Turkey’s main opposition has mounted an emphatic campaign calling the government to account on why the central bank burnt through $128 billion in foreign reserves in “back-door” hard currency sales that began in early 2019, when President Recep Tayyip Erdogan’s son-in-law presided over the economy. The campaign has forced Erdogan on the defensive, raising a slew of questions about the legality of the sales and who benefitted the most from them.

The issue is grave not only because of the pathetic state of the central bank reserves today, but also the huge profiteering that might have taken place in the sales.

Back in July 2020, Al-Monitor reported that Turkey’s central bank had come to rely on “peg legs” to fix its reserve numbers after selling about $70 billion in foreign reserves via public banks amid the slump of the Turkish lira. The bank’s database shows that the sum reached $128 billion by Nov. 6, when Treasury and Finance Minister Berat Albayrak resigned under controversial circumstances. Albayrak, who is married to Erdogan’s eldest daughter, has been away from the public eye since then.

Hard currency transactions to ensure market stability are part of the job of central banks but, needless to say, they require transparency. The records of the Turkish central bank’s buying and selling auctions until 2016 are available on the bank’s website. In contrast, the sales that began in February 2019 have been opaque and indirect — via the treasury and public banks — or “through the back door,” as some economists describe them.

Written by Mustafa Sönmez