In a brace of late-night decisions on Friday, Turkey’s President Recep Tayyip Erdogan fired the country’s central bank chief and announced Ankara’s unilateral withdrawal from a key international women’s rights treaty.
This pullout from the Istanbul Convention sparked protests across the country Saturday, while many economists and investors feared a major currency meltdown, come Monday.
These developments also came in a week that saw the country’s top court move to ban Turkey’s third-largest party – the opposition, pro-Kurdish People’s Democracy Party (HDP).
In addition, there was major move to further limit the power of key municipalities, such as opposition-controlled Istanbul and Ankara, while news also came that Gezi Park – the symbolic center of 2013’s mass anti-government protests – had been given to a religious foundation.
“If you look at everything that’s just happened, it’s really been quite a week,” Can Selcuki from research consultancy Istanbul Economics told Asia Times,
The removal of Naci Agbal, governor of the Central Bank of the Republic of Turkey (CBRT), likely means the country will face severe financial challenges, when markets re-open on Monday.
In his brief, four-and-a-half month tenure at the bank, Agbal had championed a more market-friendly, traditional approach to monetary policy, raising interest rates to tackle inflation – currently running at 16%.
This had won him plaudits from many international and Turkish investors.
Combatting inflation was also made central to the new economic action plan, announced by Erdogan just two weeks ago.
Yet, the president and his supporters have long argued that raising interest rates causes inflation, contrary to most economic theory.
Rising rates have undoubtedly caused much hardship for many Turks, particularly during the Covid-19 pandemic.
“The loans many businesses have taken out to cover themselves during the pandemic have floating interest rates,” says Selcuki. “This means that when the rates are hiked, they have to repay more. This was creating major pressure on the government.”
On March 18, Agbal had raised rates from 17% to 19% – more than most market analysts had expected and likely a major additional burden for many borrowers.
The following night, he was fired.
Yet, while future lower rates may bring some relief to borrowers, Erdogan’s unconventional approach – followed in particular last year when his son-in-law, Damat Albayrak, was finance minister – triggered sharp falls in the country’s currency, the lira.
Back then, efforts to prop up the currency decimated the central bank’s foreign currency reserves, while also undermining investor confidence.
Agbal’s replacement, Sahap Kavcioglu, a columnist for pro-government and pro-Islamist newspaper Yeni Safak, is widely thought to be an advocate of Erdogan’s low-rate theory.
Indeed, in his column, he had attacked Agbal after last Thursday’s rate hike.
Kavcioglu was also Albayrak’s PhD supervisor and is a former parliamentarian for Erdogan’s Justice and Development Party (AKP).
He was also briefly Istanbul regional chief for Halkbank – the state-owned lender currently embroiled in allegations of Iranian sanctions-busting in the US courts.
“Sharp falls in the lira on Monday seem inevitable,” Jason Tuvey, senior emerging markets economist with Capital Economics, said Saturday morning. “There is now a very real chance that Turkey is heading for a messy balance of payments crisis.”
One step forward, two back
Erdogan’s new economic action plan is not the only recent plan now contradicted by events.
“Following the Human Rights Action Plan unveiled 18 days ago, President Erdogan had pledged that his government would continue to work with institutions, civil society, media and all segments of society to eradicate violence against women,” Ece Unver, Amnesty International’s Turkey director, told Asia Times.
Yet, with a presidential decree issued in the middle of Friday night, Erdogan pulled Turkey out of the Istanbul Convention, the 2011 Council of Europe treaty protecting women’s rights.
This was named after the Turkish city where it was launched, with the AKP-controlled Turkish parliament back then the first to ratify it.
“In a country where women and rights defenders have long been raising concerns about impunity for perpetrators of male violence, there are now rightful concerns that Turkey’s withdrawal from the convention might lead to even more violence,” Selay Dalakli, from independent media network Bianet, told Asia Times.
No explanation for why Turkey withdrew was offered by Erdogan, but Vice President Fuat Oktay indicated in a tweet that the convention’s international origins were an issue.
“There is no need to look for outside remedy or imitate others,” he tweeted March 20, saying that the best protection for women lay in Turkey’s traditions and customs.
Bianet, which monitors violence against women in the country, reports that in February 2021 alone, however, 33 women and a child were reported killed by men, while 57 women were reported injured.
As a 2014 survey by Hacettepe University found only 10% of Turkish women exposed to violence reported this to any institution, the actual numbers are likely far higher.
End of the party
Revoking the convention also came just days after the country’s top prosecutor filed a case to ban the HDP, accusing it of colluding with the outlawed Kurdish Workers’ Party (PKK).
This is designated a terrorist group by Turkey, along with the US and European Union. The HDP denies any link, with the party enjoying widespread support among many of the country’s large, Kurdish minority.
The start of proceedings to ban the HDP also came after Omer Faruk Gergerlioglu, an HDP parliamentarian, was stripped of his status as a deputy, on March 18.
He now faces two-and-a-half years in jail for a 2016 re-tweet of a news story supporting a resumption of the peace process between the PKK and the government.
On the list, too, this week was a court ruling that the opposition mayors of Istanbul and Ankara could no longer appoint the heads of municipal companies, leaving that open to appointments by government-controlled authorities.
Then came Gezi Park.
One of few green spaces in central Istanbul, this highly symbolic space was where Erdogan faced his biggest street protests, back in 2013.
These were triggered after the then-AKP controlled municipality tried to demolish the park for development.
With the opposition Republican People’s Party (CHP) gaining control of the municipality in 2019, the space had come under its authority.
Last week, however, that authority was removed and the park handed to the Sultan Beyazit religious foundation.
The symbolism of this has not been lost on many Turks, who – after a week of widely unexpected changes – now wonder what next from their often unpredictable president.