Turkey’s slide towards poverty prompts Erdoğan’s economic rethink

Poverty and a slump in support for his governing Justice and Development Party (AKP) has prompted Turkish President Recep Tayyip Erdoğan into a sharp change of direction on economic policy.

“People are at the point of explosion,” said Özgür Akbaş, the owner of a tobacco shop in a wealthy neighbourhood of Turkey’s capital Ankara, describing how two elderly women came into his shop last week. One asked to buy a single egg and the other wanted free bread, the New York Times reported on Sunday.

Turkey was already battered by a currency crisis that struck in 2018 and double-digit inflation when the coronavirus pandemic swept through the country in March. After a second wave in recent months, a significant portion of the population is overwhelmed with debt and increasingly going hungry, the New York Times’ Carlotta Gall said.

A quarter of respondents in a survey by respected polling company Metropoll said they could not meet their basic living needs. The lira has lost about a quarter of its value this year, pushing up the price of many goods. 

The crisis in Turkey is also occurring as Erdoğan loses a powerful ally – President Donald Trump will leave the White House next month to be replaced by Joe Biden, who has labelled him as an authoritarian. Turkey is facing U.S. sanctions for purchasing Russian S-400 missiles and possible punitive measures from the European Union for exploring for hydrocarbons in waters claimed by Greece and Cyprus.

On Nov. 7, Erdoğan replaced the chief of the central bank after the lira hit a fresh record low and hired a new treasury and finance minister to replace his son-in-law Berat Albayrak a day later. Now Erdoğan, who had opposed interest rate increases by the central bank, is allowing monetary policymakers to act to stabilise the lira and slow inflation of 14 percent. Interest rates now stand at 17 percent compared with 8.25 percent in September.

Earlier this month, Erdoğan extended a new financial aid package for small businesses and tradesmen by three months. Albayrak’s departure now indicates a more serious policy correction as the economic crunch threatens the president’s political survival, the New York Times said.

Erdoğan watches opinion polls assiduously and pays particular attention to how things reflect on society, said Mehmet Ali Kulat, who carries out opinion polls for political parties including his AKP.

Political support for the AKP has dropped to the lowest point since it came to power in 2002, standing at around 30 percent, according to Metropoll. That suggests the AKP’s alliance with the much smaller, far-right Nationalist Action Party (MHP) will fail to secure it a legislative majority and means Erdoğan could well lose presidential elections, slated for 2023.

“His chances of being re-elected are less than 50 percent,” said Aslı Aydıntaşbaş, a senior fellow with the European Council on Foreign Relations.

“So finally,” the question is, “Is he smart enough?”

Most of Erdoğan’s own supporters and 63 percent of Turks believe the country is headed in a worse direction, according to Metropoll.

There has never been such distress in Turkey, said Hacer Foggo, founder of the Deep Poverty Network, which helps street traders and informal workers.

“I am 52 years old, and this is the biggest crisis I have ever seen,” she said, according to the New York Times.

“Retirees are in a very bad situation,” Akbaş, the shopkeeper, said. “What I am hearing from people is “Enough is enough. We have had it up to our necks, we cannot make money”, and people aged 70 and 80 are saying they are going to throw themselves in the street.”