The Turkish president who fired his head of the central bank last weekend will only add to the “mess” in the country, Egyptian billionaire Naguib Sawiris said.
President Recep Tayyip Erdogan fired yet another central bank chief on Saturday, the third to be fired in two years.
During Naci Agbal’s five-month period, he raised Turkish interest rates by about 450 basis points to 19%. Economists believe that rate hikes were necessary to control inflation and stabilize the lira.
Agbal’s replacement, Sahap Kavcioglu, has said higher tariffs will not solve Turkey’s economic problems and is expected to better comply with Erdogan’s orders.
(Erdogan) wants someone who works on the basis of a political agenda, which is a disaster recipe for central bankers.
Naguib Sawiris
Egyptian billionaire
“I predict it will only add to the mess,” said Sawiris, chairman and CEO of Orascom Investment Holding. “Inflation is very high, and cutting interest rates is not the right decision if you want to defend your currency,” he told CNBC’s “Capital Connection” on Wednesday.
Sawiris added that it is not a good idea to mix politics with economic issues or finance.
“(Erdogan) wants someone who works on the basis of a political agenda, which is a disaster recipe for central bankers,” he said. “Central bankers need to respond to the economic reality of their country.”
The Turkish lira plummeted on Monday as the market responded to the news.
The Turkish Presidency office did not immediately respond to CNBC’s request for comment.
Relations with Egypt
Sawiris also weighed in on Turkey’s foreign policy.
“(Erdogan) has now made a 180 degree turn and he is trying to appease Egypt … improve his relations with Europe and so on,” he said.
Earlier this month, Turkey said it was resuming diplomatic contacts with Egypt. Relations between the two countries have been strained since Egypt’s military toppled a president close to Turkey.
“I think it is based on the new US administration that is not too happy with its … behavior, buying Russian missiles, meddling with its forces all over the Middle East and also supporting some. … terrorist groups, ”Sawiris said.
Egyptian billionaire Naguib Sawiris, executive chairman of Orascom Telecom.
Simon Dawson | Bloomberg | Getty Images
In addition, Egypt’s alliances with regional partners were not in Turkey’s favor.
“You get sweet words from diplomats that this is not against anyone, no – it is against Turkey for their outrageous behavior,” he said.
Erdogan’s attempts to “appease Egypt” are a “victory for Egyptian diplomacy,” Sawiris said.
“We don’t need any more wars in the region, so I think it’s good,” he said.
Do what Trump did
Separately, Sawiris said that under the Biden administration, the US should renegotiate with North Korea on the nuclear issue, rather than asking China for help.
“My advice is to just do what Donald Trump did in the beginning. He called the leadership there, sat down with them, went to visit and spoke,” he said.
He acknowledged that the discussions were diverging as the two sides could not agree on sanctions and denuclearization, but said these things are negotiable.
“I don’t think the differences are too big. They’re bridgeable, but people just have to forget about ego and who calls who first and so on, and just give them the respect they want,” Sawiris said.
Oil for $ 100
He also said his view of oil reaching $ 100 hasn’t changed.
“It’s a very simple math … a lot of producers closed their production facilities as soon as (oil prices) hit $ 30, followed by all shale producers,” he said.
Sawiris also noted that some countries in Europe are still stuck, and this affects oil demand and prices. Parts of Europe have reintroduced lockdown measures amid a third wave of Covid infections.
“I’m still holding to my theory that … there is only one way, and it will go up,” he said.
In May 2020, he told CNBC that the oil price war between Saudi Arabia and Russia had killed competition and prices would hit $ 100 within 18 months.
CNBC’s Natasha Turak and Emma Graham contributed to this report.