Istanbul, Türkiye – After winning his third presidential election, Recep Tayyip Erdogan will sit at his desk to address a host of pressing issues facing Turkey.
The president’s top priority will be the economy and how to deal with the country’s ongoing financial crisis.
Erdogan has managed to shift the focus away from the cost of living crisis during the election campaign – slashing pensions and wages and offering discounts on household energy bills, while shifting the debate to issues such as security and family values.
But Turkey’s economy is not doing well, and Erdogan highlighted inflation as the country’s top problem in his victory speech on Sunday night.
“Tackling the problems caused by rising prices and inflation is the most pressing topic in the coming days,” he told supporters outside the presidential palace in Ankara.
“Solving these problems is not difficult for us. Didn’t we just prove that during my tenure as prime minister?” Erdogan added, referring to his 11 years as prime minister before becoming president in 2014. Year.
Inflation, which peaked at 85% late last year, fell to 44% last month, although independent economists dispute the official figure and put it at 105%.
interest rate policy
The value of the Turkish currency, which the government protects by selling foreign exchange reserves, is falling.
The lira hit a record low of 20.06 per dollar on Monday morning, having lost nearly 80% of its value over the past five years.
Many economists blame much of this on Erdogan’s unorthodox policy of cutting interest rates, which have been nearly halved since late 2021, as a means of fighting inflation.
Timothy Ash, a Turkey expert at BlueBay Asset Management in London, said the currency’s current levels are “just not sustainable.”
He added that the central bank “has been depleting reserves to keep the lira relatively stable ahead of the elections to ensure Erdogan wins … the lira is under a lot of pressure due to limited reserves and negative real interest rates”.
But Emre Peker, European director at Eurasia Group, said Erdogan was likely to see Sunday’s victory as an endorsement of his economic policies, which the president believes will make the Turkish economy stronger in the long run.
“Despite the highest inflation we’ve seen in years, despite enormous pressure on the lira, despite high unemployment and people’s concerns, [in] Win the election and he’ll feel right,” Peker said.
foreign capital inflow
Erdogan’s motivation, Peker added, was “the desire to free Turkey from its overall economic dependence on Western partners”.
Turkey has received financial help from Russia and Gulf states in recent months. Qatar, Saudi Arabia and the United Arab Emirates have deposited billions of dollars with Turkey’s central bank or set up multibillion-dollar investment funds.
Russia has delayed paying for gas and giving billions to Turkey’s first nuclear power plant.
“The economy has been dependent on Russian financing and investment in the Gulf region, and this is an area that Erdogan will continue to focus on,” Peker said.
He added that the next three to four months will be relatively quiet for the economy as summer tourism revenues flow, with a weak lira making exports more competitive and domestic energy demand low.
But come autumn, Erdogan could be under pressure to change his economic policies.
“The current economic dynamics will not sustain demand in Turkey,” Peker said. “Turkey will need more foreign inflows to manage its external payments, and given negative interest rates, this is difficult to sustain.”
western relations
As the president begins his five-year term, another issue requiring his urgent attention is Turkey’s relationship with Western partners, especially Sweden’s NATO membership.
Turkey and Hungary were the only NATO members to oppose Stockholm’s entry into the defense alliance following Russia’s invasion of Ukraine last February.
Sweden and the United States say they want NATO leaders to resolve membership issues when they meet in Lithuania in July.
Erdogan reiterated his opposition to Sweden’s accession less than two weeks ago. “We are not ready for Sweden right now,” he said, citing Ankara’s concerns over Stockholm’s stance on what Turkey calls a “terrorist” group.
“If Erdogan continues to delay signing the deal, I expect a major crisis in relations with the West,” Ash said, though he added he expected a compromise on Sweden’s accession.
Erdogan “squeezed all the political capital he could from this pre-election, and now that he has won, the only downside is postponing the inevitable. So I hope Sweden will be a member of NATO at the NATO summit,” Ash said.
Disputes with the West may also involve human rights.
In his victory speech, Erdogan showed no signs of compromising with those his government deems “terrorists” and said he would not release Selahattin, a leading Kurdish politician imprisoned since 2016 Demirtas.
The European Court of Human Rights ruled in 2020 that Turkey must free Demirtas, saying his imprisonment was motivated by political reasons, but the Turkish government claims that Demirtas has links to the Kurdistan Workers Party (PKK), which has been linked to Turks. State of war since 1984.
The PKK is considered a “terrorist” organization in Turkey, the European Union and the United States.
Domestically, Erdogan faces the monumental task of rebuilding the southern province hit by an earthquake in February that killed more than 50,000 people.
The United Nations Development Program estimates the cost of the disaster at more than $100 billion. Erdogan, who was backed by much of the region in the election, has pledged to build 319,000 homes within a year.
Erdogan will also be under pressure to show signs of a return of refugees, given the prominence of nationalist voters in the election and the widespread desire to repatriate Syrians to their homeland.
“We have a responsibility to meet the expectations of our citizens on this issue in ways and means that are appropriate to our country and our nation,” he said Sunday night.
Turkey’s migration agency said some 554,000 Syrians had returned, and Erdogan said a million Syrians would return to Syria within a year as new housing was built.
