Could Turkey’s currency crisis lead to worse problems for Erdoğan? - analysis

A weakened currency and constant crisis as home could be to the benefit of Turkey’s ruling party.

 Turkish President Tayyip Erdogan speaks during a news conference in Istanbul, Turkey October 16, 2021 (photo credit: REUTERS/MURAD SEZER)
Turkish President Tayyip Erdogan speaks during a news conference in Istanbul, Turkey October 16, 2021
(photo credit: REUTERS/MURAD SEZER)

Turkey’s ruling AKP party has struggled to stabilize the lira as Turkey’s currency continues to weaken.

This has been a disaster for Turkey and especially its middle class. However, it is unclear whether the ruling party is quietly applauding the ruin it is causing, by weakening the middle class it can exert more control over the economy and concentrate power. 

The ruling party in Turkey, led by Recep Tayyip Erdoğan, came to power almost two decades ago, partly on an economic platform. Since then, it has developed Turkey but in the last several years as the AKP concentrated power, jailed journalists and opposition politicians and became more nationalist, extremist and religious, the currency has been eroded. 

Now, the Turkish lira is almost at 17 to the US dollar.

This is an incredible disaster and ostensibly the government is working to deal with the problem. Turkey wants to put in place relief measures for banks. It wants to lower interest rates and raise the minimum wage. Monetary policy appears to be chaotic in Ankara. The Turkish central bank has intervened.  

However, there are questions about how much Turkey’s leadership really cares.

A US one dollar banknote is seen next to Turkish lira banknotes in this illustration taken in Istanbul, Turkey November 23, 2021. (credit: REUTERS/MURAD SEZER/ILLUSTRATION/FILE PHOTO)A US one dollar banknote is seen next to Turkish lira banknotes in this illustration taken in Istanbul, Turkey November 23, 2021. (credit: REUTERS/MURAD SEZER/ILLUSTRATION/FILE PHOTO)

They have destroyed almost all independent media in Turkey so there is very little local critique allowed of the regime in Turkey. Turkey uses its English language media as propaganda to slam the West and ignore its problems at home. For instance, Anadolu, TRT, Daily Sabah and other media do not critique the ruling party. That means Turkey’s ruling party has a stranglehold on the country.  

Recently, Ankara appeared more concerned with changing the name of the country to “Turkiye” more than it cares about the currency slide which is bankrupting people. For instance, TRT four days ago had a whole article about how Turkey is now to be called “Turkiye.”

One might think that the country’s leaders would be more concerned with an unprecedented financial crisis.

However, Ankara might be following the lead of other authoritarian regimes, such as Iran, Venezuela, Russia and China. These countries know that economic crises can be used to consolidate power in the leadership.

Evergrande, a major property developer defaulted on $1.2 billion foreign ponds, according to CBS. But that was greeted with a shrug in China. China has also cracked down on tech companies listing overseas in foreign stock markets.  

Looking at Turkey’s recent economic problems then it might be good to look at who Erdoğan’s friends are. Turkey’s ruling party is close to Venezuela’s authoritarian regime. Venezuela has destroyed its economy in the last decades as well. It has burned through cash as currency reserves declined this year. It also sold 73 tonnes of gold to foreign countries in 2019, including Turkey.

Iran’s regime, especially the IRGC, has also grown through using US sanctions to its benefit. Hezbollah in Lebanon has done the same.

Turkey’s ruling party blends religious extremism with its own brand of authoritarianism. It poses as modern and wanting to work with the West and Europe, but at its heart, it is about controlling Turkey completely and transforming society.

A weakened currency and constant crisis as home could be to its benefit. The way the leadership has mishandled the currency slide could be incompetence but it could also be stage-managed or using a crisis to the benefit of the regime.