Impressions from London: It is the politics, stupid!
As I always do when I visit London, I managed to find some time to meet up with friends who follow the Turkish economy closely: Mostly fund managers, economists and think tankers; all in all a dozen or so people.
The main theme of our conversations was politics: Everyone wondered if economy czar Ali Babacan and Finance Minister Mehmet “Nominal” Şimşek would be in the new Cabinet. They found out while I was up in the air on Aug. 29: While they should have been relieved that the duo kept their posts, I am not sure what to make of the Justice of Development Party (AKP) economy bigwig Numan Kurtulmuş’s assignment as Deputy Prime Minister.
Another question that popped up was whether former President Abdullah Gül had been marginalized or would try to take over the Party he founded with President Recep Tayyip Erdoğan. Many felt Gül had been wronged by Erdoğan, but they were not sure if he wanted to, or would be able to, get back in the game.
Surprisingly, most of my contacts were even more pessimistic than me regarding Turkish politics. For example, several disagreed with me that Erdoğan would not go as far as campaigning for the AKP in the 2015 elections – even though the president is supposed to be apolitical. One laughed at the notion that Erdoğan would respect the Constitution.
In fact, I noticed a major shift in my friends’ perceptions of Turkish political risk, one which I had sensed a couple of weeks ago: Those who used to equate Erdoğan’s one-man rule with stability now expect political and social unrest. The graft scandal seems to have taken its toll as well: A bank economist told me his clients, who were considering financing Erdoğan’s mega-projects, have cold feet now.
I was touched by questions on my well-being: Do I get censored? Nope, but I know of many columnists in other papers who are. Do I get threatened by AKP cronies? Hell yeah, but nothing I can’t handle myself. Am I worried about getting thrown in jail or seeing the taxman at my door? Nah, but those are real occupational hazards of my profession.
While economics was shadowed by politics, all the three people I met after the Central Bank’s rate decision on Aug. 28 told me they were surprised by the 0.75 percentage points cut in the marginal funding rate: After all, Governor Erdem Başçı had clearly ruled out a reduction in that rate on Jul. 24 by using the Turkish version of the idiom “once bitten, twice shy,” implicitly referring to the Bank’s previous mistakes in rushing to decrease it.
People were nevertheless not too critical of the Central Bank. They generally felt Başçı was qualified. If anything, most pitied the poor chap, arguing he was doing the best he could, especially given the enormous pressure on him by Erdoğan and his inner circle.
I am looking forward to my next London trip in exactly a month. My beloved Beşiktaş, now in the Europa League after last week’s heartbreaking loss to Arsenal, are playing against the Spurs (Tottenham, not San Antonio) in London on Oct. 2.