Tag Archives: Turkish economy

Turkish Leader’s Election Woes

Turkey’s Leader’s Election Woes

Dispatches From The Edge

Feb. 12, 2019

 

“Democracy is like a tram; you get off when you have reached your destination.” The comment by Recep Tayyip Erdogan—made more than 20 years ago when he was first elected mayor of Istanbul—sums up the Machiavellian cynicism of Turkey’s authoritarian president. As Turkey gears up for municipal elections March 31, it is a prophecy Erdogan has more than fulfilled: the prisons filled with the opposition, the media largely silenced, the courts intimidated, the bureaucracy tamed, and more than 150,000 people fired.

 

But for all that, there are dark clouds on the horizon, much of them largely of the President’s own making. And since it is traditional for the Turkish electorate to use local elections to send a message, Erdogan and his Justice and Development Party (AKP) may be in for a setback.

 

For one thing, the AKP’s bread and butter issue, the economy, is in trouble, and maybe very serious trouble. Industrial production has fallen 6 percent and retail sales 7 percent, and overall growth has dropped from 7.4 percent in 2017 to a projected 2 percent in 2019. Inflation is at 20.3 percent and unemployment is accelerating. The most recent figures show that more than 11 percent are out of work, with almost twice that for young people age 15 to 24, who constitute some 20 percent of Turkey’s population.

 

In the past “terrorism” was the major concern for voters, but recent polls indicate that the economy is the number one issue, followed by unemployment and Syrian refugees.

 

Erdogan constructed his election juggernaut on economic growth that lifted a considerable section of the population out of poverty and fueled a major growth of the middle class. Much of that economy was centered on the construction industry and mega-projects like shopping malls, bridges and the largest airport in the world.

 

For Erdogan an economy built around massive projects was a win-win formula: the AKP handed out lucrative contracts to big construction firms, which, in turn, filled the electoral coffers of a party that went from the margins of the political spectrum to at one point winning almost 50 percent of the electorate.

 

But growth fell to an anemic 1.6 percent in the third quarter of last year, and the construction industry is in a recession, with large layoffs almost certain. The crisis of the building trades has had a domino effect on allied industries in cement, steel and ceramics. And the combination of the lira’s fall in value, coupled with the economic insecurity people are feeling, has depressed sales in the automotive industry, electronics and appliances,

 

The Turkish economy has long been reliant on foreign capital—so-called “hot money”— to keep the factories humming and living standards rising. But hot money is drying up and the bills are coming due. Since much of Turkey’s debt is in foreign currency, it is harder to pay off those debts with a depressed lira. Ankara has opened talks with the International Monetary Fund to explore a bailout, but IMF bailouts come with a price tag: austerity, not exactly a winning electoral program.

 

While much of Erdogan’s political opposition has been jailed or sidelined, it has not been cowed. In spite of nine parliamentary deputies from the Kurdish-based left-wing People’s Democratic Party (HDP) being imprisoned, that party still managed to get enough votes in the last election to hold their spot as the third largest party in the parliament. A hunger strike by imprisoned Kurdish activists has also generated sympathy for the HDP, and for the first time in Turkish history many of the Kurdish parties have formed a united front.

 

The HDP has also decided not to run candidates for the mayoralties of the big cities like Istanbul and Ankara, in order to help elect candidates from the secular center-right Republican People’s Party (CHP). In short, anyone but the AKP.

 

The AKP used to get a substantial number of Kurdish votes, particularly from conservative rural areas. But when Erdogan launched a crackdown on the Kurds in an effort to marginalize the HDP, he lost many of those voters. While not all of them have migrated to the left party, they have shifted their votes to other Kurdish parties, now united under the Kurdistani Election Alliance.

 

There is a certain amount of irony here. In an effort to make sure the AKP’s ally, the extreme rightwing National Action Party (MHP) made it into Parliament, Erdogan rammed through a law that allows parties form electoral alliances. Even if a party doesn’t reach the 10 percent threshold required to enter parliament, it will still win seats if it is allied with a bigger party.

 

But what is sauce for the goose is sauce for the gander.

 

The CHP has formed an alliance with the nationalist Iti (“Good”) Party, and most of the Kurdish parties are under one umbrella. It is likely that those alliances will end up winning seats that they wouldn’t have under the old rules.

 

Besides domestic woes, Erdogan’s foreign policy is hardly a major success. The Turkish occupation of northern Syria has failed to scatter the Kurdish-based Syrian Democratic Forces, and it looks increasingly like Ankara has stumbled into a quagmire. Erdogan’s plan was to drive the Kurds out and re-populate the area with Syrian refugees. Instead he is in a standoff with the Russians and the Americans, and, to protect themselves, the Kurds appear to be cutting a deal with the government of Bashar al-Assad.

 

There is a strong streak of nationalism among the Turks, and Erdogan may yet harvest it by pressing the Kurds in Turkey’s southeast, Iraq and Syria. But the Turkish army is overextended and still reeling from the purge of officers and rank and file that followed the failed 2016 coup. And there are credible reports that the military is not overly happy with occupying part of Syria.

 

The Turkish President did score points in his battle with Saudi Arabia over the kingdom’s murder of the journalist Jamal Khashoggi, as well as with his support for Kuwait and Qatar in their dispute with the United Arab Emirates and the Saudis. His willingness to resist US sanctions against Iran is also popular, because it means trade and a lift for Turkey’s ailing economy.

 

However, the March vote is not likely to turn on foreign policy, but rather on pocket book issues like unemployment and the wobbling economy. Erdogan is doing his best to head off any unrest over the economy by handing out low-interest loans and giveaways, like paying electrical bills for economically stressed families.

 

The opposition also claims that the AKP alliance is stuffing the rolls with non-existent voters. HDP investigators found that one house in Hakkari in the Kurdish southeast has 1,108 registered voters.

 

But Turkish agriculture is a mess, and construction and manufacturing are staggering under an enormous debt load. Erdogan has used the power of the state to hobble his opposition, but the state of emergency is alienating foreign investors and many Turks are increasingly weary of it.

 

In the 2017 referendum that bestowed almost unlimited executive powers on Erdogan, he lost Istanbul, Ankara and Izmir, Turkey’s largest cities. A recent poll showed support for the AKP had dropped from 42.5 percent the Party got in the 2018 election to 35 percent today.

 

After 17 years of power, after using every device he could—including stuffing ballot boxes—to build a powerful executive system orbiting around him, it is hard to imagine Erdogan suffering a set back. But tossing people in prison and intimidating opposition has had little effect on repairing the economy or raising living standards. And many Turks may be souring on the “destination” that Erdogan has brought them to, and they could well decide to send that message on March 31.

 

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Turkey’s President: Short Term Victory, Long Term Trouble

Turkish Elections

Dispatches From the Edge

May 14, 2018

 

 

When Turkish President Recep Tayyip Erdogan called for a presidential and parliamentary election June 24—jumping the gun by more than a year—the outcome seemed foreordained: the country is under a state of emergency, Erdogan has imprisoned more than 50,000 of his opponents, dismissed 140,000 from their jobs, jailed a presidential candidate, and launched an attack on Syria’s Kurds, that is popular with most Turks.

 

But Erdogan’s seemingly overwhelming strength is not as solid as it appears, and the moves the President is making to insure a victory next month may come back to haunt him in the long run.

 

There is a great deal at stake in the June vote. Based on the outcome of a referendum last year, Turkey will move from a parliamentary system to one based on a powerful executive presidency. But the referendum vote was very close, and there is widespread suspicion that Erdogan’s narrow victory was fraudulent.

 

This time around Turkey’s President is taking no chances. The electoral law has been taken out of the hands of the independent electoral commission and turned over to civil servants, whose employment is dependent on the government. The state of emergency will make campaigning by anything but Erdogan’s Justice and Development Party (AKP) and its ally, the National Action Party (MHP), problematical.

 

But Erdogan called for early elections not because he is strong, but because he is nervous about the AKP’s strong suit, the economy. While growth is solid, unemployment is 11 percent (21 percent for youth), debts are piling up and inflation—12 percent in 2017—is eating away at standards of living.

 

The AKP’s 16-year run in power is based on raising income for most Turks, but wages fell 2 percent over the past year, and the lira plunged 7.5 percent in the last quarter, driving up the price of imported goods. Standard & Poor’s recently downgraded Turkish bonds to junk status.

 

Up until now, the government has managed to keep people happy by handing out low interest loans, pumping up the economy with subsidies and giving bonuses to pensioners. But the debt keeps rising, and investment—particularly the foreign variety— is lagging. The Turkish economy appears headed for a fall, and Erdogan wants to secure the presidency before that happens.

 

To avoid a runoff, Erdogan needs to win 50 percent of the vote, and most polls show him falling short, partly due to voter exhaustion with the endless state of emergency. But this also reflects fallout from the President’s war on the Kurds, domestic and foreign.

 

The AKP came to power in 2002 with a plan to end the long-running war with Turkey’s Kurdish minority. The government dampened its suppression of Kurdish language and culture, and called a truce in the military campaign against the Kurdish Workers Party.

 

But the leftist Kurdish-based People’s Democratic Party (HDP) broke through the 10 percent threshold in 2015 to put deputies in the Parliament, denying the AKP a majority. Erdogan promptly declared war on the Kurds. Kurdish deputies were imprisoned, Kurdish mayors were dismissed, Kurdish language signs were removed, and the Turkish Army demolished the centers of several majority Kurdish cities.

 

Erdogan also forced a new election—widely seen as fraudulent—and re-claimed the AKP’s majority.

 

Ankara also turned a blind eye to tens of thousands of Islamic State and Al-Qaeda fighters who crossed the Turkish border to attack the government of Bashar al-Assad and Syria’s Kurdish population. The move backfired badly. The Kurds—backed by American air power—defeated the Islamic State and Al-Qaeda, and the Russians turned the tide in Assad’s favor.

 

Turkey’s invasion of Syria—operations Olive Branch and Euphrates Shield— is aimed at the Syrian Kurds and is supported by most Turks. But, no surprise, it has alienated the Kurds, who make up between 18 and 20 percent of Turkey’s population.

 

The AKP has traditionally garnered a substantial number of Kurdish voters, in particular rural, conservative ones. But pollster Kadir Atalay says many Kurdish AKP supporters felt “deceived and abandoned” when Erdogan went after their communities following the 2015 election. Kurds have also been alienated by Erdogan’s alliance with the extreme rightwing nationalist MHP, which is violently anti-Kurdish.

 

According to Atalay, alienating the Kurds has cost the AKP about 4 percent of the voters. Considering that the AKP won 49.5 percent of the vote in the last national election, that figure is not insignificant.

 

The progressive HDP is trying hard to win over those Kurds. “The Kurds—even those who are not HDP supporters, will respond to the Afrin operation [invasion of Syria], the removal of Kurdish language signs, and the imprisonment of [Kurdish] lawmaker,” HDP’s parliamentary whip Meral Danis Bestas told Al Monitor.

 

The HDP, whose imprisoned leader, Selahatt Demirtas, is running for president, calls for a “united stance” that poses “left-wing democracy” against “fascism.” The danger is that if the HDP fails to get at least 10 percent of the vote, its current seats will taken over by the AKP.

 

Erdogan has also alienated Turkey’s neighbors. He is in a tense standoff with Greece over some tiny islands in the Aegean Sea. He is at loggerheads with a number of European countries that have banned him from electioneering their Turkish populations for the June 24 vote. And he is railing against NATO for insulting Turkey. He does have a point—a recent NATO exercise designated Turkey “the enemy.

 

However, Erdogan’s attacks on NATO and Europe are mostly posturing. He knows Turkish nationalists love to bash the European Union and NATO, and Erdogan needs those votes to go to him, not the newly formed Good Party—a split from the rightwing MHP—or the Islamist Felicity Party.

 

No one expects the opposition to pull off an upset, although the centrist and secular Republican People’s Party (CHP) has recently formed an alliance with the Good Party, Felicity, and the Democratic Party to insure that all pass the 10 percent threshold for putting deputies in parliament.

 

That electoral alliance excludes the leftist HDP, although it is doubtful the Kurdish-based party would find common ground with parties that supported the jailing of its lawmakers. Of the Party’s 59 deputies, nine are in jail and 11 have been stripped of their seats.

 

There is an outside chance that Erdogan could win the presidency but lose his majority in Parliament. If the opposition does win, it has pledged to dump the new presidential system and return power to parliament.

 

The election will be held essentially under martial law, and Erdogan has loaded all the dice, marked every card, and rigged every roulette wheel.

 

There is virtually no independent media left in the country, and there are rumors that the AKP and the MHP have recruited and armed “supporters” to intimidate the opposition. A disturbing number of guns have gone missing since the failed 2016 coup.

 

However, as Max Hoffman of the Center for American Progress notes, the election might not be a “slam dunk.” A run-off would weaken Erdogan just when he is preparing to take on a number of major problems other than the economy:

 

 

  • *Turkey’s war with the Kurds has now spread into    Syria and Iraq.
  • In Syria, Assad is likely to survive and Turkey will find it difficult—and expensive—to permanently occupy eastern Syria. Erdogan will also to have to deal with the thousands of Islamic State and al-Qaeda fighters now in southern Turkey.
  • Growing tensions with Egypt over the Red Sea, and Ankara’s new alliance with Sudan, which is at odds with Cairo over Nile River water rights.
  • The strong possibility of a U.S confrontation with Iran, a nominal ally and important trading partner for Turkey.
  • The possibility—remote but not impossible—that Turkey will get into a dustup with Greece.
  • And last, the rising price of oil—now over $70 a barrel—and the stress that will put on the already indebted Turkish economy.

 

The Turkish president may get his win next month, but when trouble comes, he won’t be able to foist it off on anyone. He will own it.

 

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A Looming Crisis for Turkey’s President

Turkey’s Looming Crisis

Dispatches From The Edge

Dec. 18, 2017

 

Viewed one way, Turkish President Recep Tayyip Erdogan looks unassailable: He weathered last year’s coup attempt, jailed more than 50,000 opponents, fired more than 100,000 civil servants, beheaded the once powerful Turkish military, eviscerated much of his parliamentary opposition, dismissed almost half of the county’s elected officials, and rammed through a constitutional referendum that will make him an all-powerful executive following the 2019 election. In the meantime, a seemingly never-ending state of emergency allows him to rule by decree.

 

So why is the man running scared?

 

Because the very tools that Erdogan has used to make himself into a sort of modern day Ottoman sultan are backfiring. The state of emergency is scaring off foreign investment, which is central to the way the Turkish economy functions. The loss of experienced government workers has put an enormous strain on the functioning of the bureaucracy. And the promises he made to the electorate in order to get his referendum passed are coming due with very little in the till to fulfill them.

 

Part of the problem is Erdogan himself. In that sense he is a bit like US President Donald Trump, who has also alienated allies with a combination of bombast and cluelessness. The Turkish President is in a war with Washington over a corruption trial, at loggerheads with Germany (and most of the European Union) over his growing authoritarianism and, with the exception of Russia, China, Qatar and Iran, seems to be quarreling with everyone these days. It is certainly a far cry from a decade ago when the foreign policy of Ankara was “Zero problems with the neighbors.” As one Turkish commentator put it, it’s now “No neighbors without problems.”

 

What has thrown a scare into Erdogan, however, is not so much the country’s growing diplomatic isolation, but the economy and how that might affect the outcome of presidential elections in 2019.

 

In the run up to the constitutional referendum last year, the government handed out loans and goodies to the average Turk. Growth accelerated, unemployment fell, and the poverty rate was reduced. But the cost of priming that pump has come due at the very moment that international energy prices are on the rise. Turkey imports virtually all of its energy, but when the price of oil was down to a little more than $30 a barrel, the budget could handle it.

 

The price of oil in December, however, was close to $60 a barrel, and a recent agreement between the two largest producers—Saudi Arabia and Russia—to curb production will drive that price even higher in the future. Rate hikes for gasoline and heating will be up sharply in the coming months

 

Turkish unemployment is over 13 percent, inflation is close to 12 percent, and the Turkish lira has fallen 12 percent against the dollar. With energy costs rising and currency value declining, Turkey is struggling through an economic double whammy.

 

Economist Timur Kuran of Duke University says the Turkish economy is in serious trouble. “The AKP (Erdogan’s Justice and Development Party) is doing massive long-term damage to the Turkish economy. Corruption is up, the quality of education has fallen, the courts are massively politicized, and the people are afraid to speak honestly.” Kuran argues that any growth is based on short-term investments, so–called “hot money,” drawn in by high interest rates. “This is not a sustainable strategy. It makes Turkey highly vulnerable to a shock that might cause an outflow of resources.”

 

Under Erdogan Corruption does seem to be increasing. In 2013 Transparency International ranked Turkey 53ed out of 175 countries on its Corruption Perception Index. By 2016 the country had risen to 75th out of 176 countries.

 

Turkey’s economy is highly dependent on foreign money, but the continuing state of emergency and rule by decree is scaring off investors. Figures by the Central Bank show that Turkey is losing $1 billion a week in foreign investments. Britain, a major investor in Turkey, has reduced its investments by 20% since the declaration of the state of emergency.

 

The uncertainly has spread as well to Turkish citizens, who are putting their money into foreign investments in order to preserve their savings. From the end of 2016 to this November, Turks moved $17.2 billion to foreign firms.

 

Erdogan is blaming Turkish banks—in particular the Central Bank—for rising interest rates and the downturn in the economy. But Kemel Kilicdaroglu, leader of the centrist and secular opposition Republican People’s Party (CHP) argues that “The real reason why foreign investments other than real estate purchases are decreasing is that [foreign investors] feel insecure in a country where law, justice and press freedom are non-existent.”

 

The state of emergency allows the government to suppress trade union strikes, but it has been less successful in damping down what was once a AKP strong suit: rural farmers.

 

One of Erdogan’s economic “reforms” was to open Turkish markets to foreign competition, which has resulted in losses for the country’s live stock and agricultural growers. Meat producers are up in arms over an agreement with Serbia to import 5,000 tons of red meat, and tea, grape, tobacco and apricot growers have been hard hit by falling prices and foreign competition. Hazelnut growers were so incensed at the government’s base price for their produce that they organized a large march under the banner of “Justice for Hazelnuts.”

 

A study found that foreign imports had reduced the number of families involved in growing tobacco from 405,882 families in 2002 to 56,000 in 2015.

 

It is not so much the marches that worry Erdogan, but the fact that some 20 million rural Turks are up in arms against the government, anger that might translate into votes in 2019. In the April 2017 referendum, rural votes solidly supported the AKP, while urban centers—particularly their youth—voted no. Losing cities like Ankara and Istanbul—the city where Erdogan began his political career—was a shock for the AKP, but losses in rural areas would be a political train wreck.

 

While Erdogan strains to keep the economic lid on long enough to get through 2019, there are fissures opening within his own party. A wing of the AKP is not happy with Erdogan’s foreign policy disputes and the impact that they are having on the economy.

 

On his right, former interior minister Meral Aksener has formed the Iyi Parti or “Good Party” and says she plans to challenge Erdogan for the presidency. Aksener appeals to the more nationalist currents in the AKP and hopes to attract support from the extreme right wing National Action Party (MHP). She is currently polling around 16 percent.

 

Polls indicate that the “Good Party” is cutting into the AKP’s support, which has dropped to 38 percent. Erdogan needs at least 51 percent, the figure that he claims he got in the referendum (outside observers called the election deeply flawed, however). Aksener could split Erdogan’s support within the AKP and the MHP, thus denying him a majority.

 

Nor has the CHP thrown in the towel, Besides organizing marches by angry rural residents, Party leader Kilicdaroglu pulled off a 25-day, 280-mile “Justice March” last summer that may have involved as many as a million people.

 

The Peoples’ Democratic Party (HDP), Turkey’s leftist party closely tied to its Kurdish population, has been decimated by arrests and seizure of its assets, but it is still the third largest party in parliament. “It may appear that injustice has won, but this will not last,” HDP parliament member Meral Danis Bestas told Al-Monitor. “Turkey’s future truly lies in democracy, rights and freedom.”

 

Erdogan has enormous power and has out muscled and out maneuvered his opponents for the past 20 years. But Turks are growing weary of his rule and, if the economy stumbles, he may be vulnerable.

 

That’s why he is running scared.

 

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