Patronage, not idealism, stops Erdoğan signing IMF deal, ex-deputy says
Turkish President Recep Tayyip Erdoğan is not signing an International Monetary Fund accord to help the nation’s economy because of patronage and his centralisation of power, according to Aykan Erdemir, a former deputy in the Turkish parliament and senior director of the Turkey program at the Foundation for Defense of Democracies.
Some analysts are wrong to conclude that Erdoğan’s idealism is the reason that he rejects the IMF option, Erdemir said in an analysis for Foreign Policy, co-written with John Lechner of Georgetown University, published on Monday.
“The real reason Erdoğan cannot go to the IMF is that any Stand-By Arrangement or Extended Fund Facility requires structural reform and, therefore, power-sharing and good governance measures,” the analysts said. “The rule of Erdoğan’s Islamic-rooted Justice and Development Party (AKP) has benefited from a lack of transparency and accountability.”
Erdemir and Lechner cited Turkey’s sovereign wealth fund as a prime example of Erdogan’s system of patronage. The unaudited fund, chaired by Erdogan and controlling Turkey’s three biggest state-run banks and large firms such as Turkish Airlines, acts as his parallel budget, they said.
Economic data provided by the Turkish Statistical Institute is also suspect, prompting Germany’s Commerzbank to entitle a 2017 report on Turkey’s economic growth figures as “Turkey – are you kidding me?” Erdemir and Lechner said.
“Erdoğan prefers quick fixes,” the analysts said, referring to a deal with Qatar signed last month that raised cross-currency swaps between the two country’s central banks and helped bolster Turkey’s dwindling foreign exchange reserves.
“The obstacle for Turkey’s strongman president isn’t ideology; it’s IMF conditionality and its potential to undermine his hypercentralised style of governance, Erdemir and Lechner said.
Meanwhile, Erdoğan’s mistaken belief that higher interest rates cause faster inflation have become mainstream, after he sacked and replaced the central bank governor last year for failing to lower interest rates, the analysts said.
The central bank’s defence of the lira, first at 6 per dollar then at 7 per dollar, has proven catastrophic, they said.
“Erdoğan is particularly vulnerable here because those efforts were mounted by his underqualified son-in-law, Finance and Treasury Minister Berat Albayrak, who should never have held the position in the first place,” Erdemir and Lechner said.
Erdoğan has proven pragmatic in the past, notably when he swallowed his pride in a crisis with Russia over a downed Russian military jet in 2015, but none of those examples involved a devolution of power, the analysts said.
Citing his control over the media, Erdemir and Lechner said Erdogan is free to make U-turns on policy with relative ease, a luxury that would not exist in a real democracy.
“Erdogan can make U-turns far more easily than in a true democracy, as long as they do not require him to reverse his 18 years of power consolidation,” they said.