The Emirates Policy Center (EPC) organized yesterday (Wednesday, 27 May 2020) a webinar on “Post-Corona Turkey: Economic Challenges and Political Blunder”. At the opening of the webinar, which was broadcast live via the Center’s accounts in different social media platforms, Dr. Ebtesam al-Ketbi, EPC President, said that Turkey ranks 9th in the world in terms of the number of infections with the COVID-19 epidemic, that the government of the Justice and Development Party (AKP) has come under numerous criticisms because of the way it has been handling the corona crisis, and that the crisis has become a new factor of political conflict between the government and the opposition. It has also shown its impact through the controversy over the resignation of the Turkish Interior Minister.

Ebtesam al-Ketbi: "All expectations indicate that the Turkish economy will face a long-lasting recession"

Dr. al-Ketbi added that the corona crisis coincided with an already problematic Turkish economy in terms of the depreciation of the Turkish lira and accumulated debt. Consequently, the Turkish economy is expected to experience a long-lasting recession. Dr. al-Ketbi indicated that while Turkey has invested in the so-called “disaster diplomacy” by providing medical aid to a number of countries, Turkish involvement in regional conflicts, particularly in Syria, Libya and the eastern Mediterranean, continues to face challenges that stem from the internal political environment as well as the regional and international environments.

Dr. Omer Taspinar, senior fellow at the Brookings Institution and Professor of National Security Strategy, U.S. National War College, Washington D.C., indicated that the hardest challenge facing President Recep Tayyip Erdogan and his government at the moment is economic recession. He added that the recession will last for a long time, which means that Erdogan and his government will face a major challenge in the presidential and legislative elections scheduled for 2023.

Taspinar: "Both the corona and economic crises will lead to a change in the Turkish political scene, as was the case in 2001"

Taspinar added that President Erdogan controls the media in Turkey. That media portrays his management of the corona crisis as a success story, although his government had shortcomings in countering the epidemic, such as appearing hesitant in taking strong, decisive and timely decisions and the incapacity to fulfil promises of economic support and prevent the contraction of the Turkish economy.

The Turkish expert believes that in an attempt by President Erdogan to anticipate the development of the economic crisis and reduce the chances of establishing a unified alliance against him that would bring together the new parties that have defected from the ruling party and the main opposition parties, President Erdogan could head for early elections. In any case, however, both the corona crisis and the economic implications will lead to a change in the Turkish political scene, as had been the case in 2001 when the Justice and Development Party came to power due to the economic crisis experienced by Turkey at that time.

With regard to the impact of the corona and economic crises on the Turkish regional policy, Taspinar believes that the Turkish involvement in regional conflicts, in Syria, Libya and the Middle East, will not change. However, he warned that Erdogan could seek to create an external crisis, with Greece or the bases of the Kurdistan Workers’ Party (PKK) in northern Iraq, to divert attention away from the economic crisis and mobilize the nation in his electoral interests in case he heads for early elections.

Dr. Atilla Yesilada, co-founder of the Istanbul Analytics information platform and international expert in Turkish economic and political affairs, explained that the government does not act transparently in dealing with the corona epidemic. He underlined that the figures announced by the government are inaccurate and do not indicate the real number of infections among Syrian refugees and Kurds. He expected the outbreak of a second wave of the epidemic within two months which will constitute a shock for the health system as well as a psychological and economic shock.

Yesilada: "In the eyes of the Turks, Erdogan is no longer the leader that can bring prosperity to Turks"

In terms of the economic impact, the Turkish economic expert explained that the current crisis has proved the fragility of the Turkish economic growth model that is based on external borrowing. He indicated that the total Turkish debts stand at nearly 437 billion dollars, of which 170 billion dollars are due for repayment this year. This means that the only way for Turkey to come out of the economic crisis is to resort to the IMF. However, President Erdogan does not favour resorting to the IMF since such an agreement would impose on him the implementation of undesirable political and economic reforms.

Commenting on the signature by Turkey of currency exchange agreements (SWAPs) with China and Qatar, the Turkish economist indicated that those agreements will not solve the crisis of the Turkish economy or the huge debt problem. He described them as merely cosmetic operations. Lastly, he underlined that in the eyes of the Turks, President Erdogan is no longer the leader that would bring prosperity to the Turkish people.

Dr. Mustafa Murat Kubilay, a Turkish financial and economic expert, indicated that the Turkish economy was greatly affected by the corona crisis, especially in the trade, services, transport and tourism sectors. He gave the example of tourism which recorded 30 billion dollars in 2019, whereas that figure will fall to only 10 billion dollars this year.

The Turkish economist indicated that in addition to the exit of investments from Turkey due to the corona crisis, another problem is the depreciation of the Turkish lira, which lost nearly 15 percent of its value since January 2020 despite the huge funds injected by the Central Bank into the market to maintain the lira price. He indicated that the real reserve of foreign exchange in the Central Bank has fallen to below zero (-2 billion dollars), and that Turkish banks are incapable of offering new loans to Turkish companies that already face accumulated debts. This means that many Turkish companies are on the brink of bankruptcy.

Kubilay: The real foreign exchange reserve of the Turkish Central Bank has fallen to below zero

Kubilay indicated that the IMF expects that the Turkish economy will contract in the current year by 5 percent. He added that he does not expect that the IMF will rush to save Turkey from its economic crisis due to the lack of confidence in President Erdogan and his lack of credibility. Kubilay also expected that Turkey would experience political troubles towards the end of this year or the beginning of next year because of the escalating economic crisis.

Finally, all speakers in the webinar agreed that Turkey cannot overcome its economic crisis without implementing political reforms, whether through the return to the parliamentary system or through improving the conditions of human rights and freedoms and enhancing the rule of law and, most importantly, the abandonment by President Erdogan of populist policies and authoritarian rule.

Latest News