Who prompted Erdoğan to cancel the McKinsey deal?
Accompanying his father-in-law, Turkish President Recep Tayyip Erdoğan to the United Nations General Assembly in New York late last month, Treasury and Finance Minister Berat Albayrak announced U.S. consultancy firm McKinsey had been hired to oversee a newly created Expenditure and Transformation Office (MADO) to help reshape the economy.
But after 10 days of heated dispute, Erdoğan quashed the deal. Albayrak’s announcement provoked much debate, with many arguing that granting vast powers to reshape the economy to MADO and, by extension McKinsey, amounted to a death knell for Erdoğan’s plans to implement a new administrative model dominated by him alone.
Moreover, they said, the decision risked putting some of the country’s most sensitive information in the hands of a firm from a country Erdoğan had accused of waging “economic war” on Turkey.
Some likened the arrival of McKinsey to the establishment in the late-period Ottoman Empire of the Public Debt Administration, a European-controlled entity that oversaw the empire’s failing economy to ensure it made payments on its large foreign debt.
The leader of the leftist main opposition Republican People’s Party (CHP) Kemal Kılıçdaroğlu took the issue to parliament last week, directing 10 questions to the president and challenging him to provide answers or cancel the contract with McKinsey.
Kılıçdaroğlu criticised the logic of employing a U.S. firm while Turkey remains locked in a diplomatic dispute with the United States, and on this point nationalist opposition Good Party leader Meral Akşener was even more strident, vowing that those who signed the McKinsey contract would one day be put on trial.
In response, Turkey’s pro-government newspapers called critics of the deal traitors, accusing them of opposing the rehabilitation of Turkey’s economy, and Albayrak echoed these accusations in a speech. The critical comments had been made “out of ignorance, if not treachery,” he said.
Devlet Bahçeli, the leader of the far-right Nationalist Movement Party (MHP), which formed an alliance allied with Erdoğan’s Justice and Development Party (AKP) in June elections, also chimed in to defend the contract, talking up McKinsey’s credentials as a global firm.
The one figure to keep his own counsel throughout was Erdoğan. He remained silent on the McKinsey issue both after the New York visit, and as he made his way to his next destination, Berlin, and then back to Turkey.
That is to say, the journalists he allowed to accompany him on his travels did not, or could not, ask him a single question on the matter that was occupying the political agenda and creating controversy and heated debate among the press, economists, academics and politicians back home.
Meanwhile, talk was doing the rounds of economic circles in Ankara about objections to the McKinsey agreement raised by officials from the Presidency, the Treasury and Finance Ministry bureaucracy, the central bank and Erdoğan’s own cabinet.
A day after Albayrak called critics ignorant or traitors, Erdoğan’s chief economic adviser, Yiğit Bulut wrote a newspaper column referring to McKinsey, without naming it directly, as a “Western-based capitalist intelligence” organisation conspiring to target Turkey’s relations with Russia.
The strongest criticism of the McKinsey agreement is said to have been communicated to the president by Education Minister Ziya Selçuk, who announced two weeks ago that his ministry was preparing a document detailing a new vision for the country’s education system, which will be revealed to the public on Oct. 15.
Under Albayrak’s model, McKinsey would have had the power to reshape Selçuk’s ministry and the country’s 15 others, meaning that the education minister’s work since June on reforming the education system would have to be set aside. Sources have said that Selçuk conveyed his strong opposition of this, both to Erdoğan and Albayrak.
Whether spurred by criticism from the opposition or from within his government, a speech by Erdoğan given at a consultation event with AKP deputies on Saturday put an end to the speculation on McKinsey.
“(Kılıçdaroğlu) wants to force us into a corner with his questions on a consultancy firm,” said Erdoğan. “But as I have already told all of my ministers, we will not take their advisory services. There’s no need, we are enough for ourselves.”
With these words Erdoğan left both his son-in-law Albayrak and his ally Bahçeli out in the open, as well as the stable of friendly press outlets that had worked throughout the previous week to defend the McKinsey deal.
He had evidently come to see the optics of such a deal with a U.S. firm as potentially damaging to the nationalist brand he has been cultivating, particularly with local elections months away.
A day after Erdoğan’s speech, Albayrak discussed a new programme to tackle Turkey’s rocketing inflation without making any mention of McKinsey.
At the closing speech of the consultation event, Erdoğan levelled heavy criticism at the United States’ historic policies concerning Turkey, saying a nascent Turkish national defence and aerospace industry had been killed off by the Marshall Plan and other U.S. economic aid programmes, and tying the blame to İsmet İnönü, the CHP prime minister and successor to Turkish Republic founder Mustafa Kemal Atatürk who solidified the country’s alliance with the United States during a period of one-party rule before 1950.
Erdoğan took the spotlight off the McKinsey deal by bringing up 70-year-old agreements with the International Monetary Fund, and highlighted his own party’s success at ending IMF debt.
Yet the president’s decision to shelve the McKinsey deal after 10 days of silence is also a sign of the lack of coordination, miscommunication and chaos of Erdoğan’s one-man rule.