The new Turkey
Jan 16 2019
The government of Turkish President Recep Tayyip Erdoğan is furiously dismantling any and all checks against its power. In the most recent flurry of legal amendments and protocols, the government has stepped closer to seizing control of the country’s diplomatic institutions, central bank, and even its football clubs.
One amendment, hidden in an omnibus bill, caused intense controversy by allowing the president to appoint ambassadors to “lifetime roles” according to his own preference, effectively ending the career structure of the diplomatic corps. Yet despite the uproar, the bill passed.
“What’s the point in handing out ambassador’s offices like boons from the sultan?” asked Utku Çakırözer, the main opposition Republican People’s Party (CHP)’s deputy for Eskişehir, central Turkey. “Was it not enough to appoint old AKP deputies as ambassadors?” he asked, referring to the ruling Justice and Development Party (AKP).
The amendment in question states that those appointed as ambassadors would hold the position until recalled by the president.
The president had already conferred the title of ambassador to a large number of officials in recent years, including to his spokesman, İbrahim Kalın, and Industry and Technology Minister Mustafa Varank.
With the AKP’s latest amendment, ambassadors with potentially no background in the diplomatic corps or accreditation to work as an ambassador will be assigned to diplomatic missions indefinitely.
For Çakırözer, whose background as a journalist saw him cover the diplomatic, foreign policy and defence fields extensively, it is a move that utterly disregards and discredits the foreign ministry.
“Diplomacy is a merit-based career path. You start as a secretary, then become an attaché, before becoming a consul, a charge d’affaires and finally an ambassador. Turkish diplomats earned a place among the most respected in the world thanks to the competence and experience earned through long years working in the career,” Çakırözer said.
“But, sadly, in recent years ambassadorial appointments have been made based not on merit, but on loyalty to the party and its leader,” he said.
Thus, former AKP lawmakers or advisers to the president have been assigned to high-profile embassies in countries ranging from Holland to the Vatican, regardless of their qualifications for the role.
Aside from seriously damaging the prestige, earned over 700 years of history since the early Ottoman period, of Turkey’s diplomatic corps, Erdoğan’s appropriation of the foreign ministry’s authority over ambassadors means the president and those close to him now have unbridled control of foreign policy.
Another amendment from the omnibus bill has raised fears that the president aims to politicise the central bank in a similar way. The amendment removes a previous law that laid out criteria for appointing and promoting central bank personnel. Observers are already describing it as a move to embed a cadre of party loyalists at the bank.
The government has already called the bank’s board of directors to an emergency meeting on Jan. 18 in order to transfer funds to the Treasury as an advance, three months ahead of schedule. With this latest measure, it is likely to appoint and dismiss personnel in the most important positions at the bank without any rules to hold it back.
These positions include the administrative board of the central bank, the general management of the Banknote Printing Press and the Monetary Policy Commission, which determines policies on interest rates, exchange rates and inflation. By taking these, and the Central Bank of Turkey, fully under his own control, Erdoğan appears set to wipe out the last, rarely seen displays by the bank of independent decision making.
The Turkish president is a frequent critic of the bank’s interest rate policy, due to his professed, unorthodox belief that interest is the “mother and father of all evil” and should be lowered to reduce inflation rates. Up until now, the bank has at times resisted his demands in this direction. It seems very likely, however, that the first task for bank authorities handpicked by Erdoğan would be to lower interest rates.
And it would be no surprise if a newly assigned management of the central bank’s Banknote Printing Press were to set the press working overtime ahead of local elections at the end of March.
Erdoğan has already made an election vow to ease the burden on the 25.6 million credit card debt holders in Turkey, who owe a total of 103.4 billion lira ($19 billion). The debt will be met using credit from the state-owned Ziraat Bank, which will extend 24 to 60-month loans at monthly interest rates of 1.10 to 1.20 percent. The likely source of funding for this will be excess money printed specifically for this purpose.
Such a move will force the bank, which had been lending at annual rates of 23 percent, to take a big hit.
This damage will be covered by money transferred from the Treasury. In other words, it will be paid by the Turkish public.
The incentives provided by Ziraat Bank ahead of elections are not limited to credit card debt, however. The bank is also providing 20 billion lira ($3.66 billion) in credit at highly favourable rates to provide stimulus for thousands of businesses, as well as the monthly 0.98 percent interest mortgages to help keep the construction sector afloat.
Taking into account the magnitude of the financial burden on the Treasury and the stress this is placing on state banks ahead of local elections, the need to print excess money appears inevitable. For this, Erdoğan requires compliant directors at the central bank and other institutions shaping monetary policy. Hence the legal amendment.
One more duty overtaken by Ziraat Bank, at Erdoğan’s behest, is the restructuring of debts owed by Turkey’s ailing football clubs, with figures reaching 10 billion lira.
The football clubs had been in danger of bankruptcy due to money owed to 15 separate banks. Ziraat Bank has agreed to take over and restructure this debt in its entirety. Eighty percent of that debt is owed by Turkey’s “big four” football clubs, Beşiktaş, Galatasaray, Fenerbahçe and Trabzonspor.
As part of the restructuring deal, auditing teams will be created by the Turkish Football Federation to oversee the clubs’ finances.
Clubs that do not adhere to the financial conditions set by the auditors can be disqualified from European competitions, have points deducted from their Turkish league tallies, have properties, facilities or even stadiums seized, and in the last instance be placed into administration.
This opens a clear path for the government to take control of the football clubs, centuries-old institutions with millions of fans apiece.
Thus, Erdoğan’s government continues to run the election economy at full steam, seeking advantages at every angle from credit card debt relief to rescuing the country’s football clubs. The costs to the country’s economy and institutional integrity, however, are as yet untold.