We have known what the new form of government would look like for some time now. They were in favor of a “one man” regime in which the the President would pull all the strings. With the oath-taking ceremony, the first steps were taken in this direction.
Changing the form of government and assigning new staff creates new uncertainties. Uncertainty means risk. More risk, especially in the financial markets, means price hikes. And that is exactly what has happened. After the announcement of the cabinet, the interest and exchange rates increased.
The government, however, is enthusiastic. New processes are being introduced, new actors have entered the picture, new targets have been pegged on the economic drawing board. But we do not know how much we are prepared for all this. It’s not quite clear what they are enthusiastic about. The new targets are vague and wobbly for now.
Embarking on such a journey without sufficient preparedness in today’s world, where there is threat of conflict and a possible disintegration of the existing order, will inevitably feed uncertainty and risk. Moreover, the uncertainty and risk we carry is already quite heavy. We have become one of the leading actors of regional hot conflicts; our economy is in trouble both in terms of internal and external conditions. The balance of Turkey’s economy is deteriorating in a way we have not seen for a long time. It is presumed that growth, which was pushed to unsustainable levels because of exaggerated incentives over successive election periods, will quickly lose steam after the summer. It is also unlikely that high inflation will be corrected any time soon, and it will certainly not be curtailed in one fell swoop.
The lack of discipline in government spending because of the election processes has also led to fiscal imbalance. There is a similar picture in our external balance. According to May 2018 calculations, our current account deficit has increased to $5.9 billion, while the yearly deficit exceeds $57.6 billion. Net capital outflow continues. These developments create a serious external financing problem, accompanied by the risk of carrying borrowing - already ballooning – into default territory.
All this shows that Turkey is going through a reversal of fortunes. We face serious risks and they are likely to increase further. This being the case, launching a mass initiative that aims to change the political regime wholesale, with all of its attendant uncertainties, makes me uneasy. I hope developments prove me wrong and find peace.