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Turkeys Economic Meltdown Has Loosened the Grip of Recep Tayyip Erdogan

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MG is a senior service officer and now a senior corporate advisor. A prolific writer with varied interests and hobbies

Kurds in Greece burn Erdogan poster

Kurds in Greece burn Erdogan poster


Recep Erdogan came to power almost two decades back. At that time he was being hailed in the western world as a decisive man who would take Turkey forward.. People at that time people in the west were not aware of his grandiose dream of restoring the old glory of the Ottoman Empire.

The Ottoman Empire is one of the big fixtures in world history but it was dismantled in 1919 and that was the end of it. In any case at that time it was only a shadow of its former glory. By allying with the Central Powers led by Germany it was badly defeated in World War I. The Ottoman Caliphate was dismantled in 1922 by Kemel Mustafa Ataturk after declaring the caliphate redundant and set Turkey on the path to modernization.

Turkey modernized rapidly but at the same time it could not catch up with the European powers. Having a part of its area in the European continent it bid fair to become a member of the European Union. After many decades the realization dawned on Turkey and Erdogan that the European powers were not keen to integrate Turkey into the European Union for the simple reason that the Pope and other players did not wish to change the basic character of the European Union which is predominantly Christian by incorporating almost 60 million Muslims.

Erdgan is a realist and he lost interest in joining the European Union and decided to dethrone Saudi Arabia as the leader of the Muslim world. Erdogan began to adopt Islamist policies and spoiled his relations with Israel in his quest for domination of the Islamic world. He also committed the Turkish armed forces for action in Libya and Syria.

Though being a NATO ally he began to cock a snook at the Americans and other NATO powers and began to court Russia. His various acts of commission and omission were not liked by the United States and the Western powers and they applied sanctions to Turkey.

Erdogan miscalculated the strength of the Turkish economy with the result the Turkish economy began to falter. It is now experiencing runaway inflation and the Turkish Lire has been steadily losing ground against the dollar.


Dream soured

Once feted by the west as a man who was taking Turkey forward at the moment his stock is falling rapidly as the economic problems faced by his country are piling up. To get an idea of what is happening in November this year , the inflation rate has touched 14.03%. This is a 15-month high. There is a 2.3% rise in monthly consumer prices – and basic day-to-day necessities such as food, non-alcoholic beverages and transport have been the worst affected.

The country is facing a more severe – crisis. This is the devaluation of its currency. The rate of decline is nothing short of dramatic this year. Since January 2020, the currency has lost nearly more than 30% against the euro and the dollar.

In response, Erdoğan has removed by decree Murat Uysal the Chief of the Central Bank, and his son-in-law Berat Albayrak also resigned as the country's finance minister.

What could be the reason for this downslide? there is no single reason but it is possible Erdoğan’s ambitions, aiming at establishing Turkey to the old glory are backfiring and leading to undermining of investor confidence. Turkey is trying to re-write the maritime economic boundary in the Mediterranean Sea and bringing it into a clash with Greece and its ally France. Turkey is also involved neck-deep in the Nagorno-Karabakh Conflict.

Erdogan has also stirred a hornet's nest by buying the S400 system from Russia and sanctions are imposed by the USA with a resultant effect on the economy. Turkey has also been involved heavily in Syria and Libya further draining the economy.

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With rampant inflation, Turkey is unable to service its foreign debts. Export earnings have dwindled and there have been cases of people committing suicide as they could not pay their bills.


Turkey in the dog house

The latest news is not good for Turkey. The FATF has put Turkey on the grey list. This means further investment in Turkey and credit from world financial institutions like World Bank is hard to come. Turkey has a massive debt to repair to the Western powers and the USA. The Turkish economy had risen on the back of investment from the West mostly in the construction industry but now as per the latest reports more than 200,000 flats are vacant and the real estate bubble has burst.

The runaway inflation means that the Turkish banks are unable to pay back their debt to the countries putting Turkey in a precarious position. Food prices are rising and generally, the overall atmosphere is pretty dismal. The net minimum wage, which was 2,826 lira ($382) in January 2021, had fallen to the equivalent of $254 by November 21 due to the lira’s depreciation.

Erdogan does not seem to be concerned about it because he has now become almost like a dictator and even if an election is held now there is no guarantee that he will lose. He has an iron grip on the armed forces which had tried a coup against him a few years back. Most of the opponents are in jail and there is no person with any standing who can oppose him.

The United States had seen the rise of Erdogan into an authoritative leader which became pronounced during the time of Obama but they preferred to turn a blind eye now, of course, there are no illusions in America about Turkey.

Erdogan is not bothered about the West as can be seen from the fact that he has just declared 10 western countries ambassadors as persona non-grata. This is a very big step and was taken when these countries had protested against the imprisonment of Osman Kavala a human rights activist without a trial since 2017.

Erdogan's dream of leading the Muslim world however appears to have stalled mainly because when the Turks were ruling over the Arabs they had committed many atrocities and had never treated the Arabs as equals. it was only after the Treaty of Severes (1920) that the Arabs were taken out of the control of the Ottoman empire. Most of the Arab nations will not accept the Turkish leadership. At the same time, Erdogan will not be defeated in Turkey as he now has firm control over all aspects of governance. His popularity in Turkey has fallen down yet he remains in control. The world will have to accept Erdogan as a necessary evil unless he is overthrown in an internal disturbance which at the moment looks highly unlikely.

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