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Albayrak, married to President Ezra’s daughter, is likely to have chosen to leave the impossible in other hands. Erdogan’s fixed idea, contrary to all experience, that low interest rates offset inflation has driven Turkish governors to despair and the country’s finances to the bottom.
During Erdogan’s 18 Years in power, the economy has grown steadily, but with an unhealthy recipe: government-subsidized credit to businesses, especially the construction sector. In the good old days, when people can afford to buy apartments and consume, this goes hand in hand. During crises, as now, dangerous deficits are created.
Erdogan’s curious insight into the relationship between interest rates and inflation, first launched by former Iranian President Mahmoud Ahmadinejad, has prevented the country from safeguarding its currency and depleting the dollar reserve. Economists and advisers have torn their hairs trying to explain to Erdogan how he is connected, but instead of reasoning, he has fired them.
Those who insisted on raising interest rates To prevent the flight of dollars, they have been branded as agents of an international “banking mafia”, often described with anti-Semitic clichés. These dark forces, in the history of the president, are constantly looking for a hook for Turkey on its march towards great power status.
To boost employment and consumption at all costs, Erdogan during the good years encouraged private Turkish companies, not just exporters, to borrow abroad. Today this private external debt amounts to 180 billion dollars, money that right now seems like a dubious claim.
Mismanagement of the economy, the adventures of foreign policy and the neutralization of the judiciary have reduced the inflow of foreign investment. One way out of the acute crisis would be to seek help from the International Monetary Fund and use the money for determined economic reforms to stimulate dynamic export industries, rather than the politically stuck and corrupt construction sector.
But the IMF does not make loans without the consideration of its clients. In the Turkish case, the fund would certainly make it a condition that the Turkish Riksbank regain its independence, something that is out of the question for Erdogan. You have three years until the 2023 presidential election to take over the economy or destroy it.
