ANALYSIS: Turkey’s economic bureaucracy sees dramatic reshuffling
Güneş KömürcülerThe economic bureaucracy in Turkey has been reshuffling in a dramatic fashion over the last couple of years, as some contradicting views have appeared and grown in the country’s administration, creating a kind of “dual-administration” in Ankara.
Who will be appointed to head the Central Bank after current governor Erdem Başçı’s term of office expires on April 19, or whether he will be reappointed, is being closely followed by the markets amid escalating contradictions behind closed doors.
The bank’s monetary policy, mainly its rate policy, has been criticized by several circles, mainly those close to President Recep Tayyip Erdoğan. Although some leading economy ministers have underlined the importance of the Central Bank’s independence from time to time, some other figures who are close to Erdoğan, such as his economic advisors, have not stopped harshly criticizing the bank’s rate policies.
The Central Bank cut the upper band of its interest rate “corridor” last month after months of no change in the rates.
There has however been some other key repositioning or dramatic changes in the country’s economic bureaucracy, which deserve a thorough review as some sort of contradiction deepens.
The management of the country’s main stock exchange, Borsa Istanbul, recently changed in an unexpected way. In the Borsa Istanbul general board meeting at the beginning of April neither the bourse chairman nor the bourse CEO were elected, even though they came to these positions just one year ago.
Former bourse head İbrahim Turhan, who was seen as Prime Minister Ahmet Davutoğlu’s top candidate to manage the economy, was elected as a member of parliament. He was, however, not given a ministerial position in the cabinet, as was the case for the economy’s former tsar, Ali Babacan, who was seen as the “guardian of economic reforms” by the markets.
Babacan, who had indicated he was reluctant to run for office again in the November 2015 election and played a huge role in several former appointments in the economy administration, such as the appointments of Turhan and Başçı, was not named to Davutoğlu’s team.
What is more, Turkey’s Treasury has not had a president since 2014, when its then undersecretary, İbrahim Çanakçı, was appointed executive director of the International Monetary Fund (IMF). He was also known as an ally of Babacan, whose prudent economic oversight was seen as a bulwark against pressure for pro-growth policies such as low rates despite stubborn inflation.
Meanwhile, a new president has not yet been appointed to the Turkish Statistics Institute (TÜİK) after its former head, Birol Aydemir, retired in February in a surprising move as his term in office had not yet expired.
Why new names cannot be appointed to these key economic institutions and how the works or the required reforms will be realized by these institutions is a big question.
We will probably see further reshuffling in Turkey’s key economic positions, as has also been the case in other institutions. The pendulum needs to be swung to the ones who will able to make reforms for the sake of the economy’s future.