Does the Turkish economic crisis sound the end of Erdogan?
Turkey is currently in the midst of an economic crisis, with the value of the Turkish lira collapsing and inflation reaching its highest level since 2002. Balki Begumhan Bayhan writes that ahead of elections scheduled for 2023, Turkish President Recep Tayyip Erdoğan now risks losing his grip on power.
Once considered an emerging economy and one of the success stories of the 21st century, things don’t look so bright in Turkey. Although the country has experienced a number of economic problems in the past, the past year has been particularly difficult.
As the Turkish lira plummets to record lows and the country experiences soaring inflation, the Turkish economy is rapidly accelerating downward. This presents a risk for the country’s president, Recep Tayyip Erdoğan, whose popularity is in decline. Ahead of the upcoming elections in 2023, the combination of a collapsing economy and falling government support has left Erdoğan in an extremely vulnerable position.
Turkey’s economic difficulties
The currency crisis has seen the value of the Turkish Lira plummet at an accelerated rate. While the lira was at 7.3 against the dollar in January 2021, it plunged as low as 16.69 at some point in December. Losing more than 40% of its value, the lira has been the worst performer among emerging countries over the past year. Although he appeared to recover slightly in late December, he relapsed thereafter. The lira is currently at 13.79 against the dollar.
In addition to the currency crisis, Turkey’s inflation rate has also increased from 21% in November to over 36% in December. The current rate is the highest recorded in Turkey since just before the Justice and Development Party (AKP) came to power in 2002. The cost of food and beverages has increased by more than 43% per year, due to rising commodity prices. food products such as bread, flour and milk.
The current escalation of the Turkish crisis has been triggered by Erdoğan’s unorthodox economic policy – which has included lowering interest rates despite the skyrocketing rate of inflation. The president has long been obsessed with ultra-low interest rates, believing that lower rates have benefits such as economic growth and boosting jobs. Part of Erdoğan’s justification for this unorthodox economic policy is Islamic doctrine. He recently said that “as a Muslim” he “will continue to do whatever the religious decrees require”. He has remained faithful to this dogma even in the face of the unprecedented crisis.
Turkey’s central bank is under constant pressure to comply with Erdoğan’s policies. In December, it cut its one-week repo rates for the fourth consecutive time to 14% (previously 19% in September) despite rising inflation. The bank, once fairly independent of the government, has gradually become so under Erdoğan, insofar as it is now fully under government control and open to widespread interference from the president, who replaced three of the bank’s governors in so many years. .
Is this the end for Erdoğan?
The impact of the current crisis is felt in the daily life of the Turkish people. According to a survey conducted in December 2021, 61.5% believed that annual inflation had accelerated by more than 100 percent. For a regime that has built much of its support on its reputation for economic stewardship, these numbers are worrying. Moreover, Erdoğan’s personal ratings have also been hit, with his approval dropping to 38.6% from 57.2% who disapprove of his actions as president. All of this indicates that his hegemonic position in Turkish politics may be eroding.
Erdoğan now finds himself in a vulnerable position. Economic crises have precipitated the fall of several authoritarian regimes in recent history. The ongoing protests in Kazakhstan – sparked by rising fuel prices – could serve as the most recent example. However, the situation is all the more threatening for Erdoğan given the prospect of elections in 2023, which already promised to be a close competition for him but have now become much more difficult.
Elections carry an even greater threat because of the level of coordination that now exists between the country’s opposition parties. This coordination, initiated during the 2018 elections, has not only been maintained in recent years but has even been strengthened. The National Alliance of Anti-Erdoğan Parties now has a wide range of popular presidential candidates who surpass Erdoğan. Several of these candidates are the mayors of big cities like Istanbul and Ankara. They were elected as part of opposition alliances in 2019 at a time when the president’s approval ratings and the economy were in a much rosier position.
According to vote in December, Turkey’s most admired politician is Ankara Mayor Mansur Yavaş, who represents the Republican People’s Party (CHP) and is viewed favorably by around 60% of the public. Ekrem İmamoğlu, the current mayor of Istanbul, who also represents the CHP, came second with 51%, with Meral Akşener of the Good Party coming third with 39%. Erdoğan was only ranked fourth out of 38%, a disastrous result for a politician who dominated the political scene for two decades.
Erdoğan’s current approval rating is similar to the situation in June 2015, when general elections were held in which the AKP was unable to win. It was the closest the party has come to losing power – at least by electoral means – since its breakthrough in 2002. In 2015, Erdoğan’s popularity rating was only about a percentage point lower than it is today.
While the AKP managed to escape its moment of weakness in 2015, rebounding in a new election held in the fall, it did not have to deal with such a deteriorated economic situation and faced a much less united opposition. Furthermore, the past six years have seen an accumulation of additional grievances against the regime as its authoritarian character has been reinforced, especially after the 2016 coup attempt.
Erdoğan tries to construct a narrative about the economic crisis that assigns blame to a variety of different factors, including the influence of “outsiders” and “outsiders”. However, the electorate does not seem to accept the argument, and there is growing recognition that Turkey is going through an internal crisis resulting from government policy.
A survey carried out in December showed that 76 percent of people said their confidence in the government’s economic policy had declined, and an earlier poll in October showed that 64 percent did not believe that the government would be able to solve the current economic problems.
Erdoğan made some attempts to rectify the situation, such as increasing the minimum wage by 50%. However, this is unlikely to make any real difference given the rising prices and current currency depreciation. While the old minimum wage was worth $387 a year ago, the new “higher” amount is worth just $309 at current prices. Moreover, many basic products, including their components, are imported, so the fall in the purchasing power of the lira means that basic necessities are more expensive in Turkey than before.
Erdoğan gave a speech on December 20 in which he pledged to guarantee lira savings. This caused something of a rally, but the currency quickly resumed its decline and it is unclear how much worse the situation could get. He will soon have to conduct an election against a unified and popular opposition, in the midst of an economic crisis and stripped of his reputation for competent governance. All is not yet lost, not least because the possibility of electoral manipulation remains real, but the current surge of anger among ordinary people may well spell the end of Erdoğan’s hegemony over Turkish politics.
Note: This article gives the author’s point of view, not the position of EUROPP – European Politics and Policy or the London School of Economics. Featured Image Credit: European Council