Will the Turkish lira regain its value

Starvation wages, poverty, inflation: Erdoğan is in ruins

Istanbul - On Sunday evening, Berat Albayrak, finance minister and son-in-law of President Recep Tayyip Erdoğan, surprisingly announced his resignation on Instagram. The 42-year-old Albayrak claimed health reasons for his resignation, but in fact the reason could be found in the constantly deteriorating economic situation.

Lira slips

Although Albayrak had made some imaginary success stories almost every week, the Turkish lira depreciated dramatically while inflation rose steadily. Foreign investors had long since lost all confidence in Albayrak.

Immediately before Albayrak announced that it would give up his ministerial post after five years, President Erdoğan fired the head of the Turkish central bank, Murat Uysal, without giving any reason and replaced him with a former finance minister, Naci Ağbal, at the weekend.

He announced on Monday morning that he would do everything possible to stabilize the rate of the Turkish lira again. The resignation of Albayrak alone had already enabled the lira to gain two percent against the dollar. The lira hit a new low on Friday. For one euro you had to pay ten lira, a few years ago it was three lira. The currency recovered strongly on Monday.

Growing despair

The resignation of Berat Albayrak, if he is accepted by President Erdoğan, is an unmistakable sign of the growing despair of the Turkish government, which apparently no longer knows how to save the country from bankruptcy. According to the American investment bank Goldman Sachs, the Turkish central bank has burned around 100 billion dollars in the last two years in a fruitless attempt to stop the lira from falling. Now the foreign exchange reserves are apparently used up.

For a large part of the Turkish population, this means that they have less and less money at their disposal, because prices are constantly rising without wages rising accordingly. Retirees are also constantly losing purchasing power. The situation is particularly dire for adolescents and young adults. Unemployment for school and university leavers is 50 percent.

Even those who get a job have to be content with a starvation wage. Even university graduates with a master's degree from the best universities in the country or from abroad go home with the equivalent of 250 euros a month, where they inevitably live with their parents because they cannot afford an apartment.

Upswing over

Corona-related dismissals are currently still prohibited, but it will not be able to hold out for long because many companies are facing bankruptcy due to high dollar debts.

The rise of Recep Tayyip Erdoğan was essentially linked to the fact that he succeeded in overcoming many blockades in bureaucracy and state-owned companies and thus triggered an upswing that lasted over ten years, which increased the country's overall prosperity enormously. That is long gone, but after years of stagnation, the Turkish economy is now in free fall.

Alleged Crown Prince

The resignation of Albayrak, if it lasts, therefore also has a far-reaching political dimension. Albayrak was energy minister for three years and was appointed finance minister and new economic tsar of the government by Erdoğan after the last presidential election. As the president's son-in-law, he rose to become crown prince, who was to inherit Erdogan.

After the attempted coup in 2016, Erdoğan relied more and more on a small group of absolutely loyal supporters, including his sons, daughters and, above all, his son-in-law Berat Albayrak. The departure of Albayrak would therefore be a heavy loss that could shake the entire power architecture within the ruling AKP.

Hated favorite

Albayrak was hated in large parts of the AKP as Erdoğan's favorite. For many it was an expression of the regime's nepotism. Erdoğan's former comrades-in-arms such as Ali Babacan, who had successfully steered Turkey's economy for ten years, have left the AKP and founded their own party. Like the former Prime Minister Ahmet Davutoğlu, he is now part of the opposition. With Albayrak's departure, the economic crisis is increasingly turning into a political crisis for the Erdoğan government. (Jürgen Gottschlich, November 9, 2020)