Image Erdogan's high wire act keeps Turkey's economy spinning, for now [Lima Charlie News]

Erdogan’s high wire act keeps Turkey’s economy spinning, for now

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Turkey’s President Recep Tayyip Erdogan is fairly popular, his political opponents have been crushed in an ongoing purge, and Turkey’s economy has been growing by leaps and bounds. But the economy is showing cracks, and Erdogan has moved elections forward by 18 months to cash in on a strong position before it crumbles.

On Thursday, President Erdogan was formally nominated by his party ahead of general elections coming up this June. If the election schedule were running as normal, Turkey’s elections would have been scheduled for November 2019.  Back on April 18th Erdogan’s ruling Justice and Development Party, or AKP, surprised many by calling for a snap election for parliament and the presidency.

In April 2017, Turkey held a constitutional referendum to abandon its parliamentary system for an executive presidency, which greatly increased the authority of Erdogan by eliminating the office of Prime Minister and redistributing its powers.

There is a lot riding on this hastened decision. Erdogan doesn’t actually have his added powers yet because the referendum’s constitutional changes will only come into effect after the election, marking a clean break from nearly a century under a parliamentary system. If he were to be defeated in June’s election, he could lose the dizzying array of powers that he’s set himself up for, such as the presidential appointment of department heads, the ability to declare a state of emergency, and the appointment of judges to the supreme court.

That, however, is very unlikely due to a crackdown which has largely targeted legal professionals, civil society organizations, and opposition politicians and journalists. Nearly all voices against the president and his government have been silenced.

Erdogan currently enjoys the favor of the public in Turkey, one reason he might have pushed for the move-up of the elections. Photo: DPA

The judiciary is one of the largest prizes on offer. An estimated 20 to 25 percent of judges and prosecutors have been removed from their stations, and the victor of the election will have access to the newly politicized appointment process for judges. Control of the judiciary will also determine the results a substantial caseload brought on by the state of emergency, one that has been ongoing since July 2016, when an attempted coup threw the country into political disarray. Since then, over 107,000 people have been dismissed from government jobs on suspicion of disloyalty and collusion with the coup plotters. Additionally, over 100,000 people have charges against them, and over 50,000 of those are jailed and awaiting trial.

Despite waves upon waves of international scrutiny for these crackdowns, Erdogan, and ergo his party, have relatively high support. An international poll indicated that 46 percent of Turkey approved of Erdogan, while a mere 26 percent disapprove. And, although 48 percent of the country voted against the constitutional referendum, gerrymandering of opposition strongholds will make an electoral upset more difficult. Additionally, the improving economic climate of the country has quieted dissent. Although the economy dipped following the attempted coup — unsurprisingly — Turkey’s overall growth in 2017 exceeded 7%.

So with a booming economy, relative popularity, and crushed political dissent, why is Erdogan in such a rush? As it turns out, the economic boom may not be sustainable.

7% growth is a triumph, especially considering the country’s internal instability and the circumstances of its closest neighbors. Greece’s economy has shown no signs of recovery since its debt crisis began and may need another bailout in August. Armenia’s government collapsed in the face of a peaceful protest last month. Syria remains a tragic war zone. Following an announcement that Moody’s Investor Service is downgrading Turkey’s bonds two levels below investment grade, foreign investment has now dried up.

Graphical representation of a new airport under construction in Istanbul. It is expected to take up more space than the Island of Manhattan. (Kongres Magazine)

A trick that Turkey has deployed to goose its economy is a program of devaluing its currency and sovereign debt-driven government spending. And the spending has not been without results, as Turkey’s capital, Istanbul, has major projects underway. These include the largest international airport in the world, a suspension bridge over the Bosporus waterway which will be the widest in the world, and, most ambitiously, a $14.1bn canal project which will only be rivaled by Suez and Panama.

These major projects are concentrated in the capital, which has grown from a population of 3 million people in 1980 to 15 million today. It continues to grow at a pace of 300,000 people a year.

Although the city is rapidly developing, the bursting population is spilling out into older structures. For example, this UNESCO-protected, 19th century Ottoman Mansion is occupied by a family of Syrian refugees. (Roads & Kingdoms)

Erdogan is proud of his infrastructure achievements, and frequently publicly cites them while dismissing concerns about his grabs for power.

“Oh, the West. You defended them [terrorists], you stood behind them or next to them. In this world, you don’t have any problem or concern about freedoms. This is not freedom,” he said in January. “Freedom is presenting the virtue of living humanely to the people. It comes from the Yavuz Sultan Selim Bridge, from Marmaray, from the Eurasia Tunnel, the Osman Gazi Bridge, the Çanakkale Bridge and a number of airports.”

However, the domestic stimulation of the economy is starting to show signs of trouble.

The Turkish Lira hit a record low value against the USD on Friday, having lost half of its relative value since 2013. Businesses in Turkey are beginning to feel the pinch.

“Corporate debt is now roughly 70 percent of gross domestic product according to our estimate,” said Ugras Ulku of the Institute of International Finance told the Financial Times. “More than half of that is in foreign currency.”

So, the lower the Lira drops, the more expensive it is for corporations to service their debt. To meet their obligations, some of the largest companies in Turkey are selling off their assets and attempting to restructure with their creditors.

When the Lira dropped below the ¼ mark in April, it triggered a sell off of the currency. Erdogan took responsibility, and described the sell off as an international conspiracy.

“There are games being played with our economy… We have thwarted them and will continue to thwart them,” Erdogan said in a speech in Ankara. “I call out to those attacking our economy: You will not succeed.”

In spite of these red flags, Turkey’s economy is still humming, and the IMF still projects that it will enjoy a 4% growth in 2018. However, the instability is starting to trickle down; unemployment increased to over 10% in Q1 of 2018.

So, although the plates have started to wobble, Erdogan has cut the time that he needs to keep them spinning through the expedited elections.

Meanwhile, the opposition is trying to match the president’s belligerence, and on Friday the largest opposition party, Republican People’s Party (CHP), nominated its candidate, Muharrem Ince. Ince is known for his combativeness, and while accepting the nomination he declared his intention to go after the President’s legacy. He even promised to convert the 1,000-room presidential palace which Erdogan constructed into a school.

However, the main challenge to Erdogan is expected to come from one of his own former ministers, Meral Aksener. She was credited as one of the primary opponents of the constitutional referendum. Unlike the left wing CHP, her new Iyi (Good) Party is conservative and could split votes off from Erdogan’s base.

If Erdogan is able to run the gauntlet and make it past all of these challenges, he will have a full five years before he faces re-election again. However, calling out opponents has been a cornerstone of his rhetoric (even before the coup, or his row with Gulenists, he was attacking his country’s “deep state”). Yet, with all of his opponents purged from office, and an electoral victory likely, all of the problems facing Turkey today seem to fall squarely on his shoulders. But now, between the invasion of Syria, a war of words with the European Union, and ongoing diplomatic tensions with the Greeks, his rogues’ gallery is filling back up.

The tensions with the Greeks have focused on the 1923 Treaty of Lausanne, which set the borders of modern Turkey after World War One, and fragmented the Ottoman Empire. Erdogan has repeatedly attacked the treaty, stating that Turkey surrendered too much territory. Media sympathetic to Erdogan has backed him up, even circulating maps of alternative proposals for Turkey’s border.

An image used in Turkey’s media, representing the “Misak-ı Millî” borders of the country. Misak-ı Millî (National Oath) was an oath taken by members of the Ottoman parliament in the lead up to the Turkish War of Independence. (Foreign Policy Image)

When we entered the War of Independence, our goal was to preserve the boundaries of the Misak-ı Millî. Unfortunately, we could not protect it,” Erdogan said, in a speech on the treaty, and the situation in Syria. “Those imprisoned in Turkey for the purpose of this vicious cycle is to make us forget the Seljuk and Ottoman past. In 2016, we can not act with the psychology of 1923.”

[Title Image: Turkey Islamic Justice and Development]

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