Streetwise Professor

April 28, 2019

Erdogan: Cruisin’ For a Bruisin’

Filed under: Economics,Politics,Turkey — cpirrong @ 7:18 pm

I don’t believe it is an exaggeration to say that Turkey is ruled by a lunatic–Recep Tayyip Erdogan. His increasingly autocratic rule is putting Turkey at serious risk of an economic and geopolitical crisis.

Erdogan dreams of Turkey becoming the dominant power in the Middle East, a modern day version of the Ottoman Empire, including an explicit Islamic orientation–a decisive break with the founder of the Turkish Republic, Mustafa Kemal Ataturk, who eschewed imperial ambitions, and who was avowedly secularist, and indeed, harshly anti-Islam. (Which is one reason Erdogan despises him.)

These ambitions have led Erdogan into some foreign policy disasters, most notably in Syria. At the outset of the Syrian civil war, Erdogan was supporting the rebels and foursquare behind attempts to overthrow Assad. In this he failed utterly. But in the attempt, he (through his intelligence services) provided support to the most radical Islamist elements in Syria–including ISIS.

The Syrian debacle contributed to a serious breach with Europe which has all but eliminated the prospects for Turkish accession to the EU. In particular, his cynical unleashing of waves of Syrian refugees into Europe, and his threats of sending even more, thereby blackmailing the EU into providing Turkey financial aid, have left Turkey friendless in Europe.

Even worse, from a geopolitical perspective, has been his picking fight after fight with the US. The list is long. The extended standoff over an American minister he had imprisoned. His rapprochement with Iran in Syria (which in effect was a concession of his failure to achieve his objectives there), and generally cooperative relationships with Iran, including most notably helping the Islamic Republic circumvent US sanctions by exchanging Turkish gold for Iranian gas. His strident opposition to Israel. His cooperation with another American pariah–Venezuela–which Turkey is helping evade sanctions by agreeing to refine Venezuelan gold. His burning desire to destroy America’s Kurdish allies who have been the only effective local force in the battles against ISIS, said desire driven by Erdogan’s burning hatred of the Kurds in Turkey. This desire to attack Kurds in Syria has led to standoffs (with the serious risk of escalation) with US troops working with them. And last, but by no means least, an agreement to purchase S-400 surface-to-air missile systems from Russia despite the information this could provide the Russians about US F-35 aircraft–which Turkey wants to purchase.

Some of these things–canoodling with Iran, opposing Israel–were not a problem with the Obama administration. They are a big deal with Trump.

The real lunacy is that Erdogan is risking a confrontation with the US at a time when his economy is teetering–in large part due to his mismanagement. The lira dropped significantly last summer, and although it has recovered (a) it is still substantially below the level of 2017, (b) has been dropping steadily since topping out in December, and (c) is poised for another drop due to Erdogan’s inveterate hostility to higher interest rates–well, to interest rates period, which he calls “the mother and father of all evil.” The Turkish Central Bank has been playing games to conceal how weak its reserve position is. These include borrowing dollars from Turkish banks via swaps, putting the dollars as on-balance sheet assets, but treating the swaps as off-balance sheet.

The Turkish economy is in recession, has heavy external indebtedness (which makes its low reserve position all the more dangerous), and has an economic management team that is universally considered to be greatly out of its depth. Erdogan did not help matters when he declared:

The main issue is interest rates. As interest rates are brought down, inflation will fall. The real problem is interest rates. I’m also an economist.

Not only is he not an economist (as his getting the Fisher effect exactly backwards shows), I don’t even think he’s ever even stayed at a Holiday Inn Express. Combining his economic stupidity with his autocratic behavior is a recipe for disaster.

Given this fraught economic situation, Erdogan courts disaster by continuing to pull Uncle Sam’s beard. He is very likely to need the US’s help to stave off economic crisis, and on the flip side, if sufficiently provoked the US could smash the Turkish economy with a mere flick of its fingers.

Erdogan also has domestic political problems. After prevailing in a surprise national election last summer that cemented his changes to the constitution creating a presidential system, his AKP party suffered some stunning losses in local elections last month, most notably a (narrow) loss in Istanbul. Erdogan is attempting to get a do over in the Istanbul election, claiming systemic voting abuses–in a city his party controlled at the time of the election. It is something akin to the Chicago Democratic machine blaming a loss on nefarious Republican voter fraud.

There are many reasons for Erdogan’s near panic over Istanbul. It will give his CHP opponents a highly visible platform and power base, in a city that is widely viewed as the launching pad for Turkish national leaders. (Erdogan was mayor there before becoming prime minister, then president.) Perhaps even more importantly to Erdogan, CHP control of Istanbul threatens to undermine his vast patronage system there (which will undercut his power), and also threatens to expose equally vast corruption (of which Erdogan has already been very credibly accused in the past).

Erdogan is not the type of man who will trim his sails in the face of such fierce headwinds. He will more likely redouble his confrontational efforts, both internationally and domestically, despite his extremely weak economic situation. This is not wise, and will not end well. A bad end to Erdogan is hardly something that should be rued, but his bad end will also mean serious and extended misery for the Turkish people, and a serious potential for even more instability in the Middle East.

This last prospect may be the only thing that saves Erdogan. The potential for turmoil may be the only reason why the Trump administration does not give Erdogan the brusin’ he has been cruisin’ for, not just recently, but since 2003.

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  1. All the hysterical dems, crazed never-trumpers, the BBC and most of the world’s print media and woke politicians the world over should look at Erdogan’s Turkey and realise that that is what a dangerous populist autocrat looks like, and that Trump for all his perceived, and endlessly commented upon, personality traits is just a teddy bear by comparison.

    Comment by Jack the dog — April 29, 2019 @ 5:44 am

  2. Once upon a time, a person could make the sweeping statement: “Democracy is incompatible with an Islamic society.” and be immediately refuted with the response: “What about Turkey?”

    That situation WAS true because Mustafa Kemal Ataturk had reforged Turkey into a secular society.

    Ataturk was a military and political genius.

    He was the main guy behind the foundation of the Turkish Republic from the ruins of the Ottoman Empire (a failed Islamic theocracy).

    Ataturk’s political genius should have been respected and the Turkish political system that he founded allowed to remain intact. Unfortunately, Erdogan is an Islamist. People say that Erdogan is sympathetic to the Muslim Brotherhood. Turkey will continue to decline as long as Erdogan remains in power.

    Comment by Eggplant — May 1, 2019 @ 5:43 pm

  3. @Eggplant. I agree with all that. I am a great admirer of Ataturk, both as a military man and as a political leader. I have visited his battlefield (and statue) at Gallipoli, and the Anitkabir. I have also visited the sites of some of the battles in the War of Independence, which was a truly remarkable achievement given the odds against him. But his greatest accomplishments are were what you state–his creation of the Turkish Republic and a secular Turkey. Under his successor Inonu, Turkey wisely stayed out of WWII. All in all, Ataturk put Turkey on the path to modernity and away from obscurantism.

    Erdogan wants to undo all that. He hates Ataturk for secularizing Turkey, and eliminating the caliphate. He envisions himself as a new sultan. (Weirdly, he reveres Abdulhamid II, which is an odd choice given the disasters that visited the Ottoman Empire during his reign.) Unless he is removed soon (and hopefully by democratic means) he will undo all that Ataturk achieved.

    Comment by cpirrong — May 1, 2019 @ 7:13 pm

  4. real lunacy is that Erdogan is risking a confrontation with the US at a time when his economy is teetering–in large part due to his mismanagement. The lira dropped significantly last summer, and although it has recovered

    TRY Had recovered. Back above 6.1. My guess is 7 by year end, and around 12 by 2023. And I remember when it looked a bargain at 3!

    Erdogan is a lunatic.

    Comment by alwalad — May 8, 2019 @ 10:18 am

  5. Whilst your blog has some good stuff, it’s rather difficult to read due to the picture in the background. Is there a way to turn it off?

    Comment by Winston Smith — May 10, 2019 @ 12:01 am

  6. @alwalad–I agree. That was one of my core arguments. Given the parlous state of Turkey’s economy, he needs to placate the US, not anger it. The US can make or break the Turkish economy, without breaking a sweat.

    And I see that he’s doubled down on his lunacy by getting the Istanbul election overturned. Or perhaps it’s desperation rather than lunacy–if İmamoğlu keeps turning over rocks in Istanbul, exposing the corruption, dismantling the patronage networks, Erdoğan knows that he’s a goner.

    Comment by cpirrong — May 12, 2019 @ 9:24 pm

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