News / Middle East

    Erdogan's Presidential Plans Linked to Turkey's Economic Fortunes

    A scrap collector pulls her trolley in front of a Turkish bank in Istanbul, Tuesday, June 4, 2013. Turkey's stock market recovered slightly after plummeting amid nationwide unrest. On Monday the Borsa Istanbul 100 Index closed down 10.5 percentA scrap collector pulls her trolley in front of a Turkish bank in Istanbul, Tuesday, June 4, 2013. Turkey's stock market recovered slightly after plummeting amid nationwide unrest. On Monday the Borsa Istanbul 100 Index closed down 10.5 percent
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    A scrap collector pulls her trolley in front of a Turkish bank in Istanbul, Tuesday, June 4, 2013. Turkey's stock market recovered slightly after plummeting amid nationwide unrest. On Monday the Borsa Istanbul 100 Index closed down 10.5 percent
    A scrap collector pulls her trolley in front of a Turkish bank in Istanbul, Tuesday, June 4, 2013. Turkey's stock market recovered slightly after plummeting amid nationwide unrest. On Monday the Borsa Istanbul 100 Index closed down 10.5 percent
    David Arnold
    Turkish Prime Minister Recep Tayyip Erdogan’s handling of recent anti-government demonstrations and his public quarrel with the country’s banks and business leaders could delay needed economic reforms until after next year’s presidential elections and possibly a year after that, political analysts say.
     
    The analysts also say those two factors could affect Erdogan’s plans to run for president in those elections.
     
    When the prime minister returned from talks in North Africa in late June, he was welcomed by massive demonstrations protesting government plans to convert Istanbul's Gezi Park into a sort of monument to the old Ottoman Empire. In a nation that has looked to the secular West instead of the Islamic Middle East for much of the past 90 years, Erdogan's park conversion plan was predictably provocative.
     
    But instead of addressing the Gezi Park issue directly, Erdogan ordered police to crack down on the demonstrators and decided instead to complain about the nation’s economic problems.  The banks, he told a political gathering in Ankara, had increased interest rates, causing Turkey’s annual growth rate to fall from 8.8 percent to 2.2 percent in the last year.
     
    “I am telling this to whomever – one bank, two banks, three banks,” Erdogan warned, “ … you started this fight, you will pay for it… Those who try to bring the stock exchange down … we will throttle you.”
     
    The prime minister also lashed out at Cem Boyner, the chief executive officer of Boyner Holdings AS, a retail and manufacturing conglomerate that owns more than 380 department stores.
     
    Boyner was one of thousands who demonstrated in Gezi Park, sarcastically declaring himself an economic “looter.” So did Ergun Ozen, the head of GE Garanti Bank, one of Turkey’s largest financial institutions.
     
    Who are the looters?
     
    Political and economic analyst Kemal Kirisci said declaring oneself a “looter” has become something of a badge of honor in recent weeks among a certain segment of the Turkish political spectrum.
     
    “It’s a term the prime minister used in a denigrating fashion against the protesters,” said Kirisci, director of the Turkey project at the Brookings Institution’s Center on the United States and Europe. “Now, I think there is a broadly supported consensus that this particular usage of the term did fuel the protest and led to its aggravation.”

    That may be so, but Kirisci and other political analysts sid the harshness of Erdogan’s Gezi Park crackdown and his handling of Turkey’s economy are not doing anything to further his hopes of becoming Turkey’s next president.
     
    And that, said Kirisci and the analysts, may be why Erdogan and his supporters are talking about scapegoats and conspiracy theories to blame for Turkey's woes.
     
    “The notion of referring to conspiracy theories in Turkey and in the region is not particularly new,” Kirisci said.
     
    Turkish economist Seyfettin Gursel, director of the Bahcesehir University Center for Economic and Social Research, said the relatively prosperous West and its dominant banking system were enticing targets. And the United States was the best target of all, Gursel wrote in the English language daily, Today's Zaman.
     
    Turkey’s economic downturn, Gursel wrote, was at least partially the result of international capital pulling out of the Turkish economy after U.S. Federal Reserve chief Ben Bernanke announced Washington's intentions to end its loose monetary policy, he said.
     
    “This statement of intention [by Bernanke] caused an exodus … from the Turkish market” and other emerging markets,” Gursel wrote.
     
    But according to Gursel, Erdogan also needed a local scapegoat and settled on the bankers and the business community.
     
    “He, obviously, confuses - voluntarily or not - speculation with manipulation,” Gursel said of Erdogan's quarrel with the bankers. 
     
    But even though Turkey’s stock market is beginning to bounce back from its losses last month, Gursel said the country still has to avoid being trapped in a long period of flat or slow growth. And the way to do that, he said, is through radical reform of Turkey's fiscal system, its labor markets and public education system.
     
    The path to the presidency is less clear

    Though easy to articulate, Gursel said such wide-ranging reforms could not even begin until after Erdogan and his party get through the the coming 2014 elections.
     
    “The party is more focused on establishing a presidential system that would make Prime Minister Recep Tayyip Erdogan a powerful president in the next decade…, ” he says. For now, he continues, “all these economic reforms are postponed to the aftermath of a series of elections starting March 2014 and ending July 2015,” he said.
     
    The bottom line is the powerful presidency Erdogan hoped to run may not happen anytime soon, if at all.
     
    For the immediate future, Brookings’ Kirisci said the current talk in Turkish political circles is that Erdogan’s strategy of achieving constitutional change ”seems a lot less likely than what was the case before the [Gezi Park] protests.” 
     
    According to Kirisci, even members of Erdogan's own party are not eager to introduce a strong presidential system in Turkey.
     
    The likelihood of Erdogan “getting himself elected is not as cut and dried as if he were to present himself as a prime minister,” Kirisci said, adding that the party's own bylaws limit a prime minister to two terms in office.
     
    Kirisci concludes, however, that whatever Erdogan decides, his AK Party will do well for itself in the next elections.
     
    “The moral of the story here is that he and his political party, if they were to run for election today, they would only lose about 5 or 6 percent,” Kirisci said. “That’s not a lot.”

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