Turkey’s one-man regime denied confidence vote by markets
The downturn in the Turkish economy looms as a major challenge for President Recep Tayyip Erdogan, as economic actors show little confidence in his new and sweeping powers and his selection of his son-in-law to manage the economy.
Turkey’s June 24 elections — which were held on an uneven playing field under a state of emergency and with few checks and balances in place — marked the country’s transition to a new model of governance that concentrates power in the hands of President Recep Tayyip Erdogan.
The new system, narrowly approved in a referendum last year, gave the president extraordinary executive and legislative powers as well as control over the judiciary. With parliament largely disabled, Erdogan began to issue decrees as soon as he started his new term July 9. The far-reaching decrees took effect directly with their publication in the Official Gazette, with no one in the 600-seat parliament aware of their content. Erdogan’s Justice and Development Party (AKP) is readying to lift the two-year state of emergency, but is planning legal amendments that would effectively make the emergency rule permanent.
The most remarkable member in Erdogan’s new Cabinet is his son-in-law, Berat Albayrak, who took the reins of the economy at a time of serious financial woes. Erdogan chose to sideline Mehmet Simsek, the hitherto czar of the economy who enjoyed credibility among local and foreign investors; he then attached the Treasury to the Finance Ministry and handed the portfolio to Albayrak, who was previously energy minister. Regulatory boards overseeing the banking sector and capital markets, public banks and even the central bank — though in an indirect way — were all placed under the control of Albayrak’s ministry, meaning the 40-year-old is now single-handedly in charge of the economy.
The abrupt transfiguration of the Turkish state, which marks a sharp departure from the modern governance norms of the Western world, has added new layers to Turkey’s economic frailty. Financial actors, both local and foreign, have so far denied a confidence vote to the new political system and its cadres, compounding worries over the already serious risks and fragilities in the economy.
