Deputy PM Babacan summons economy team in September amid questions over his future

ANKARA

Some AKP figures have been implicitly criticizing Babacan and implying that he is linked with Islamic scholar Fethullah Gülen in the last months.

Deputy Prime Minister Ali Babacan has called on top members of the country’s economy management to meet on Sept. 2 to discuss short- and medium-term policies amid lingering questions regarding the future of the Cabinet.

Babacan summoned a meeting of the Economic Coordination Council (EKK) members to begin studies regarding the 2014 year-end forecasts in the Medium Term Program (OVP) and macroeconomic growth estimations for the 2015-2017 period, Reuters reported.

A number of senior government officials, including Finance Minister Mehmet Şimşek and Development Minister Cevdet Yılmaz, are expected to attend the meeting that will be headed by Babacan.

The OVP will include the 2015 Central Budget Draft Code in addition to medium-term estimations for several key economic indicators including the current account, growth, inflation and foreign trade.

The future of the economy ministers has been a key concern for investors since the Aug. 10 presidential election, which was won by current Prime Minister Recep Tayyip Erdoğan, but expectations for the team to retain their posts have strengthened in the past few days.

The ruling party formally designated Foreign Minister Ahmet Davutoğlu to be Erdoğan’s successor on Aug. 21 as both prime minister and chairman of the Justice and Development Party (AKP).

Davutoğlu is expected to be given the mandate to form the next government by Erdoğan on Aug. 29, a day after the official presidential handover.

Davutoğlu’s announced Prime Ministry nomination has further soothed concerns over the economy ministers’ fates as the sources close to the matter have been saying Davutoğlu is favoring Babacan and Şimşek to remain at their posts.

“The decision will be up to Erdoğan and Davutoğlu, but in the new Cabinet, which is expected to be formed at the beginning of September, no changes are expected with Babacan and Şimşek or other economic portfolios,” one senior AKP official told Reuters.

Prudent approach

According to rumors circulating in Ankara, advisers and party members close to Davutoğlu have already begun to lobby to keep Babacan at the top of Turkey’s economic policy decision-making.

Even some party figures, who have been implicitly criticizing Babacan and implying that he is linked with Islamic scholar Fethullah Gülen, have adopted a more positive attitude about the deputy prime minister since seeing the impact of worries over his absence in the Cabinet, daily Hürriyet has learned.

Babacan’s prudent economic oversight is seen as a bulwark against Erdoğan’s pressure for pro-growth policies, such as low interest rates despite stubborn inflation.

Erdoğan, determined to maintain growth ahead of the parliamentary polls next year, has been disappointed by the Central Bank’s overall policies, a stance that has also been shared by Economy Minister Nihat Zeybekci.

As Zeybekci, a loyal supporter of Erdoğan’s rhetoric that contradicts orthodox economics theories, blasts the Bank, Babacan and Şimşek have been seeking to downplay concerns by saying the government fully understands the need for an independent Central Bank and does not interfere with the country’s monetary policies.