Ex-Turkey president says alarm bells ringing on economy under Erdoğan

Former Turkish President Abdullah Gül said alarm bells are ringing for the economy, which he warned could return to a period of crises and instability due to lack of vision and partisanship.

“Economic indicators are going seriously backward,” Gül, once close political ally of President Recep Tayyip Erdoğan, said in an interview with Taha Akyol, a columnist for the Karar newspaper, published on Monday.

“There is a lack of strategy based on the long-term, on analysis and on expertise,” Gül said. “This situation is worrying.”

The Turkish authorities have raised the concern of foreign investors by slashing interest rates to below the rate of inflation, using state-run banks to lend at below market rates of interest and straying from economic reforms implemented with close International Monetary Fund guidance a decade ago.

Gül said Turkey’s economy had remained on its feet over the past five years only due to the measures implemented when the governing Justice and Development Party (AKP) came to power in 2002. The AKP had become the largest political party in parliament 18 years ago in part due to financial crises that exploded under previous governments. It immediately started adhering strictly to an IMF loan accord.

“The desire seen in 2002 gradually began to break down over subsequent years,” Gül said. “The vision disappeared with time.”

Now Turkey is faced with a period of uncertainty in which the future cannot be foreseen and foreign investment is falling rapidly, he said.

Turkey’s lira hit a record low of 7.269 per dollar in early May after the central bank spent tens of billions of dollars of its foreign currency reserves propping up the currency, leaving net reserves, including liabilities, in negative territory. Erdoğan sacked and replaced the central bank’s governor in July last year saying he failed to support government policy.

Gül said Turkey is now suffering from a serious problem with separation of powers after the introduction of a full presidential system of government in 2008.

Since the advent of the presidential system, approved in a hotly contested nationwide referendum, Erdoğan has started bypassing parliament through decrees and employed his son-in-law, Berat Albayrak to head a newly merged Treasury and Finance Ministry. At the same time, he has brought Turkey’s biggest public enterprises under a sovereign wealth fund that he chairs. Albayrak is his deputy chairman.

“There must be a parliamentary system that is based on power separation,” Gül said. “Because this is the way to ensure democratic ideals in Turkey and a state based on the rule of law. It is also the basis of sustainable economic growth.”

Gül, who established the AKP with Erdoğan 20 years ago, served as president between 2007 and 2014 in a role that was largely symbolic. He was also prime minister for four months between 2002 and 2003 as Erdoğan served a political ban that parliament then lifted.