MuMTAZER – The economic policies of a dictatorship

The economic policies of a dictatorshipThe rapid rise of the dollar against the Turkish lira is triggering some unstoppable political consequences.The system of patronage formed and run by President Recep Tayyip ErdoIan makes the dollar-lira currency rates unsustainable.

Yes, the economic policies of the dictatorship are no longer functioning. Moreover, the increasingly apparent clashes between ErdoIan and other members of the government when it comes to macroeconomic policies have become the norm, not only for both sides but also the country as a whole.

It is a fight that looks set to lead the way to significant political consequences (which will first and foremost be apparent in the June 7 election) it is also a fight that will have no victors. Both sides will lose vital life-blood there are no miracles that could instantly heal the economic injuries at this point.

Which, in turn, is why no one expects the Council of Ministers to find an immediate solution that it will then implement until the election. And though this reality may not be reflected in recent government statements, the fact is that the government is not in fact bowing its head to ErdoIanand#39s aggressive demands.

There is an economic mentality that has driven the autocratic order masterminded by ErdoIan. A wide arena of economic power has been solidified, resting on the stateand#39s abilities to create and distribute wealth.

And perhaps not surprisingly, the people who benefit from the enormous state-run bidding tenders and those whose pockets are filled with city-generated wealth have always been the same. This Turkish oligarchic structure does not possess unlimited natural resources, unlike in Russia After all, Turkey does not boast the natural gas holdings that support other autocracies in regions not so far-off from these lands.

Which is why the moment the profits and sustainability of the construction sector come to an end, ErdoIanand#39s autocracy will lose a significant chunk of its critical economic dimension.And this is why ErdoIan is trying to intervene in the central bank, pushing it to lower interest rates it is all linked to his attempt to protect this oligarchy and the profits from this dirty economy.

But, as it turns out, ErdoIan was powerless against the dollar, and the interventions have made things even worse. In the meantime, the banking system has essentially canalized all its own tools towards this oligarchy, taking out foreign currency loans.

It now appears inevitable that this system will collapse, what with foreign currency panics and credit callbacks.What ErdoIan is pursuing is impossible but even if the impossible were possible, he still doesnand#39t have the tools to actually do what he wants.

The office of the president is truly a symbolic one, and ErdoIan can of course pressure the government, forcing it to pursue what is actually impossible. In the meantime, the duo of Prime Minister Ahmet DavutoIlu and Deputy Prime Minister Ali Babacan are completely outside of ErdoIanand#39s dirty oligarchic structure.

And so why should they bow to pressure from ErdoIan, which seems likely to drag the country into an irreversible and deep economic crisis?The economic policies of the ErdoIan dictatorship are no longer functioning, and while the government may be making and implementing rational decisions, it is having a difficult time as it keeps bumping into barriers set by the president.One example of this is the mid-term program and some structural transformation programs announced by Babacan last October these ran into blockades from ErdoIan, and wound up turning into clashes between the industrial and construction sectors.

The rapidly worsening macroeconomic balances we see in place now may wind up bringing about a swifter end than anticipated to the ErdoIan autocracy, which of course had already been seriously wounded by the Dec. 17-25 corruption investigations.

For while ErdoIan is a politician who does not give up easily, the fact is, he no longer really has an arena left in which to act. Finding international support from the Gulf States and capital from Saudi Arabia is going to be very difficult from here on out.

And he has essentially destroyed support for himself on the financial markets due to tyrannical interventions he has made in an effort to protect his wobbling autocracy. There appears to be no hope left that this dictatorship will find a way out when it comes to the economy.

This week, the hopelessness looks set to become even more deeply rooted.

SOURCE: Today’s Zaman