Photo : Angelos Tzortzinis/AFP
28 March 2025, Friday | NIAS Europe Daily Brief #1099
By Fleur Elizabeth Philip
TÜRKIYE
Day 09 of protests: Market fluctuations after the arrest of Mayor İmamoğlu
On 27 March, Türkiye faced heavy losses in the capital markets, as many investors lost confidence in the presidency of Recep Tayyip Erdroğan. Türkish stocks are facing the worst and it has never happened since the global financial crisis of 2008, with the blue-chip ISE 100 stock index losing more than 16 per cent at the peak. The capital market authorities banned short selling and betting on further declines, along with this, the stock buybacks to support the plunging shares. The index initially rose by two per cent and now it has turned negative reaching the lowest level. This can be a problem for the president. Türkish investors have turned to the stock market to protect their wealth from high inflation which floats at 39 per cent in March. At the beginning of this week, Türkiye’s bond and stock markets stabilised after Finance Minister Mehmet Simsek pledged to do whatever it takes to shore up the financial markets. He said “Türkiye continued to offer good long-term investment opportunities, and together with the governor of the Türkish central bank, Faith Karahan reaffirmed the President’s commitment to maintaining the investor-friendly policies pursued over the past two years to prevent sell-off of the Türkis lira. The Türkish national currency has depreciated against the dollar but the fact that it fell by three per cent reassured investors. Timothy Ash, Analyst at RBC Bluebay said: “most of the outflows appear to be coming from foreign investors.” Professor of International Economics at the University of Applied Sciences Constance, Germany, Erdal Yalcin says Türkiye had recently been on the path of stabilisation after a prolonged period of political uncertainty and extremely high inflation and ongoing economic crisis. High interest rates and the currency supported by the central bank managed to attract international investors.
At the moment, a political crisis is affecting the markets because of the major uncertainties. Within hours, investors withdrew large amounts from Türkiye’s financial markets, and the Türkish Lira came under severe pressure forcing the central bank to sell their significant shares to stabilize the currency. Tourism is one of the major revenue generation industries and due to the political uncertainties, there is not much visible growth in the sector. Marco A Gardini, a professor at Kempten University of Applied Sciences' Faculty of Tourism Management, said: “While the measures against the mayor were of high relevance, international political and diplomatic circles, and that they would have little impact on the booking decisions of many potential travellers.” Gardini believes that the current protests in Türkiye will have a huge impact on the tourism industry. Erdal Yalcin thinks that the sectors of the Türkish economy, like the banks, and financial sector, are under significant pressure. The banks can face higher financing costs and international investors might cut their funding increasing the risk of capital outflows which could exacerbate liquidity problems and endanger the stability of the entire financial system. Apart from that, the real estate industry is also vulnerable due to its heavy reliance on foreign investors. Growing political instability raises the risk of capital withdrawals and financial difficulties, particularly in an environment of rising interest rates and high exchange volatility. Export-dependent industries are also shaking due to the political administration, as they could face tougher conditions as their business partners become more cautious and potentially demand higher guarantees. Uncertainties in the forex market lead to an increase in competition. Economists believe that the full economic and political impact of İmamoğlu incarceration will only become clear by 2025. (Dirk Kaufmann, “Turkish economy takes a battering after Imamoglu arrest,” Deutsche Welle, 27 March 2025)
DENMARK
Greenland to form a new government amid threats by Trump
On 28 March, Greenland's government agreed to form a new group to tackle the pressure and threats from the US President Donald Trump to buy the Danish territory. Four out of Five parties elected Greenland Parliament and have agreed to form a coalition that will have 23 of 31 seats in the legislature. The agreement comes as Trump ramps his efforts to gain control of the icy island. US Vice President JD Vance will visit the US’ Pituffik Space Base along with his wife Usha Vance which supports missile surveillance and defence operations. (Malek Fouda, “Greenland forms new unity government on the eve of JD Vance trip,” Euro News, 28 March 2025)
LITHUANIA
Defence minister reports on ongoing rescue operations and ground enforcement after US soldiers go missing
On 27 March, rescue efforts were made for the four US soldiers that came to Lithuania for military training. Their vehicle was found submerged in the water located near the Belarus border. According to Lithuanian Defence Minister Dovilė Šakalienė, the M88 Hercules armoured vehicle was located more than five meters down after which enough water was drained out to dig for it and rescue efforts continued throughout the night with water pumping and ground reinforcement underway to enable heavy equipment to access the site without damaging a nearby gas pipeline. (Emma de Ruiter, “Search for missing US soldiers in Lithuania continues as vehicle is found submerged in water,” Euro News, 27 March 2025)
THE NETHERLANDS
Five killed in stabbing in Dam Square
On 27 March, five people were injured after a stabbing incident in Amsterdam. Witnesses said that the suspect stabbed a number of people at random on Sint Nicolaasstraat, near Dam Square. The victims included a 67-year-old woman, a 69-year-old man of American citizenship, a 26-year-old from Poland, a 73 year old from Belgium and a 19-year-old from the Netherlands. The suspect was detained describing him as a young man with blonde hair. Dutch authorities said a bystander overpowered the suspect during the attack with the alleged perpetrator taken to the hospital because of the injury to his leg. (Wesley Dokery, “Amsterdam: Several wounded after stabbing near Dam Square,” Deutsche Welle, 27 March 2025)