ERDOGAN’S ECONOMICS
Contrary to the mainstream economic theory of interest rate increases helping to keep consumer prices in check, Erdogan maintains that high borrowing rates cause inflation. The Central Bank of the Republic of Turkey, under pressure from the president, repeatedly slashed interest rates to boost growth and exports.
Instead, the value of the Turkish lira nosedived, and the rate cuts exacerbated a cost-of-living crisis. Inflation peaked at 85% in October. The official April figure was 44%, although independent groups say they think the actual rate is much higher.
To offset the impacts of inflation and win back votes, Erdogan has engaged in a public spending spree ahead of the elections, increasing the minimum wage and pension payments.
The opposition alliance has promised to restore the central bank’s independence and a return to orthodox economic policies, if Kilicdaroglu becomes president.
Erdogan reportedly has asked Mehmet Simsek, his internationally respected former finance minister, to return to the position, a sign that a new government may embrace more orthodox policies, if the Turkish leader wins a third presidential term.
On Thursday, Erdogan described Turkey’s economy, banking system and financial system as “sound.” He also said, however, that Gulf states, which he did not name, had “deposited money” in Turkey, providing temporary “relief.” for the devastation with lax building code enforcement. Some people left homeless or struggling to earn money also found the government’s earthquake response to be slow.
Despite the criticism, in the parliamentary election Erdogan’s alliance won 10 out 11 provinces in areas affected by the quake, signaling that the president’s focus on rebuilding during the campaigning has paid off. Erdogan has pledged to construct 319,000 homes within the year and has attended a number of groundbreaking ceremonies, trying to persuade voters that only he can rebuild lives and businesses.
Kilicdaroglu says his government would give houses to quake victims for free instead of the 20-year repayment plan envisaged by Erdogan’s government.
Turkey, but anti-migration sentiment is on the rise amid the economic downturn. A shortage of housing and shelters in the quakehit provinces has increased calls for Syrian refugees to go home.
The soft-mannered Kilicdaroglu had vowed to repatriate Syrians within two years, saying he would seek European Union funds to build homes, schools, hospitals and roads in Syria and encourage Turkish entrepreneurs to open factories and other businesses there. In a bid to woo nationalist voters in the lead up to the runoff race, Kilicdaroglu hardened his tone, saying he would send refugees packing within a year of being elected. He has since also won the backing of an antimigrant party.
Under mounting public pressure, Erdogan’s government has begun constructing thousands of brick homes in Turkish-controlled areas of northern Syria to encourage voluntary returns. On Thursday, Erdogan announced in a television interview that Qatar was funding a separate housing project that would help resettle up to a million Syrians.
His government is also seeking reconciliation with Syrian President Bashir Assad to ensure their safe return.
Erdogan said Thursday there are some 4 million refugees in Turkey, including around 3.4 million Syrians, but anti-migrant parties say the figure is closer to 13 million.