The severe economic crisis that befell Turkey between 2000 and 2001, and was the worst in the country’s modern history, pushed millions of citizens below the poverty line. The following year, those same citizens went to the polls to punish the governing coalition made up mainly of center-right parties, and elected Recep Tayyip Erdogan as prime minister. In a banal twist of fate nearly two decades later, Erdogan’s biggest opponent ahead of the 2023 presidential election is once again the poverty line.
The first ten years of Erdogan’s rule brought relative prosperity to the Turks and strengthened the president’s popularity. The GDP per capita rate rose sharply from $ 3,688 in 2002 to almost $ 12,000 in 2012. But since 2013, shameless nepotism, growing dictatorial tendencies, corruption and financial negligence have accelerated the rise in interest rates, inflation and unemployment, and the GDP rate Plunged again into the abysses of the past.
Last October, the annual inflation rate in Turkey was, according to official indices, 19.89 percent. However, a group of independent researchers who independently examined the data estimated the real inflation rate to be tens of percent higher. Nearly half of the country’s workers earn the minimum wage, which means millions of families are forced to survive on a meager income of just $ 233 a month.
In late 2017, when the Turkish lira traded at a rate of 3.5 pounds to the dollar, Erdogan advised the Turks to sell their foreign exchange reserves and invest in local currency instead. Unfortunately, since the beginning of 2018 the pound has been on a crash course due to a number of factors including geopolitical tension with the West, deficits and large debts and shrunken foreign exchange reserves.
President Erdogan, who has been aggressively supporting interest rate cuts, has fired two of the central bank’s commissioners in the last two years. Since September, it has been urging the central bank to make more and more reductions in the interest rate, the last of which was a few weeks ago. It is possible that Erdogan hopes that in this way he will be able to revive the labor market, increase exports and stimulate growth – an economic miracle that may bring him more voters in 2023.
At the time of writing, the Turkish lira has crashed even further at a rate of 13.88 pounds per dollar, far beyond what was previously defined as a “psychological barrier” of 11 pounds per dollar. In the four and a half years since Erdogan offered to invest in local currency, the value of the dollar against the pound has soared from 3.5 to 13.88. In the current year alone, the pound has lost 42 percent against the dollar, and is now considered one of the weakest currencies in the world. On November 23, while the entire market was at the height of the storm, Apple decided to halt most of its sales in Turkey.
As the Turkish lira crashes into historic abysses, salaries in the country have also plummeted in terms of value for money. Today, a Turk earning a monthly minimum wage can barely buy a few dozen bottles of beer with his money. Such a situation causes millions of households to become unstable when it comes to budget planning and the future. Last August, private sector foreign currency debt stood at $ 174 billion. Since the beginning of the year, this debt has swelled in pound terms by 42%, putting thousands of companies at risk of bankruptcy.
And the Turks, including those who were loyal supporters of Erdogan, are angry and expressing anger. At the end of November, protesters on the streets of Istanbul and the capital Ankara called for a change in economic policy that led to the currency crisis and soaring inflation rates. In parts of Istanbul, police have even set up roadblocks in the face of a number of angry demonstrations.
As mentioned, the economic crisis poses an existential threat to the continuation of Erdogan’s rule. Many studies have pointed to the fact that the question of bread and butter is one of the most important issues for voters in the country. The polling company Optimer found that 63.8% of Turks believe that the most serious problems they face are the economy and unemployment. In that poll, only 27.8% of respondents said they trusted the president’s ability to resolve the acute crisis.
And what can Erdogan do? In the current situation, the president does not seem to have many options for action. It could, for example, stop challenging market forces and reverse interest rate policy, which could cost it another heavy recession before the election. He can try to enlist the help of his wealthy friends like those in Qatar, who can inject cash and investment. This could be a temporary relief for the Turkish market suffering from a basic imbalance.
In the broader picture, Erdogan seems to have fallen victim to his many mistakes: disgraceful management of the economy and strategic adventures that go far beyond Turkey’s capability and power. It is possible that these falls will mark the beginning of the end of the era of the ugly populism of Arodan, the man whose neo-Ottoman aspirations destroyed Turkey’s economy and increased its international isolation.
Burak Bakdil is a Turkish journalist and fellow at the Middle East Forum. A full version of the column was first published on the Gatestone Institute website.
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