The Turkish economy was long expected to enter a difficult period, like all developing economies, due to global factors. The troubles, however, are growing as Prime Minister Recep Tayyip Erdogan keeps hardening his attitude against the private sector over the Gezi Park protests.
Deputy Prime Minister Ali Babacan, who oversees the economy, has a proven record of sound economic management, illustrated by the hitherto positive results. But now he is up for a far harder task.
Erdogan had already demoralized the business community and complicated economic management when he blamed the Gezi Park protests on an “interest rate lobby” and accused certain companies, business people and foreigners. And now tax inspectors, escorted by police, have launched an inspection targeting Turkey’s largest business group Koc. The move is seen as a “punishment” for the refuge that Koc’s Divan Hotel offered to protesters fleeing the heavy-handed police, which Erdogan had publicly condemned.
The incident sparked heavy criticism both in the public opinion and the business community, raising concern over market economy processes and fears of further political escalation.
Babacan has watched the developments in silence. It’s obvious, though, that the existing climate is hampering his ability to steer the economy.
According to the prevailing opinion among business people and local and foreign market players, Erdogan’s interventions in the economy are taking place against the backdrop of Babacan’s discontent.
During recent contacts in Ankara, well-known businessmen, who wished to remain anonymous, questioned whether Erdogan was genuinely looking for a domestic and foreign conspiracy behind the protests. I saw first-hand how they struggled to understand whether Erdogan’s attitude was a political tactic or an impulsive reaction to something he truly believes in. The businessmen were curious about how Babacan views the prime minister’s attitudes and asked questions to understand where he stands.
As the wrangling goes on, financial data show that Turkey’s foreign debt stock, especially its short-term portion, continues to grow and that the already troubling current account deficit is further expanding.
There is no doubt left that the course of the global economy will be no longer that favorable to emerging economies such as Turkey. The latest financial data, too, signals economic volatility. And with Erdogan’s mounting pressure on the business community, things are becoming even harder for the managers of the economy.
Read more: Erdogan’s Top Economic Adviser Takes Heat from Business - Al-Monitor: the Pulse of the Middle East
Deputy Prime Minister Ali Babacan, who oversees the economy, has a proven record of sound economic management, illustrated by the hitherto positive results. But now he is up for a far harder task.
Erdogan had already demoralized the business community and complicated economic management when he blamed the Gezi Park protests on an “interest rate lobby” and accused certain companies, business people and foreigners. And now tax inspectors, escorted by police, have launched an inspection targeting Turkey’s largest business group Koc. The move is seen as a “punishment” for the refuge that Koc’s Divan Hotel offered to protesters fleeing the heavy-handed police, which Erdogan had publicly condemned.
The incident sparked heavy criticism both in the public opinion and the business community, raising concern over market economy processes and fears of further political escalation.
Babacan has watched the developments in silence. It’s obvious, though, that the existing climate is hampering his ability to steer the economy.
According to the prevailing opinion among business people and local and foreign market players, Erdogan’s interventions in the economy are taking place against the backdrop of Babacan’s discontent.
During recent contacts in Ankara, well-known businessmen, who wished to remain anonymous, questioned whether Erdogan was genuinely looking for a domestic and foreign conspiracy behind the protests. I saw first-hand how they struggled to understand whether Erdogan’s attitude was a political tactic or an impulsive reaction to something he truly believes in. The businessmen were curious about how Babacan views the prime minister’s attitudes and asked questions to understand where he stands.
As the wrangling goes on, financial data show that Turkey’s foreign debt stock, especially its short-term portion, continues to grow and that the already troubling current account deficit is further expanding.
There is no doubt left that the course of the global economy will be no longer that favorable to emerging economies such as Turkey. The latest financial data, too, signals economic volatility. And with Erdogan’s mounting pressure on the business community, things are becoming even harder for the managers of the economy.
Read more: Erdogan’s Top Economic Adviser Takes Heat from Business - Al-Monitor: the Pulse of the Middle East
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