Government backs Başçı against Erdoğan

Government backs Başçı against Erdoğan

President Recep Tayyip Erdoğan is a very clever man. If this were not the case, he would not be where he is today. He therefore knows the relationship between cause and effect.

He knows full well, for example, that his abrasive statements concerning the governor of the Central Bank will create unwelcome waves for the economy, especially when he ups the ante by accusing Erdem Başçı, the governor, of treason for not bringing down interest rates as ordered.

It is impossible for Erdoğan not to know that his meddling in this way will send the value of the Turkish Lira – which is already pitted against unfavorable external factors – into a downward spiral, while the value of the dollar against the lira reaches historic heights.

It is also impossible for Erdoğan not to know who this situation benefits and who it works against. He recently questioned who Başçı and those in the government who support him are in the service of, suggesting again that there is something treasonous involved in their behavior. 

One can, by virtue of the same token, question whose interests it is that Erdoğan is serving with his demands from the Central Bank. The answer to that is not difficult. He is serving his own political ambitions. He wants cheap money to be made available to the public so that the ruling Justice and Development Party (AKP) can get the votes it needs in the June elections in order to introduce the presidential system he desires.

“Erdoğanomics” - if one may call it that, even though it is grating to the ear - is based purely on self-serving populism and has nothing to do with the proper administration of the economy. It is designed to save the day politically, whatever its long-term ill effects may be.

Başçı is one of the most hapless of people in Turkey today. He has a job whose independence he has to protect against an assertive and politically ambitious president. If he bows to presidential pressure, the economy risks going head over heels.

Başçı undoubtedly knows that if that were to happen he, and not the president, will be the one who is blamed. Given the prevailing political atmosphere in Turkey, Başçı will most likely also be accused of complicity with the “international interest rate lobby” and its domestic extension, the villainous “parallel structure.”

Başçı appears to be damned if he does, and damned if he doesn’t. Fortunately for us ordinary citizens, he is more inclined to stand his ground. The support he is getting from the government is also encouraging him. 

Başçı got this support again on Tuesday, after the eight-hour meeting of the Economic Coordination Board headed by Prime Minister Ahmet Davutoğlu. The written statement issued after the meeting underscored the fact that the Central Bank is independent by law. 

It added that the Central Bank had proved its capabilities in various crises since 2002, including the global crisis in 2009, and said there was close consultation between the Bank and the government. It also declared the Bank was continuing to take the necessary measures in a timely manner and in line with monetary targets.

The statement, of course, blamed external factors, especially originating from the U.S., for the volatility of the exchange rate and did not mention, or even hint at, domestic political factors - in other words, Erdoğan’s interferences – as one of the causes behind this.

Its decision to stand behind Başçı can, however, be taken as an indirect warning to Erdoğan to stop tampering with the economy and leave the Central Bank alone so it can get on with its job. But will Erdoğan listen? He most likely will not. 

Even this statement from the government, though, appears to portend trouble ahead between Başçı and the government, especially if the June elections do not produce the results Erdoğan desires.