* Erdogan accuses speculators of harming economy
* Prime minister wants low interest rates and high growth
* Investors braced for another turbulent week
By Jonathon Burch
ANKARA, June 9 Turkish Prime Minister Tayyip
Erdogan vowed on Sunday to "choke" financial market speculators
who he said were growing rich off "the sweat of the people", and
urged Turks to put their money in state not private banks.
Speaking at a series of rallies in the capital Ankara after
a week of the fiercest anti-government demonstrations in years,
Erdogan blamed a "high-interest-rate lobby" for causing
volatility in financial markets and vowed to stop them.
"The lobby has exploited the sweat of my people for years.
You will not from now on," Erdogan said to cheers from crowds of
flag-waving supporters at Ankara airport.
"Those who attempt to sink the bourse, you will collapse.
Tayyip Erdogan is not the one with money on the bourse ... If we
catch your speculation, we will choke you. No matter who you
are, we will choke you," he said.
Erdogan repeatedly said last year he wanted real interest
rates of zero percent, saying high rates amounted to modern-day
theft and lashing out at what he called an "interest rate lobby"
of investors who at that time wanted higher rates.
Bent on high economic growth, especially ahead of an
election cycle beginning next year, he accuses speculative
investors in the capital markets - both domestic and foreign -
of stoking volatility by seeking quick profit at the expense of
Turkey's longer-term economic health.
"I am saying the same thing to one bank, three banks, all
banks that make up this lobby. You have started this fight
against us, you will pay the high price for it," he said,
without indicating what action might be taken.
At a subsequent rally in Ankara, he urged people to use
state banks, and rounded on some of Turkey's largest companies
that he also sees as part of the lobby, including the Koc
, Dogus and Sabanci
"You should put the high-interest-rate lobby in their place.
We should teach them a lesson. The state has banks as well, you
can use state banks," he said.
FOREIGN INVESTORS RATTLED
Turkey's financial markets were turbulent last week, as
protests raged in cities around the country, and investors are
preparing for more volatility this week as the uncertainty
Early on Friday, the lira hit its weakest against its
euro/dollar basket since October 2011, while
Istanbul's main share index lost around 15 percent over
the week. The yield of Turkey's two-year benchmark sovereign
bond hit a 6-month high on Thursday.
Erdogan's AK Party has taken Turkey from being a
crisis-prone economy to Europe's fastest-growing over the past
decade, and has won three successive elections, each time with a
higher share of the vote.
It is a success story applauded by international investors,
including the debt ratings agencies Moody's and Fitch, which
have both raised Turkey to "investment grade".
But the unprecedented protests against Erdogan's government
have exposed faultlines between a religiously conservative
heartland fiercely supportive of him and a secular middle class,
including some wealthy businesspeople and bankers, who fear
"The attack on stock market speculation will hardly go down
well with foreign portfolio investors who have bought into the
Erdogan/AKP story over the past decade, and have been part of
its success," said Timothy Ash, head of emerging markets
research at Standard Bank.
"It is strange that they are somehow trying to pin the blame
for the protests on markets, and market participants, including