Erdogan beats the nationalist drum
On 5 June, at a campaign rally in Sakarya, to the east of Istanbul, Erdogan ascribed the rapid deterioration of the Turkish Lira to an attack on the Turkish economy by "outside forces", a phrase he now uses regularly. The lira has depreciated almost 20 percent since the beginning of the year, falling to record lows. The Turkish president promised supporters he would "settle the score" with these unspecified foreign powers after elections slated for 24 June.
The snap parliamentary and presidential elections were called in April by Erdogan himself, but he has already faced a tougher campaign than he appears to have expected. In April, Turkeyʹs opposition parties looked to be in disarray. However the opposition has over performed expectations. Opposition parties have formed an alliance of convenience aimed at forcing a second-round run off in the presidential poll between Erdogan and the Republican Peopleʹs Party (CHP) candidate Muharrem Ince, who has energetically presented himself as an everyman candidate.
The ruling Justice and Development Party (AKP) campaign has sometimes looked lacklustre. In an attempt to present the partyʹs record as cool economic managers ahead of the election, Erdogan stressed the rise in refrigerator ownership since the party came to power in the early 2000s. But the liraʹs depreciation has drawn concern and complaints from across the society threatening the AKPʹs electoral prospects, which until recently appeared bulletproof. Inflation is rising too; the latest data show prices rising 12 percent over the past year.
Passing the economic buck
The economy tops the list of Turkish voter concerns and according to Oguz Erkol, a Turkish markets analyst, nationalist rhetoric about the liraʹs fall will only increase as the elections approach. "Erdoganʹs rhetoric that claims ʹforeign evil powersʹ are behind the recent sell-off in Turkish markets is essentially employed for influencing the electorate," Erkol said.
The Turkish president has expressed highly unusual views on the relationship between interest rates and inflation which do little to inspire confidence in Turkeyʹs creditors, particularly as he has shown a willingness to override the nominal independence of the Turkish central bank.
On 7 June, the central bank hiked interest rates by 125 basis points in an attempt to stop the liraʹs slide. But Erdoganʹs eccentric theories and his dominance in policy-making have resulted in the authorities being slow to act in the face of clear indicators that rate rises were needed. "Aside from his hostile attitude towards not-so-clear enemies, Erdoganʹs bizarre ideas on economics have been problematic," Erkol said.