With cabinet reshuffle, Erdoğan signals economic turnaround for Turkey

Turkish President Recep Tayyip Erdoğan signaled a move towards more conservative economic policies as he unveiled sweeping changes to his cabinet, revamping his finance team and firing an interior minister known for his hardline rhetoric.

In a speech late Saturday, Erdogan shook up several top portfolios, announcing new finance, foreign and interior ministers.

The appointments come less than a week after Erdogan won one of the most hotly contested elections since becoming Turkey’s leader two decades ago. The presidential election, which took place after Erdogan failed to win half the vote in the first round, showed that while the president maintains strong support among his base, Turkey’s deep economic crisis has taken a toll on his popularity.

The sweeping changes announced on Saturday, which left only two ministers from Erdogan’s previous cabinet, come ahead of next year’s municipal elections in which the president’s Justice and Development party seeks to take back control of Istanbul and Ankara, Turkey’s two largest cities. Will do

“The Turkish century has begun, and the doors to our country’s development have opened,” Erdogan said in an opening speech hours before announcing his new cabinet.

Erdogan’s decision to bring back former deputy prime minister and finance minister Mehmet Simcek, who is well regarded by investors, as finance and treasury chief is one of the clearest signs yet that Erdogan is changing course on unconventional economic policies. Many blame that for sending the lira to a record low and igniting an acute inflationary crisis.

The choice of Cevdet Yilmaz, who had previously held senior economic roles in the Turkish government and parliament, for vice president was also seen by analysts as a sign of a possible change in policy.

Yilmaz’s appointment shows that “Erdogan’s priority is the economy and there will be changes in economy policies, which is positive for Turkey, but cabinet changes (alone) will not be enough,” said an economist, who asked not to be named. .

Simsek’s predecessor Nureddin Nebati pursued a “lira-ization” strategy in which the government adopted a series of measures to induce businesses and consumers not to hold foreign currency. The policies have deepened concerns of foreign investors who fled the country’s markets in recent years, coinciding with a sharp drop in Turkey’s foreign exchange reserves this year.

Another key change was replacing Suleiman Soylu, known for his tough talk against the West and calling the May elections an attempted Western “political coup”, as interior minister. He will be replaced by Ali Yerlikaya, the governor of Istanbul Province.

“Soylu was problematic and toxic,” said Wolfgango Piccoli at the consultancy Teneo, noting that he took a strongly anti-Western and particularly anti-American stance, which “antagonized a lot of people”.

On the foreign policy front, Erdoğan replaced his longtime foreign minister, Mevlut Cavusoglu, who is well-known in Western capitals. Türkiye’s national security chief Hakan Fidan will take over the role.

Fidan would enter the role with Turkey under strong pressure from its NATO counterparts to allow Sweden to join the alliance. The country has so far resisted, Stockholm first takes further action to fight terrorism.

Piccoli said the cabinet changes appeared to be a sign Erdogan was taking a slightly “more moderate” stance with more “technical prodding” than the previous leadership.

Turkish President Recep Tayyip Erdoğan signaled a move towards more conservative economic policies as he unveiled sweeping changes to his cabinet, revamping his finance team and firing an interior minister known for his hardline rhetoric.

In a speech late Saturday, Erdogan shook up several top portfolios, announcing new finance, foreign and interior ministers.

The appointments come less than a week after Erdogan won one of the most hotly contested elections since becoming Turkey’s leader two decades ago. The presidential election, which took place after Erdogan failed to win half the vote in the first round, showed that while the president maintains strong support among his base, Turkey’s deep economic crisis has taken a toll on his popularity.

The sweeping changes announced on Saturday, which left only two ministers from Erdogan’s previous cabinet, come ahead of next year’s municipal elections in which the president’s Justice and Development party seeks to take back control of Istanbul and Ankara, Turkey’s two largest cities. Will do

“The Turkish century has begun, and the doors to our country’s development have opened,” Erdogan said in an opening speech hours before announcing his new cabinet.

Erdogan’s decision to bring back former deputy prime minister and finance minister Mehmet Simcek, who is well regarded by investors, as finance and treasury chief is one of the clearest signs yet that Erdogan is changing course on unconventional economic policies. Many blame that for sending the lira to a record low and igniting an acute inflationary crisis.

The choice of Cevdet Yilmaz, who had previously held senior economic roles in the Turkish government and parliament, for vice president was also seen by analysts as a sign of a possible change in policy.

Yilmaz’s appointment shows that “Erdogan’s priority is the economy and there will be changes in economy policies, which is positive for Turkey, but cabinet changes (alone) will not be enough,” said an economist, who asked not to be named. .

Simsek’s predecessor Nureddin Nebati pursued a “lira-ization” strategy in which the government adopted a series of measures to induce businesses and consumers not to hold foreign currency. The policies have deepened concerns of foreign investors who fled the country’s markets in recent years, coinciding with a sharp drop in Turkey’s foreign exchange reserves this year.

Another key change was replacing Suleiman Soylu, known for his tough talk against the West and calling the May elections an attempted Western “political coup”, as interior minister. He will be replaced by Ali Yerlikaya, the governor of Istanbul Province.

“Soylu was problematic and toxic,” said Wolfgango Piccoli at the consultancy Teneo, noting that he took a strongly anti-Western and particularly anti-American stance, which “antagonized a lot of people”.

On the foreign policy front, Erdoğan replaced his longtime foreign minister, Mevlut Cavusoglu, who is well-known in Western capitals. Türkiye’s national security chief Hakan Fidan will take over the role.

Fidan would enter the role with Turkey under strong pressure from its NATO counterparts to allow Sweden to join the alliance. The country has so far resisted, Stockholm first takes further action to fight terrorism.

Piccoli said the cabinet changes appeared to be a sign Erdogan was taking a slightly “more moderate” stance with more “technical prodding” than the previous leadership.