🌍 The Turkish economy is at a turning point

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🗺️ AROUND THE WORLD

1. 🇰🇷 South Korea: President Yoon Suk Yeol has pledged to protect his country’s semiconductor sector amid an “all-out [tech] war” between China and the US. Global chip revenues are projected to drop 11% this year.

2. 🇺🇦 Ukraine: At least nine people are dead and thousands have been evacuated following Tuesday’s breach of the Kakhovka dam, according to local officials.

3. 🇲🇾 Malaysia: Indonesia and Malaysia agreed to end an 18 year maritime border dispute and pledged to unite in promoting palm oil worldwide during Indonesian President Joko Widodo’s visit to Malaysia.

4. 🇧🇷 Brazil: The Lula administration has unveiled plans to stop deforestation in the Amazon by 2030. But the proposal faces an uphill battle after Congress voted to scale down the relevant ministries.

5. 🇨🇩 Democratic Republic of the Congo (DRC): A top UN official has said UN peacekeepers should withdraw from the DRC “as quickly as possible” (without creating a power vacuum). The UN mission to the DRC costs about $1B per year and has been running since 1999.

🇹🇷 TURKEY | GEO-ECONOMICS

Turkish lira plunges as new minister vows more “rational” direction

Briefly: The Turkish lira slipped by more than 7% against the US dollar on Wednesday, hitting a record new low.

The slide comes as Turkey’s newly appointed finance minister, Mehmet Simsek, pledged to return the country’s economy to more “rational ground”.

And you don’t need to read between the lines here. You can just read the lines. Simsek was criticising Erdoğan’s economic management as being irrational:

• Erdoğan frequently intervened to try and prop up the lira, and

• He said lower interest rates reduce inflation (the opposite is true)

The result?

• ☝️ Sky high inflation, peaking at 86% last year

• 👇 A weak currency, losing 60% of its value since 2021, and

• 😨 Spooked investors, who now hold <1% of Turkey’s bonds (they held 19% in 2017)

So… if we’re returning to rationality, why has the lira now plunged even faster?

Before his re-election, Erdoğan was burning through reserves to prop up the lira (to avoid voters seeing this exact collapse). But the central bank’s coffers are now basically empty. So the currency’s prop is now gone. And the market is speaking.

Intrigue’s take: Rebuilding the Turkish economy is a daunting task, but this isn’t Simsek’s first rodeo. He’s a highly regarded ex-banker who was instrumental (as finance minister) in helping Turkey rebound from the 2008 financial crisis.

But to do that again, he’ll need Erdoğan to hand over the reins. And that’s not really Erdoğan’s style.

Also worth noting:

• During his re-election campaign, Erdoğan promised he would keep cutting interest rates if reconfirmed as president.

• Erdoğan has overhauled several other key cabinet roles in an apparent effort to help normalise Turkey’s economic and foreign policies.

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🇪🇭 WESTERN SAHARA | GEOPOLITICS

Israel might back Morocco in Western Sahara

Briefly: Israel is reportedly considering recognising Morocco’s sovereignty over Western Sahara in exchange for full diplomatic ties and a free trade agreement.

Since the 70s, Western Sahara has been split between Moroccan control along the coast, and the local Sahrawi people’s control in the interior (under the flag of the Polisario Front). Though each side claims full sovereignty, the UN has designated it all as a ‘non-self-governing territory’, leaving its status ambiguous.

But in 2020, in exchange for Morocco’s partial upgrade of relations with Israel, the US became the first country to recognise Morocco’s full sovereignty over Western Sahara. And now Israel may do likewise.

Intrigue’s take: Quick quiz: which country was the first to recognise US independence? Yep, it was Morocco. So there was something neatly symmetrical about the US becoming the first country to recognise Morocco’s claims here.

But the US move did attract some criticism that Washington was sacrificing American principles (and Sahrawi rights) for the sake of political expediency.

And if Israel follows suit, it can expect similar criticism (plus a bit more scrutiny of its own territorial disputes back home).

Also worth noting:

• The speaker of Israel’s Knesset visited Morocco this week, making him the highest-ranking Israeli official to visit since 2020.

• For four decades, Morocco has been building a 2,700km wall along the Sahrawi areas (longer than the distance between London and Kyiv).

👀 EXTRA INTRIGUE

Here’s what Team Intrigue recommends for the weekend. If you have:

• 10 mins: read why the US should reveal evidence of alien life, if it has any.

• 50 mins: watch the first episode of ‘The Bureau’, a hit series based on an elite team within the French Secret Service.*

• 4 hours: read ‘Walking in Mud: A Navy SEAL’s 10 Rules for Surviving the New Normal’, on how to navigate our increasingly muddy world.

* This was one of several brilliant suggestions shared with Team Intrigue through our exclusive WhatsApp community. Just recommend Intrigue to five people using the unique link at the bottom of this email to join the conversation!

📜 THIS DAY IN HISTORY

On this day 95 years ago, Australian aviator Charles Kingsford Smith landed in Brisbane after piloting the first ever trans-Pacific flight. The four-man crew had taken off from Oakland, California nine days prior and clocked an average speed of 138 km/hour (85mph) during the journey.

🗳️ QUIZ TIME!

 Answers: 1: b, 2: b, 3: b