News / Middle East

Turkish Markets Jittery Over Erdogan Presidency

Turkey's Prime Minister Tayyip Erdogan waves to supporters as he celebrates his election victory in front of the party headquarters in Ankara August 10, 2014. Erdogan secured his place in history as Turkey's first directly elected president on Sunday, swe
Turkey's Prime Minister Tayyip Erdogan waves to supporters as he celebrates his election victory in front of the party headquarters in Ankara August 10, 2014. Erdogan secured his place in history as Turkey's first directly elected president on Sunday, swe
Dorian Jones

With the election of Recep Tayyip Erdogan as Turkey's president, speculation is growing over the future of key economic ministers and the head of the central bank. Though they are facing growing criticism within the ruling the AK Party, their presence is seen as key to the country's economic stability.

During Erdogan's tenure as prime minister, the Turkish economy more than doubled in size.

But the markets have responded cautiously to his presidential election victory this past weekend.

According to economist Deniz Cicek of the Istanbul-based Finansbank, the markets are concerned about who will succeed Erdogan as prime minister and leader of the ruling AK Party.

"I think the uncertainty regarding the leadership of AKP might have some consequences for the markets. Currently, it's creating an uncertainty," said Cicek. "There is much pressure from the government on the central bank, and who will replace Erdogan will determine whether this pressure will ease or continue."

The governor of Turkey's central bank, Erdem Basci, has been under strong political pressure from Erdogan and key ministers, who have attacked him for not reducing interest rates fast enough.

Observers say Basci is being protected by Economics Minister Ali Babacan, who is widely seen as the architect behind Turkey's boom. But Babacan is also facing criticism from Erdogan supporters.

Atilla Yesilada, a consultant for Global Source Partners, an Istanbul-based research group, says Babacan is key to maintaining the confidence of international markets.

"As long Babacan and Erdem Basci are managing Turkish economic policy, we do not really care. They may be too tolerant of political intervention, but when push comes to shove, they do what needs to be done," he said. "Now the biggest fear in the markets is Babacan may not find a place in the new cabinet. And a lot of people speculate, without the patronage and protection by Babacan, Basci will not survive long."

Adding to markets' concern is what analysts claim is the steady erosion of independence of the financial markets' regulators.

In 2002, in the aftermath of Turkey's worst financial crisis, tough independent regulation was introduced under the guidance of the International Monetary Fund and World Bank. That regulatory regime is widely seen as being the reason why Turkey escaped the international banking crisis of 2008.

In addition, the strong pressure Erdogan's government is putting on the central bank to bring interest rates back down - and the government's success in getting the central bank to do so - has forced investors to recognize that the central bank's monetary policy committee is only nominally independent of the government.

Analyst Yesilada says, "From the statements of Numan Kurtulmus, who may become the [new] economy czar, Erdogan is going to completely personalize economic policy by ending whatever independence is left of all the regulatory agencies, to be brought under his personal order."

Turkey's strategic economic position makes it a bridge between Asia and Europe. Its NATO membership and candidacy to join the European Union reflect its importance. But with unrest and uncertainty already costing the country millions, and its stock market losing a third of its value last year, Turkey's new president and yet-to-be appointed prime minister will face considerable financial and economic challenges.

You May Like

Obama: I Will Do 'Everything I Can' to Close Guantanamo

US president says prison continues 'to inspire jihadists and extremists around the world' More

Sierra Leone Educates on Safe Ebola Burials

Also, country is improving at rapid response to isolated outbreaks, but health workers need to be even faster, officials say More

Religion Aside, Christmas Gains Popularity in Communist Vietnam

Increasingly wealthy Vietnamese embrace holiday due to its non-religious glamor, commercial appeal More

This forum has been closed.
Comment Sorting
Comments
     
by: Hidar Massud from: Turkey
August 12, 2014 8:11 PM
Capital flight from Turkey is at all times high. The people will try to take back their country from this revolting Muslim Brotherhood Islamists. Listen to me, many of you laughed when the Government in Turkey told women not to laugh. What you did not understand is that in Gaza if a woman laughs she will be arrested by Hamas, gang raped until she consent to become suicide bomber to save the honor of her family, or slaughtered. And this is the depravity you do not get to hear in the "Western Media" about the Muslim Brotherhood.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Decision on Cuba Underscores Divisions Among Miami Cubansi
X
Sharon Behn
December 19, 2014 9:34 PM
For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video US Decision on Cuba Underscores Divisions Among Miami Cubans

For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video Three Cities Bid for Future Obama Presidential Library

President Barack Obama still has two years left in his term in office, but the effort to establish his post-presidential library is already underway. The bid for the Obama Presidential Library is down to four locations in three states -- New York, Hawaii, and Illinois. As VOA’s Kane Farabaugh reports, each of them played an important part in the president’s life before he reached the White House.
Video

Video Cuba Deal is Major Victory for Pope’s Diplomatic Initiatives

Pope Francis played a key role in brokering the US-Cuba deal that was made public earlier this week. It is the most stunning success so far in a series of peacemaking efforts by the pontiff. VOA religion reporter Jerome Socolovsky has more.
Video

Video Fears of More Political Gridlock in 2015

2014 proved to be a difficult year politically for President Barack Obama and a very good year for the U.S. Republican Party. Republican gains in the November midterm elections gave them control of the Senate and House of Representatives for the next two years -- setting the stage for more confrontation and gridlock in the final two years of the Obama presidency. VOA National Correspondent Jim Malone has a preview from Washington.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.

All About America

AppleAndroid