Turkey desperate for swap lines as recession looms

A board showing the currency exchange rates of the U.S. dollar and the Euro against Turkish lira is seen outside a currency exchange office in Istanbul, Turkey. (Reuters)
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Updated 07 May 2020
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Turkey desperate for swap lines as recession looms

  • US swap line with Turkey deemed unlikely as Ankara struggles to deal with mounting economic woes
  • Coronavirus pandemic has piled added pressure on Turkey’s national currency, pushing it back to 2018 crisis levels

ISTANBUL: Turkey’s hopes of securing access to US swap lines have taken a nosedive with the Federal Reserve highlighting the need for “mutual trust” with any applicant country.

The Fed’s statement on Wednesday added weight to predictions that a US swap line with Turkey seems unlikely as Ankara struggles to deal with mounting economic woes.

Asked about extending swap lines to Turkey, Richmond Fed President Thomas Barkin said that the Federal Reserve opens swap lines with countries that have a relationship based on mutual trust with the US.

During the online forum, Barkin also noted that the Fed requires high credit criteria, adding that “it does not cover all countries.”

“Fed’s Barkin more or less rules out swap lines for Turkey,” tweeted European economist Timothy Ash.

On the same day, Turkey’s state-run Anadolu Agency claimed that London-based financial institutions are attacking the Turkish lira by using manipulative operations to devalue the currency.

Meanwhile, Turkey’s battle to halt the currency’s fall suffered a further setback this week with state banks reportedly selling dollar assets while the lira fell to lows of 7.49 to the US dollar early on Thursday.

The coronavirus pandemic has piled added pressure on Turkey’s national currency, pushing it back to 2018 crisis levels when the lira hit a record low, and triggering predictions of a full-year recession.

Experts say that the way out of the currency crisis is either to ask the International Monetary Fund (IMF) for emergency assistance or gain access to the Fed’s swap line.

Turkey’s financial authorities recently hinted at the possibility of swap deals with a number of foreign central banks in order to strengthen currency liquidity.

“It looks very unlikely that the Fed will agree to a swap line with Turkey,” said Nigel Rendell, a senior analyst at Medley Global Advisers in London.

Political relations between the US and Turkey are far from good, he said.

“Many US politicians and those at the Pentagon have not forgiven Turkey for buying the Russian S-400 missile system in clear violation of NATO protocol. Other issues relating to state-run Halkbank and US-based cleric Fethullah Gulen have caused friction between the two countries,” he told Arab News.

According to Rendell, Turkey wants to use US dollars to prop up its ailing currency.

“Turkey’s central bank has already burned through a considerable amount of cash this year and is now using borrowed funds from commercial banks and other central banks while swap facilities are in place with China and Qatar. It’s effectively throwing good money after bad,” he said.

In a surprise move on Thursday, Turkey’s banking watchdog BDDK introduced regulations targeting what it described as “financial manipulation” and “deceptive transactions.”

Banking transactions that keep the price of a financial instrument at artificial levels or influence the exchange rate will be viewed as “manipulative practices” under the ruling.

Experts predict the Turkish economy will fall into recession this year.

“Despite recent suggestions from Turkish Treasury and Finance Minister Berat Albayrak that there will be positive growth for the year as a whole, given the effects of the coronavirus, like elsewhere, a recession is inevitable,” Rendell said.

Ash said that the “the lira will weaken until we see a policy response,” citing a rate hike, massive foreign exchange intervention or a plea to the IMF as possible policy responses.

But he said that an intervention on foreign exchange rates is unlikely unless the central bank gets FX swaps from friendly central banks.

In a recent interview, Ali Babacan, Turkey’s former economy chair and ex-ally of Turkish President Recep Tayyip Erdogan, said that “the IMF won’t be sufficient to meet Turkey’s foreign financing needs even if the government were to request assistance, making currency swap deals with other central banks a necessity.”

However, Babacan, who is now leads a breakaway party challenging the ruling Justice and Development Party, said: “Turkey’s increasingly bellicose foreign policy makes such an arrangement more difficult.

“There is no such thing as exporting to countries we’re quarrelling with and asking for swap deals as if nothing happened,” he said.

Rendell compared the request for a swap line with the Fed to a gambler who has run out of money going to the bank and asking for a loan so he can go back to the gambling tables.

“Apparently, Turkey is also looking elsewhere for swap lines, to other G20 members and also to its major trading partners. It may have more luck there than with the Fed,” he said.

During an online meeting with international investors on Wednesday, Albayrak announced that Turkey is negotiating one-to-one swap deals with G20 countries with which it has a trade deficit and also a free trade agreement.

However, Ankara still rejects any swap line talks with the IMF.

By relaxing coronavirus restrictions by next week, Turkey intends to restart its retail and manufacturing sectors, but tourism and export sectors still need time to recover.


UN chief calls for probe into deaths near Gaza aid site

Updated 54 min 8 sec ago
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UN chief calls for probe into deaths near Gaza aid site

  • Antonio Guterres says he is appalled by reports of Palestinians killed and injured while seeking aid
  • Israeli gunfire killed at least 31 people and wounded 176 near aid distribution site in the southern city of Rafah

GAZA: UN chief Antonio Guterres called Monday for an independent investigation into the killing of dozens of Palestinians near a US-backed aid center in Gaza after rescuers blamed the deaths on Israeli fire and the military denied any involvement.
Gaza’s civil defense agency said Israeli gunfire killed at least 31 people and wounded 176 near the aid distribution site in the southern city of Rafah, with AFP photos showing civilians at the scene carting away bodies and medics at nearby hospitals reporting a deluge of gunshot wound victims.
The Israeli military, however, denied its troops had fired on civilians in or around the center, and both it and the aid site’s administrator accused Hamas of sowing false rumors.
“I am appalled by the reports of Palestinians killed and injured while seeking aid in Gaza yesterday. It is unacceptable that Palestinians are risking their lives for food,” Guterres said in a statement, without assigning blame for the deaths.
“I call for an immediate and independent investigation into these events and for perpetrators to be held accountable.”
The Israeli government has cooperated with the group running the site, the Gaza Humanitarian Foundation (GHF), to introduce a new mechanism for distributing aid in Gaza that has bypassed the longstanding UN-led system.
The UN has declined to work with the group out of concerns about its neutrality, with some aid agencies saying it appears designed to cater to Israeli military objectives.
An eyewitness from the scene in Rafah, Sameh Hamuda, 33, had told AFP he was headed toward the aid site amid a crowd of other Palestinians when “quadcopter drones opened fire on the people, and tanks started shooting.”
“Several people were killed right in front of me,” he said.
Another witness, Abdullah Barbakh, 58, also told AFP “the army opened fire from drones and tanks.”
Following the reports, the Israeli army said an initial inquiry found its troops “did not fire at civilians while they were near or within the humanitarian aid distribution site.”
Army spokesman Effie Defrin said in a video message that “Hamas is doing its best, its utmost, to stop us from” distributing aid, and vowed to “investigate each one of those allegations” against Israeli troops.
“I urge you not to believe every rumor spread by Hamas,” he added.
GHF also denied any deaths or injuries took place, adding that “these fake reports have been actively fomented by Hamas.”
Israel has come under increasing international pressure to improve the humanitarian situation in Gaza following a more than two-month blockade on aid that was only recently eased.
The UN has warned the entire population of the territory is facing the risk of famine.
It has also reported recent incidents of aid being looted, including by armed individuals.


Talks aimed at securing a ceasefire and the return of hostages taken by Hamas during its October 2023 attack that triggered the war have failed to produce a breakthrough.
Militants took 251 hostages during the attack, 57 of whom remain in Gaza, including 34 who the Israeli military says are dead.
After the two sides failed to agree on a new ceasefire proposal last week, Hamas said it was ready to “immediately begin a round of indirect negotiations to reach an agreement on the points of contention.”
Israeli Defense Minister Israel Katz, meanwhile, said he had told the army “to continue forward in Gaza against all targets, regardless of any negotiations.”
Since a brief truce collapsed in March, Israel has intensified its operations to destroy Hamas.
On Monday, Gaza’s civil defense spokesman Mahmud Bassal said 14 people were killed in an Israeli strike on a house in Gaza, “including six children and three women, in addition to more than 20 missing individuals still under the rubble.”
“This house has been bombed before... and people were martyred previously,” resident Mousa Al-Bursh told AFP.
“The house primarily belongs to the Al-Bursh family, but it shelters many others, more than one family, and we don’t know the number of victims inside.”
The health ministry in Hamas-run Gaza says at least 4,201 people have been killed in the territory since Israel resumed its offensive on March 18, taking the war’s overall toll to 54,470, mostly civilians.
Hamas’s 2023 attack on Israel resulted in the deaths of 1,218 people, also mostly civilians, according to an AFP tally based on official figures.


Nearly 41% of kidney patients died in Gaza as Israel destroys major dialysis center

Updated 02 June 2025
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Nearly 41% of kidney patients died in Gaza as Israel destroys major dialysis center

  • Israeli forces destroyed the Noura Al-Kaabi Dialysis Center in northern Gaza
  • The facility was damaged amid the war and remained standing among the heavily ruined area of Beit Lahiya

LONDON: Palestinian medical sources in the Gaza Strip revealed on Sunday that nearly half of the kidney failure patients in the coastal enclave have died since October 2023 amid ongoing Israeli attacks and restrictions on humanitarian and medical aid.

Israeli attacks on hospitals and medical facilities in Gaza barred 41 percent of kidney patients from accessing life-saving dialysis treatment, resulting in their deaths, according to the Wafa news agency.

On Saturday, Israeli forces destroyed the Noura Al-Kaabi Dialysis Center in northern Gaza, one of the few specialized facilities providing kidney dialysis to 160 patients.

Video footage appears to show Israeli military excavators completely demolishing the facility that was partly damaged amid the war and remained standing among the heavily ruined area of Beit Lahiya.

“The destruction of this center is a catastrophic blow to the health system,” a Palestinian medical source told Wafa, warning of dire consequences for the remaining kidney patients in Gaza.

“This is a disaster with consequences we cannot yet fully comprehend,” they added.


Israeli strike on Gaza kills 14 Palestinians, mostly women and children, hospitals say

Palestinians react at the site of an Israeli strike on a mosque, in Deir Al-Balah, in the central Gaza Strip, June 2, 2025.
Updated 02 June 2025
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Israeli strike on Gaza kills 14 Palestinians, mostly women and children, hospitals say

  • Shifa and Al-Ahli hospitals confirmed the toll from the strike in the built-up Jabaliya refugee camp in northern Gaza

DEIR AL-BALAH: An Israeli strike on a residential building in the Gaza Strip on Monday killed 14 people, mostly women and children, according to health officials.
The Shifa and Al-Ahli hospitals confirmed the toll from the strike in the built-up Jabaliya refugee camp in northern Gaza, saying five women and seven children were among those killed.
The Israeli military did not immediately respond to a request for comment. Israel says it only targets militants and tries to avoid harming civilians. It blames civilian deaths on Hamas because the militant group is entrenched in populated areas.
The Israel-Hamas war began when Palestinian militants stormed into Israel on Oct. 7, 2023, killing some 1,200 people, mostly civilians, and abducting 251. Hamas is still holding 58 hostages, around a third of them believed to be alive, after most of the rest were released in ceasefire agreements or other deals.
Israel’s military campaign has killed over 54,000 Palestinians, mostly women and children, according to Gaza’s Health Ministry, which does not say how many of the dead were civilians or combatants. The offensive has destroyed vast areas of Gaza and displaced around 90 percent of the population.
Hamas has said it will only release the remaining hostages in return for more Palestinian prisoners, a lasting ceasefire and an Israeli pullout.
Israel has vowed to continue the war until all the hostages are returned, and Hamas is defeated or disarmed and sent into exile. It has said it will maintain control of Gaza indefinitely and facilitate what it refers to as the voluntary emigration of much of its population.
Palestinians and most of the international community have rejected the resettlement plans, viewing them as forcible expulsion.


Iraq probes fish die-off in southern marshes

Updated 02 June 2025
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Iraq probes fish die-off in southern marshes

NAJAF: Iraqi authorities on Monday launched a probe into a mass die-off of fish in the southern marshlands, the latest in a string of such events in recent years.
One possible cause for the localized die-off could be a shortage of oxygen sparked by low water flow, increased evaporation and rising temperatures fueled by climate change.
Another possible reason could be chemicals used by fishermen to make it easier to catch their prey, local officials and activists told AFP.
AFP images showed large quantities of silver fish floating in the marshlands of Ibn Najm near the southern city of Najaf.
Buffaloes could be seen surrounded by dead fish, trying to cool themselves off in the water.
“We have received several citizens’ complaints,” said chief environmental officer in Najaf, Jamal Abd Zeid, adding that a technical inspection team had been set up.
An AFP photographer at the site saw a team of civil servants collecting water from the marshland.
Among the issues the team was tasked with probing, Abd Zeid said, were a shortage of water, electrical fishing and the use by fishermen of “poisons.”
For at least five years, Iraq has been hit by successive droughts fueled by climate change.
Authorities also blame the construction of dams by neighboring Iran and Turkiye for the drastic drop in flow in Iraq’s rivers.
The destruction of Iraq’s natural environment is only the latest layer of suffering imposed on a country that has endured decades of war and political oppression.
“We need lab tests to determine the exact cause” of the fish die-off, said environmental activist Jassim Assadi.
A lack of oxygen caused by low water flow, heat, evaporation and wind were all possible reasons, he said.
He said agricultural pesticides could also have led to the mass die-off.
Probes into other similar events showed the use of poison in fishing led to mass deaths.
“It is dangerous for public health, as well as for the food chain,” Assadi said.
“Using poison today, then again in a month or two... It’s going to accumulate.”


Medical NGO blames new US aid group for deadly Gaza chaos

Updated 02 June 2025
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Medical NGO blames new US aid group for deadly Gaza chaos

  • Humanitarian aid must be provided only by humanitarian organizations who have the competence and determination to do it safely and effectively

RAFAH, Palestinian Territories: Medical charity Doctors Without Borders said Sunday that people it treated at a Gaza aid site run by a new US-backed organization reported being “shot from all sides” by Israeli forces.
The NGO, known by its French name MSF, blamed the Gaza Humanitarian Foundation’s aid distribution system for chaos at the scene in the southern Gaza town of Rafah.
Gaza’s civil defense agency said Israeli fire killed 31 Palestinians at the site. Witnesses told AFP the Israeli military had opened fire.
The GHF and Israeli authorities denied any such incident took place but MSF and other medics reported treating crowds of locals with gunshot wounds at the Nasser hospital in the nearby town of Khan Younis.
“Patients told MSF they were shot from all sides by drones, helicopters, boats, tanks and Israeli soldiers on the ground,” MSF said in a statement.
MSF emergency coordinator Claire Manera in the statement called the GHF’s system of aid delivery “dehumanizing, dangerous and severely ineffective.”
“It has resulted in deaths and injuries of civilians that could have been prevented. Humanitarian aid must be provided only by humanitarian organizations who have the competence and determination to do it safely and effectively.”
MSF communications officer Nour Alsaqa in the statement reported hospital corridors filled with patients, mostly men, with “visible gunshot wounds in their limbs.”
MSF quoted one injured man, Mansour Sami Abdi, as describing people fighting over just five pallets of aid.
“They told us to take food — then they fired from every direction,” he said. “This isn’t aid. It’s a lie.”
The Israeli military said an initial inquiry found its troops “did not fire at civilians while they were near or within the humanitarian aid distribution site.”
A GHF spokesperson said: “These fake reports have been actively fomented by Hamas,” the Islamic militant group that Israel has vowed to destroy in Gaza.