Caesar not above economy

İbrahim Türkmen

"Caesar non supra grammaticos" is a well-known Latin phrase that asserts that even unquestionable and mighty rulers have limits, not only against the timeless and indiscriminate rules of nature, but also with regard to fields that require special expertise. In this particular example, Holy Roman Emperor Sigismund had been disputed by a courageous grammarian over his insistence that a misused word should be accepted as is if it is uttered by a ruler.

President Recep Tayyip Erdoğan's bullying stance on issues concerning politics, his aggressive treatment of his opponents and his ability to control and manipulate the minds of the masses may work in the art of ruling. But when it comes to the economy, blatant moves in complete disregard of the inner mechanism of its system inflict real damage to it.

His exclamation in a speech to businessmen on Thursday that he "wasn't trying to sink Bank Asya, since the bank has already sunk" will undoubtedly be perceived as an open threat to market confidence in Turkey. Erdoğan is increasingly turning into a scarecrow for foreign investors.

His call last week for the Banking Regulation and Supervision Agency (BDDK) to do "whatever it takes" to take over Bank Asya or to "face the consequences" is defined in the law as a crime. Banking Law Article 82 is very clear on this matter: “The institution [BDDK] performs the duties of regulation and supervision and uses the authorities given to it by this law and the relevant regulations freely under its own responsibility. The decisions of the institution cannot be assessed in terms of appropriateness. No body, office, authority or person can give orders or instructions to affect the decisions of the institution.” The law also envisages a penalty for any person trying to exert influence over the BDDK: imprisonment of one to three years plus the imposition of up to 1,000 days' equivalent in punitive fines.

Erdoğan has been spearheading a dirty war against Bank Asya for its affiliation with Hizmet, a faith-based movement consisting of millions of volunteers who serve to spread peace, interfaith dialogue and education in Turkey and around the world. Hizmet's relations with the government, which was led by Erdoğan, were severed after the government decided to close dershanes (prep schools), which are one of the major parts of Hizmet's activities. Corruption scandals that went public in late 2013 added insult to injury, and Erdoğan waged a war against the Hizmet movement after announcing it as a proxy of some undefined international powerhouses that were trying to topple his rule.

He has not bothered to show any proof of this and his followers have not needed any. He has disregarded legally collected evidence about his government's involvement in corruption practices and his followers have not even questioned whether his denials were grounded in truth. He has had the power and he has extended this power even beyond legal frontiers; he has succeeded in stifling the investigations and consequently rising to the presidential post.

The presidency in Turkey is like playing in "God mode" in a computer game. The president cannot be tried for any crime except for treason, and even that requires the approval of the qualitative majority of Parliament. So, impeaching the president is practically impossible. Thanks to his limitless immunity, being involved in independent institutions' work, pressuring them to make decisions in line with his political aims and taking steps to increase his popular support are not sources of concern for Erdoğan. And he is not shy to rely on the superiority of his new position to attain his political aims.

Despite his continuous pestering, however, Bank Asya will not sink. There is no way the BDDK can seize it, as its financials are strong. It has enough money in its coffers to answer all short-term withdrawal demands and its loyal customers are rushing to put in more money than what is being taken out. It is the third-best bank in Turkey in terms of capital adequacy rates. Its shares have been in a free fall since the beginning of the week, but as of Thursday, they have bounced back from the dip level and started climbing at a record pace.

The BDDK cannot take it over since the law necessitates that if a bank is in a bad situation, the BDDK and the other institutions, like the Central Bank of Turkey, must take measures to keep it afloat. Liquidation is the last resort and for that to happen the bank must be irrecoverably bad. That is not the case for Bank Asya.

Bank Asya, Turkey's largest Islamic lender, will not sink before the other banks that are in real trouble. There is a growing systemic risk in the Turkish banking system and an illegal seizure of Bank Asya will not serve to do anything but underline this looming risk and unavoidably trigger a vacuum effect. Even this government cannot take this stake. The government, which is in the position of suffering the consequences of an economic crisis, will probably consider the dire repercussions of this clear breach of law and egregious move to assault a private enterprise out of political targets on foreign investors.

Erdoğan, who seems to be flaming with anger by seeing the bank still hale and hearty, will continue to stay mad because even though he is immune from legal proceedings, his bureaucrats are not. And any gun they use to assassinate a bank as per orders from their boss will backfire terribly on them.

Published on Today's Zaman, 18 September 2014, Thursday