(Bloomberg Opinion)
Turkish President Recep Tayyip Erdogan will undoubtedly read his latest election victory as a mandate to continue his pugnacious foreign and economic policies. Both he and Turkey would be better off steering a more pragmatic course.
Erdogan has reason to feel vindicated. Despite nosebleed inflation and anger over the government’s feeble response to a devastating earthquake in February, he triumphed easily in Sunday’s runoff, winning approximately 52% of the vote. Turnout in the first round neared 90%. Among Turkey’s conservative, nationalist majority, Erdogan remains genuinely popular.
At the same time, his systematic elimination of rivals, dominance of the media, and control over the levers of state afforded him huge advantages over opposition candidate Kemal Kilicdaroglu. The fact that nearly half the country still voted to oust him is striking.
What should his next term look like?
Abroad, he should avoid provoking more needless conflict with the West. The European Union remains by far Turkey’s biggest trading partner and a crucial source of investment; a breakdown in relations over, say, enforcement of Russian sanctions would be shortsighted. Moreover, Erdogan has carved out a hard-earned role for Turkey as an interlocutor between opposing camps — whether in Ukraine, where it has negotiated prisoner exchanges and a deal to allow exports of Ukrainian grain, or in the Middle East. Tilting too much further toward Russia’s Vladimir Putin could diminish the Turkish leader’s global influence.
Most important, Erdogan can’t defy economic reality forever. His interference with Turkey’s central bank and support for unorthodox monetary policies — in particular, his unsupported conviction that lowering interest rates will bring down inflation — are driving the country toward a balance-of-payments crisis. The inflation rate looks set to top 40% through the rest of the year, according to Bloomberg Economics. Since a December 2021 currency crisis, the lira has lost a third of its value against the dollar.
Turkey’s president is nothing if not a survivor. He’s shown himself fully capable of shifting course when necessary, and should have room to do so again now.
A good first step would be to appoint market-friendly technocrats such as former finance czar Mehmet Simsek to his economic team. While an influx of tourism revenue over the summer might buy Turkey some time, Erdogan would be wise to let the central bank start raising rates and unwinding measures to prop up the lira by the fall, ahead of looming debt repayments. The government should use its fiscal space to cushion the blow on the poorest.
Meanwhile, Erdogan should address Turkey’s most urgent and unnecessary dispute with the West — its refusal to approve Sweden’s entry into NATO. The differences between Turkey and Sweden over the latter’s treatment of Kurdish separatist groups are broad but resolvable. The two sides should aim to bridge those gaps by the next NATO summit in July. US President Joe Biden should make clear that there will be no progress on the sale of new F-16s to Turkey without a breakthrough.
More broadly, now that the election has passed, Erdogan should have less need to use the US and EU as foils. A change in tone, and a focus on areas of potential cooperation — from negotiating an end to the Ukraine war to defense production and joint development projects in Africa — would stabilize relations and burnish Erdogan’s credentials as a statesman. That would be good for his legacy and even better for Turks — the many who voted for him, and the millions who did not.
Turkish President Recep Tayyip Erdogan will undoubtedly read his latest election victory as a mandate to continue his pugnacious foreign and economic policies. Both he and Turkey would be better off steering a more pragmatic course.
Erdogan has reason to feel vindicated. Despite nosebleed inflation and anger over the government’s feeble response to a devastating earthquake in February, he triumphed easily in Sunday’s runoff, winning approximately 52% of the vote. Turnout in the first round neared 90%. Among Turkey’s conservative, nationalist majority, Erdogan remains genuinely popular.
At the same time, his systematic elimination of rivals, dominance of the media, and control over the levers of state afforded him huge advantages over opposition candidate Kemal Kilicdaroglu. The fact that nearly half the country still voted to oust him is striking.
What should his next term look like?
Abroad, he should avoid provoking more needless conflict with the West. The European Union remains by far Turkey’s biggest trading partner and a crucial source of investment; a breakdown in relations over, say, enforcement of Russian sanctions would be shortsighted. Moreover, Erdogan has carved out a hard-earned role for Turkey as an interlocutor between opposing camps — whether in Ukraine, where it has negotiated prisoner exchanges and a deal to allow exports of Ukrainian grain, or in the Middle East. Tilting too much further toward Russia’s Vladimir Putin could diminish the Turkish leader’s global influence.
Most important, Erdogan can’t defy economic reality forever. His interference with Turkey’s central bank and support for unorthodox monetary policies — in particular, his unsupported conviction that lowering interest rates will bring down inflation — are driving the country toward a balance-of-payments crisis. The inflation rate looks set to top 40% through the rest of the year, according to Bloomberg Economics. Since a December 2021 currency crisis, the lira has lost a third of its value against the dollar.
Turkey’s president is nothing if not a survivor. He’s shown himself fully capable of shifting course when necessary, and should have room to do so again now.
A good first step would be to appoint market-friendly technocrats such as former finance czar Mehmet Simsek to his economic team. While an influx of tourism revenue over the summer might buy Turkey some time, Erdogan would be wise to let the central bank start raising rates and unwinding measures to prop up the lira by the fall, ahead of looming debt repayments. The government should use its fiscal space to cushion the blow on the poorest.
Meanwhile, Erdogan should address Turkey’s most urgent and unnecessary dispute with the West — its refusal to approve Sweden’s entry into NATO. The differences between Turkey and Sweden over the latter’s treatment of Kurdish separatist groups are broad but resolvable. The two sides should aim to bridge those gaps by the next NATO summit in July. US President Joe Biden should make clear that there will be no progress on the sale of new F-16s to Turkey without a breakthrough.
More broadly, now that the election has passed, Erdogan should have less need to use the US and EU as foils. A change in tone, and a focus on areas of potential cooperation — from negotiating an end to the Ukraine war to defense production and joint development projects in Africa — would stabilize relations and burnish Erdogan’s credentials as a statesman. That would be good for his legacy and even better for Turks — the many who voted for him, and the millions who did not.