Turkish president follows his own advice even as economy shrinks

ANKARA, Turkey – President Recep Tayyip Erdogan gave an interview on national television late last month, apparently seeking to calm ner...

ANKARA, Turkey – President Recep Tayyip Erdogan gave an interview on national television late last month, apparently seeking to calm nerves over the weakening Turkish currency and soaring inflation. But the reaction has been anything but calm.

He insisted there was “no turning back” to his newly announced economic plan, which promoted policies that appear to be aimed at defying the laws of economic gravity, such as refusing to hike rates. interest to fight against rising prices and strengthen the value of its currency.

“Interest rates make the rich richer, the poor poorer,” he said. “We have prevented our country from being crushed in this way. We will not allow that.

the currency of Turkey, read it, began to virtually slide as he spoke, ending a day in which he lost 8% of his value. It has hardly stopped diving since mid-November, hitting new lows every few days. The Turks have seen the price of basic commodities double and fuel costs jump 40%.

Mr Erdogan’s TRT interview cost the country billions of lire in just two hours, said Republican People’s Party spokesman Faik Oztrak. “TRT’s show with Erdogan tonight was the most expensive production in TRT history,” he said on Twitter. A former prime minister, Ahmet Davutoglu, called on the president to stop. “For the love of God, do not speak any more! ” he tweeted.

But Mr Erdogan continues to speak out – and shake up the markets and erode confidence in the pound and its handling of Turkey – as he doubles down on a policy prescription that few economists agree with and which has left the Turks and other suffering people wondering why he is doing it. what he does.

Mr Erdogan has been in power for nearly two decades, and much of his political success has hinged on almost continuous economic growth that has propelled millions of Turks into the middle class. Facing his re-election in 18 months, he slips in the opinion polls, in large part because of the deteriorating economy. His goal is to know how to reverse the decline over time to increase his chances of being elected.

“He’s trying to keep the boat afloat in his own way,” said Akif Beki, who served as chief adviser to Erdogan when he was prime minister. “He thinks he can turn the tide and convince people again as the election approaches.”

But for now, markets and analysts agree that his medicine is making Turkey’s ailments worse, and Erdogan has become increasingly isolated in his economic plan, having tightened his circle of advisers since his beginnings as he was accumulating practically authoritarian power for himself. .

Specifically, Mr. Erdogan’s transition to a strong presidential system in 2018 made him more dependent on a small inner circle rather than the wider spectrum of party officials and elected politicians under the old parliamentary system. This has given rise to criticism that he is surrounded by yes men and increasingly detached from the electorate – and economic realities.

Mr Erdogan has replaced a series of central bank chiefs and finance ministers in recent years, believing he knows the economy better than any of them and believing that by controlling monetary policy, he could make decisions more efficiently.

“He doesn’t listen to economists, which is typical of strong men,” said Ozgur Unluhisarcikli, director of the Ankara office of the US German Marshall Fund. The president, he added, was “less and less tolerant of dissent, especially within the party.”

Indeed, what infuriates many, in companies large and small, is that Mr. Erdogan does not speak out of the blue or inadvertently drop comments. He and his island team in the presidency, supervised by his attentive communications director Fahrettin Altun, deployed prepared speeches, which he delivered live on national television using a teleprompter.

In his first speech two weeks ago, he explained at length his decision to go against most Western economic practices and instead follow China in lowering interest rates and lowering the national currency. to balance Turkey’s current account deficit and make its products more attractive for export. He called on Turkish citizens to prepare for a “historic struggle” in what he called an “economic war of independence”.

He pledged that the country would no longer have to surrender to high interest rates, inflation and currency traps and he pledged to improve production, employment and close the current account deficit.

“Turkey can, for the first time in its history, have the opportunity to conduct an economic policy in accordance with its own needs and realities,” he said.

Lira began to free fall within hours of his speech, losing 15% of its value in one day. Undeterred, Erdogan gave another speech the next day and several since, each time reaffirming his determination to lower interest rates in the pursuit of growth.

He has responded to price increases not by adjusting his own approach but by going after suppliers and warning them not to hoard merchandise and pressuring supermarkets to keep prices low. Social media was lively on Thursday with discussions of the price increases for toilet paper and dairy products.

“I am stunned by the increases,” said Mehmet Eraltay, who on Wednesday was selling bagels in a cart in the capital’s main square. “He thinks the end of the world is approaching.”

Analysts have struggled to explain what prompted Erdogan to insist on monetary policy that goes against the most widely accepted economic practice of controlling inflation by raising interest rates.

“The only thing going on right now is the next election,” said Mr. Unluhisarcikli, of the German Marshall Fund of the United States. Mr Erdogan is slipping in the polls, largely because of the economy, and is looking to regain momentum ahead of the 2023 election, he said. “He’s looking for a way out. “

Most economists say the Chinese example would take a decade to take effect and could not bring economic relief in six to eight months, as Erdogan promises.

Mr Erdogan is also constrained by his political ally, Devlet Bahceli, the right-wing leader of the Nationalist Movement Party, who frequently holds back Mr Erdogan’s proposals that would improve Turkey’s international position.

Even limited efforts to restore democratic institutions and the independence of the judiciary could go some way to addressing investor concerns, Unluhisarcikli said. It could also improve Mr Erdogan’s standing with voters, who are feeling increasingly anxious and ignored.

One of the few poll consultants who continues to advise both Mr Erdogan and his opponents, Mehmet Ali Kulat, said he must have given some uncomfortable news during their last meeting.

Its most recent survey found that around 60% of those polled were very uncomfortable with the economic situation and 41% said they could not meet their basic needs.

There is widespread distrust of government institutions and even anger in respondents’ reactions to some questions, Kulat said. “It’s something beyond politics.”

Still, the president, who is known to follow opinion polls closely, rejected the poor results and insisted he would always win, Kulat said. “Sir. Erdogan thinks the data on the economy that we and other pollsters are giving is exaggerated,” he said.

The leader of an Islamist party, Temel Karamollaoglu, who met Erdogan in November, also called the president dismissive of his concerns.

“Sir. The president believes that all developments in the economy and in foreign policy are infallible,” he said in an interview published in online media, Gazete Duvar. “He sees no problem. told him, ‘The information you get may be wrong or different.’ He does not share this idea.

But Mr Beki, the former adviser, said Mr Erdogan would focus on preventing the spread of bad news rather than questioning it.

“He thinks he knows best,” he said. “I don’t think he’s listening to advice.”

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Newsrust - US Top News: Turkish president follows his own advice even as economy shrinks
Turkish president follows his own advice even as economy shrinks
Newsrust - US Top News
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