Erdogan extends economic grip
Turkey’s President Recep Tayyip Erdogan extended his control over the economy, giving himself the exclusive power to name central bank rates a day after naming his son-in-law as his economic minister.
Members of his investor-friendly economic team have been gradually removed from the government, rattling markets. Yesterday (Monday), the lira fell by the largest margin since the botched 2016 coup, meaning it has fallen 19 per cent against the dollar this year.
Erdogan was sworn in yesterday for a five-year term as president with new powers, after winning re-election last month under an amended constitution which hands him direct control over monetary policy.
Describing the change as a “new beginning”, he told a ceremony at his presidential palace that he would be the president of all 81 million Turks.
“We have come not to be master but to be servant of our people,” Erdogan said, echoing his usual remarks that everyone wins from his electoral victories, including those who voted against him.
He then unveiled the first cabinet under the new system, appointing his son-in-law Berat Albayrak, 40, as finance minister, unnerving markets.
Albayrak, a former energy minister who only became an MP in 2015, will run a new ministry of treasury and finance, combining what used to be the two most powerful economic jobs. He replaces Mehmet Simsek, a former Merrill Lynch executive and the final figure who was purportedly trusted by investors to control the president’s spending instincts.
Simsek was dismissed from the reduced cabinet of 16 ministries.
Army chief of staff General Hulusi Akar joined the cabinet as defence minister but Mevlut Cavusoglu kept his role as foreign minister.
Prime Minister Binali Yildirim sees his job dissolved and is expected to become Speaker of the new parliament.
Fuat Oktay, a former head of Ankara’s emergency agency, was named vice president, a newly created position.
On numerous occasions, Erdogan has disagreed with the central bank over borrowing costs that he is determined to keep low.
“I’d have expected Erdogan to have learned the bitter cost of messing with markets,” Atilla Yesilada at GlobalSource Partners in Istanbul. “Apparently, he does think that with his new powers he can best the markets.”
The central bank chief used to be named jointly by the president, prime minister and a deputy prime minister in a decree signed by the cabinet.
President Recep Tayyip Erdogan faces few checks on his power. Picture credit: Wikimedia