Turkey’s conflicting visions of the economy
There is a growing conflict in Ankara between two distinct views of the economy: the rational/conventional one led by Deputy Prime Minister Ali Babacan and the conspiratorial/revisionist one led by Yigit Bulut, senior adviser to President Recep Tayyip Erdogan.
Turkey's daily Sabah, a top-selling newspaper, on March 6 published an article titled, “The exchange rate conspiracy of the interest rate lobby." The story recounted a conspiracy theory arguing that the rapid increase of the value of the US dollar against the Turkish lira was a carefully crafted plot against President Recep Tayyip Erdogan’s "New Turkey” in the lead-up to the general elections in June. According to the article, the co-conspirators were “London bankers, their local collaborators and the parallel [i.e., pro-Gulen] media.” Moreover, the head of Turkey’s Central Bank, Erdem Basci, was helping these evil powers by “doing nothing.”
The Turkish media is often full of such overblown news, but Sabah is no ordinary paper — it is the most dedicated mouthpiece of Erdogan. This particular conspiracy theory is no ordinary one as it has been repeatedly promoted by both Erdogan and his close circle. No wonder on the same day the Sabah article was published, Erdogan asserted that the dramatic rise of the value of the dollar against the lira was connected to “the work of the interest rate lobby.”
Meanwhile, however, the very masters of the Turkish economy — Prime Minister Ahmet Davutoglu, Deputy Prime Minister Ali Babacan and Finance Minister Mehmet Simsek — met in New York March 4-7 with the very conspiratorial powers condemned by the pro-Erdogan media. Their New York hosts included investors from Goldman Sachs, Citibank and Merrill Lynch. As Reuters reported, the goal of the Turkish team was to “soothe the nerves of New York investors, who hold more than a fifth of the main Turkish stock index.” But this was no easy task, because the investors were “rattled by Erdogan’s demands that the Central Bank, which is battling inflation as well as the weak lira, must deliver sharper interest rate cuts.”
This confusing picture about the management of the Turkish economy is a reflection of the growing visible conflict in Ankara between two distinct camps.
