Erdogan denies capital controls for wealth smuggling

The president gives no demand or instruction to restrict the movement of capital

ANKARA • Turkey’s President Recep Tayyip Erdogan on Monday ruled out capital controls as he clarified his demand for measures to prevent the smuggling of wealth abroad by unnamed businessmen he branded as traitors.

“I gave no demand or instruction to restrict the movement of capital,” Erdogan said in a televised speech in Ankara, a day after he urged the government to pre- vent the illegal transfer of wealth overseas. “Turkey has a free-market economy, anyone has had the right to take their money abroad since 1989,” he said. “There is no doubt this will continue.”

The lira was buoyed by his declared commitment to the free movement of capital and support for Turkish firms operating overseas. On Sun- day, the president generated jitters by saying in a televised speech that “we don’t look favourably upon those who are making money in this country and attempting to smuggle their wealth abroad”.

Although Erdogan has ruled out any capital controls, his statement on Monday will also serve as a warning to businesspeople, said Wolfango Piccoli, co-founder of Teneo Intelligence in London.

The president’s remarks indicate “that he has become alarmed by what — in the absence of any reliable official figures — anecdotal evidence suggests is a growing trend for Turkish business- people to transfer money abroad, not least because of concerns about the declining rule of law in Turkey”, Piccoli said in an email.

Erdogan’s equation of wealth smuggling and treason, first made on Sunday, builds on his allegations of an international conspiracy against his government, more than a year after a coup attempt.

A Turkish banker is on trial in New York, charged with helping Iran to evade US financial sanctions, while some of the president’s relatives have been accused by the country’s main opposition party of transferring millions of dollars abroad. Erdogan has denied the allegations against his family members as “slander”.

At a time when Turkey is facing attempts to pressure it economically “along with other attacks, our businessmen should adopt a national stance”, Erdogan said on Monday. “I have no word for those who are doing trade or taking their resources abroad for investment.”

Deputy Prime Minister Mehmet Simsek assured businesspeople that restricting capital flows has not been on the government’s agenda.

“As our president has announced, Turkey is a fully liberal country from the perspective of capital flows and will stay that way,” Simsek said. “While keeping regulations on capital flows in harmony with global best practice, Turkey will also continue decisively its fight against terrorism financing and flows of black money.” — Bloomberg

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