In today’s world Recep Tayyip Erdogan is certainly not unique as an elected, populist leader with an authoritarian bent, who is seeking to anchor his position at the top by grabbing as much power as possible and not minding if social freedoms get curbed or laws get bent in the process. Among others that come to mind are Viktor Orban in Hungary, Vladimir Putin in Russia, Xi Jinping in China, Narendra Modi in India and – just recently emerged – Rodrigo Duterte in the Philippines. But Erdogan is noteworthy for the zeal he has shown in getting rid of potential rivals and the extreme sensitivity to criticism that now marks his drive to convert Turkey into a religion-based “presidential democracy,” in effect a new sultanate of sorts.
This drive does not find much of an echo in the big cities such as Istanbul, Izmir or even Ankara, where Erdogan had a “saray” or presidential palace built for himself, atop a hill, with a reported 1,000 rooms at a cost of USD 615 million. There, the President and his AKP (Justice and Developement) party are applauded mainly for the economic growth Turkey has enjoyed under their stewardship. But the transformation is well-received in the Anatolian hinterland, Turkey’s “Koran belt,” where the secular Republic that Ataturk had created never really took root.
Determined -- now that he holds the presidency, which in Turkey is meant to be a largely ceremonial office -- to change the constitution so that his position becomes the most powerful in the land, Erdogan has been hard on anyone who disagrees with him. He has shut down or taken over virtually all opposition media, including Zaman, the largest-circulation newspaper. He has used patronage extensively to bring loyalists into his government and into other key positions. To the chagrin of many in the EU who would like to pull Turkey closer into their community, Pres. Erdogan has been using anti-terrorist legislation to silence academics and journalists he finds unpalatable and to prosecute members of the main Kurdish party. He is now so thin-skinned that since becoming President he has already brought defamation charges against close to 2,000 people.
He has been leaning heavily on the Central Bank to keep interest rates low, since in his view high rates cause rather than fight inflation. This led to a clash between him and Prime Minister Ahmet Davutoglu over the recent appointment of Murat Cetinkaya as Governor. He has now forced out PM Davatoglu in an effort to find someone more amenable to his ultimate goal, which is to prepare the ground for a referendum to overhaul the constitution and create a presidential office with far more powers than it currently has.
With this, it looks as though long-promised economic reforms will come to a halt, which were supposed to include a restructuring of the labor market, the roll-out of a government-mandated retirement scheme, and the development of Turkish bond and equity markets to help local companies raise capital. There was also talk about finding ways to increase the country’s low savings rate, modernize the highly unproductive agricultural sector and attract more foreign investment into sectors other than construction and banking. Erdogan used to be supportive of economic reforms, but now his attention appears to be focused solely on controlling dissent and emasculating political opponents.
In this context, it bears watching how under Erdogan and the Islamist-rooted AKP the Turkish state has experienced a religious infiltration into all aspects of public life as secularist officials were systematically replaced. It is by no means coincidental that the Speaker of Parliament, Ismail Kahraman, just last month told a group of religious scholars that the country should ditch its secular constitution altogether and adopt one that reflects its Islamic identity. None of this makes things easy for Western powers trying to rely on Turkey as useful bridge between East and West, a stabilizing force in the Middle East, a reliable NATO partner and a sturdy bulwark against ISIS. In fact, given the government’s preoccupation with the Syrian Kurdish militia, which is allied with the secessionist Turkish Workers’ Party (PKK), one gets the impression that for the government ISIS is almost a secondary issue.
Pres. Erdogan worries that at the tail-end of the Syrian war he will be confronted with an independent Syrian-Kurdish state in addition to the already existing Kurdistan Regional Government in Iraq. The concern is that, with two autonomous Kurdish neighbors at its borders, Turkey will find its own Kurds seeking similar status. Rather than embracing the Kurds’ 60 members of parliament in Ankara (the Leftwing Peoples’ Democratic Party or HDP), Erdogan wants to win back a number of their seats in by-elections so that he gains the majority he needs to amend the constitution and wrest more power from parliament and the courts. A parliamentary vote this week is aimed at stripping deputies of immunity from prosecution, which would open the way for court cases against Kurdish MPs who could be threatened with jail under the country’s anti-terrorism laws.
One man to keep an eye on for possible future trends is the President’s son in law, Berat Albayrak, who is credited, if that’s the word, with engineering PM Davutoglu’s ouster. This is not to say that everything is now aligned in Erdogan’s favor. After more than a dozen years of being attacked, demoralized and marginalized by the strongman and his supporters there are now early signs that the military is regaining a bit of its previous confidence. As yet, Erdogan does not have to worry that the men in uniform may try to topple him, as they did four civilian governments since 1960, but the generals of the second-largest standing army in NATO have found the backbone to resist pressure to send large numbers of combat troops into Syria. They are seeking to maintain strong ties with NATO and with the United States and are playing an increasingly vital role in the fight against ISIS. Erdogan also has to deal with emerging rifts in his AKP party, the departure from government of Mr. Davutoglu notwithstanding.
The economy, fortunately, is still doing quite well. Real gross domestic product grew by 0.7% in the final quarter of 2015, to where it was 5.7% higher than a year earlier. For 2015 as a whole, the expansion was 4.0%, accelerated from 3.0% in 2014. The foreign trade deficit has been contracting even though exports continue to benefit little from the exchange-market decline of the lira. After flirting with parity against the US dollar in 2008 the unit has fallen to where it now trades at almost three to one against the greenback. It lost 20% of its value last year alone and has given up another 1.5% so far in 2016. But inflation in April was a relatively moderate 6.57%, after 7.46% in March.
On the other hand, unemployment remains high, clocked at 11.1% in January. Net foreign exchange reserves, excluding the holdings of commercial banks at the Central Bank, have fallen below USD 30 billion, which leaves the monetary authorities relatively little firepower for defending the lira. And the country’s economic Achilles heel is still a current-account BoP deficit equivalent to roughly 5% of GDP, which is still being bridged to a substantial extent with inflows of short-term money from abroad. This keeps Turkey vulnerable to any sudden loss of confidence among international investors.