Erdogan fired Turkey’s central bank chief, adding Naguib Sawiris to the mess

Turkey’s president, who fired his central bank chief over the weekend, will only contribute to the country’s “misery,” said Egyptian billionaire Naguib Sawiris.

President Recep Tayyip Erdogan fired another central bank chief on Saturday, the third fired in two years.

During Naci Agbal’s five-month period, he raised Turkey’s interest rate by about 450 basis points to 19%. Economists believe that rate hikes were needed to control inflation and stabilize the pound.

Agbal’s replacement, Sahap Kavcioglu, has said the higher rates will not solve Turkey’s economic problems and is expected to be more in line with Erdogan’s orders.

“I guess it will only add to the mess,” said Sawiris, president and CEO of Orascom Investment Holding. “Inflation is very high and trying to lower the interest rate when you want to defend your currency … is not a right decision,” he told CNBC’s Capital Connection on Wednesday.

Sawiris added that it is not a good idea to mix politics with economic or financial problems.

“(Erdogan) wants someone to work on a political agenda, which is a disastrous recipe for central bankers,” he said. “Central bankers need to react to the economic realities of their country.”

The Turkish lira fell on Monday, when the market reacted to the news.

The Turkish presidency’s office did not immediately respond to CNBC’s request for comment.

Sawiris also influenced Turkey’s foreign policy.

“(Erdogan) has made a 180-degree change now and is trying to calm Egypt … to improve its relations with Europe and so on,” he said.

Earlier this month, Turkey said it had resumed diplomatic contact with Egypt. Relations between the two countries have been strained since the Egyptian army overthrew a president who was close to Turkey.

“I think it is based on the new US administration, which is not so happy with its behavior, with the purchase of Russian missiles, with interference throughout the Middle East with its troops, and also with the support of … terrorist groups,” he said. said Sawiris.

In addition, Egypt’s alliances with regional partners have not been in favor of Turkey.

“Speak sweetly from diplomats that this is not against anyone, no – it is against Turkey because of their frantic behavior,” he said.

Erdogan’s attempts to “calm Egypt” are a “gain for Egyptian diplomacy,” Sawiris said.

“We don’t need wars in the region anymore, so I think it’s good,” he said.

Separately, Sawiris said the US under the Biden administration should return to direct negotiations with North Korea on the nuclear issue, instead of asking China for help.

“My advice is to do the same thing that Donald Trump did in the beginning. He called the leadership there, sat down with them, went on a visit and talked,” he said.

He acknowledged that talks had broken down as the two sides could not reach an agreement on reducing sanctions and denuclearizing, but said that these things could be negotiated.

“I don’t think the differences are too big. They can be compensated, but people just have to forget about the ego and who calls who first and so on and just give them the respect they want,” Sawiris said. .

He also said his views on oil reaching $ 100 have not changed.

“It’s a very simple math … many producers closed their production facilities once (oil prices) reached the $ 30 range and were followed by all shale producers,” he said.

Sawiris also mentioned that some European countries are still stuck and this is influencing oil demand and prices. Parts of Europe have reintroduced blockade measures amid a third wave of Covid infections.

“I still hold my theory that … there is only one way and it will grow,” he said.

In May 2020, he told CNBC that the Saudi Arabia-Russia oil price war had killed competition and that prices would reach $ 100 in 18 months.

– CNBC’s Natasha Turak and Emma Graham contributed to this report.