Turkish PM has a hard job in the US

Turkish PM has a hard job in the US

Turkish Prime Minister Ahmet Davutoğlu started his three-day contacts in the U.S. on March 4.

His stay does not cover any city other than New York and he is not scheduled to meet any administration figure from Washington DC. Besides delivering a speech on the floor of the United Nations on gender equality on March 6 and meeting U.N. Secretary General Ban Ki-moon, it has been announced that his plan will focus on investments in Turkey. Economy maestro and Deputy Prime Minister Ali Babacan is accompanying Davutoğlu on the trip, along with Finance Minister Mehmet Şimşek.

A ranking prime ministerial source, who asked not to be named, denied reports that they had been turned down for appointments with either President Barack Obama or Vice President Joe Biden. That speculation is based on the chilly winds between the U.S. and Turkish administrations over a number of issues, including their respective stances on the Islamic State of Iraq and the Levant (ISIL), Syria, and Ukraine. 

“Our prime minister decided to prioritize foreign investments to Turkey in this trip,” the source said, adding that this could be considered the second step of a roadshow, the first one being his January meeting with international investors in London.

But being so close to the White House and the Congress, (which the Israeli prime minister had stormed just a few days before, against the will of the White House), and deciding not to even ask for appointments is only one dimension of Davutoğlu’s difficulties in his contacts in the U.S.

One of the aims of talking to global investors from Goldman and Sachs to Citibank, and from Merill Lynch to the CEO’s of major companies, is to assure them that there is nothing wrong in the direction of Turkish economy. These conversations come in the context of debates over the independence of economic institutions from daily politics, particularly the Central Bank.

Davutoğlu’s difficulties lie at exactly that point. On the very day, Feb. 25, when Babacan was to report to Davutoğlu about the informal stages of his New York contacts with investors, President Tayyip Erdoğan was delivering blows to Central Bank Governor Erdem Başçı, questioning his “other” loyalties for claiming independence from the Turkish government. Meanwhile, before Davutoğlu left Turkey for Portugal on March 3, ahead of the U.S., Erdoğan was back from Saudi Arabia, where he had slammed Babacan and Şimşek, along with Başçı, for resisting his demands to further lower interest rates. The Turkish Lira has been losing value against the U.S. dollar after every remark from Erdoğan targeting Davutoğlu’s economy team. It can be observed that the Davutoğlu government is not complaining much about the Central Bank; it is President Erdoğan who wants to see the Bank move in line with his instructions.

Meanwhile, investors who follow developments in Turkey well know that Babacan will not be in parliament after June 7 elections, as his seat will expire due to the Justice and Development Party’s (AK Parti) three-term rule. It will still be possible for Davutoğlu, if he forms the government after the election, to appoint Babacan from outside parliament, but it is more likely that neither Babacan nor Şimşek will have a place in the next cabinet. Erdoğan does not favor them any longer anyway. 

All this makes Davutoğlu’s job in New York very difficult: Convincing investors that there is nothing wrong in the statements of the president - who will stay in power for at least five more years - against the economy and finance ministers - who are likely to go in three months. What’s more, there is a Central Bank governor who is under fire all the time.

If Davutoğlu survives the investors’ test, he will surely come out stronger against Erdoğan, and against Erdoğan’s influence on his party.

To secure the support of New York, before Washington, Davutoğlu must have something new to say on Turkish foreign policy. He knows well that investors, and the audience of the Council on Foreign Relations, tend to favor Israeli interests. Perhaps that could also be a worry of Erdoğan back in Ankara.