As Europe prepares for a possible gas supply crisis, Turkey is already in the thick of it.

And it may last longer than expected.

On Wednesday, President Recep Tayyip Erdoğan announced that it would probably take 10 to 15 days for gas supplies from Iran to return to normal levels.

Power outages and production stops in industry are a consequence.

Hopes that Iran will increase deliveries to the old level again at the beginning of next week do not seem to be working.

Thilo Pahl, the managing director of the German Chamber of Foreign Trade in Turkey, fears that the interruption is no exception: "Companies fear further power and gas shutdowns in the near future," he tells the FAZ

Andreas Mihm

Business correspondent for Austria, Central and Eastern Europe and Turkey based in Vienna.

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Iran surprisingly halted its gas supplies at the end of last week, just as consumption had soared to a record high given the low winter temperatures.

The pressure in the gas pipelines was soon increased again, but not to the old level.

Instead of the contractually guaranteed 30 billion cubic meters, only a third is said to be delivered.

Technical reasons for the pressure drop complained by the Iranian side were rejected by the Turkish side after a delegation visited Tehran: Iran apparently needs the gas itself. Turkey also obtains pipeline gas from Azerbaijan and Russia as well as liquefied natural gas (LNG) with tankers, but missing quantities cannot be compensated for at short notice.

The effects of the disruption were enormous, even if, according to official data, Iran only accounted for 16 percent of Turkey's gas imports from January to October.

households are not affected

The operators of the gas-fired power plants were the first to feel this, because the authorities instructed them to reduce gas consumption by 40 percent.

Because the reservoirs in the drought-plagued country are not well filled and the hydroelectric power plants are not running at full capacity, more than half of the electricity generated comes from gas-fired power plants, according to reports in the Turkish media.

National pipeline and power grid operators Botaş and Teiaş cut power supplies to industrial plants after the government promised that households would not be affected by cuts in gas and electricity supplies.

The suspension should last until Thursday.

There are exceptions for manufacturers of medicines and food.

Botaş rejected reports on social media that the gas storage facilities were empty or that the bill had not been paid.

The storage would be used to the maximum.

Great turmoil in the economy

The hitherto unknown supply interruptions have led to great unrest in the economy. Industry and Technology Minister Mustafa Varank and Energy Minister Fatih Donmez had to explain the measures and placate managers. Automakers such as Tofaş, a joint venture between Turkey's Koç Holding and European automaker Fiat Chrysler, and Renault halted production altogether. German industrial companies that produce on a large scale in Turkey are also affected. Unlike the Siemens plant in Gebze near Istanbul, not all of them could rely on generating their own electricity using solar panels and generators.

In view of the sharply reduced gas supplies from Iran, German companies are "highly unsettled and on the alert," said AHK Managing Director Pahl. For the first time, industrial companies in Turkey are faced with such serious disruptions in the electricity and gas markets. Major material damage to machines and systems was "avoided by higher payments for energy". In order to avoid such interventions in the energy market in the future, the government should make the framework for renewable energies and for increasing energy efficiency more investor-friendly, advised Pahl.

In Turkish industry, the supply disruptions have raised concerns that Turkey's reputation as a trustworthy manufacturing location is suffering.

In view of the currency's rapid fall of 45 percent against the dollar last year and an "unorthodox" monetary policy pursued by President Erdoğan with interest rate cuts to combat inflation, the country is already the focus of international interest.

Real interest rate at minus 22 percent

In December, inflation rose to 36 percent, in January analysts calculate an increase of 50 percent year-on-year.

The central bank also raised its own estimate in its outlook published on Thursday.

She now expects a rate of inflation of 23.2 percent by the end of the year, instead of the previous 11.8 percent.

The foreign exchange market reacted little changed with rates around 13.60 lira per dollar and 15.23 lira per euro.

Finance Minister Nureddin Nebati recently announced that the rate would fall below 10 percent again by the expected date of the presidential election in the middle of next year.

Erdoğan's popularity ratings had already fallen sharply before the gas and electricity crisis.

The government wants to boost economic activity, increase exports and turn the current account into positive figures with low interest rates – the key interest rate is 14 percent, which means real interest rates are at minus 22 percent.

The aim is to become less dependent on foreign currency, which is needed today to pay high import bills for raw materials and energy, among other things.

Their rising prices fuel inflation, which in turn weakens the currency.

The latter should also be stabilized by rewarding residents if they bunker their deposits in lira instead of foreign currency or money.

The government intends to use the budget to compensate for potential exchange losses due to a devaluation.

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