Turkey’s Babacan Warns Of Financial Turmoil

Yasemin Çongar

Aug 27, 2013

Turkey's lira coins are seen in this picture illustration taken in Istanbul July 23, 2013. Turkey's central bank raised interest rates on Tuesday and said it would, if necessary, take further steps to stop the lira from falling. The move - a rise in the overnight lending rate to 7.25 percent from 6.5 percent - was a reaction to capital outflows that have knocked the lira down as much as 9 percent against the dollar. REUTERS/Osman Orsal (TURKEY - Tags: BUSINESS) - RTX11W1Y — Turkey's lira coins are seen in this picture illustration taken in Istanbul, July 23, 2013. — REUTERS/Osman Orsal

Emerging markets will soon find themselves operating in a new world order. Few people are as painfully aware of this as Turkey’s Deputy Premier Ali Babacan.

A soft-spoken politician whose key positions in three successive Justice and Development Party (AKP) governments included a two-year stint as foreign minister, Babacan is currently the highest-ranking cabinet member responsible for the economy.

Needless to say, he was all ears when US Federal Reserve Chairman Ben Bernanke suggested on May 22 before the US Congress that it could begin to downsize its $85 billion-per-month bond-buying program.

Babacan had seen that coming. He warned Turkey repeatedly against overspending in 2012 — even at the risk of displeasing Prime Minister Recep Tayyip Erdogan — because he knew cheap loans would soon grow scarce.

Turkey’s Babacan Warns Of Financial Turmoil

Deputy Prime Minister Ali Babacan warns of the implications for Turkey of the US Federal Reserve’s plan to taper bond purchases.

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