Turkey’s economy in dead-end under Erdoğan
“You can fool all the people some of the time and some of the people all the time, but you can’t fool all the people all the time.”
Turks are feeling the pain as the long-forecast economic storm finally breaks. Amongst other consequences, the fallout threatens to erode support for President Recep Tayyip Erdoğan.
To deflect blame for the debacle, Erdoğan and his chorus in Turkey’s largely subservient media have doubled down on a tried-and-trusted narrative that portrays Turkey as a rising star whose inevitable ascent a merry-go-round cast of rivals and na’er-do-wells are intent on thwarting. Latest in the firing line is the United States, accused, among other things, of having initiated an economic war against the country.
Regardless of the extent to which such assertions reflect reality, they serve the useful purpose of keeping Erdoğan’s support base onside as economic pain grows.
But promulgating this narrative has an obvious downside.
Turkey’s economy depends on foreign investment and much of the cash comes from the United States and Europe, another prominent villain in Erdoğan’s narratives.
For years, Erdoğan was able to get away with this because investors viewed his rhetoric as meant for domestic consumption and believed they did not reflect his real beliefs.
This has changed, especially since a London meeting between Erdoğan and investors in May this year that wrecked Erdoğan’s credibility in financial circles ― ironically because financiers began to take unorthodox economic pronouncements at face value ― and the replacement of economic tsar Mehmet Şimşek with the president’s son-in-law.
Subsequently, Western investors have become increasingly reluctant to put money into Turkey, accelerating the economic deterioration. But as Turkey’s economy founders, so Erdoğan has, in turn, voiced increasingly divisive and conspiratorial explanations, further alienating Western capital.
The situation amounts to a feed-forward loop, one in which increasing economic problems engender increasingly hostile conspiracy theories which, in turn, further undermine the economy.
How long this can go on is anyone’s guess. Erdoğan and his advisors must know what is happening. They are also likely aware that their long-term efforts to reduce their dependence on Western finance, by securing alternative sources of investment and promoting a more self-sufficient economic model, are not progressing fast enough to save the day.
Neither is the shorter-term strategy of cosying-up to Europe likely to pay dividends. Turkey’s credibility is shot. European governments have not forgotten occasions in the recent past when they played the role of Turkey’s villain. Investors, likewise, have little faith in a country where the rule of law collapsed as Erdoğan cemented his grip on power.
This bodes for a long, cold winter in Turkey.
For Erdoğan, there is no easy way out, primarily because he has conflated what is good for him personally with what is good for Turkey.
Erdoğan has shown himself to capable of pragmatic turns on numerous occasions in the past, recently in his attempt at rapprochement with the European Union, some of whose leaders he labelled, not so long ago, “Nazi remnants”. That he might pull a similar volte-face over ongoing issues with the United States is therefore possible. And Turkey’s media have shown themselves adept at brewing amnesia inducing potions to feed the captive domestic audience.
But Turkey’s economic problems are deep-rooted, so the reforms needed to get it back on track will be both painful and prolonged. Such an approach would therefore leave Erdoğan vulnerable to losing face, and support, without achieving much in the way of immediately tangible results.
The alternative is to let the economy burn, keep blaming it on little green men and, once again, trust the media to sell it to the populace. Should the spin not be entirely successful, there is always the option, again well honed, of demonising those who object, irrespective of prior records of loyalty. The police too have plenty of experience of suppressing dissent on the streets.
Because Erdoğan seems to believe many of the eye-watering theories he airs, this approach has the added benefit of conforming to his self-image as honest, heart on the sleeve man of the Muslim people who acts on his conviction.
Erdoğan may also fail to grasp the consequences of such a course of action, even as it unfolds. He is isolated and insulated in his palace, shielded by a series of filters and advisors who are, for the most part, no less unconsciously self-serving than he. They will ensure that, as the pain increases, the messages penetrating the inner sanctum are screened such that the voices of those citizens who say they consider the economic hardship worthwhile are represented as the norm.
The chances of Erdoğan overseeing a meaningful recovery of the Turkish economy therefore appear slim. He is out of touch, out of date and, increasingly, out of time. And besides, it was Erdoğan who got Turkey into this mess, so it is unlikely he can get it out again. These who believe he can consist of his cynical loyalists who profit from it and the foolish.