Letter of no-intent

There are countries, like Korea, that engage into intent-driven growth and development. Hyundai took off in 1967, and one of its premium cars Genesis could finally become a known luxury brand in 2010. That is, 43 years after the take-off. It takes time to build.

● There are also countries that don’t intend to develop.

Instead, they just pretend to be so, possibly due to temporarily foreign capital inflows and a sense of prosperity generated by large wealth effects. They have no patience.

● But this isn’t development. You didn’t study engineering, your daughter didn’t go to graduate school, you didn’t discover anything new, and there is no technological improvement. It is just that your homes have somehow gained value and you used your home equity to buy an imported new car.

● It takes a culture of devotion, persistence, work ethics, science and modernity, commitment to modern secular education and also social imagination to launch a genuine development drive. Otherwise, it’s all pretension and empty boosting. The fact that part of the populace can’t tell the difference is immaterial. Realities are bitter.

● This is why the only real problem people care about these days is the fate of the Lira after the elections. Everybody without exception probably think that the exchange rate will jump in the aftermath of the elections no matter what.

● With USD 47 billion negative net reserves what would you expect? There has been an incredibly long period of “sell all FX you get to the market so the exchange rate stays put” policy and the elections motive behind that policy is understood by everyone.

● This is why the exchange-rate protected TL deposit scheme now offers even higher TL interest than the regular TL deposit accounts –there is also a tax advantage. People try to protect their meagre savings from an abrupt Lira depreciation.

● The expectation is that the Lira will weaken shortly, but stabilize at a higher USD TL parity when Lira interest rates will gradually climb the ladder. Also, if the opposition wins, people think that eventually credibility will be restored and Western funds will favour Turkish assets anew. This is the only Letter of Intent we got now.