RIYADH - Turkish President Recep Tayyip Erdogan arrived Monday in Riyadh for a visit at the king’s invitation in what is seen as a Saudi bid to unify Sunnis against Iran and jihadists.
Erdogan’s meeting with King Salman comes a day after Egyptian President Abdel Fattah al-Sisi held talks with the monarch, and precedes a visit by Pakistan’s Prime Minister Nawaz Sharif later this week. The leaders of neighbouring nations Qatar, Kuwait, Jordan and the United Arab Emirates have already visited Salman since mid-February, and other Arab heads of state will follow, said Nawaf Obaid, a visiting fellow at the Belfer Center at Harvard University in the United States.
‘Saudi Arabia is drastically going to re-energise its foreign policy to bring the kingdom back to its natural role as the main unifier of the Sunni world because of its unique attributes,’ Obaid told AFP. He was referring to the kingdom’s hosting of Islam’s holiest sites, the size of its economy, and its position as the world’s largest oil exporter. ‘Clearly, things are shaping up in a very different way than they have been in the last several years.’
Salman acceded to the throne in January after the death of King Abdullah, aged about 90. Erdogan arrived in Riyadh after performing a weekend pilgrimage in the Muslim holy city of Mecca and visiting Medina. Cairo has accused Turkey of interfering in Egypt’s internal affairs and of supporting the Muslim Brotherhood. Sisi and Erdogan have had strained relations since Sisi ousted president Mohamed Morsi in 2013, launching a crackdown on his Muslim Brotherhood which Qatar was also accused of backing.
But Obaid said keeping Turkey ‘on the sidelines’ only weakens the Sunni world. ‘So as long as you can start having a serious sustained discussion between the major Sunni powers then you can come up with some form of policy at some point down the road, dealing with Iran and dealing with ISIS,’ he said, referring to the Islamic State group jihadists who have seized large parts of Iraq and Syria. The group has claimed atrocities including the beheading of foreigners and Christians and the burning alive of a caged Jordanian fighter pilot. Saudi Arabia and its Sunni Arab neighbours are part of a US-led military coalition conducting air strikes against IS. Shiite-dominated Iran competes with Saudi Arabia for influence in the region. Moreover, Defending high interest rates is tantamount to treason, Turkish President Tayyip Erdogan warned at the weekend, and said the governor of the central bank and deputy prime minister in charge of the economy needed to ‘shape up’.
Deepening a standoff which has rattled investor nerves, Erdogan was quoted on Monday as saying he would hold talks with Central Bank Governor Erdem Basci, under fire for failing to cut rates as sharply as Erdogan wants. ‘We will call him and talk,’ broadcaster NTV quoted Erdogan as saying on his plane travelling to Saudi Arabia, adding the central banker had himself requested a meeting.
Basci sought to calm nervous investors on Friday by dismissing rumours he would resign, days after Erdogan said the bank’s monetary policy was ‘unsuited to the realities of the Turkish economy’ even after the bank lowered its main rate for the second straight month. The bank trimmed the one-week repo rate by 25 basis points to 7.5 percent last week but Erdogan wants more aggressive cuts. Economy Minister Nihat Zeybekci, another critic of central bank policy, wants the repo rate cut to 6 percent.
NTV reported Erdogan, who is determined to see stronger growth ahead of a June general election, as saying he had already held face-to-face talks with Basci and economy czar Deputy Prime Minister Ali Babacan. ‘They need to shape up a bit,’ Erdogan was quoted as saying. ‘If interest rates don’t fall, Turkey can’t invest.’
The lira hovered near record lows after Erdogan’s latest comments, easing as far as 2.5220 against the dollar from 2.5096 late on Friday, when it touched a record low of 2.5275. ‘We think these comments and market tension will continue until the election. I don’t think anything will become clear before then,’ said HSBC Turkey’s Treasury Director Fatih Keresteci. ‘A process which began with a call for an interest rate cut is being dragged unfortunately towards an unknown channel which will require rates to be hiked more.’
Erdogan believes current rates are impeding economic growth, potentially denting the ruling AK Party’s support in an election crucial to his goal of enacting legislative changes to create an executive presidency. Growth worries were reinforced by February economic data, with a purchasing managers’ index showing manufacturing activity falling to a seven-month low while exports fell 13 percent. At a news conference on Saturday, Erdogan said Turkey was facing a ‘very serious threat from the interest-rate lobby’.
‘Anyone who defends this (high rates) is at the beck and call of the interest-rate lobby, this is treason against this nation,’ he said. Last Wednesday, Erdogan questioned whether the central bank was under external influence, in what traders took as a thinly-veiled reference to the network of U.S.-based cleric Fethullah Gulen, a former ally-turned-foe whom Erdogan accuses of plotting against him. But he told reporters on his plane he did not believe there was such a link to what he calls Gulen’s ‘parallel structure’ within the state apparatus. ‘I don’t think our friends at the central bank have links to the parallel structure,’ Erdogan said, adding Ankara had looked into possible ties at lower levels in the bank.