Will Turkey's economic crisis doom presidential system?
Turkey seems to be on the cusp of a stormy 2017, as a failing economy and the drive for a presidential regime threaten to increase its already high economic and political risks.
In a few days, Turkey will leave a tough year behind, fraught with political and economic setbacks. Two general elections in 2015 had contributed nothing to the country’s stability, instead paving the way for more tension, conflict and polarization. Tensions peaked with the July 15 coup attempt this year and continued with a crackdown on the Kurdish political movement and its representation in parliament, the Peoples’ Democratic Party (HDP). Then, in August, Turkey joined the warring parties on the ground in Syria, launching Operation Euphrates Shield, which in its essence is aimed more at blocking the advance of the Syrian Kurdish Democratic Union Party's military wing than combating the Islamic State. While those developments increased Turkey’s political and geopolitical risks, a string of bloody suicide bombings and the assassination of the Russian ambassador in Ankara further added to the gloom in the final weeks of 2016. Economic damage was inevitable given the heightened risks.
Standard & Poor’s and Moody’s cut Turkey’s credit rating to non-investment grade, while the US dollar, which had risen 25% against the Turkish lira in 2015, continued to gain ground, especially after October. Turkey will end the year with a dollar that is 16% more expensive to buy with Turkish liras. True, the rise of the greenback was global, but the lira slid more than other currencies.
