The para­dox of pol­i­tics un­der Er­do­gan

Financial Mirror (Cyprus) - - FRONT PAGE -

On Sun­day, Turkey was tasked for the first time with elect­ing its Pres­i­dent. Re­cep Tayyip Er­do­gan, barred from stand­ing as Prime Min­is­ter for a fourth time, won with a dis­tinct 52% of the vote. Some­what con­tro­ver­sially, he amended the con­sti­tu­tion af­ter a ref­er­en­dum in 2007 stat­ing that the pres­i­dency should be pub­licly elected and has an­nounced that be­cause of this, the of­fice will now hold greater power. What does his vic­tory mean for Turkey’s fu­ture?

Un­der Er­do­gan, Turk­ish pol­i­tics has be­come a se­ries of para­doxes. In his eleven years in power, the econ­omy has grown an av­er­age 5% per year, but this has co­in­cided with a more au­thor­i­tar­ian style of pol­i­tics. He rep­re­sents democ­racy but ac­cord­ing to the Com­mit­tee to Pro­tect Jour­nal­ists, Turkey was the lead­ing jailor of jour­nal­ists in the last years. The in­vest­ments in pub­lic and pri­vate in­fra­struc­tures, from rail­ways to shop­ping malls, have gained Er­do­gan pop­u­lar­ity at home, but his for­eign pol­icy has led to crit­i­cism abroad. No­tably, at the start of the Arab Spring in 2011, Er­do­gan pre­sented Turkey as a model of Mus­lim cul­ture meet­ing Western democ­racy, yet Turkey’s eco­nomic suc­cess has helped to fund the anti-Western Mus­lim Broth­er­hood in Egypt and Ha­mas in Gaza.

This dishar­mony looks set to con­tinue. Not only will Er­do­gan hold sway as Pres­i­dent, but it is highly likely that his AKP party will choose as their next leader some­one in line with Er­do­gan’s agenda. On his elec­tion cam­paign ear­lier this month, he vowed both that “Turkey will be one of the world’s ten big­gest economies by 2023” and that he will con­tinue to crack down on po­lit­i­cal foes.

Yet how long can Turkey flour­ish in a global econ­omy if it can­not as­sert its dom­i­nance over­seas?

Sit­ting on the border of Europe and the Mid­dle East, Ankara could have played an im­por­tant diplomatic role in work­ing to­wards a cease­fire agree­ment be­tween Is­rael and Ha­mas, but in­stead it has frus­trated Is­rael and Amer­ica with its out­spo­ken onesid­ed­ness. Er­do­gan re­fuses to co­op­er­ate with Egyp­tian Pres­i­dent al Sisi and has been highly crit­i­cal of Iraq’s Prime Min­is­ter Nouri al-Ma­liki.

Un­der­min­ing its own abil­ity to me­di­ate and in­flu­ence, Turkey no longer has am­bas­sadors in Syria, Is­rael and Egypt, and its re­la­tions with Iraq and Abu Dhabi are strained. Aside from the po­lit­i­cal reper­cus­sions, and risk to the tourist in­dus­try, the coun­try’s trade and in­vest­ment could also suf­fer from its in­creased iso­la­tion. In­vestors may be cau­tious about the po­ten­tially er­ratic style of pol­icy mak­ing which could neg­a­tively im­pact the coun­try’s busi­ness en­vi­ron­ment.

Although gross do­mes­tic prod­uct has soared, Er­do­gan’s pol­icy of keep­ing the in­ter­est rate close to zero has led to cheap credit and high lev­els of busi­ness and house­hold debt. Given the debt bub­ble and the fact that Turkey’s cur­rent-ac­count short­fall reached 7.5% of its GDP in the first quar­ter of this year, it would be in a highly vul­ner­a­ble po­si­tion if it lost for­eign in­vest­ment.

It is a safe bet that Er­do­gan will con­tinue trump­ing his ex­ist­ing eco­nomic poli­cies for the time be­ing but he must also take re­spon­si­bil­ity for Turkey’s cur­rent po­lit­i­cal state. Per­haps now that he has won the vote of the elec­torate, he will tone down his lan­guage and ap­pease his Amer­i­can al­lies.

If he wishes to avoid a crash­ing econ­omy, that is surely the very least he must do.

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