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NY Times, June 26, 2018
Now, Erdogan Faces Turkey’s Troubled Economy. And He’s Part of the Trouble.
By Carlotta Gall
ANKARA, Turkey — With his victory in Sunday’s elections, President Recep
Tayyip Erdogan has taken his place among the world’s emerging class of
strongman rulers, nailing down the sweeping powers he has insisted he
needs to address Turkey’s numerous challenges, at home and abroad.
Now, all he needs to do is deliver.
“He won on a knife-edge,” said Ugur Gurses, a former banker who writes
for the daily newspaper Hurriyet. “But now he has in his lap all the
problems.”
Mr. Erdogan is contending with an array of economic troubles, an
increasingly disgruntled populace and deteriorating relations with
Turkey’s Western allies. Among the many problems Mr. Erdogan faces is
one fundamental roadblock: His foreign policy is fighting with his
economic needs.
His increasingly authoritarian, nationalist and anti-Western bent is
alienating foreign investors, which is hurting the Turkish lira. As the
currency plunges, domestic capital flees. And he is newly reliant on a
nationalist party that enabled him to maintain his majority in
Parliament but promises to reinforce all those tendencies, as well as
his hard line against the Kurdish minority.
The lira briefly rose with the news of Mr. Erdogan’s re-election, and
his most senior economic adviser posted a message on Twitter on Sunday
night: “This sets the stage for speeding up #reforms.”
The economy is Mr. Erdogan’s most pressing problem, but analysts express
doubt that he will be able to perform the necessary surgery and
introduce needed austerity measures with municipal elections looming in
March 2019.
“Now the first challenge is the deterioration of the economy, and he has
no means, no perspective to change the course of events,” said Kadri
Gursel, a columnist for the newspaper Cumhuriyet, who was imprisoned by
Mr. Erdogan for 11 months.
Mr. Gursel said Mr. Erdogan offered no ideas during his campaign to
explain how he would lift the economy, except more of the same. “He
could not offer a vision for the future,” Mr. Gursel said. “All he could
offer was infrastructure projects and a bad representation of the past.”
After years of strong growth, the economy is languishing in recession,
economists say, with rising foreign debt levels, double-digit inflation,
the sagging lira and paltry levels of foreign investment, compared with
past years. An increasing government role in the economy has led to
charges of cronyism and corruption, with critics complaining of insiders
becoming fabulously wealthy on government contracts and sweetheart deals.
Many economists also blame the dismal economic performance on Mr.
Erdogan’s increasingly authoritarian rule, following a failed coup
attempt two years ago.
In the aftermath, he declared a state of emergency and began a
widespread crackdown against his political opponents, confiscating
businesses in the process and prompting many wealthy Turks to shift
their companies and capital out of the country. And he spooked foreign
investors with his anti-Western belligerence and meddling with the
central bank to keep interest rates artificially low.
As the election results underscored, Mr. Erdogan still maintains the
strong backing of the newly prosperous Islamists who were long
marginalized under the secular republic founded by Mustafa Kemal
Ataturk; people who, like Mr. Erdogan, as the historian Soner Cagaptay
has written, were “born on the wrong side of the tracks.”
The transfer of power and wealth to those newcomers over the past 15
years represents a transfer of capital that is permanently changing
Turkey, said Bekir Agirdir, director of the polling firm Konda.
“The government subsidizes them and they come up and become so
successful,” Mr. Agirdir said of the newcomers. “It is social and
political engineering.”
And while ordinary Turkish citizens are hurting financially, they
evidently still trust Mr. Erdogan. Ozgur Unluhisarcikli, the Ankara
director for the German Marshall Fund of the United States said in an
interview, “There is this worry that, ‘What would happen if Erdogan goes?’ ”
“The economy is suffering, there is an issue of performance in some
areas, but those were not reflected in the vote,” he added.
Economists say Mr. Erdogan needs to cut public spending, including
expensive subsidies for gasoline and electricity. Turkey borrowed
heavily in recent years on international markets, and now faces a bill
of $250 billion a year to finance the debt and the country’s current
account, which is also deteriorating. This could force it to seek help
from the International Monetary Fund.
But few say they think he will take the necessary measures. “Erdogan
must do a surgical operation on the economy,” Mr. Gurses, the Hurriyet
correspondent, said. “I don’t think he will be able to do it since
municipal elections are coming in March 2019, but Turkey cannot sustain
the situation any longer.”
“The Turkish economy cannot stay on hold,” he added.
In light of the growing economic gloom, it would seemingly behoove Mr.
Erdogan to moderate his foreign policy, dialing back the anti-Western
policies and language. But he comes across as a prideful man and seems
reluctant to back down, especially now that he is relying to some extent
on the Nationalist Movement Party, or M.H.P., which preserved Mr.
Erdogan’s majority in the Parliament.
The leader of that party, Devlet Bahceli, has made it clear that he will
demand concessions for his support, and that he will push an agenda that
is anti-Syrian, anti-Kurd and anti-Western, at least rhetorically. He
has indicated he would not agree to Mr. Erdogan reaching out to any of
the opposition parties after the election.
According to a post on Twitter by Mr. Unluhisarcikli, the Marshall Fund
director, “The weight of M.H.P. not only on domestic but also foreign
policy will likely increase in the upcoming period, which is not a good
sign for Turkey trans-Atlantic relations.”
Mr. Bahceli’s party is strongly opposed to the presence of over three
million Syrian refugees in Turkey, and Mr. Bahceli has said he will push
for policies to make them return home. Mr. Bahceli has also supported
further operations against Kurdish militants inside Turkey and in
neighboring Iraq and Syria.
On that issue, Mr. Erdogan promised in his victory speech that he would
act decisively against terrorist organizations and work toward
liberating more Syrian land from Kurdish militants so that Syrian
refugees in Turkey could return home.
That is likely to lead to more demands from Turkey for the United States
to end its cooperation with Kurdish militias in Syria that it has been
using in the fight against the Islamic State.
And it bodes ill for the Kurdish minority in Turkey. Even as the
pro-Kurdish People’s Democratic Party won representation in the
Parliament, crossing the 10 percent threshold, nine party members from
the last Parliament remain in jail along with dozens of local political
officials and student activists.
For now, Turkey’s Western allies seem prepared to give Mr. Erdogan the
benefit of the doubt. Going into the NATO summit next month, “at least
there will be clarity about the political situation in Turkey,” said
Amanda Sloat, who dealt with the country for the State Department during
the Obama administration.
Mr. Erdogan’s warming relations with President Vladimir V. Putin of
Russia remain a potential point of contention, particularly the
negotiations with Russia over the S-400 air defense system, problematic
for a NATO member.
But the Trump administration will not regard the sale as complete until
it “physically takes place,” Ms. Sloat said, and the Turks emphasize
that they are also negotiating with an Italian-French military consortium.
The NATO secretary general, Jens Stoltenberg, has already congratulated
Mr. Erdogan on his victory, and Ms. Sloat said she expected Washington
quickly to follow suit.
Mr. Erdogan’s drift toward authoritarianism so strained relations with
Europe that he was not welcomed in any European country to campaign
among Turkish expatriates, except in Bosnia. And the process for Turkey
to become a member of the European Union is at a standstill.
Nevertheless, Sweden’s foreign minister, Margot Wallstrom, said that
while the state of Turkey’s democracy had to improve, Mr. Erdogan should
be given the chance to do that. At a meeting of European Union foreign
ministers in Luxembourg on Monday, she also said that the issues with
Turkey’s large Kurdish minority and the country’s economic development
were “huge challenges.”
Analysts held out the meager hope that despite an unfair campaign, Turks
did vote freely and enthusiastically on Sunday. “With a turnout of more
than 90 percent, and the very high mobilization of the opposition,
Turkish society still holds its dynamism,” Mr. Unluhisarcikli said. “It
gives hope for the future.”
Steven Erlanger contributed reporting from Brussels.
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