Turkey’s President Recep Tayyip Erdoğan is fast turning out to be the most conniving leader of all the heads of State or government across the world. Having ruined the Turkish economy with endless wars, Erdoğan is now finding novel ways to remain popular within Turkey. First, he ratcheted Muslim fundamentalism and now Erdoğan is falsely marketing a small ‘gas reserve find’ in the Black Sea to divert attention from real issues.
Erdoğan is in a desperate situation with the Turkish currency Lira plunging into a painful crisis and inflation hitting a record high. Therefore, when Turkey discovered a gas reserve in the Black Sea, Erdoğan immediately announced the beginning of a “new era”. He promised a large gas reserve which would bring the Turkish economy back in track. But the “new era” hasn’t really started and now it is becoming clear that Erdoğan’s claim of a big find in the Black Sea is a big fat lie.
While Erdoğan’s supporters continue to claim that Turkey’s bad days are over, the markets do not seem at all impressed with the size of the gas reserve find- 320 billion cubic meters (bcm). The find is less than half of the 800 bcm gas field that was being earlier anticipated, and even this is not independently verified.
According to the Economist, 320 bcm of natural gas would be a good amount, enough to fulfil Turkey’s own demand for seven years. But it will not pump up Turkey’s fortunes. Turkey will not become a net gas exporter, and in fact, the gas reserve find won’t even make Turkey independent in the gas sector. Ankara will remain dependent on imports from countries like Russia, Iran and Iraq.
The not-so-big size of the gas reserve find is not the only issue. But analysts are also sceptical about the actual size of the gas field, which has not been independently verified. Also, doubts are being cast on Turkey’s ability to kick-starting production from 2023, as promised by Erdoğan.
According to FT, Jonathan Lamb at Wood & Company said, “They may be able to attract international oil major as they have essentially a captive market for the gas sales, but the tone around this discovery is very nationalistic so I suspect they may try to go it alone.” He also said, “I suspect five years is the best you can hope for.”
Moreover, not many oil and gas companies would be willing to help Turkey, because offshore gas exploration is an expensive sector and the recent slump in hydrocarbons prices makes it an unattractive option.
Erdoğan is selling false hope to the people of Turkey in the name of a huge gas reserve find. But the investors haven’t taken the Turkish President at face value. It is true that when the hype was being built around the size of the gas field, Turkish currency Lira had made some gains against the US Dollar. But after Erdoğan announced that Turkey found 320 bcm of natural gas, the market got disappointed by the size of gas discovery and Lira hit an all-time low on Thursday.
Turkey’s economy remains in shambles, as the currency crisis has also come along with a steep rise in inflation that is fuelled by interest rate cuts, enhanced credit flow and surge in fiscal spending. Experts feel that the worst might be yet to come as far as the Turkish economy is concerned.
Bloomberg has quoted Timothy Ash, a strategist at BlueBay Asset Management in London as saying, “Given the weakness in the lira, the pass-through likely underpinned inflation.” Ash added, “High and sticky inflation is one of the factors helping drive dollarization.”
Turkish Lira is in a free fall and Erdoğan’s policies are only aggravating the currency crisis. Ankara seems to be getting gripped by the ongoing currency crisis and there is no relief in sight. For Erdoğan, some “good news” needed to be given to the people of Turkey to rake up a jingoist narrative and retain voter confidence.
The pro-Turkish government media in the country rallied behind Erdoğan’s exaggeration and marketed the gas reserve discovery as the end of Turkey’s problems. But this is no solution to Turkey’s economic woes. And the latest Lira crash makes it clear that fake gas discoveries will not bring the crippled Turkish economy back on track.
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