The effects of the economy on the referendum

The effects of the economy on the referendum

While there are a few who still believe that the votes in the parliament might fall short of what is necessary to bring the constitutional changes that will transform the Turkish administrative system into an executive presidency to a referendum, the general conviction is that Turkey is set for a referendum come spring.

Analysts are divided in two in terms of what consequences the current economic deterioration will have on the outcome of the referendum.

The third quarter of 2016 witnessed negative grow – a first since 2009. And if that is also the case for the fourth quarter, that technically means a recession.

But living in Turkey, one does not need these figures to see how people are suffering from the deterioration in the economy.

Terror attacks and Russian sanctions following the downing of a warplane by Turkish jets in November 2015 has led to a difficult summer, and although Turkey and Russia have mended their fences, the failed coup in July 2016 and the state of emergency declared in its aftermath has created additional difficulties.

Last week, we saw high volatility in the foreign exchange rates, which is a serious barometer for Turks.

Despite calls from the president to ordinary citizens to sell their dollars and despite the fact that under normal circumstances, people have the tendency to sell dollars when they see the greenback going up, that has not been the case this time. “Turks have some kind of a love affair with foreign exchange,” said a veteran economist the other day. “They got severely beaten in the past because of this love,” he said, making references to the past crises of devaluation.

“Ask them to die for you, and they will, but ask them to sell dollars, and they won’t;” he added, which made us recall how some of the supporters of the ruling party took to the streets during the failed coup at the expense of their lives out of love for President Recep Tayyip Erdoğan.

“When the economy goes bad, those in power have always paid for it; that has always been the case ever since Ottoman times,” says one group. They say how the Justice and Development Party’s votes dropped to 40 percent in the 2009 elections due to effects of the global crisis at the time.

“That algebra no longer works in Turkey,” says the second group. And the polls seem to support the view of the second group. According to the findings of the polling company A&G, a clear majority of the public does not hold the government responsible for the economic slowdown. “The citizen has felt a foreign threat ever since July 15. Some 61 in 100 people do no not believe the government has any responsibility in the slowing economy and the high rise in the foreign exchange rates. They say, ‘there is an outside intervention and the government is trying the best it can,’” wrote Adil Gür, the head of the A&G, in an article published yesterday in daily Milliyet.

It seems that some analysts are now trying to make their economic projections, based on a “yes” outcome in the referendum. Then again, it is political questions lingering in the air that dominate the projections rather than economic ones.

The good scenario, said one veteran economist, addressing a private gathering, is that “the boss [meaning President Erdoğan] will stop his polarizing rhetoric and policies, which will mean that we will pass to a period where we will be less democratic but more stable and thus politically more normal. The second scenario is that the polarization will continue and we will face even more difficult problems and economic problems will even be sidelined in comparison,” he said.

“Less democratic but more stable; that’s something my generation is not familiar with,” he said. Apparently he is busy reading about countries like Venezuela or Argentina these day to get some idea!

As has been seen recently, it is all going to depend on one man alone, and we’ll see whether that makes the life of analysts easier or harder.