2021 was a difficult year for Turkey - and the outlook is not bright
Created: 01/13/2022, 05:22 PM
From: Foreign Policy
President Erdogan's economic policy is highly controversial.
© - / Kremlin / dpa
Bleak outlook for the economy, climate disasters and a headache political situation are likely to persist in 2022.
Turkey * has had a tough year - marked by currency collapse, inflation and natural disasters.
The events and their effects on the population are damaging the reputation of Turkish President Erdogan.
The loss of confidence could be a crucial moment for the opposition.
This article is available for the first time in German - it was first published on January 3, 2022 by the magazine
Foreign Policy
.
Ankara - 2021 was a year marked by currency collapse, rising inflation and devastating climate change events for Turkey.
A year that further fueled the loss of confidence in the leadership of Turkish President Recep Tayyip Erdogan *.
While Erdogan's polling numbers have fallen deeper than ever before, he faces some of the biggest challenges of his presidency.
We are looking at one of the most difficult years for Erdogan's Justice and Recovery Party (AKP) * - and we dare to look ahead to what will probably be an even tougher year 2022.
1. Turkey's economic collapse
Even before the pandemic, Turkey was on the verge of a financial disaster and tried to stave off a recession. The country struggled with enormous debts, currency depreciation and rising inflation. Erdogan has made the crisis worse by pushing through his unorthodox economic policies - such as lowering interest rates despite rising inflation - against any advice from his leading economists. The Turkish lira and the Turkish people paid the price for it. On January 1, 2021, the lira was trading at 7.4 against the US dollar. At its low on December 20, 2021, the lira had fallen to 18.36 against the US dollar. Since then, the lira has strengthened somewhat thanks to government interventions worth billions, but it is still far from its value at the beginning of the year.
Part of that roller coaster ride is due to Erdogan's meddling in Turkey's central bank, which is tasked with setting interest rates and keeping inflation in check. But Erdogan has shown time and again that if bankers and finance ministers don't do what he wants, they're out of the window *. He sacked three central bank governors in two years, including Naci Agbal in March, as well as a number of deputy governors and top officials during the year.
The collapse of the lira fueled inflation, which is officially 21 percent year-on-year but is unofficially estimated to be much higher.
Officially, it could soon go much higher: after the difficult December, some experts expect that the official inflation rate in Turkey could reach the 30 percent mark when new figures are announced in January.
This economic pain, which has driven the prices of everyday goods so high and resulted in people having to queue in long lines for state-subsidized bread, could endanger Erdogan's retention of power.
2. Make friends with old enemies
Turkey's economic troubles have led Erdogan to improve Turkish relations with Armenia * and the United Arab Emirates, partly motivated by the need to acquire investment.
In November Erdogan and the Crown Prince of Abu Dhabi initiated the signing of several investment and cooperation agreements. In recent years, tensions over Turkey's support for the Muslim Brotherhood, viewed by the UAE as a security threat, have rocked the region. Ankara has also accused Abu Dhabi of supporting Turkey's failed coup attempt in 2016 - the two were at odds over the Libya conflict. But now the UAE will set up a $ 10 billion fund to support primarily strategic investments in Turkey, including healthcare and energy.
Meanwhile, Turkey and Armenia, whose differences go back more than 100 years to the Ottoman genocide of the Armenians (which Ankara did not officially recognize), have pledged to appoint special envoys to normalize bilateral relations.
They cut ties and closed borders about three decades ago during the first Nagorno-Karabakh conflict in the 1990s.
Even in the most recent battles over the controversial enclave, they were on opposing sides.
3. A nation on fire
Turkey's plight expanded to its forests over the summer as the worst forest fires in living memory raged along its south coast, burning more than 656 square miles in July and August.
The fires were fueled by months of drought caused by climate change and misuse of water resources.
Few Mediterranean countries are more affected by climate change than Turkey.
In May, the Sea of Marmara was covered in sticky slime in an explosion of "sea red" - an overproduction of phytoplankton caused by warmer water.
In August, 82 people died in floods in the western Black Sea region.
Despite the devastation, the government has still not taken any concrete steps to protect the environment from further damage.
4. Another decline in human rights
The rights of women, LGBTQ + and minorities were further curtailed in 2021 when the country withdrew from the Istanbul Convention *, the largest international agreement to protect women's rights, in March.
In the same month, a politically motivated decision to shut down the country's third largest political party, the pro-Kurdish People's Democratic Party, was tabled.
A decision is still pending.
In November, a court in Istanbul ordered the further detention of the philanthropist Osman Kavala, despite the fact that the European Court of Human Rights had already issued a final ruling on his release in 2019.
Kavala is accused of participating in anti-government protests in 2013 and of being involved in the failed coup attempt in 2016 - two allegations that Kavala describes as "absurd".
5. What Turkey Expects in 2022
The biggest problem for Turkey will remain the economy, which is expected to deteriorate further. That could even force Erdogan to call early elections, which are currently planned for 2023. “I am very worried about Turkey. I think the risks of a systemic crisis are greater today than they have been in the last 20 years, ”said Timothy Ash, Senior Emerging Market Strategist at BlueBay Asset Management. He anticipates an inflation peak of around 50 percent and a further devaluation of the currency by 25 to 30 percent. "With a return to normality and orthodox politics, I think that can be tackled," he said. "But if Erdogan wants to continue the current policy, it will be too late at some point."
Turkey has tried to combat some of the symptoms, such as raising the minimum wage and introducing a new deposit insurance system to protect savers from the collapse of the currency. However, this did not eliminate the causes. Because higher wages mean higher costs to businesses, which will translate into higher prices for consumers, and printing money for the austerity program will only add to inflationary pressures. There is even a political component to the economic solutions, Ash said, as around eight million Turks depend on state services.
"I could imagine that Erdogan will ensure that a lot of money is spent to protect this group from the worst effects of the downturn in order to get this segment of the population into the elections," said Ash.
6. Will there be early elections?
This question was hotly debated throughout 2021, and opinions differ widely as to whether this would be a good idea.
But if early elections were called, the time would be after the economy had time to stabilize, but before the opposition won over too many voters, says Berk Esen, a political scientist at Sabanci University in Turkey.
"Some of the new measures, such as the increase in the minimum wage, have to bear fruit for Erdogan to call elections," he said.
"The longer he waits, the greater the opposition's chances."
7. A crucial moment for the opposition
Perhaps the most important step for the opposition in the coming months will be the selection of a common candidate for a coalition, including the Republican People's Party (CHP).
While CHP boss Kemal Kilicdaroglu has expressed his interest in wanting to run, the most likely candidate is Istanbul mayor Ekrem Imamoglu, who won the local elections again in 2019 and gave Erdogan's party a significant defeat.
Erdogan had this role himself earlier in the 1990s.
"Imamoglu is very popular, almost like a rock star," said Esen.
He is also increasingly the target of various accusations from government circles: Erdogan's allies want to see the popular mayor in court because of terrorism allegations.
The great dynamic will therefore be the extent to which the opposition parties can come to an agreement and succeed in luring Erdogan's AKP voters away.
"I think opposition politicians will be courting AKP voters in the Anatolian provinces and major cities next year," Esen said.
“And it's already happening.
But they have to band together to criticize the AKP's economic model because it clearly doesn't work. "
by Liz Cookman
Liz Cookman
is an Istanbul-based freelance journalist covering Turkey, Syria and the wider Middle East.
This article was first published in English on January 3, 2022 in the magazine "ForeignPolicy.com" - as part of a cooperation, it is now also available in translation to readers of the IPPEN.MEDIA portals. * Merkur.de is an offer from IPPEN.MEDIA.
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