Turkey: Erdogan’s Economic Policy Makes Turks Poor | International

A woman bought bread at a subsidized price last Friday in Istanbul.
A woman bought bread at a subsidized price last Friday in Istanbul.YASIN AKGUL (AFP)

Saygin gets up early each day to bake bread, rolls and simit. But every day he does it with less conviction. “I’m fed up. There are people who cannot buy bread and part of it remains unsold. So the next day you do less. And the next day less. If this continues, I will have to close. ” Eight people worked in his oven. Now there are only him and a part-time master baker left. “Last year I sold the bar for 1.5 liras. Last week at 2.5. This week to three. Next time, maybe four. When the dollar goes up, factories raise the price of flour [se ha incrementado un 200% en un año] and I have to raise the bread ”.

As the price of such an essential product has risen, the queues of people waiting every day in the rain and cold for the kiosks of IHE, a company of the Istanbul City Council that offers bread at subsidized prices, have also grown (1 , 25 lire).

Behind these images of crisis there is a reason: the complete collapse of the Turkish lira (despite the astonishing rise on Tuesday, since February it has lost half its value) as a result of the monetary policy of the Government of Recep Tayyip Erdogan, which aims to lower interest rates at all costs. At the beginning of December, the Turkish president announced his “new economic model”, which equaled those undertaken by China and other Asian economies in the 1980s and 1990s. Its objective is to lower the price of credit for companies and take advantage of the devaluation of the lira and the fall in the price of labor to turn Turkey into an export power and thus make it less dependent on foreign financing. In addition, he wants his model to give results in less than a year.

“There is no model and there is nothing. Erdogan cannot control the situation and he has invented this story of the new economic model ”, criticizes the economist Mustafa Sönmez. “Of course there are these types of models, but they cannot be applied in this context of instability in which nobody knows what the prices or the exchange rate will be next week, which means that nobody can plan their economy ”, Adds the expert.

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Erdogan knows that the economy will be his weak point and that reelection will be at stake in 2023. In recent weeks, three youtubers who asked about the family’s financial situation on the street were arrested and ordered house arrest; A man who took down a portrait of Erdogan and threw it to the ground has been imprisoned, and another man, in this case from the town where the president’s family comes from, was arrested after complaining in an interview about the economic situation, then three neighbors told him they were beaten and, finally, the City Council has cut off his running water, according to the newspaper One day. They are implacable responses to simple citizens who suffer the crisis in their flesh, but which reveal the fear that arouse in the Government who cast doubt on the victorious narrative of the president.

In a country that lives glued to currency trading screens, the president has asked the Turks to stop looking at the exchange rate and has promised to compensate savers when the Turkish currency falls. “Our currency is the lira, not the dollar,” says Erdogan. But Sönmez recalls that the Turkish economy, including its export industry, needs to import to produce, and those imports have to be paid for in dollars, euros or other hard currencies, which in the end results in a rise in prices.

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The economists in the universities know this, and the poultry shop owners also know: “If the dollar goes up, the price of chicken goes up. The feed they eat is imported and paid for in dollars. In a month, the kilo of chicken breasts has risen from 30 to 45 liras, so people buy half as much as before, ”complains one who prefers not to give his name.

To counteract the tremendous loss of purchasing power that the Turks have suffered, the Government has announced a 50% increase in the minimum wage – paid by almost half of Turkish workers – to 4,253 liras (294 euros), although it remains to be known how much it will take time for rampant inflation to swallow up this increase. According to the Istanbul statistical office, prices have grown by 50% in the last year, a figure that rises to almost 59% according to the calculations of the ENAG group of academics.

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The World Bank has warned in a report of the “increase in poverty” in Turkey. Also the inequalities: at the same time that the “bread lines” grow, the fashionable restaurants and bars of Istanbul, the most expensive city in the country, are overflowing. “The gap between rich and poor is bigger than ever. Because inflation affects much more those who live on a minimum wage or those who work for a daily wage, ”explains Sevval Sener, from the NGO Deep Poverty Network. In Istanbul alone, it is estimated that there are some 1.3 million workers without a contract or social protection among street vendors, garbage collectors, workers who work in black … who will not be able to benefit from the increase in the minimum wage. “During the pandemic, many lost their jobs. Now, even though they work, they do not earn enough to cover their basic needs due to the price hike. So many skip meals or collect food from the garbage, ”says Sener.

Supply problems

The sinking of the lyre has also led to supply problems. In some supermarkets, the amount of non-perishable products that customers can buy has been limited to prevent them from running out, and in pharmacies it is increasingly common for pharmacists to point out some of the medicines when they arrive with a doctor’s prescription and say: “This brand is not on the market.” The pharmacists union has warned that it is impossible to find hundreds of drugs. The Ministry of Health determines the prices of the medicines it imports at a fixed exchange rate (the current one is three times lower than the real price), and given the loss of value of the Turkish currency, the big pharmaceutical companies refuse to sell at Turkey.

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“All producers [nacionales] they are focusing on exports because it is becoming less and less profitable to produce for the Turkish market ”, explains analyst Yavuz Barlas on the television channel Haberturk. This is palpable, for example, in construction, where it is increasingly difficult to find cement despite Turkey being the sixth largest producer in the world. “If you want cement, there is; but you have to pay for it at an export price ”, explained the promoter of a work in October. Rising prices and the difficulty of obtaining materials weigh on one of the most powerful sectors of the Turkish economy, which employs two million people.

For Erdogan, the inflation and supply problems are the product of “speculators” and “enemies of Turkey”, so he has sent inspectors to fine supermarket chains, car dealerships and other companies that he accuses of “hoarding supplies. ”To sell when prices rise. “Work more, produce more and export more,” he asked last Thursday in a speech in which he demanded “sacrifices” in order to defeat what he has dubbed the “war of economic independence” against the “external forces” that conspire against Turkey. .

The baker Saygin, whose business is located in a working-class neighborhood loyal to Erdogan, is also in favor of this thesis, which is continually fed by the pro-government media: “The lira falls because [el presidente de EEUU, Joe] Biden wants to overthrow Erdogan ”. Many supporters of Erdogan’s party, the Islamist AKP, or his partner in the government, the ultra-nationalist MHP, share this theory, although more and more voters from the ruling party attribute the bad economic situation to the management of the Executive (17% of the AKP voters and 27% of the MHP according to an AREA survey). A Metropoll poll shows that support for the AKP among poorer Turks has declined to a greater extent than among higher-income groups. Saygin himself, Erdogan’s voter, begins to doubt: “I also have complaints about the policies of this government.”

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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