Economist, covering Emerging Europe, Middle East and Africa. Key focus on Ukraine, Russia and Turkey, amongst others. Tweets represent my personal views. LUFC.
The loss of the Moskva is a catastrophic military defeat and humiliation for Russia. It’s the FLAGSHIP of the Russian Black Sea Fleet. Simply extraordinary. I cannot understand why this is not the number one news story across all networks today.
Italy saying they will not veto an EU Russian energy ban, so it’s now Germany, Austria and Hungary standing in the way. Looks like the learned nothing from WW2 about how to stand up against genocide.
Absolutely insane day in Turkish FX today. Is there time for it to get to Robin Brooks’ 9.50 fair value yet? Don’t think I have ever seen such intraday FX volatility ever in my 30+ year career.
Germany agrees to halt coal imports from Russia but not oil and gas. Not good enough - Germany is financing genocide in Ukraine. It learned nothing from WW2.
Turkey - just realised, Keynes, Friedman, Hayek, Solow, Samuelson, Adam Smith, Kornai, Dornbush, the Fed, ECB, BOE, me, all Western economists, we are all idiots. Wasted all our time, learning economics. Erdogan just rewrote all the theories.
Russia confirming international banks rejected $649m transfer for Eurobond payment - due to sanctions. Looks like Russian sovereign default is looming.
1/ Let’s get this right, Germany spends the past 20y appeasing Putin. It’s industry taking Putin’s blood money, and it’s politicians doing the same. It makes wrong choices in terms of energy dependency on Russia. This appeasement is now coming home to roost.
Turkey is taking a huge risk with Russia here. But if it is putting its balls on line, risking wrath of Putin by closing straits, and loss of tourism, we should all back Turkey by holidaying in Turkey this year - I will!
Oh dear…looks like someone totally misunderstood what I said. To underline I think the current monetary policy settings in Turkey are completely insane.
Flight to Istanbul - British Airways flight crew make announcement that during Ramadan eating, drinking and smoking in public places is not allowed in Turkey. Completely false - idiots. Just be respectful of others fasting. Common decency.
Now that Putin has revealed he is at war with the West by stopping gas supplies how about the West taking direct action to confiscate + use the $400bn in frozen Russian assets in our financial system? Use to support Ukraine + bail out poorest consumers.
1/ So it looks like Nord Stream 2 was not a commercial project after all, and was a geopolitical project. How could the German establishment get Russia so spectacularly wrong - I think they took Moscow’s blood money. That essentially sums it up.
Hearing ruble being quoted up as far as 115 for tomorrow, from 83 on Friday. Putin is setting stage for financial collapse of Russia. So much for Fortress Russia as really devastating sanctions now roll out
I wonder if Macron, Scholz and Erdogan would be calling Hitler. They seem to have no comprehension that for Putin this is about eradicating Ukraine and Ukrainians. Read his essay from last summer which was his drum beat for war.
Putin made catastrophic decision to invade - meaning he has lost Ukraine, half his army, Euro energy biz, allies (going to N Korea and Iran for munitions shows desperation as China not helping him), credibility, and likely ultimately Russia. Putin the Loser
Turkey - bit of a joke that the EU is not lifting the travel ban. Turkey has done as well, if not better than the EU average in fighting Covid19, and arguably much better than the UK. Guess inbuilt biases, racism and geopolitical interests playing out here.
When the war ends - with an inevitable Ukrainian victory - there needs to be a G7 public inquiry about how the West was corrupted by Russian money. Let’s not be blind to this - 1/
1/ Russia lots of talk that it is “winning” from sanctions as they elevate commodity prices. But in April It sold oil at an average of $70 a barrel, versus $107 for Brent, while oil production was down 9%. Russia is struggling to sell oil except at discount.
If Kilicdaroglu wins the election in May Turkey will be welcomed back with open arms into the Western fold - 1st foreign visit for Kemal Bey will be DC or Brussels for sure. Huge amount of Western financing will flood back in - the coming Turkish boom.
Turkey = decent banks, great corporates, solid public finances, pro business entrepreneurial culture. Good location - manufacturing hub close to key markets. All ingredients for great success. But the landmine in all this is totally idiotic monetary policy.
If Putin wins in Ukraine then Europe’s security is at risk - how come the Germans, Italians and Hungarians just don’t get this? Sold out to Russian money? The West is not doing enough to support Ukraine. These three WW2 Axis allies should know better.
Istanbul is literally full of Russian tourists - I cannot help myself looking into their eyes & asking myself were they bombing innocent civilians in Ukraine or Syria last week, committing war crimes and atrocities. And now getting R&R before doing it again.
Great read - Russia is now essentially a fascist state, as per Nazi Germany, the sooner everyone comes to that realisation the better. People like Cyril Ramaphosa need to wake up, it’s a which side were you on moment in history.
1/ When Macron warns that we should not humiliate Putin does that mean he thinks it’s ok to accept a little genocide against the Ukrainian people, but not a full genocide? Would he have adopted the same line against Hitler?
5/ But energy sanctions are really one of the key actions which could really hurt Russia, and perhaps dissuade Putin or Russia’s elites from backing this invasion. So Germany is now blocking this.
The Macron - Scholz - Draghi visit to Kyiv looming looks like a recipe for disaster. Fear that rather like the three stooges they will look to bully Zelensky to concede territory with Putin for peace which will not hold. Putin will take and expect more later.
Half of the Russian army was destroyed without the participation of a single American soldier. At the same time, only 5% of our annual defense budget was spent. We must continue to support Ukraine," said James Stavridis, former Supreme Allied Commander of NATO.
Stavridis called…
So let me get this right. The US Treasury eases sanctions on Russia to enable it to avoid default and pay out investors who failed to listen to the advice of their own governments and continued to invest in Russia? Talk about a moral hazard play.
2/ But now Putin has invaded Ukraine, and the West has no real military intervention options, only sanctions, the German government is unwilling to sanction Russia energy imports as it will damage its industry which has profited from Russian appeasement.
3/ Sure, estimates suggest cutting off Russian energy could cost the German economy from 0.5-3% of GDP, and weaker growth. But Germany still has the strongest fiscus in the EU. Lots of fiscal space to ease to offset recessionary impact of cutting energy
Breaking 🚨🚨
GENOCIDE ALERT 🚨
Commissioner for "Human Rights" in the Russian Federation Tatyana Moskalkova has just published a report stating 557,000 Ukrainian children were now in Russia and they could attend school, in person, free of charge.
They aren't even hiding it.
This is a big positive. Cevdet Akcay is a superb economist and thinker. Hatice Karahan is excellent. Fatih Karahan is from the NY Fed. This a a sea change at the Turkish central bank. Massive vote of confidence in Erkan from Erdogan.
JUST IN: Erdogan sacks Central Bank Deputy Governors who are known for their unorthodox policy views.
New governor Erkan fills up the positions:
• Cevdet Akçay, a respected banker
• Fatih Karahan, an economic advisor from Fed
• Hatice Karahan, an Erdogan advisor
Turkey's Finance Minister on CNN TURK spreads a conspiracy theory that the US Federal Reserve does not belong to the American public but rather is in the hands of 5 families. Just everyday news on
@CNN
's affiliate in Turkey.
Turkey - probably the worst economic situation I have seen since the 00/01 crisis. Totally fcuked economic inter-relations. Banks not lending due to wacky regulatory environment and big negative IR margins. 1/
Turkey - another $1bn used by state banks today to defend the lira and it still lost 2% on a day when the $ was weak. A huge price is being paid for Erdogan’s aversion to interest rate hikes - massive loss in FX reserves. Peoples FX deposits being spent.
⚡️Ambassador asks Germany why it refuses to ship armored vehicles.
“Why are you refusing the Ukrainian army these Marder (vehicles)..., while Ukraine is bleeding dry in the Donbas before your eyes?” Andriy Melnyk, Ukraine’s ambassador to Germany, tweeted.
Photo: Wikipedia.
Turkey - Erdogan apparently knows better than generations of Nobel economists. Says that Western views that inflation is caused by overconsumption is just wrong. We should just all retire then and let Erdogan run global economics.
Putin has lost the energy war, lost Europe, lost Ukraine (forever), lost Central Asia, lost the arms race (his military kit is crap - no one globally will want to buy), lost huge amounts of troops, military kit and treasure. What an idiot!
So the US has spent $18.6bn in military support for Ukraine, but the casualty rate for Russia has been immense: 2800 tanks taken out, 5800 AFVs, hundreds of aircraft. Best bang for buck for US military since WW2 in eroding an enemy.
Turkey - I met Kilicdaroglu in London a few months back with other investors & I thought his answers to questions were weak/waffling. I thought at the time that this guy is just no match for RTE in a campaign. Those concerns have kind of being realised. 1/
Turkey - I have been at technofest in Istanbul. Extraordinary show case of Turkish high tech capability and incredible to see the passion and enthusiasm of Turkish youth. Mega impressive.
Turkey - think we have learned that lira has rallied this week not because locals have started buying lira but because central bank sold $15bn in thin markets.
Italians throwing in the towel before war even started - Draghi saying sanctions on Russia must be limited and exclude energy. Disgraceful albeit I guess not unexpected.
I know that the whole Bayraktar thing is becoming politicised in the context of the election but I just hope whoever wins, the Bayraktar guys can continue to provide support to Ukraine. They have been real heroes for what Turkey has done in Ukraine.
Just met a young Russian who has recently received a UK passport, and was passionately defending Putin and did not seem that enthused by the Western Liberal Democratic model. Was left thinking that citizenship test needs some more work.
1/ Turkey - Erdogan does not get it on Sweden/Finland NATO accession that the decision is made, and even if he blocks their NATO membership they will be accepted into the Western security alliance by bilateral agreements.
Turkey - it’s incredible how long an economy can survive despite an administration running crazy economic policies for so long. Shows real underlying durability of the Turkish economy and talent of Turkish economic actors who have learned thru adversity.
Wow, huge move. Just shows weakening grip across region of Russia because of Putin’s idiotic invasion of Ukraine. He lost Armenia in recent weeks on Russia’s inability to help in NK.
BREAKING — Kazakhstan will follow the sanctions regime against Russia, President Tokayev says
The country does not have any concerns regarding territorial claims from the Russian Federation, he added.
Russia is clearly a fascist state and Putin a dictator, war criminal and genocide pusher in Ukraine. The willingness of Western companies to stay in Russia is disgusting.
Fortress Russia = sanctions, higher borrowing costs, reduced investment, low growth, lower living standards, social unrest, repression, brain drain, tech decline, EU energy diversification, dependence on China, stagnation. Road to nowhere. USSR circa 83’.
Turkey and UAE sign a massive $50bn MOU for investments. That’s much bigger than the $30bn originally mentioned. I assume with something similar from Saudi that would take Gulf support to $100bn plus. Are they selling Fenerbahce for that?
Turkey - pretty clear big defeat for AKP in local elections with CHP taking Istanbul, Ankara and Izmir and big cities, and beating AKP in national vote. It’s all about inflation! Erdogan needs to double down in support for Simsek and the new team at the CBRT.
Turkey - the prob is inflation. 20% in Nov, likely rising to 30-50% over next few months. That’s why Turks don’t want to hold lira. CBRT needs to do its job + focus on fighting infl. Likely it needs higher rates not FX intervention/fancy deposit schemes.
4/ Long term the invasion of Ukraine and sanctions will be economically disastrous for Russia, only a question when ordinary Russians begin to feel the pain and realise this is coz of bad choices by Putin.
Three big conclusions from AKP’s defeat in local elections: 1) Democracy is alive and kicking in Turkey; 2) Personalities matter - Imamoglu/Yavas led the charge in Istanbul/Ankara; 3) Inflation hurt the AKP vote badly. Erdogan has to get to grips with it.
Erdogan says no need business with the IMF, “at the moment”, so not ruling it out then? Meanwhile, signing up to big contract with McKinsey for Cost and Transformation Office to cut budget spending. IMF might have been cheaper.
Turkish foreign minister, Hakan Fidan, says “the West has completely lost moral superiority” - after years of failed Western intervention in the MiddleEast, and double standards, it’s hard to argue against this.
Most over-used term - “things are never black and white”. Wrong, some things are crystal clear - like who is the aggressor here. Crimea, Donbas, MH17. 140,000 troops on the border of Ukraine. I worry about the judgement of people who cannot see the obvious.
Big take out from Istanbul trip is that Turkey is not cheap. London prices for most things. Can see why many Turks are struggling to survive the inflation and cost of living crisis - hence the election result.
1/ Interesting how Putin has made himself and Russia the international pariah Nimber 1. Result - brings US to table with Venezuela. Turkey and Israel closer. Even makes US and Iran work harder on deal - even if Russia will now try and scupper it.
Shame on Italy and Germany by blocking SWIFT sanctions. Selling a few more BMWs and Fiats seems more important to them then their democracy. Let’s see how the German army does against a Russian army blitzkrieg without US support.
The solution on using frozen Russian assets for Ukraine is clear - allow Ukraine to issue Recovery Bonds. Use the frozen $400bn in Russian assets to buy them. Russian still owns the underlying asset - no attack on property rights. 1/
Lavrov suggesting if US proposes Biden - Putin summit the Kremlin will consider it. Kremlin speak for we are desperate for peace talks. Typical Putin, escalate before talks.
Turkey - great country, people, corps + banks. Should be No.1 EM but insane policies at present, particularly around monetary policy, makes it very hard to invest. Message to Erdogan - you are totally+utterly wrong on relationship between inflation + rates.
Russia notifies Turkey that it will not renew the Black Sea Grain deal. Putin kicks Erdogan in the balls, and with it the rest of the Global South. Russia is responsible for the global cost of living crisis because of its invasion of Ukraine, not sanctions.
That looks like Yuri Boyko on the right - so even the “pro-Russian” Opposition Block is now allied with Zelensky against Russia. That is what Putin has done
Важливі рішення Верховної Ради України:
- про можливість отримати вогнепальну зброю громадянами України та іноземцями, які хочуть захищати Україну #ЗП7120
- про націоналізацію російських активів на території України #ЗП7122
Nagi Agbal was a decent, honourable man, a good economist and central banker and a patriot trying to do the best for the country. His firing is a This is a ridiculous move by Erdogan and very, very worrying. Markets will give their verdict next week.
3/ Longer term the West will massively cut energy imports from Russia and without investment in pipelines this will be hard to divert east. And sanctions means Russia will be starved of capital to build pipelines.