Turmoil in Turkey, but steel executive is standing firm
ISTANBUL — In a prominent spot on a shelf close to his desk, Fuat Tosyali keeps a reminder of what his life was like long before he became a steel magnate and one of the richest people in Turkey, with a penthouse office outside Istanbul and a Mercedes limousine parked out front.
It is a black-and-white photograph of a young man polishing a stovepipe.
The young man is Tosyali, and in many ways the photograph tells the story of how far the Turkish economy has come. Tosyali’s road from poverty to wealth mirrors Turkey’s journey from tattered former empire to Mediterranean powerhouse with growth rates to rival China, at least until the economy took a steep dive last summer.
Tosyali professed confidence despite a downturn that has been exacerbated by the punitive tariffs imposed on Turkish steel by the United States.
“This is my 51st year in the business,” said Tosyali, 55. “I have seen many crises.”
Tosyali’s bravado may sound odd given the events of the past year, when he and other Turkish business executives have been forced to cope with a plunge in the value of the lira, a sharp decline in consumer demand, and President Donald Trump’s 50 percent levies on steel imported from Turkey — twice the size of tariffs imposed on Europe and other U.S. allies.
The problems have put Turkey, which has the world’s 17th-largest economy, high on the list of places where the next global financial crisis could start.
In growing numbers, Turkish entrepreneurs are leaving the country or transferring their wealth overseas because they fear that the country’s economy could get much worse, or that their assets and freedoms could be seized by President Recep Tayyip Erdogan’s authoritarian government.
But Tosyali said he planned a major new investment in steel production, although he declined to give details.
After one of the country’s most difficult years in two decades, it is unclear how the current chapter in the story of Turkey’s rise will end. Most economists expect things to get worse before they get better. “Everyone is anticipating a recession,” said Güven Sak, who leads the Economic Policy Research Foundation, a think tank based in Ankara.
There are a few hopeful signs. The lira, which was in danger of falling below 7 to the dollar in August, has recovered somewhat and was trading at about 5.30 to the dollar Monday. Still, the Turkish currency lost 28 percent of its value in 2018.
In another positive development, inflation is retreating from the astronomical levels it had reached. The annual rate, which had climbed above 25 percent, fell below 22 percent in November after the Turkish central bank raised its benchmark interest rate to 24 percent.
But Erdogan is not making things any easier. He has driven some business owners into exile for allegedly plotting with his opponents. Akin Ipek, another of Turkey’s richest men, had holdings in mining and media before the government seized his conglomerate in 2015 while he was visiting London. Erdogan has also criticized the Turkish central bank for raising interest rates, a step that most economists considered the only way to corral inflation.
The government has responded with temporary measures like tax incentives for people who buy furniture, large appliances, cars and homes.
“Some precautions are being taken for industry,” said Sak of the Economic Policy Research Foundation. “But these are BandAids, not the remedy.”
As Tosyali sees it, the rough period now facing Turkey is another opportunity for entrepreneurs to demonstrate their fortitude. Tosyali Holding, he said, planned to take advantage of lower manufacturing costs to expand and put itself in position to gain market share when the crisis is over.
Other bosses “put their feet on the brakes, they cut the workforce,” Tosyali said. “We do the opposite.”