Created: 01/14/2022, 12:56 p.m.By: Foreign PolicySharePresident Erdogan’s economic policy course is highly controversial. © -/Kremlin/dpa Gloomy prospects for the economy, climate catastrophes and a political situation that causes headaches are likely to continue in 2022.
Ankara – For Turkey, 2021 was a year marked by currency depreciation, rising inflation and devastating climate change events. A year that has further fueled the loss of confidence in the leadership of Turkish President Recep Tayyip Erdogan*. While Erdogan’s poll numbers have fallen lower than ever, he is facing some of the biggest challenges of his presidency 2022.
1. The economic collapse of Turkey
Even before the pandemic, Turkey was on the brink of financial disaster and trying to stave off a recession. The country was struggling with enormous debt, currency collapse and rising inflation. Erdogan has made the crisis worse by pushing through his unorthodox economic policies – such as cutting interest rates despite rising inflation – against the advice of his top economists. The Turkish lira and the Turkish people paid the price for it. On January 1, 2021, the lira was trading at 7.4 to the US dollar. At its low point on December 20, 2021, the lira had fallen to 18.36 against the US dollar. Since then, while the lira has firmed somewhat thanks to billions of dollars in government intervention, it is still a long way from where it was at the start of the year. Part of this roller coaster ride has been attributed to Erdogan’s meddling at Turkey’s central bank, which is tasked with setting interest rates and keeping inflation in check to keep. But Erdogan has shown again and again: if bankers and finance ministers don’t do what he wants, they’re gone*. He sacked three central bank governors in two years, including Naci Agbal in March, as well as a number of deputy governors and top officials during the year. The lira’s collapse has fueled inflation, which is officially at 21 percent year-on-year but unofficially much higher is appreciated. Officially, too, it could soon be much higher: after the difficult December, some experts expect that Turkey’s official inflation rate could reach the 30 percent mark when new figures are announced in January. This economic pain, which is causing the prices for goods in the daily necessities and led to people having to queue for state-subsidized bread could endanger Erdogan’s hold on power.
2. Make friends with old enemies
Turkey’s economic difficulties have prompted Erdogan to improve Turkey’s relations with Armenia* and the United Arab Emirates, partly motivated by the need to attract investment. In November, Erdogan and Abu Dhabi’s Crown Prince arranged for the signing of several investment and cooperation agreement. Tensions over Turkey’s support of the Muslim Brotherhood, which the UAE sees as a security threat, have rattled the region in recent years. Ankara has also accused Abu Dhabi of backing Turkey’s failed coup attempt of 2016 – on which the two disagreed over the Libyan conflict. But now the United Arab Emirates will set up a $10 billion fund to mainly support strategic investments in Turkey, including healthcare and energy. Meanwhile, Turkey and Armenia, whose differences have reached the point of the Armenian Genocide the Ottomans (which Ankara has not officially recognized) dating back more than 100 years pledged to appoint special envoys to normalize bilateral relations. They cut ties and closed borders some three decades ago during the first Nagorno-Karabakh conflict in the 1990s. They were on opposing sides in the most recent fighting for the disputed enclave.
3. A nation on fire
Over the summer, Turkey’s distress extended to its forests as the worst wildfires in living memory raged along its southern coast, burning more than 656 square miles in July and August. The fires were further fueled by months of drought caused by climate change and misuse of water resources. Few Mediterranean countries are more affected by climate change than Turkey. In May, the Sea of Marmara was covered in sticky slime by an explosion of “sea snot” – an overproduction of phytoplankton caused by warmer water. In August, floods killed 82 people in the western Black Sea region. Despite the devastation, the government has still not taken any concrete steps to protect the environment from further damage.
4. Another decline in human rights
The rights of women, LGBTQ+ and minorities have been further curtailed in 2021 when the country withdrew from the Istanbul Convention*, the largest international agreement protecting women’s rights, in March. In the same month, a politically motivated decision to shut down the country’s third-largest political party, the pro-Kurdish People’s Democratic Party, was tabled. A decision is still pending. In November, a court in Istanbul ordered the continued detention of philanthropist Osman Kavala, even though the European Court of Human Rights had already issued a final judgment on his release in 2019. Kavala is accused of taking part in anti-government protests in 2013 and being implicated in the failed coup attempt of 2016 – two allegations Kavala calls “absurd”.
5. What Turkey can expect in 2022
The biggest problem for Turkey will remain the economy, which is expected to continue to deteriorate. That could even force Erdogan to call early elections, which are currently planned for 2023. “I am very worried about Turkey. I think the risks of a systemic crisis are greater today than they have been for the past 20 years,” said Timothy Ash, senior emerging market strategist at BlueBay Asset Management. He expects inflation to peak at around 50 percent and the currency to depreciate further by 25 to 30 percent. “With a return to some normalcy and orthodox politics, I think that can be tackled,” he said. “But if Erdogan wants to continue the current policy, it will be too late at some point.” Turkey has tried to combat some symptoms, such as raising the minimum wage and introducing a new deposit insurance system to protect savers from currency depreciation. However, this did not eliminate the causes. Because higher wages mean higher costs for businesses, which will translate into higher prices for consumers, and printing money for austerity will only increase inflationary pressures. There is even a political component to the economic solutions, Ash said, since around eight million Turks are dependent on state benefits. “I could imagine Erdogan making sure that a lot of money is spent to protect this group from the worst effects of the downturn to get that segment of the population to vote,” Ash said.
6. Will there be early elections?
This question has been hotly debated throughout 2021, and opinions vary widely as to whether it would be a good idea. However, if early elections were called, it would probably be after the economy has had time to stabilize but before the opposition has won over too many voters, says Berk Esen, a political scientist at Turkey’s Sabanci University , like raising the minimum wage, must first bear fruit before Erdogan can call elections,” he said. “But the longer he waits, the greater the opposition’s chances will be.”
7. A crucial moment for the opposition
Perhaps the most important step for the opposition in the coming months will be the selection of a common candidate for a coalition including the Republican People’s Party (CHP). While CHP leader Kemal Kilicdaroglu has expressed an interest in running, the most likely candidate is Istanbul Mayor Ekrem Imamoglu, who won local elections again in 2019 and dealt Erdogan’s party a significant defeat. Erdogan used to hold that role himself in the 1990s. “Imamoglu is very popular, almost like a rock star,” Esen said. He is also increasingly becoming the target of various allegations from government circles: Erdogan’s allies would like to see the popular mayor in court on charges of terrorism. So the big dynamic will be to what extent the opposition parties can unite and poach Erdogan’s AKP voters. “I think that next year opposition politicians will directly court AKP voters in the Anatolian provinces and cities,” Esen said. “And it’s already happening. But they must unite to criticize the AKP’s economic model because it is clearly not working.” by Liz CookmanLiz Cookman is a freelance journalist based in Istanbul, covering Turkey, Syria and the wider Middle East. This article was first published in English in ForeignPolicy.com magazine on January 3, 2022 – it is now available as part of a collaboration also available in translation to the readers of the IPPEN.MEDIA portals. *Merkur.de is an offer from IPPEN.MEDIA.Foreign Policy Logo © ForeignPolicy.com
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