Ankara and Cairo broke off ties after the 2013 overthrow of Egypt’s first democratically elected leader Mohamed Morsi.
“Where is the $128 billion?” asked posters on billboards around Istanbul intended by Turkey’s main opposition to embarrass and annoy President Recep Tayyip Erdogan and his ruling Justice and Development Party (AK).
The gambit seems to have worked. Police took the posters down, using cranes in some instances, according to videos shared online by the opposition Republican People’s Party (CHP), which said it would keep putting them back up.
The question has also trended on social media, while the AK on Tuesday blocked a CHP call to debate the missing funds in parliament.
The sum refers to the dollars sold by state banks to support the Turkish lira in foreign exchange markets. The unorthodox policy began around the 2019 municipal elections and was ramped up in 2020, when the coronavirus pandemic laid bare the lira’s vulnerability and Turkey’s reliance on external funding.
Bankers have calculated that the sales totalled $128.3bn in 2019-20.
Erdogan says the sales helped to support the economy, but they sharply depleted Turkey’s buffer of foreign reserves, leaving it more exposed to crisis, and opposition politicians want to know more.
“[Erdogan] says ‘you cannot even ask me questions’,” CHP leader Kemal Kilicdaroglu told party members on Tuesday, accusing the AK of stifling debate. “Those leading the country must give an account to the people.”
Kilicdaroglu said a prosecutor had ruled that some posters that bore a silhouette of the presidential palace were an insult to Erdogan. Insulting the president is a crime in Turkey.
The lira, which has lost more than 50 percent of its value since the end of 2017, held around 6.85 versus the United States dollar between May and August 2020, which economists attributed to forex sales. It later weakened to a record low of 8.58 by November, after the sales stopped. The lira traded at 8.08 on Wednesday.
The CHP first posed the question about the sales in February, prompting Erdogan to defend the legacy of his son-in-law, former Finance Minister Berat Albayrak, who had overseen the policy.
Albayrak abruptly resigned in November when Erdogan named Naci Agbal as governor of the central bank, which had backed the dollar sales with swaps.
Agbal was in turn fired last month, partly, Reuters news agency reported, because Erdogan was uncomfortable with the bank’s investigation into the sales, which cut its net foreign exchange reserves by 75 percent last year.
The net buffer was $10.7bn on April 2, the lowest in at least 18 years, central bank data shows. Excluding $41.1bn in outstanding swaps, the reserves are deeply negative.
AK lawmaker Mustafa Savas said the sales helped Turkey avoid raising interest rates or seeking International Monetary Fund support.
The CHP has asked how the sales were conducted and at what rate. AK lawmaker Nurettin Canikli said they were all conducted at market rates.
Canan Kaftancioglu, the CHP’s Istanbul organisation head, said just a fraction of the $128bn could have supported Turks through a 28-day coronavirus lockdown that the party has urged in the face of a surge in infections.
“They will never prevent us from asking these questions,” she said, adding that the posters would hang outside CHP buildings until an answer was provided.