President Recep Tayyip Erdogan for facilitating the release.
“Everybody wanted this to happen. I think we can say this was bipartisan. I think if there was ever a bipartisan event, this was it,” Trump said.
Brunson thanked Trump, his administration and Sens. Thom Tillis, R-N.C., Lindsey Graham, R-S.C., and Jeanne Shaheen, D-N.H., who he said visited him while he was imprisoned. Brunson’s wife, Norine, and their children also thanked Trump.
“You really fought for us,” Brunson said.
Trump praised Vice President Mike Pence and U.S. Secretary of State Mike Pompeo, who he said brought Brunson’s case up frequently.
“I would say we spoke about this at least once a day,” Trump said. “We thought we had it done two months ago. Sometimes it doesn’t always work out, but I can only tell you that’s better than anybody else could have done.”
Trump also championed his role in facilitating the release of Americans held in North Korea and Egypt.
“Right now the whole world is fan of yours,” Trump said, referring to numerous faith leaders, members of Congress and his administration who advocated for Brunson’s release. “The whole world is your fan and your family’s fan.”
Brunson later asked to pray over the president, which Trump joked he needed “more than probably anybody in this room.” Kneeling before Trump, Brunson asked God to give the president “supernatural wisdom to lead the country.”
Norine Brunson also offered her prayers to Trump. The president then replied, “Can I ask you a question? Who did you vote for?”
Trump joked that he already knew the answer, and Andrew Brunson offered that he “sent in an absentee ballot from prison.”
The president also joked that he wouldn’t ask Brunson if he had plans to return to Turkey.
“We do love Turkey. We were there for 25 years and we love the Turkish people” Brunson said.
Bruson said he and his wife plan to go home, pray, and “see what God wants for the next part of our lives.” He said he planned to discuss his treatment in Turkish prison at a later date.
“This is a time to thank the administration and people in government who supported us … We love this country,” Brunson said.
While speaking to media Trump also answered questions about Jamal Khashoggi, the Washington Post journalist, who was alleged to have been killed inside the Saudi consulate in Istanbul.
When asked if the timing of Brunson’s release and Khashoggi’s suspect death were in any way related, Trump said the timing was purely coincidental.
Trump and Pompeo said they have not yet seen or heard any tapes that would prove what happened to Khashoggi, and added that they’re going to “determine what happened first” before considering any action.
NBC News reported a day before Brunson’s release that a deal had been struck between the U.S. and Turkey that would result in certain charges against him being dropped. Senior Trump administration officials told NBC News that discussions between the two countries included a commitment by the U.S. to ease economic pressure on Turkey.
But Trump tweeted on Saturday that there was no deal made with the Turks and that he doesn’t “make deals for hostages.”
Donald J. Trump
There was NO DEAL made with Turkey for the release and return of Pastor Andrew Brunson. I don’t make deals for hostages. There was, however, great appreciation on behalf of the United States, which will lead to good, perhaps great, relations between the United States & Turkey!
Brunson, a North Carolina native, was one of two dozen Americans charged with helping Kurdish militants and supporters of Fethullah Gulen, the cleric whom the government blames for planning a failed coup in 2016. Brunson, who had lived Turkey for more than two decades, has denied the charges.
The evangelical pastor who led a small congregation in Turkey had been convicted and sentenced to more than three years in prison. But he was ordered released for time served and allowed to leave the country after spending nearly two years in detention. A separate charge of espionage was also dropped.
Trump was among many politicians celebrating his release. It’s viewed as a triumph for both the president and Republicans who are counting on the support of evangelical Christians in the November election.
Trump told a crowd of thousands of supporters in Lebanon, Ohio, on Friday, “We’ve had a lot of success.”
(Reuters) Ratings agency Moody’s sounded more alarm about Turkey’s banking sector on Tuesday, downgrading 20 financial institutions and citing the increased risk of a deterioration in funding.
The comments from Moody’s are the latest to highlight the risk to Turkey’s banking sector from an ongoing currency crisis. It said the operating environment is now worse than previously expected.
The lira TRYTOM=D3 has fallen some 40 percent so far this year, hit by investor concern about President Tayyip Erdogan’s grip on monetary policy and a widening rift with the United States. Investors are concerned the Turkish economy is set for a hard landing and lenders could see a spike in bad debts.
“The downgrades primarily reflect a substantial increase in the risk of a downside scenario, where a further negative shift in investor sentiment could lead to a curtailing of wholesale funding,” Moody’s said in a statement.
It lowered its “standalone baseline credit assessments” of 14 lenders by one notch, and those of four other banks by two notches. It downgraded the “corporate family ratings” of two finance companies by a notch.
For years Turkish firms have borrowed in euros and dollars, to take advantage of lower rates, but that has exposed firms to substantial currency risk.
In the next 12 months, around $77 billion of foreign currency wholesale bonds and syndicated loans, or 41 percent of the total market funding, needs to be refinanced, Moody’s said.
Turkish banks hold around $48 billion of liquid assets in foreign currency and have around $57 billion in compulsory reserves with the central bank, Moody’s said, adding the latter would not be entirely available.
“In a downside scenario, where investor sentiment shifts, the risk of a prolonged closure of the wholesale market would lead most banks to materially deleverage, or to require external funding support from the government, or the Central Bank.”
In Berlin, a German government official said Germany is not considering providing Turkey with a financial lifeline to help it overcome its currency crisis.
A second German official told Reuters: “You can’t do much from outside but to stress that Turkey must reform itself.”
I want to flag a point about the President’s current trade spat with Turkey.
First, Turkey has moved in a decidedly negative direction in recent years, both in terms of internal repression and attempts to find a working alliance with Russia, despite being a NATO member state. There are lots of reasons for the US to be down on Turkey. But the Trump administration has actually been fairly indulgent toward Turkey and the man who is increasingly synonymous with the Turkish state, President Recep Tayyip Erdogan. He’s the kind of guy Trump likes – autocratic, intolerant of dissent. But the current flare-up in US-Turkish relations is unrelated to any of that. It has to do with the detention of American Pastor Andrew Brunson.
Brunson was arrested in October 2016 on charges of being a member of the Gulen Movement and complicit in the July 2016 failed coup, as well as possibly being an American spy. (Gulen is a Muslim cleric who lives in exile in the US. Erdogan holds his movement responsible for the coup, which may or may not be true.) The Erdogan government arrested tens of thousands of Turks for alleged ties to the coup and conducted a massive purge of the state sector. This was a dramatic acceleration of the growing repression and autocracy that preceded the coup. Point being, the Erdogan government is bad news and they clearly used the coup to deepen their grip on Turkey. In this context I really have no idea whether Brunson’s arrest has some merit to it or is completely trumped up.
But Brunson is not the only US citizen swept up in the crackdown. And even if we believe that he’s a victim in this – which is entirely possible, perhaps even probable – states don’t destroy their bilateral relationships over the fate of a single national caught up in another country’s legal system.
Here we get to the real issue. It is quite clear that the only reason Brunson has become the central issue in US-Turkish relations is because he is an evangelical pastor and he’s become a top issue for US evangelicals who are the core of Trump’s power base. What is important to them is non-negotiable for him. Full stop. So here we have the US President wreaking havoc with the Turkish economy and putting the bilateral relationship into crisis as a payoff to his evangelical supporters. That is simply terrible.
The situation is murkier because of all the good reasons for downgrading relations with Turkey. But the fact is that this is another prime example that President Trump doesn’t want to be President but rather more like a faction leader or warlord who uses his control of the state to direct nonstop payoffs to his core supporters.
(FXstreet) According to the Financial Times (FT), Tusiad, the Turkish Industry and Business Association, and Tobb, the Union of Chambers and Commodity Exchanges of Turkey have urged the Turkish President Erdogan to tighten monetary policy, introduce austerity measures and urgently resolve a dispute with the US in a bid to stabilize the battered the Lira.
Leading Turkish business groups said that “tighter monetary policy is required in order to stabilize exchange rates”, as were accompanying “austerity measures”.
The business organizations called for continued “diplomatic efforts to urgently resolve the problems in the US-Turkey relationship”.
Meanwhile, Reuters reported that for a second consecutive day Turkey’s central bank was not lending at its benchmark interest rate of 17.5 percent, instead of making funds available at 19.25 percent.
(GlobalNews) Turkey’s currency and stock market kept on falling Monday, weighed down by investor fears about the country’s economic policies and worsening relations with the United States.
The lira fell as low as 6.89 to the dollar Monday, down about 7 per cent on the day and 45 per cent since the start of the year. The main stock index fell 3.5 per cent.
Here is a look at some of the reasons behind the plunge and how it might affect the rest of the world.
Why is Turkey’s currency suddenly so weak?
The country’s economy has grown strongly in recent years, booking 7 per cent growth last year. A favourable global environment has given an added push. Central banks in the rich world kept interest rates at or near zero for years, making it attractive for companies in Turkey to borrow in foreign currencies. Investors facing sparse returns on short-term investments in the more developed world, like the U.S., found higher returns if they sent their money to emerging markets such as Turkey. Low oil prices helped, too.
Now, those factors working in reverse. The U.S. Federal Reserve is raising rates, and oil prices are higher.
How has Turkey hurt itself?
Turkey’s economy has long shown signs of overheating. Inflation hit 15.9 per cent annually in June. The country has run a large trade and investment deficit with the result of the world, buying more than it sells and relying on foreign investment and lending. That deficit — called the current account — can weigh on a currency, especially when foreign investment stops flowing in.
As the currency weakens, it can make foreign investors pull their money out of Turkish stocks and bonds as their lira investments lose value. To do that, they have to sell lira — worsening the rout.
Is it politics or economics?
The lira’s fall has been made worse by President Recep Tayyip Erdogan’s statements on economic policy. He has urged the central bank to not raise interest rates. Rate increases are the central bank’s main tool to support the currency and fight inflation, though they can slow growth. The central bank appears to have heeded Erdogan and has not raised rates when many — including the International Monetary Fund — have urged it to. That drained investor confidence in the central bank, leading to a further sell-off of the currency.
Erdogan’s decision to name his son-in-law as finance minister also made people wonder about the direction of the country’s economic policy.
What about the dispute with Trump and the U.S.?
Turkey’s decision to jail Protestant pastor Andrew Brunson from the U.S. has led to the U.S. imposing sanctions on two Turkish government ministers. Conservative evangelical Protestants are a key constituency for U.S. President Donald Trump.
The mere fact that the U.S. would impose sanctions on Turkey — a stalwart NATOally for decades during the Cold War — has increased uncertainty about the future in Turkey.
Trump raised the stakes Friday when he said his administration would double its tariffs on Turkish steel and aluminum. That caused a further drop in the lira. The U.S. was Turkey’s biggest export market for steel last year, though exports have fallen since.
How is the fall in the lira a problem?
It is a problem for Turkish businesses and banks that get revenues in lira and owe money in dollars or euros. The lira has fallen about 40 per cent against the dollar this year. That makes a loan in dollars that much more expensive to repay. So the sudden fall raises the possibility of corporate bankruptcies or bank failures that could hurt the economy.
The currency drop will also increase the cost of living for people in Turkey by making imports more expensive. Prices are already up 16 per cent since last year and this week’s drop will make that worse.
What impact could the turmoil have outside Turkey?
There are some concerns about whether European banks would suffer losses on loans in Turkey. The euro currency dropped to a 13-month low on Friday, and bank shares fell.
Tom Kinmonth, senior fixed income strategist at ABN Amro Bank, has calculated that European bank exposure is limited in Turkey. Spain’s BBVA has significant exposure, with 31 per cent of pre-tax profit coming from Turkish operations. UniCredit, BNP, ING and HSBC have smaller businesses there.
Outside those five banks, he said, European exposure is “minimal.”
Trouble in Turkey could make investors reassess their holdings in other emerging markets. So far, however, Turkey has not sparked a global rout in emerging markets.
Additionally, Europe is nervous because depends on Turkey to restrain the flow of migrants from conflict in the Middle East in return for aid. Some 4 million displaced people, most them from Syria, are currently living in Turkey. Any resumption of serious migrant flows from Turkey would be a big political issue in Europe, where opposition to immigration has fueled the rise of right-wing parties.
How is Turkey trying to fix this?
In theory, Erdogan could turn to the International Monetary Fund for financial help. He could also impose limits on money transfers to keep capital from fleeing. So far he’s shown no sign of doing either.
Having to obey IMF conditions in return for assistance would be a blow to his prestige. Money controls could backfire because Turkey needs foreign investment.
WATCH BELOW: Trump welcomes Erdogan to the White House in 2017
Instead, Erdogan has doubled down. He has mainly blamed foreigners for trying to destabilize the country and equated the financial turmoil to the 2016 coup attempt that sought to depose him. He told supporters to “change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks. This is a domestic and national struggle.”
The central bank has taken steps to make short-term credit more easily available to banks, but has not raised interest rates.
(EUobserver) The Turkish lira dropped almost nine percent in early trading on Monday and the euro hit a one-year low as investors feared Turkey’s financial crisis could spread into European markets. The lira has lost more than 40 percent of its value this year on worries over president Recep Tayyip Erdogan’s economic management. Erdogan accused foreign countries of waging war on Turkey and said he would respond with trade measures.
Turkish lira hits all-time low versus the U.S. dollar.
The country’s economy is viewed as imbalanced due to rampant inflation.
The United States has also threatened to impose “big sanctions” over a U.S. pastor.
Turkish lira weakens to fresh record low against the US dollar
The Turkish lira has collapsed to an all-time record low against the dollar, but the country’s leader has brushed aside concerns, telling Turks “we have our God.”
The lira hit fell more than 12 percent in value to reach more than six lira to each dollar on Friday morning. At around 5:00 ET, the currency had risen back to $5.911. As recently as April one dollar bought about four Turkish lira.
The latest bout of selling comes after a Turkish delegation returned from the United States with apparently no progress on the detention of a U.S. pastor. The evangelist, Andrew Brunson, is charged with supporting a group blamed for an attempted coup in 2016.
President Donald Trump said in July that the U.S. would place “large sanctions” on the country for the pastor’s detention.
Late Thursday, Turkish President Recep Erdogan said he will stand up to the pressure.
“There are various campaigns being carried out. Don’t heed them,” Erdogan said. “Don’t forget, if they have their dollars, we have our people, our God. We are working hard. Look at what we were 16 years ago and look at us now,” Erdogan told supporters.
The lira’s three-month implied volatility gauge hit its highest since late 2008. Implied volatility shows the market’s opinion of the currency’s potential moves. If the implied volatility is high, the market things the currency has potential for large price swings in either direction.
European bank concern
The euro dropped 0.5 percent against the dollar on Friday morning, following reports that the European Central Bank (ECB) is concerned over the impact of a weak Turkish lira on European banks.
According to the Financial Times, the lira’s depreciation could hurt European banks such as Spain’s BBVA, Italy’s UniCredit, and France’s BNP Paribas in particular.
Turkey’s central bank has zero credibility, strategist says
Speaking to CNBC’s “Squawk Box Europe” Friday, Timothy Ash said the FT report was “sensationalist” as any losses incurred by the banks would be by local subsidiary branches who had invested using Turkish lira and not U.S. dollars.
He added however that while banks in Turkey remained in reasonable shape, the country did have a problem with its balance of payments that has occurred because the economy had been allowed to overheat.
“Ultimately now, there is zero credibility in the Central Bank of Turkey and zero credibility in Turkish policy making. Whatever they do, the market doesn’t believe them,” Ash said.
Turkey’s economy is seen as particularly fragile due to its high level of debt that is priced in dollars. The more the lira weakens, the more expensive that debt becomes. The latest estimates from the International Monetary Fund (IMF) show that the total amount of Turkish debt payable in other currencies is more than 50 percent of the country’s gross domestic product.
Inflation in the country has been rampant with consumer prices rising almost 16 percent in July alone. While the country’s central bank has raised interest rates in the past to support the currency and quell inflation, the most recent meeting in July saw the Turkish central bank unexpectedly hold its benchmark interest rate at 17.75 percent. Erdogan has repeatedly insisted that rates should not be raised too high, triggering suggestions that the central bank doesn’t act with full independence.
Berat Albayrak, Turkey’s finance minister, is set to reveal “a new economic model” later Friday.
(GUA)The Germany footballer has been criticised for showing pride in his Turkish roots. But why should people of colour have to ditch their national heritage?
It’s often said that black people do so well in sport in countries where they are in a minority because it offers the only opportunity they have to compete on a genuinely level playing field. That’s a simplification, of course: the playing field is not completely level there, either; the ongoing and countless stories of overt racism, from football to athletics and tennis, are testament to that. And if there’s one thing recent events have revealed, it’s that while sport may be more meritocratic than other workplaces, for people of colour the rewards are still conditional.
The footballer Mesut Özil feels he is being penalised for his pride in Turkey, the nation of his heritage, by Germany, the nation of his citizenship. This episode has opened an emotive window into just how precarious national status can be. “I am German when we win, but I am an immigrant when we lose,” Özil said, announcing his retirement from the national team after criticism of his recent performances.
Özil, a key member of the German team that won the World Cup in 2014, had faced a backlash before this year’s tournament after posing for a photo with the Turkish president, Recep Tayyip Erdoğan – a hardliner widely condemned for human rights abuses. But the problem Germans have with Özil seems to be more about his statement of cultural allegiance with the Turkish nation.
You don’t actually need to pose with a problematic president to experience this disowning. I will never forget the way in which Mo Farah – the British long-distance runner who was propelled to national treasure status after his two 2012 Olympic gold medals – immediately became “Somali-born Farah” when the integrity of his coach’s techniques came into question.
There are many other examples. Ben Johnson, the 100m world record holder, was Canadian – until he was banned for doping, at which point he became widely referred to as “Jamaican-born”. Yannick Noah, the French Open tennis champion who at one point seemed set for world domination, became camerounais when the dream expired.
The French experience is rather specific, as the row over the South African comedian Trevor Noah’s description of France’s World Cup triumph as a victory for the African continent – since that’s where so many players are descended from – reminds us. France has mastered the art of hypocrisy with its official “we don’t see race” stance. Instead, people of minority heritage are stigmatised as les issus de l’immigration – simply another way of othering them.
This prejudice is hard-baked into terminology across Europe. Visible minorities in Britain are labelled “immigrants” or, if they’re born here, “second generation immigrants”. Yet “indigenous” is a nonsensical term for a nation formed by millennia of immigration. Meanwhile, Brits abroad are seen as “expatriates”.
In the Netherlands, visible minority Dutch people were, until recently, allochtoon, a word many of them hate because – while it may initially have been well intentioned – it was always perceived as a way of distinguishing between white “indigenous” Dutch and non-white descendants of immigrants.
In Germany there were Gastarbeiter – who were invited from Turkey to compensate for German labour shortages, but whose long-term presence in the country was not fully accepted. Not surprisingly, some of their children feel an emotional attachment to Turkey (“I have two hearts”, Özil has said), yet Germany has decided that dual allegiances are no longer convenient.
Germany doesn’t get to decide what the children of those it has treated as second-class citizens for so long get to do with the rights they have now acquired. Nor do France and Britain. Nor do the leaders of European countries that invented racial categories – necessary for the purposes of their own plans for enslavement and colonisation – get to unilaterally decide that these are no longer relevant, now that it’s become inconvenient for them to face up to the legacy of their own creation.
We get to define our identities, our allegiances and our relationship to our heritage. Özil’s identity as both Turkish and German – quite apart from being perfectly logical – is his by right to express. French people of African heritage have earned the right to their unconditional Frenchness, whether or not they play football, and no French person can stop them celebrating being part of the African diaspora.
This matters. In Britain, for example, many black people benefit from the struggle our parents and grandparents faced to secure citizenship and economic security – although the recent Windrush scandal reminds us that battle is still not over – and now have the luxury of choosing how we want to self-identify. And many of us are actually growing closer to our countries of heritage, despite having never lived there.
There is nothing particularly unusual about this. Similar connections can be found in the Irish and Italian diasporas in America, and in Jewish people everywhere. But for some reason it’s deemed more problematic when people of colour wish to organise around shared cultural or national heritage. It’s part of a belief that somehow Britain did us a favour by letting us come to this country, with our brown faces and strange faiths and all, for which we should be uniquely grateful.
The problem is, European countries didn’t “let” their migrants in; they needed people to rebuild their countries, offering in return low wages and poor living conditions. The descendants of those workers are still processing the racism, prejudice and disadvantage that resulted. But the one thing no one can take away is what we decide about who we are.
The resignation of star player of Turkish origin, Mesut Ozil from the German national team on Sunday evening and the following intense debate in Germany reflects the deep uncertainty around Europe over identity, migration and integration.
The Arsenal player Ozil, born in Germany to Turkish parents, announced in a statement that he would no longer play for Germany after what he said were feelings of “racism and disrespect”.
The 29-year-old Ozil, who won the World Cup in 2014 as part of the German squad, said he would quit after he was heavily criticised for posing for a photo with Turkish president Recep Tayyip Erdogan in May in London. Erdogan has been cracking down on opposition and the press at home.
The two have met before, but the May meeting took place during Erdogan’s campaign for June’s general election in Turkey, and following a deep row between Berlin and Ankara over Germany’s refusal to allow Erdogan to campaign among Germany’s over three million Turkish minority.
“I have two hearts, one German and one Turkish,” Ozil wrote, adding: “For me, having a picture with president Erdogan wasn’t about politics or elections. It was about me respecting the highest office of my family’s country.”
Ozil said he faced months of racist comments from politicians, fans and the German football association, which seemed to have hold him responsible for the German team’s poor performance in this year’s World Cup tournament.
“In the eyes of [German football association president Reinhard] Grindel and his supporters, I am German when we win, but I am an immigrant when we lose,” Ozil wrote.
Ozil’s resignation exposed a deeply-divisive debate in Europe about identity and migration during the World Cup and who can be considered ‘European’.
The German-Turkish player’s feelings of never really being accepted in his native Germany were echoed earlier by Belgian striker Rumalu Lukaku who wrote that went things were going well for his team, he was “the Belgian striker”, and when things were not going so well, he was labelled, “the Belgian striker of Congolese descent”.
A row also erupted around the French team that eventually won the Word Cup, and whose players are mostly from immigrant origins. South African comedian Trevor Noah was criticised by the French ambassador to the US for describing the French national team’s victory as “Africa won the World Cup”.
In a letter Gerard Araud – pointing to the French concept of citizenship – wrote that it is wrong to refer to the players’ African identity.
“France is indeed a cosmopolitan country, but every citizen is part of the French identity and together they belong to the nation of France,” the ambassador wrote. Noah responded saying both African and French identities should be celebrated.
The World Cup, where several European national teams have reflected their society’s multiculturalism, also highlighted how the debate about identity fuels increasingly stronger anti-migration and anti-Islam populist parties across the continent.
While France’s win was celebrated partly because of the players’ mixed origin, it also enraged politicians such as Italy’s interior minister Matteo Salvini, who – according to media reports – left the Moscow stadium early because of his tense relationship with France’s president Emmanuel Macron over migration.
The finalist Croatian team’s homogeneity was taken advantage of by politicians who oppose migration and boast about a homogenous, ‘Christian’ culture in Europe.
“The World Cup finals could be an important message for the future of Europe as an immigrant country plays a Christian country proud of its national identity. That’s why go Croatia!,” a Hungarian MP, Istvan Hollik from a Christian democratic party aligned with premier Viktor Orban’s ruling Fidesz posted on Facebook before the final.
Turkey is a controversial ally to Europe.
The EU in 2016 signed a statement with Erdogan, who pledged to stem the flow of migration towards the continent.
The response on Monday to Ozil’s resignation was divided in Germany.
“With all respect for the family roots, national players must be ready to accept criticism when they allow themselves to be used for election campaigning,” tweeted the German government’s integration commissioner Annette Widmann-Mauz.
Foreign minister Heiko Maas, a Social Democrat, dismissed the idea that Ozil was sending a message to minorities across Germany that integration is impossible.
“I don’t believe the case of a multimillionaire living and working in England gives much insight into the success or failure of integration in Germany,” he said.
Hard-right AfD leader Alice Weidel turned that around and said: “The integration dream doesn’t work even with football millionaires.” She described Ozil’s “tirade” as a “typical example of failed integration”.
Cem Ozdemir, the most prominent ethnic Turkish politician and former leader of the Green Party said that Ozil’s photo remains “wrong and his explanation is unconvincing”.
A spokeswoman for chancellor Angela Merkel, whose decision to allow hundreds of thousands of migrations into Germany in 2015 sparked a fierce debate in Europe about migration – said Monday that most of the roughly three million people with Turkish roots living in Germany were well-integrated.
Turkish justice minister Abdulhamit Gul on the other hand congratulated Ozil on his decision, which he deemed “the most beautiful goal against the fascist virus.”
(BBG) Turkey’s lira plunged after President Recep Tayyip Erdogan appointed his son-in-law, Berat Albayrak, as economic chief of his new administration, fueling investor unease that the government can calm financial markets.
Albayrak will be in charge of a new ministry of treasury and finance, replacing roles previously held by Deputy Prime Minister Mehmet Simsek, a former Merrill Lynch banker, and Finance Minister Naci Agbal. Investors considered both to be market-friendly counterweights to a pro-growth bias under Erdogan that has weighed on sentiment.
The lira fell 3.8 percent to 4.7488 per dollar, extending one of the biggest slides across emerging markets this year. Albayrak served as energy minister since 2015.
Investors are concerned that authorities aren’t committed to unwinding months of stimulus that inflated the current account and budget deficits and left assets exposed as major central banks scale back years of loose monetary policy. Political pressure on the central bank not to raise rates in the face of accelerating inflation has also stoked worry about the policymaker’s independence.
Unless Simsek or Agbal are given another policymaking roles, such as in the economic coordination committee, “the likelihood of a July hike by central bank is now lower as key proponents of a hike are out of the picture,” said Inan Demir, an economist at Nomura Plc. in London. “This is the nearest-term policy implication. For longer-term implications we need to hear Mr Albayrak’s announcements/statements.”
Erdogan, who was sworn in as Turkey’s first executive president on Monday, told investors in May that he plans to take more control of economic policy in his new role. He has also pledged to lower interest rates, spooking investors who say the central bank needs to keep real policy rates high to support the nation’s assets and help the economy slow. Turkey grew faster than China last year and the central bank raised interest rates by 500 basis points since April.
(EUobserver) More than 18,000 civil servants, including police officers, academics and military staff, in Turkey are to be dismissed, according to a 461-page decree issued on Sunday. The move comes before Recep Tayyip Erdogan on Monday is sworn in as president following re-election in June and prior to lifting a state of emergency in place since summer 2016. Twelve NGOs, three newspapers and one television station will also be closed.
Born Fethullah Gülen 27 April 1941 (age 76) Pasinler, Erzurum, Turkey
Residence Saylorsburg, Pennsylvania, U.S.
Nationality Turkey (as of 2017, stateless)
Main interests Islamic thought, Islamic conservatism, Turkish politics, anti-communism, Turkish nationalism, education, interfaith dialogue among the People of the Book, Sufism
Notable ideas Gülen movement
Muhammed Fethullah Gülen Hocaefendi (Turkish: – the honorific Hoca Efendi, used among followers, translates to “respected teacher”); born 27 April 1941) is a Turkish preacher, former imam, writer, and political figure. He is the founder of the Gülen movement (known as Hizmet meaning service in Turkish), which is 3 to 6 million strong in Turkey and has an empire of affiliated banks, media, construction companies, and schools, especially those providing primary and secondary education, in Turkey (in which business entities and foundations have been closed down by the Turkish government by the thousands in 2017) and in Africa, Central Asia, the Americas, and Europe. Hizmet’s most populous organization is a moderate Islamic advocacy group, Alliance for Shared Values. Gulen lives in exile in the United States, residing in Saylorsburg, Pennsylvania. He is sought by the Turkish government for alleged involvement in the 2016 coup attempt in Turkey.
Gülen is actively involved in the societal debate concerning the future of the Turkish state, and Islam in the modern world. He has been described in the English-language media as an imam “who promotes a tolerant Islam which emphasises altruism, hard work and education” and as “one of the world’s most important Muslim figures.” However, James Jeffrey, former American ambassador in Ankara, has claimed that the Gülen movement, aside from its “legal and visible” activities, had infiltrated the Turkish armed forces, police and judiciary.
The Gülen movement (often referred as Gulenists) has been characterized as a civil society group promoting education, religious tolerance, and building social networks. Having shared a major goal of Turkish President Recep Tayyip Erdoğan of empowering religious individuals in civil life officially disenfranchised under then existing law in secular Turkey, Gulen and his movement were aligned with Erdogan prior to 2013. The alliance was destroyed after the 2013 corruption investigations in Turkey. Erdoğan accused Gülen of being behind the corruption investigations. He is currently on Turkey’s most-wanted-terrorist list and is accused of leading what the current Turkish officials call the Gülenist Terror Organisation (Fethullahçı Terör Örgütü, FETÖ). A Turkish criminal court issued an arrest warrant for Gülen Turkey is demanding the extradition of Gülen from the United States. However, U.S. figures in general do not believe he is associated with any terrorist activity, and have requested evidence to be provided by the Turkish Government to substantiate the allegations in the warrant requesting extradition.
Gülen has been described as a Kurdophobic preacher. He was accused of being against the peace process which had aimed to resolve the long-running Kurdish-Turkish conflict. However, Gülen’s supporters dismiss this claim, citing his work with many Kurds.”»
“That’s All Folks!”
Francisco (Abouaf) de Curiel Marques Pereira
(Bloomberg) — Sweeping changes to Turkey’s electoral laws
that could help President Recep Tayyip Erdogan tighten his grip
on power are set to begin their passage through parliament, with
the opposition warning that they would increase the risk of vote
The proposed overhaul comes just over 18 months before the
scheduled date for one of the most pivotal votes in modern
Turkey. When Turks go to the polls next November, or earlier if
plans are advanced, they’ll pick a new parliament and formally
concentrate executive power in the office of the president.
The amendments allow parties to form alliances that would
help them enter parliament, relaxing the current rule that
requires them to secure 10 percent of the vote each. The most
likely beneficiary would be the nationalist MHP, which some
analysts say has lost support since it became a junior partner
to Erdogan’s ruling AKP.
The changes, which lawmakers will begin debating Monday,
will help ensure Erdogan stays at the pinnacle of power as
Turkey begins a controversial transformation from decades of
parliamentary democracy into an executive presidency. Erdogan
has cracked down on political opponents since a failed coup
attempt almost two years ago, and has risked ties with the US
and Europe by launching an offensive against Kurdish militias
Together the AKP and MHP hold 352 seats in Turkey’s 550-
seat parliament, way above the 276 they need to ensure the bill
Under the alliance’s draft blueprint, authorities would
also be able to appoint government officials to run ballot
stations, relocate election stations on security grounds, let
law-enforcement officials monitor voting, and permit the
counting of unstamped ballot papers — an issue which clouded
the 2017 referendum on presidential rule.
‘Shadow of Guns’
Put together, the measures amount to a “serious threat” to
fair and free elections, the main opposition CHP said in a
statement on Thursday, following meetings with representatives
of eight other parties.
“The risk of holding elections under the shadow of guns
could put voters under pressure,” CHP lawmaker Ugur Bayraktutan
told a parliamentary committee, referring to the prospect of
armed security forces in voting stations.
The government says the changes to the way ballots are
conducted are necessary to secure the vote in Turkey’s southeast
from the influence of the Kurdish separatists.
Every vote could count next year. In the referendum on an
empowered presidency, Erdogan won only narrowly, while most of
his parliamentary landslides were secured with less than 50
percent backing. Under the new system, he’ll need a clear
majority for a first-round victory.
“The president knows that a small shift in votes could mean
a defeat in a contest he cannot lose,” Wolfango Piccoli, co-
founder of Teneo Intelligence in London, said in an emailed note
on Friday. “Further initiatives to maximize the chances of a
positive outcome on ballot day are likely.”
The fragmented opposition has been left on the “back foot”
by the AKP-MHP alliance, he said.
Erdogan’s party has never called early elections during its
15 years in power, and officials insist there are no plans to go
to the polls before November 2019.
Still, the AKP has surveyed opinion for any signs of
shifting voting intentions. Nationalist fervor has gripped
Turkey since the army launched an offensive against Syrian
Kurdish fighters, and the economy appears to have been put on a
In August 2013, Hungarian prime minister Viktor Orban welcomed Sergey Kiriyenko, head of Russia’s state-run nuclear energy company Rosatom, in Budapest.
It was not their first meeting — but it was probably their most important one. According to Hungarian government sources, it was then that Orban decided to contract Rosatom to expand Hungary’s Paks nuclear power plant — a choice made without a public tender.
The Hungarian government made the decision, which will affect the country’s financial and foreign policy for decades to come, in complete secrecy. It did not reveal any details about the Orban-Kiriyenko meeting in August 2013 either.
The circumstances of the meeting, uncovered here by Direkt36, provide deeper insight into Russian-Hungarian relations and the developments in the multibillion-euro Paks expansion project financed mostly through a loan from Russia.
Influential German businessman, Klaus Mangold, played a key role in facilitating this meeting, Direkt36 has learned from government sources.
Mangold, 74, has been active among Europe’s business elite for decades and is known for his exceptional relations in Russia. He has personally known Russian president Vladimir Putin since the early 1990s.
Our investigation shows that Mangold, referred to as “Mr Russland” (“Mr Russia”) in the German media, was involved in several aspects of the Paks deal.
Not only did he participate in the organisation of the Orban-Kiriyenko meeting but also worked to make the project palatable for EU and Western business circles. His closest contact in Hungary is minister Janos Lazar, who also played a decisive role in the Paks project and who enjoys good relations with German business circles. Lazar, who shares the hobby of hunting with Mangold, introduced him to Orban.
Mangold did not respond to inquiries by phone and by email. Hungarian government officials did not answer our questions and have so far revealed almost no details about Mangold’s activities — save that he works for them as a consultant. His contracts have been classified and were not even shared with the members of the Hungarian parliament’s national security committee.
‘He understands the Russians’
Mangold, who was born in 1943, spent most of his career among the top management of various German corporations.
He helmed the German mail-order company Quelle in the early 1990s; then, between 1995 and 2003, he held executive-level positions in the German carmaker Daimler. Between 2000 and 2010, he was the president of the German Committee on Eastern European Economic Relations, an industry group that represents German business interests in eastern Europe and Russia.
Currently he sits on the boards of several American, Austrian, French, and German companies and works as a consultant through his two firms. According to German company records, his clients included the subsidiaries of such huge corporations as the Dutch Shell, and the Russian Gazprom.
As a consultant, Mangold has put together numerous deals between the Russian and European business and political elites.
He has reportedly facilitated the access of Russian billionaires to European investment opportunities. For instance, as German media reported, Mangold helped Russian steel tycoon Alexey Mordashov acquire shares of one of the world’s biggest tourist companies, the Hannover-based TUI Group. After the appointment of Mangold as chair of the company’s supervisory board, Mordashov further increased his share in the firm.
A Frankfurter Allgemeine Zeitung (FAZ) story published last year described him as a person who “understands the Russians.” According to FAZ, he met Vladimir Putin in 1993 during a visit to St Petersberg as CEO of Quelle. The two have been in touch ever since.
“I have good relations with important Russian governmental institutions,” Mangold told the newspaper.
According to FAZ, he also regularly invites the political and economic elite to a 700-acre property in Schwarzwald, Baden-Württemberg. He avoids publicity but is proud of his relations. As he told FAZ, “my relations are my know-how.” He added, “This is the basis of my businesses.”
The Hungary connection
Mangold appeared in Hungary after the fall of state socialism. The mail-order company Quelle entered the Hungarian market in 1992, and Mangold, as CEO, visited Budapest several times in 1994.
Later, as head of Daimler-Benz Interservices, he developed contacts within the first Orban government (1998-2002). Daimler’s management met among others with the Hungarian defense minister, and in those meetings the Germans signaled their interest in upgrading the Hungarian military’s MiG-29 fighter jets as the Russian-manufactured planes had to be made NATO-compatible.
This upgrade was subject of an agreement signed in Stuttgart between Mangold and Hungarian economy minister Attila Chikan in April 1999. However, the Hungarian government in the end decided to purchase Swedish Gripen planes, dashing Daimler’s hopes of winning the contract. Still, the mere spectre of such a contract caused a political scandal in Hungary.
After a long pause, Mangold renewed his relationship with the Hungarian government once Orban swept back into power in 2010.
In December 2012, by now in the consultancy business, Mangold met with Orban to review, as an official press statement put it, “Hungarian-German and Hungarian-Russian economic relations, in particular energy and financing issues.”
Following the meeting with Orban, Mangold started to work for the Hungarian government as a consultant. At the same time, the Hungarian government began to deepen its relations with Russia. That year, Orban gave his backing to the Russia-sponsored South Stream gas pipeline instead of its EU-supported rival, Nabucco.
At the beginning of 2013, Orban announced that the Hungarian government purchased German energy company E.ON’s Hungarian gas branch, including the subsidiary holding the gas treaty between Hungary and Russia. This made it possible for the Hungarian government to negotiate directly with Russia about the price of its gas.
With this move, the Hungarian government entered a geopolitical arena in which it had to pay special attention to the positions of big powers — in particular, Germany.
However, Western sanctions imposed on Russia after Putin’s 2014 annexation of Crimea have complicated the situation for Orban’s government. The Russians invaded Crimea just one and a half months after Rosatom’s contract for Paks expansion project was inked.
In this fraught geopolitical climate, Mangold promised to be particularly useful to the Hungarian government. The prime minister’s office has kept Mangold’s contracts between 2013 and 2015 under wraps.
What’s known is that the government issued certificates of Mangold’s performance 75 times between July 2013 and December 2016. (Invoices can be paid based on these certificates.) In early October 2017, the prime minister’s office disclosed that Mangold has remained on the government’s payroll.
According to public data, Mangold’s consultancy was paid €125,000 for providing energy policy advice through April 2018. Another of Mangold’s companies, Mangold Dienstleistungs GmbH, has been awarded a contract for the preparation of Hungary’s e-mobility strategy worth €126,000 that also expires in April 2018.
The government did not share details about these contracts but a government source said that Mangold’s knowledge is used when various Russian-Hungarian meetings are prepared. Mangold also advises the government in concrete cases, including the Paks expansion project. He does not appear at official meetings, though. “He is active from the background, an eminence grise,” the source said.
The Paks expansion project is a key element of Russian-Hungarian relations.
According to a former government official, Orban’s government conducted exploratory talks with American, French, and South Korean nuclear power companies. However, from the very beginning, the source added, Rosatom remained the leading candidate for the Paks expansion project. The current plant at Paks was built using Russian technology, the source explained, and awarding the expansion contract to Rosatom improved Hungary’s negotiating position with Russia on other pending issues.
The fate of the expansion was then decided at the August 2013 Orban-Kiriyenko meeting in Budapest. “Up to that point, it was open who would build Paks, but there we gave [the project] to the Russians,” said another former government official, who was told in August 2013 to stop negotiations with potential Western contractors.
According to a source with knowledge about the August 2013 meeting, Mangold played a key role in its preparation.
Lobbying in Brussels
Mangold and his connections have also appeared in other phases of the Paks project. For example, the German businessman has had close ties to the Rothschild Investment Bank, which helped the government during the negotiations about the Paks expansion deal.
The Rothschild bank later came to play a more visible role in the Paks project. In the fall of 2015, the European Commission, suspecting illegal state aid greased the Russian-Hungarian deal, launched an in-depth investigation into the Paks project. According to the Hungarian government, Paks’ expansion would be profitable if energy prices increase in the future.
Several studies questioned the calculations of the Hungarian government, arguing that the new Paks plant will be profitable only with state aid. The Rothschild Group’s study, which the bank provided to the Hungarian government, concluded however that the investment would be profitable even under market conditions.
The government and the bank did not respond to questions about who commissioned and paid for the study. Rothschild declined to answer questions about whether Mangold played any role in the preparation of the report.
The European Commission also objected that the Hungarian government selected Rosatom for the construction of the new reactors without a public tender. Therefore, it launched an infringement procedure against the Hungarian government in November 2015.
The Hungarian government went to great lengths to get European Commission approval for the Paks expansion project. According to a governmental official, Mangold also played a role in this process.
“In case of Paks, it wasn’t the typical lobbying,” Benedek Javor, a Hungarian MEP and a staunch critic of the Paks expansion told Direkt36.
Usually, he said, officially-registered lobbyists in Brussels contact MEPs and other decision-makers — but not in this case. EU databases show that Mangold has not been a registered lobbyist, and, according to Javor, the businessman instead leveraged his personal connections to European economic and political elites.
Mangold has good relations with Guenther Oettinger, the German member of the European Commission, who is currently in charge of budget and human resources. Mangold serves as Russia’s honorary consul in Stuttgart, the capital of Baden-Württemberg, where earlier Oettinger was the province’s Prime Minister.
A governmental source called him “the strongest German politician in Brussels.” Mangold’s close relationship with Oettinger came to light when Hungarian online news portal 444.hu reported that the commissioner travelled to Budapest last May by Mangold’s private plane to participate at a conference opened by Orban. It was also reported on Euobserver the same day.
The trip sparked a scandal in Brussels. Oettinger said that the travel costs were covered by the Hungarian government, an assertion later confirmed by Hungarian officials. In doing so, the Hungarian government finally admitted the fact that it retains Mangold as a consultant.
However, this explanation did not allay all concerns about the commissioner’s activities. Oettinger was responsible for energy issues in the European Commission when the Hungarian government first announced its deal with Rosatom.
The European Commission only launched its investigation after Oettinger left the energy portfolio. Therefore, Oettinger likely possessed insider information that could have been valuable to the Hungarian government — though the commissioner denies he talked about Paks with Orban during his May 2016 trip to Budapest.
Euractiv reported in January that a European Commission director-general who previously worked under Oettinger may have advised the Hungarian government on how to argue in the infringement procedure.
Ultimately, the European Commission closed both investigations, and gave its green light to the construction of Paks.
Meat and flies
It was clear to the Orban government from the beginning that involving Western companies in the Paks project would increase its acceptance internationally. Following the launch of the infringement procedure by the European Commission, Lazar even stated in November 2015 that the EU was investigating Paks because Western companies wanted a share in the project. “Where there is meat, there are also flies,” Orban said the next day.
Then, last January, Orban held discussions with John G. Rice, the vice-president of US-based General Electric (GE) about Paks expansion. The GE vice-president signalled shortly before the meeting that his company would be happy to construct turbines for the new power plant. Rosatom issued a call for bids for the turbines in June, and two applicants showed interest: a Russian company and the Hungarian subsidiary of GE, GE Hungary Kft., which submitted its bid in consortium with Alstom Power Systems.
Mangold had contacts to GE as well. Before 2015, he served on the board Grid Solutions, then a joint company of GE and Alstom. GE Hungary did not answer questions on whether they have been in contact with Mangold regarding the nuclear project. They said, however, that they expect a decision in the turbine tender by the end of the year.
Constructions of the Paks expansion project have yet to start, and no subcontractors have been selected. The involvement of US and Western European companies as subcontractors would evidently mean less work for the Russians.
“A solution satisfying Russian, German, French, EU and Hungarian interests must have been found,” Javor said. He added that Mangold was an “ideal actor” for this task.
As usual, Mangold tried to stay out of the limelight throughout the whole process — but he did not succeed completely. His role in the Paks project drew the attention of opposition politicians, and, on the initiative of LMP parliamentary leader Bernadett Szel, the Hungarian parliaments national security committee discussed his activities at its March 1, 2017 session.
The session was closed. Szel told Direkt36 that the Fidesz-controlled committee did not agree to disclose Mangold’s governmental contracts to the members of the committee. Szel requested the contracts from the Prime Minister’s office but has not received any documents yet.
Another participant of the meeting said that Hungarian secret services, including those falling under the supervision of Lazar, gave briefings on Mangold’s activities. The presentation apparently did not contain many new details, as it mostly described Mangold’s network of connections.
Based on the information provided at the briefing, the source concluded that Mangold is a “lobbyist… who pacified Paks.” By this, the source meant that Mangold’s role was to ensure that “the project is not considered as solely a Russian investment” by the Western circles.
(Reuters) The Iraqi government ruled out talks on possible secession for Kurdish-held northern Iraq on Tuesday and Turkey threatened to choke it off, after a referendum on independence there showed strong support for a split.
Initial results of Monday’s vote indicated 72 percent of eligible voters had taken part and an overwhelming majority, possibly over 90 percent, had said “yes”, Erbil based Rudaw TV said. Final results are expected by Wednesday.
Celebrations continued until the early hours of Tuesday in Erbil, capital of the Kurdish region, which was lit by fireworks and adorned with Kurdish red-white-green flags. People danced in the squares as convoys of cars drove around honking their horns.
In ethnically-mixed Kirkuk, where Arabs and Turkmen opposed the vote, local Kurdish-led authorities lifted an overnight curfew imposed to maintain control.
The referendum has fueled fears of a new regional conflict; on Tuesday Turkey, which has fought a Kurdish insurgency within its borders for decades, reiterated threats of economic and military retaliation.
Kurdistan Regional Government (KRG) President Masoud Barzani says the vote is not binding, but meant to provide a mandate for negotiations with Baghdad and neighboring countries over the peaceful secession of the region from Iraq.
But Iraq’s opposition to Kurdish independence did not waver.
“We are not ready to discuss or have a dialogue about the results of the referendum because it is unconstitutional,” Iraqi Prime Minister Haider al-Abadi said in a speech on Monday night.
The Kurds held the vote despite threats to block it from Baghdad, Iraq’s powerful eastern neighbor Iran, and Turkey, the region’s main link to the outside world.
“This referendum decision, which has been taken without any consultation, is treachery,” Turkish President Tayyip Erdogan said, repeating threats to cut off the pipeline that carries hundreds of thousands of barrels of oil a day from northern Iraq to global markets.
Oslo-based broker Sparebank 1 Markets said oil companies could sell some oil locally if exports were blocked but their revenues would take a hit.
Iraqi Kurds – part of the largest ethnic group left stateless when the Ottoman empire collapsed a century ago – say the referendum acknowledges their contribution in confronting Islamic State after it overwhelmed the Iraqi army in 2014 and seized control of a third of Iraq.
Voters were asked to say ‘yes’ or ‘no’ to the question: “Do you want the Kurdistan Region and Kurdistani areas outside the (Kurdistan) Region to become an independent country?”
With 30 million ethnic Kurds scattered across the region, mainly in Iraq, Iran, Turkey and Syria, governments fear the spread of separatism to their own Kurdish populations.
Iraqi soldiers joined Turkish troops for military exercises in southeast Turkey on Tuesday near the border with Iraq’s Kurdistan region.
Turkey also took the Rudaw TV channel off its satellite service TurkSat, a Turkish broadcasting official told Reuters.
The U.S. State Department said it was “deeply disappointed” by the KRG’s decision to conduct the referendum but added that Washington’s “historic relationship” with the people of the Iraqi Kurdistan Region would not change.
Asked about the referendum, White House spokeswoman Sarah Sanders said on Monday: “We hope for a unified Iraq to annihilate ISIS (Islamic State) and certainly a unified Iraq to push back on Iran.”
Iran announced a ban on direct flights to and from Kurdistan on Sunday, while Baghdad asked foreign countries to stop direct oil trading with the Kurdish region and demanded that the KRG hand over control of its international airports and border posts with Iran, Turkey and Syria.
Iranian Major General Yahya Rahim Safavi, a top military adviser to the Supreme Leader, called on “the four neighboring countries to block land borders” with the Iraqi Kurdish region, according to state news agency IRNA.
Tehran supports Shi‘ite Muslim groups that have ruled or held security and government positions in Iraq since the U.S.-led invasion that toppled Saddam Hussein in 2003.
Syria, embroiled in a devastating civil war and whose Kurds are pressing ahead with their own self-determination, rejected the referendum.
KRG Prime Minister Nechirvan Barzani said he hoped to maintain good relations with Turkey. “The referendum does not mean independence will happen tomorrow, nor are we redrawing borders,” he said in Erbil on Monday. “If the ‘yes’ vote wins, we will resolve our issues with Baghdad peacefully.”
British Foreign Secretary Boris Johnson reiterated London’s opposition to the vote, urging ”all sides to refrain from provocative statements and actions in its aftermath.
“The priority must remain the defeat of Daesh and returning stability to liberated areas,” he added, a reference to Islamic State militants who continue to control parts of Iraq and Syria, including a pocket west of Kirkuk.
Turkey, in my opinion, should never, ever, be a Member of the European Union.
Francisco (Abouaf) de Curiel Marques Pereir
(CBC) Ibrahim Kalin, spokesman for the Turkish presidency, said in a tweet Monday that Merkel and her Social Democratic Party rival were seeking to divert attention from urgent issues in their country and in Europe, such as a surge in discrimination and racism.
In Sunday’s debate, Schulz said he would seek to end long-running but currently stalled talks on Turkey joining the EU over what he perceived to be Turkish President Recep Tayyip Erdogan’s increasingly authoritarian policies.
Merkel, left, and Martin Schulz are seen in a TV debate in Berlin on Sunday. (RTL via AP)
Merkel, who has previously expressed doubts about Turkey ever joining the EU, refused to commit firmly to the move, which would have to be agreed among EU members. She sharply criticized Erdogan’s rule, saying: “Turkey is departing from all democratic practices at breakneck speed.”
Candidates blasted for ‘myopic views’
Relations between the two countries have been tense for some time. Turkey has blamed Germany for harbouring people with alleged links to last year’s failed coup against Erdogan as well as outlawed Kurdish militant groups, while Berlin has accused Turkey of backsliding on democratic values. More than 50,000 were arrested in the aftermath of the coup.
Omer Celik, Turkey’s chief negotiator for its European Union bid, slammed the candidates for their “careless” tone.
“We do not accept these disrespectful messages against Turkey,” he said in a tweet.
Omer Celik, Turkey’s chief negotiator for its European Union bid, slammed the candidates for their ‘careless’ tone. (Fabio Frustaci/Associated Press)
Turkey’s foreign ministry also released a statement criticizing the “myopic views” of politicians and reminding the world of Turkey’s role in stemming a migrant crisis from pushing the EU into “a big chaos.”
The ministry said populistic campaign politics should not undermine bilateral relations and warned against encouraging xenophobia and Islamophobia.
12 Germans detained in Turkey
One reason Merkel gave for keeping lines of communication open with Turkey was Germany’s attempts to secure the release of 12 German citizens being held there for what Berlin considers political reasons.
Last week, for example, two were detained at Antalya Airport.
German Foreign Ministry spokesman Rainer Breul told reporters in Berlin on Monday that one of them was released. The German couple of Turkish descent were detained for alleged links to the network of U.S.-based cleric Fethullah Gulen.
Ankara blames Gulen, a former ally of Erdogan, for last year’s coup attempt in Turkey. Gulen denies the claim.
Polls show a double-digit lead for Merkel’s conservative bloc over Schulz’s centre-left Social Democrats before Germany’s Sept. 24 election.
…As I wrote many times before, in my opinion Mr Erdogan is not even fit to have a cup of
coffee with us.
Francisco (Abouaf) de Curiel Marques Pereira
(Reuters) German Chancellor Angela Merkel said on Sunday she would seek an end to Turkey’s membership talks with the European Union in an apparent shift of her position during a televised debate weeks before a German election.
“The fact is clear that Turkey should not become a member of the EU,” Merkel said in the debate with her Social Democrat (SPD) challenger Martin Schulz.
“I’ll speak to my (EU) colleagues to see if we can reach a joint position on this so that we can end these accession talks,” Merkel added.
The comments are likely to worsen already strained ties between the two NATO allies that have deepened since Turkish President Tayyip Erdogan’s crackdown on opponents in the aftermath of a failed coup attempt in July of last year.
There was no immediate reaction from Turkey which is in the midst of a national religious holiday.
Merkel’s comments came after Schulz appeared to surprise her by vowing to push for an end to the negotiations if he was elected chancellor in the Sept. 24 federal election.
“If I become German chancellor, if the people of this country give me a mandate, then I will propose to the European Council that we end the membership talks with Turkey,” Schulz said. “Whether we can win over all the countries for this I don’t know. But I will fight for this.”
Merkel initially cautioned against such a move, saying it would be irresponsible to endanger ties with Turkey at a time when German citizens are imprisoned there.
Twelve German citizens are now in Turkish detention on political charges, four of them holding dual citizenship.
“I do not intend to break off diplomatic relations with Turkey just because we’re in an election campaign and want to show each other who is tougher,” she said.
But after the moderators had moved on and asked the two candidates a question about U.S. President Donald Trump, Merkel returned to the Turkey issue, suddenly throwing her weight behind an end to the membership talks.
Merkel’s conservative party, the Christian Democratic Union (CDU), has long opposed Turkish membership in the European Union.
But the green light for membership talks was given months before Merkel became chancellor in 2005 and she has always said that she will respect that decision, referring to the negotiations as “open ended”.
The accession talks have ground to a virtual halt and EU leaders have stepped up their criticism of Erdogan.
There are fears within the ranks of the government that a new intensified influx of undocumented migrants from neighboring Turkey is happening with the blessings of Turkish President Recep Tayyip Erdogan though the development is also being viewed as potential leverage with the European Union with which Ankara’s relations are being sorely tested.
Although arrivals from Turkey are still way below the heights they reached at the peak of the refugee crisis in 2015, they have increased in recent weeks with more than 1,000 migrants and refugees landing on the islands of the eastern Aegean last week.
Government sources believe this increase is not accidental, but is occurring as Turkish authorities turn a blind eye to human smuggling along the country’s coastline, and is expected to continue. The same sources do not connect Ankara’s stance on the refugee issue to its cultivation of tensions with Athens in the Aegean – recent weeks have seen a spike in Turkish violations of Greek air space despite the moratorium that usually applies over summer – but with the recent deterioration of relations between Ankara and Brussels.
As government sources note, by allowing the increased influx of migrants heading to Europe, Erdogan is seeking to send a warning as Turkey’s EU membership talks appear to be headed for collapse.
Meanwhile the government is bracing for the beginning of returns to Greece of migrants from Germany and other European countries.
Migration Policy Minister Yiannis Mouzalas confirmed, in comments to The Guardian last week, that returns are to begin in September. Mouzalas said he was unsure where the new arrivals would be hosted but insisted that conditions at state-run reception centers have improved.
Human rights groups have consistently decried conditions at many venues, particularly on the islands of the eastern Aegean, which are currently operating at double their capacity as thousands of migrants await the outcome of asylum applications or deportation.
Tensions have been building on Lesvos, Samos and Chios, both in the centers and in the local communities where tolerance of growing migrant populations is being tested.