The analysts differ over the total losses to the Turkish economy across a range of sectors, with one estimating $50 billion and another putting the figure at $20 billion. Though Nevzat Saygılıoğlu, former head of the Ministry of Finance's General Directorate of Revenues, and Ünsal Ban, rector of Türk Hava Kurumu University, agree that the government's handling of the crisis has aggravated the economic damage, both say that foreign television channels also played a leading role.
The Gezi protests have caused both direct, quantifiable effects on interest rates, foreign exchange rates and stock prices, and indirect effects – loss of time, synergy and motivation. “We can't currently calculate the indirect costs, but we will feel their effects in the course of time. The mismanagement of the crisis has played an important role in increasing the costs, but the fact that foreign television channels broadcast protests live for hours has been even more effective [in raising the cost], Saygılıoğlu has told Today's Zaman.
One of the immediate effects of the protests was a steep drop in the Turkish stock exchange. Saygılıoğlu, however, said the exchange could quickly claw back the losses. “The fall in the stock exchange is a loss in the big picture, but those who needed to sell their assets at that time [when stocks fell] actually felt the loss in real terms. Because rises and falls in asset values are virtual. The real cost comes to the fore when the assets change hands. After the crash at the stock exchange, interest rates rose to 6.7 percent from 5.4. When the interest rate goes up 18 percent, borrowing costs for Turkey increase as well. The increase in foreign currency exchange rates has also brought additional costs. For those who have debt to be paid in foreign currency, and the private sector, whose debt [in foreign currency] totals $250 billion, the change in the exchange rate is important. The real cost could only be calculated by the data the Treasury has. I estimate the cost of Gezi protests at around $20 billion, he said.
Hard-to-quantify indirect costs, like postponed investments and spending due to uncertainty would also hit the economy, Saygılıoğlu said, adding that he didn't predict a “disaster” that Turkey couldn't manage.
“I don't expect a disaster for our economy. When the protests end, the indicators will get back to positive. If the crisis had been well-managed, it could have served as an extraordinary new acceleration for economic growth. We were very lucky in this crisis that tenders for the third Bosporus bridge and İstanbul's third airport had already been carried out before the crisis broke out. The cost for the investors [in these projects] has increased, but if the tenders were to take place now, the cost [of the projects] would be much greater, and it would be unimaginable for the bidders to offer such high amounts of money.
Tourism has taken the brunt of the protests' costs. Though tourism businesspeople reported a satisfactory start to the summer season, “now the picture is not all that good. When you get down to the reasons behind it, you see that live coverage of events by foreign television channels has played a substantial role in the cancellation of reservations. Is it just by chance that CNN and some other television channels broadcasted the protests live for hours? Is it just by chance that Turkey has been presented as an unsafe country?” Saygılıoğlu said.
Interest rates will take nine months to fall
Ünsal Ban pegged total losses at $50 billion. “The cost of the 18-20 percent fall in value at the stock exchange alone represents a loss of around $30 billion. The increase in interest rates from around 4 percent to a level of around 7 percent has caused Turkey's three-month borrowing costs to rise by $12 billion. The total cost of $50 billion may even increase more,” Ban has told Today's Zaman.
After spiking over one week, interest rates would take time to return to former levels, he added. “It's difficult to lower the interest rates and it takes time, while the interest rates increase very easily. A period of nine months is needed to lower the rate back to around 4 percent, where the rate stood before the Gezi protests.”
For Ban, who believes the stock exchange will return to normal much faster than interest rates, the international media is partly at fault. “Broadcasts foreign media carried out, particularly, were meant to increase costs for Turkey. Economic stability in Turkey has been perceived as a loss of production power on the part of Germany. With Gezi protests, Germany felt relieved and rid itself of worries in this area for at least another two years,” he said. Ban went on to say that the international media's broad coverage of the events was aimed at dealing a blow to the Turkish tourism industry. “Thanks to the broadcasts of the protests, Turkey has not only been prevented from obtaining a larger piece of the pie, but she was forced to share it with Greece and Spain. It's not just by chance,” he said.