Economics and finance, Trade and industry | Asia, The World

31 March 2020

An economic slowdown combined with escalating adventurism in Syria are pushing Turkey’s leader into a corner, Danforth Oghigian writes. 

Turkey’s political discourse has become disjointed. President Erdogan’s legitimacy, and by extension his power, has been sourced from a series of crises. By sustaining, and then occasionally solving these crises, he has maintained tacit approval for his regime’s legitimacy.

This was the case in the aftermath of the July 2016 coup attempt. Nicholas Morgan wrote then that the crisis had been used to unite the Turkish nation behind President Erdogan while giving him an opportunity to label his opponents as a ‘fifth column’, opposing not just him but the state.

In March, Turkey stepped up incursions into Syria’s Idlib province to something resembling a full-scale intervention. This brought Turkish forces into direct confrontation with Russian forces when a Russian airstrike killed at least 34 Turkish soldiers there.

President Erdogan’s allies on the right wing have revived old territorial claims on Idlib and Aleppo for the Turkish state and pushed the theory that the Russian Government, not Turkey, is trying to use Syrian refugees to ‘blackmail’ the European Union.

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On 5 March 2020, President Erdogan met with Putin to diffuse the crisis in Idlib. In announcing his intention to travel, he spoke of defeating Kurdistan Worker’s Party (PKK) ‘terrorists’, victory in Syria, and in defence of his policy to open the border to refugees so they could flee into the Europe Union. His rhetoric often invokes outright nationalism.

Whether it be claims on territories neighbouring Turkey, national righteousness in aiding refugees, or the use of force against the Kurdistan Workers’ Party in Syria, these nationalist goals are repeated because they are ‘crises’ that Turkey can claim to be succeeding at dealing with, and important to such a tactic is that these crises are, in fact, actually manageable.

Now, Turkey may be facing a crisis which is beyond its ability to sustainably control. The real crisis is the economy, which is increasingly showing signs of crisis . An economic crisis has been predicted as the inflection point that could bring down Erdogan as far back as 2014. The potential for larger scale conflict in Syria and a poorly performing lira both push Turkey’s economy closer to crisis. The President is now backed in to a corner, and should therefore do whatever possible to maintain the ceasefire he negotiated with Putin on 5 March in order to prevent the military operation in Syria from becoming more expensive and spilling into an economic crisis.

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Turkish economic growth looks to be at its lowest since the Justice and Development Party came to power in 2002. Per capita, Turkey’s GDP has fallen nearly $3400 over the past six years, and losses this year on the Istanbul Stock Exchange total more than four per cent, while the Turkish lira has also fallen to 17-month lows.

Consumer price inflation also hit 12.4 per cent in February, rising for the fourth straight month. Given the added burden that a war economy would bring, Turkey is in no position for adventurism.

Within the government though, Turkish Treasurer and Finance Minister Berat Albayrak touted Turkey’s 0.9 per cent year-on-year growth in the third quarter of 2019 as a cause for celebration. Much of the current growth is fueled by cheaper credit due to interest rate cuts by the central bank.

Despite government optimism, the current growth rate of 0.9 per cent is similar to that of the first year of the 2008 financial crisis. Zülfikar Dogan, a journalist who was one of the founders of Turkey’s Economic Reporters’ Association, argues that credit-fueled growth without commensurate growth in fixed-asset investment, production, or employment risks creating further crises in the future.

Polling numbers show a decline in domestic support for Turkey military operations in Syria and Libya. The Turkish public is no longer convinced by their President’s crisis management skills and he risks losing his legitimacy. Even worse, polling also shows support for his party, the AKP, at only around 33 per cent, nearly 10 per cent less than their result in the 2018 parliamentary election.

Even when including the 9.4 per cent of respondents who support the right-wing National Movement Party, which votes with Erdogan’s AKP in parliament, they may not have enough support to maintain a parliamentary majority.

A new party founded by Ali Babacan, an ex-founding member of the AKP and former Minister of Economy, promises to offer a similar centre-right platform but without the authoritarian baggage. It may pose a real threat to the AKP in future elections.

Erdogan’s style of managing crises he has partly manufactured himself has been enough to carry him through in the past. However, he may now be running short of crises that he can actually control.

Threats from the Syrian civil war combined with enemies at home may no longer be enough to distract the Turkish public from a failing economy. And, as Erdogan’s numbers slide in the polls, alternatives to his rule will appear.

Ultimately, any economic crisis will likely push Turkish authorities towards more authoritarian governance. If it does not, President Erdogan’s failure to distract or reassure the Turkish public from their economic woes will likely lead to a further decline in popularity that the Turkish opposition would only capitalise on.

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