Imagining Life after Erdogan Turkish Economic Woes Fuel Speculation of Early Elections

Turkish President Erdoğan flying over the Dardanelles: He fueled the upswing in his first years in office primarily by investing in the construction industry.
Turkish President Erdoğan flying over the Dardanelles: He fueled the upswing in his first years in office primarily by investing in the construction industry. Foto: Murat Cetinmuhurdar / Turkish Presidency / Abaca / ddp

Imagining Life after ErdoğanTurkish Economic Woes Fuel Speculation of Early Elections

A lira in freefall and skyrocketing prices: Turkey’s economy is in poor shape and much of the population is suffering. President Erdoğan’s weak response is strengthening the opposition and fueling speculation that elections may be held sooner than planned.By Sebnem Arsu und Maximilian Popp25.11.2021, 14.45 UhrArtikel zum Hören•16 MinAbspielen

For years, Hasan Karavus’ career only went in one direction: up. Like millions of other Turks, Karavus moved to Istanbul from southeast Anatolia in the 1990s, and his brother got him a job with a textile merchant. Later, Karvus went into business for himself, selling cheap clothes in Istanbul, Izmir and Antalya. It was the early 2000s and Turkey experienced an enormous economic boom under its new prime minister, Recep Tayyip Erdoğan. Karavus expanded abroad, and his company, which he named after his daughter Sima, grew two dozen employees.

Today, Karavus lives in a one-room apartment in Istanbul’s poor Tarlabaşı district. The cold and damp of a late autumn evening in Istanbul creep through the window. On the street, prostitutes wait for customers as young people sniff glue.

The article you are reading originally appeared in German in issue 47/2021 (November 20th, 2021) of DER SPIEGEL.SPIEGEL International

He lights a cigarette. In the past three years, he says, his company went broke before he then had to sell his apartment and his car. To top it all off, his wife left him. “I’ve hit rock bottom,” he says.

Karavus blames one man in particular for his plight: Erdoğan, who has since become the country’s president. As much as Erdoğan strengthened the Turkish economy at the beginning of his term in office – by expanding infrastructure and liberalizing the labor market – he is also responsible for ruining it again through mismanagement and corruption.

Many in Turkey hold the same view as Karavus. According to one survey, eight out of 10 Turks are dissatisfied with the government’s economic policies and Erdoğan’s approval ratings have likewise plummeted. In fact, the coalition between Erdoğan’s Islamist Justice and Development Party (AKP) and the far-right MHP party has now fallen behind the opposition alliance of Social Democrats and Nationalists in the polls. The next presidential and parliamentary elections aren’t scheduled until 2023, but rumors are growing in Turkey that the vote could be brought forward to next year as a result of the devastating economic situation.

Former business owner Hasan Karavus in Istanbul's impoverished Tarlabaşı district: "I've hit rock bottom."

Former business owner Hasan Karavus in Istanbul’s impoverished Tarlabaşı district: “I’ve hit rock bottom.” Foto: Rena Effendi / DER SPIEGEL

Erdoğan has ruled Turkey for almost two decades now and has taken control of just about every institution in the country, including the judiciary, the police and the media. But he hasn’t found a way to fix the economic crisis, and Turkey’s currency, the lira, is in free fall, with the current exchange rate at 13.68 lira to the euro. In 2007, two lira would still get you a euro. Meanwhile, prices are continuing to rise, with inflation skyrocketing to 20 percent since September. Many food items cost almost a third more than they did just one year ago. Recently, thousands of contractors went on strike in protest against cement prices, which have tripled since the beginning of the year. In Istanbul, students took to the streets over high rents.

Although Turkey’s gross domestic product has grown significantly this year, the majority of regular people have yet to feel the effects. Meanwhile, the weakness of the lira in combination with inflation are driving more and more people into poverty. A study by the World Bank found that one in 10 Turks now lives below the poverty line. The Turkish Statistical Institute officially puts the unemployment rate at 13 percent, but trade unions believe the number of unreported cases is much higher because many long-term unemployed people or temporary workers don’t register with the authorities.

In the first five months of this year, at least 150 people took their own lives out of despair over their financial situation, according to a study by the opposition CHP party. Hayrettin Bulan, director of the Istanbul aid organization Şefkat-Der, says he now receives calls almost every day from people who don’t know how they are supposed to support their families. “I’ve never seen anything like this,” he says.

A Society in a State of Shock

Karavus is convinced that more than anything, it is the tense political climate that is standing in the way of an economic recovery. He says his company flourished until 2016, but then the coup attempt, in addition to several terrorist attacks by the Islamic State and the Kurdish PKK, shook the country. Erdoğan responded with mass arrests. Karavus says that demand for clothing has plummeted. Tourists, who are also potential customers, have also stayed away.

Initially, Karavus thought it was a temporary lull, but things continued to get worse and worse. His business depended on imported fabrics and metal, which he was soon no longer able to afford because of the exchange rate. In 2019, Karavus tried to start over by opening a café on the Aegean coast, but the pandemic wiped that business out as well.

These days, Karavus is getting by in Istanbul with odd jobs, sometimes working as a janitor, sometimes helping out at a real estate agency. His income is barely enough to cover the 1,600 lira a month in rent. Prices for eggs and yoghurt have doubled since last year, so Karavus just lives on bread and water on some days. He’s 60 years old and has little hope that his situation will ever change. “There’s no future for people like me in this country,” he says.

Large swaths of Turkish society seem to be in the same state of shock that has gripped Karavus. In the 20 years of AKP rule, many Turks grew accustomed to the fact that their standard of living continued to improve. They were even prepared to accept Erdoğan’s dismantling of democracy for that bit of extra prosperity. Now, though, they are coming to the realization that it was all a sham.

The president fueled the upswing in his first years in office largely by investing billions in the construction industry. He built roads, hospitals and high-rise housing developments. One of the largest airports in the world opened in Istanbul in 2018.

The government’s growth policy went well as long as the lira was stable and money continued flowing in from abroad. Now, thought, the country is caught in a downward spiral. Unlike Russia, for example, Turkey barely has any raw materials and is thus dependent on investment. With his authoritarian-style of rule, his persecution of opposition figures and his interventions in interest rate policy, however, he has frittered away investors’ trust. Direct investment from abroad plummeted from $19 billion in 2009 to $5.8 billion last year, while rating agencies have downgraded Turkey’s creditworthiness to junk status. The country’s foreign debt has grown to $422 billion.

Erdoğan Can’t Accept that the Economy Doesn’t Obey Him

Erdoğan apparently refuses to accept that the global economy doesn’t obey him the way his voters at home have long done. He believes he can simply carry on as before despite the crisis. The president continues to claim, for example, that low interest rates will lead to lower prices. But pretty much all economists agree that the exact opposite is the case.

This spring, Erdoğan fired the third head of the central bank in two years because he refused to go along with the government’s low interest rate policy. The country’s most important financial institution is now headed by Şahap Kavcıoğlu, a man notable primarily for his energetic defense of the president’s crude economic theories in guest editorials for the pro-government newspaper Yeni Şafak.

The extent to which the financial crisis is affecting the economy is clearly visible in Central Anatolia, in cities like Kayseri, which together with Istanbul forms the backbone of Turkish industry.

A currency exchange office in Istanbul: The lira is in a state of free fall.

A currency exchange office in Istanbul: The lira is in a state of free fall.Foto: Sedat Suna / epa

Kayseri is considered the birthplace of the “Anatolian Tigers,” those Muslim-conservative business owners who managed to achieve fantastic prosperity under Erdoğan. The city’s population has skyrocketed in the last two decades from half a million to 1.4 million. In 2004, it sought to be included in the “Guiness Book of World Records” with 139 companies founded on a single day.

Today, Kayseri resembles a ghost town and the streets are deserted on a recent November morning. “For Sale” signs hang in the windows of many stores. There is likewise hardly any activity in the industrial quarter, where one furniture factory follows the next.

The machines in Hakan Yilmaz’s carpentry shop are also standing still. Two workers sit on a stool, rolling cigarettes. Yilmaz, 35, makes wardrobes, which he mainly supplies to dealers in the region. Before the crisis, he says, he sold five to six cabinets a month, but today, he sells one or two at most, and for weeks now he hasn’t received any orders at all. Production is growing increasingly expensive for him because he has to import materials from abroad. A sheet of pressboard for which he once paid 200 lira, now costs 450 lira. Yilmaz says he had to borrow money from friends to keep his company going at all.

Yilmaz has a Turkish flag hanging in his shop and describes himself as a patriot. The furniture maker has voted for Erdoğan in every election so far, as has his family. But that’s over now. He says he’ll vote for the opposition in the next election. “Erdoğan has lost touch with reality. He doesn’t know what’s going on in the country.”

Erdoğan has weathered a number of crises during his time in office – from the mass protests around Istanbul’s Gezi Park in 2013 to the failed military coup in 2016. But the current crisis goes much deeper. When Erdoğan experienced domestic pressure in the past, he always managed to distract people – by invoking the threat to Turkey posed by foreign powers, as he did before the 2017 constitutional referendum, for example. But that strategy doesn’t appear to be working any longer. People in Turkey feel they have less in their wallets with each passing day.

Even those close to Erdoğan are starting to wonder just how lucid he still is. Recently, Erdoğan has fallen asleep repeatedly at public events. To counter speculation about the state of his health, advisers to the president recently felt compelled to post a video on the internet showing Erdoğan playing basketball.

CHP party leader Kılıçdaroğlu: A confident and united opposition.

CHP party leader Kılıçdaroğlu: A confident and united opposition. Foto: Emin Ozmen / DER SPIEGEL

Meanwhile, the opposition is displaying more self-confidence and unity than it has at any time since the AKP took power in 2002. For years, the Republican People’s Party (CHP), in particular, has been looking for a way to get rid of Erdoğan. But their criticisms of the president’s authoritarian style of government, of his restrictions on freedom of the press and freedom of opinion, and of his religious fundamentalism never gained much traction with large sections of the Turkish population. It took the poor economic figures to shake Erdoğan’s system.

Given his party’s rising fortunes, CHP party head Kemal Kılıçdaroğlu is in a good mood when he sits down for an interview at party headquarters in Ankara on a November afternoon. A portrait of party and state founder Mustafa Kemal Atatürk hangs on the wall of his 11th-floor office. To this day, the CHP regards itself as the guardian of the Kemalist legacy. For a long time, though, few in Turkey seemed interested and the CHP looked like a party that was stuck in the past. The future seemed to belong to Erdoğan and his AKP. That’s is now changing.

During the interview, Kılıçdaroğlu reiterates demands that he has made over and over again for years. He says that a new government must restore the rule of law in Turkey. That it needs to strengthen freedom of expression and freedom of the press and ensure the independence of the central bank. Against the backdrop of recent developments, his statements have gained in significance. Suddenly, many Turks are seeing the revival of democracy as a prerequisite for the revival of the economy.

Free and Fair Elections?

Kılıçdaroğlu is often described by critics as plain and unassertive, but he’s actually a skilled strategist. His greatest achievement in recent years has not just been that of holding his own party together, despite its many competing factions, but he has also forged an alliance with the nationalist İyi Party and, more loosely, with the left-wing, pro-Kurdish HDP. This helped the CHP to defeat the AKP in local elections in Istanbul and Ankara in 2019.

Kılıçdaroğlu now wants to repeat this success at the national level. Within the CHP, many are bracing themselves for the possibility that the elections could be brought forward to autumn 2022. The economy is in such a poor state that Erdoğan can’t possibly hold on until 2023, Kılıçdaroğlu argues.

It will probably be much more difficult for the opposition to win nationally than in some of Turkey’s large cities. Despite his declining health, Erdoğan remains Turkey’s most gifted campaigner. The opposition hasn’t even managed to find a common candidate yet. Kılıçdaroğlu, it is said, wouldn’t mind taking on the role, as would the mayors of Istanbul and Ankara.

The opposition alliance, though, is fragile. The CHP and İyi Party are relatively close, but without at least indirect support from the Kurds, they wouldn’t have enough to beat Erdoğan.

There’s also the question of how fair and free the election will ultimately be. Erdoğan ordered a revote in the 2019 Istanbul mayoral vote because he didn’t like the result. The CHP is already training election monitoring teams to prevent any attempts to manipulate the presidential election.

If the social democratic CHP win the election, Kılıçdaroğlu is promising to scrap the presidential system Erdoğan introduced in a referendum in 2017 and return to parliamentary democracy. The CHP is already in talks with other opposition parties, including the Deva Party of former Minister of State for the Economy Ali Babacan.

Babacan once founded the AKP together with Erdoğan and is viewed as the architect of the party’s once successful economic policy. He left the party following a dispute in 2019. Now Deva, together with the other opposition parties, is pushing for a return to the parliamentary system. “This is not just about beating Erdoğan,” Babacan tells DER SPIEGEL. “It’s about creating democratic institutions that will last beyond 2023.”

The fact that politicians in Turkey are even talking openly about the time after Erdoğan – that, too, is a novelty.


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