In recent years, two major attempts were made by the Fetullah Terrorist Organization (FETÖ) to overthrow the Turkish government, once in December 2013 and again in an attempted coup on July 15, 2016, costing 252 lives and injuring 2,734 others.
The losses incurred during and after these two plots have come back into the spotlight after the confirmed death of the organization’s U.S.-based ringleader, Fetullah Gülen, last week in the U.S. state of Pennsylvania. Besides the tragic loss of life, they resulted in heavy financial damages as well — more than $500 billion, data compiled by Anadolu suggests.
Even before the failed 2016 coup attempt, the FETÖ bid to detain prominent government figures in large-scale raids on Dec. 17-25, 2013 had resulted in an economic burden of $120 billion, Turkish President Recep Tayyip Erdoğan had said in a speech in early 2015, citing “modest” estimations. He had said the figure would have been leagues higher had the scheme succeeded.
The U.S. dollar/Turkish lira exchange rate, which had closed at 1.94 a day before the operation on Dec. 16, had surged to 2.15 by the end of the year. In a similar fashion, Türkiye’s BIST 100 benchmark stock index had reached an all-time high of 93,178.87 and closed 2013 at 67,801.73 points.
The borrowing interest rate, which was down to a historic low of 4.61% in mid-May 2013, rose to 12% as of March 2014, with the dollar/lira exchange rate continuing its ascent to 2.30.
That same month, the deputy chairman of then-Prime Minister Erdoğan’s Justice and Development (AK) Party, Numan Kurtulmuş, called the exchange rate’s rise “extremely serious.”
As these figures indicate, FETÖ’s actions deeply impacted Türkiye’s economy, with the total losses skyrocketing by an estimated $400 billion more after the 2016 putsch.
On the first trading day after the attempted coup, the BIST 100 experienced one of its sharpest historic declines, down 7.08%, and the downward trend continued for a week, as the index lost 13.4% week-on-week, falling to 70,526 points, though it quickly recovered the following weeks.
The FETÖ’s coup attempt marked the beginning of a tumultuous period in markets in 2016 due to increased perception of risk, as the state of emergency declared soon after also negatively impacted economic indicators.
The coup attempt took place on a Friday, with international markets opening the following Monday. By the end of the week, the BIST 100 was down 13.39%.
The third quarter of 2016 saw the Turkish economy shrinking 0.8% as the dollar/lira exchange rate increased 5.1% from its level on July 14 — 2.8778 — to 3.0250, following a sales-heavy course after the coup attempt.
The government managed to technically avoid a recession, with growth bouncing back in the next quarter after a successful policy intervention by the economic administration.
DIRECT COST OF COUP ATTEMPT ESTIMATED AT $160B
Sefer Şener, an economics professor at Istanbul University, told Anadolu that the direct cost of the 2016 coup attempt was estimated to be approximately at $160 billion, while the indirect cost was much higher.
Şener said the per-capita cost of the attempted coup may have exceeded $2,000, with indirect costs possibly above $400 billion in total after credit rating agencies promptly downgraded the country. However, he argued, these downgrades were not necessary considering the Turkish economy’s rapid recovery.
Mentioning that post-coup attempt inflows of foreign direct capital into Türkiye fell from $16 billion in 2016 to $8.6 billion in 2019, Şener said this was followed by a decline in national income per capita from $12,582 in 2013 to $8,600 in 2020.
“The coup attempt caused a loss of 10 years of time in terms of per-capita income losses,” he said.
As for foreign direct investment, this figure was at $19.3 billion in 2015, a year before the coup, dropping to $7.7 billion in 2020. It only exceeded $10.7 billion last year, Şener added.
While the central government’s budget deficit was just 1% of gross domestic product (GDP) in 2015, this ratio rose to 3.2% in 2020, he said, attributing the rise to the reduction in productivity and resulting increased costs following the putsch.
Şener also noted that the international image of the Turkish economy had also suffered, with the country added to the “gray list” of the Financial Action Task Force (FATF) and facing credit rating downgrades.