RUTHFULLY YOURS

• The lockdown has already put too much economic pressure on small businesses. A total of 125,000 small businesses and shop owners have gone bankrupt during the pandemic. That makes an estimated 500,000 people in Turkey badly affected by the unfortunate blend of economic and pandemic mismanagement…
• Growing poverty is seen in other official numbers too. Energy Minister Fatih Dönmez said that power distribution companies cut electricity supplies to 3.7 million households last year due to unpaid debts. That makes more than 10 million Turks having to live without power due to inability to pay bills.
• As of December 11, there were 22,759,000 cases of legal proceedings for unpaid debts, corporate and individual. Unemployment is another pressing problem.
• This means that means Turkey must maintain its lockdown rules. Further lockdown, however, will mean further economic contraction especially in a country that depends on tourist industry revenues.
• The pandemic has further impoverished Turkey’s fragile economy. It threatens to do worse damage to the budgets of poorer families, who are the core of the voting public. One recent study says that Erdoğan loyalists are the biggest number of voters who will vote differently or abstain from voting in the next elections.
• Erdoğan’s biggest political rival appears to be poverty.

After 19 years of uninterrupted governance, Turkey’s Islamist strongman, President Recep Tayyip Erdoğan, seems to remain politically unchallenged. With presidential and parliamentary elections 2½ years away, credible research shows he is still the most popular politician, with his closest rival coming far below him in the polls. But he is now facing an unexpected rival that may unseat him.

MetroPOLL, an independent pollster, found recently that Erdoğan’s popularity was at 31%, followed by the main opposition party CHP at 17.4%. If elections were held today, Erdoğan’s ultranationalist coalition partner, MHP, would win 7.2%, bringing the government bloc’s vote up to 38.7%. The opposition bloc, a fragile alliance of six parties from different ideologies, would win an overall 36.1%.

Polls say that Erdoğan’s followers follow him as if they were following the Messiah, both figuratively and literally, rain or sunshine. At a new peak of a national currency crisis in November, a pro-Erdoğan columnist, Ali Karahasanoğlu, wrote that “even if the dollar rate rises to 15 lira (from 8.50) we will not surrender to the executioner.” He wrote: “We’d prefer one dollar to 15 liras instead of 8.50 in order not to see a Turkey that follows America’s orders.”

Since then, things have not gone well for Turkey. In March, Turkish inflation accelerated for the sixth month in a row as the weak lira drove up the cost of imports, making it harder for the country’s new central bank governor to fulfill Erdoğan’s wish to ease monetary policy. Consumer prices have increased 16.19% year on year. For much of the past three years, the country’s inflation rate has been stuck in double digits. Şahap Kavcıoğlu, appointed by Erdoğan in March, is the fourth central bank governor since 2019. Kavcıoğlu’s predecessor, Naci Ağbal, had been appointed less than five months ago.

All this turbulence has come at a time when the main opposition is demanding to know what happened to the $128 billion it says were sold from the central bank’s reserves. The disappearance of such a huge amount of money remains a mystery. Apparently, the Central Bank continuously sold dollars to defend the falling lira but it does not reveal to which banks it sold its dollars and at what exchange rates, thereby raising suspicion about corrupt deals.

On March 19, the Central Bank increased its one-week repo rate by 200bp (basis points) to 19%, taking the cumulative increase in the past four months to 875bp. This makes Turkey one of the top 10 countries in the world that borrows most expensively. Turkey’s sovereign credit default swap (CDS)[1] was at 444.69 points on April 5, the highest among Western and emerging economies.

Such excellent examples of mal-governance come when most Turks feel crushed under severe economic hardships and the prospects of further poverty as the country also mal-governs its fight against COVID-19. On April 2, Turkey confirmed 40,809 new COVID-19 cases, setting a single-day record of infections since the outbreak of the pandemic.

The lockdown has already put too much economic pressure on small businesses. A total of 125,000 small businesses and shop owners have gone bankrupt during the pandemic. That makes an estimated 500,000 people in Turkey badly affected by the unfortunate blend of economic and pandemic mismanagement, including shop owners and their families.

Growing poverty is seen in other official numbers too. Energy Minister Fatih Dönmez said that power distribution companies cut electricity supplies to 3.7 million households last year due to unpaid debts. That makes more than 10 million Turks having to live without power due to inability to pay bills.

As of December 11, there were 22,759,000 cases of legal proceedings for unpaid debts, corporate and individual. Unemployment is another pressing problem. Turkey’s official unemployment rate in November was 12.9%. But DISK-AR, a labor union, said the unemployment rate in the same month was actually 28.8% based on International Labor Organization’s methods of computation.

Erdoğan is facing a difficult dilemma. The double dose of vaccinations has been given to just 5.8% of the population while the country aims to have vaccinated 50 million people by autumn, or 59.5% of the entire population.

This means that Turkey must maintain its lockdown rules. Further lockdown, however, will mean further economic contraction especially in a country that depends on tourist industry revenues.

The pandemic has further impoverished Turkey’s fragile economy. It threatens to do worse damage to the budgets of poorer families, who are the core of the voting public. One recent study says that Erdoğan loyalists are the biggest number of voters who will vote differently or abstain from voting in the next elections. MetroPOLL’s survey showed that a third of Erdoğan voters will not vote for him, will abstain or are undecided. Erdoğan’s biggest political rival appears to be poverty.

Burak Bekdil, one of Turkey’s leading journalists, was recently fired from the country’s most noted newspaper after 29 years, for writing in Gatestone what is taking place in Turkey. He is a Fellow at the Middle East Forum.

[1] A credit default swap is a financial derivative or contract that allows an investor to “swap” or offset his or her credit risk with that of another investor. For example, if a lender is worried that a borrower is going to default on a loan, the lender could use a CDS to offset or swap that risk.