Erdogan’s Economic Experiment Continues

Here is today’s Foreign Policy brief: Turkey’s Central Bank considers interest rate cut, EU leaders meet in Brussels, and U.K. COVID-19 cases break one-day record.

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Turkey’s Central Bank is expected to issue a decision on interest rates today amid record inflation and as the value of Turkish lira plunges to new lows against the dollar.

Unlike the central banks of many similar-sized economies around the world, Turkey’s Central Bank is again expected to cut rates, even as inflation has soared 20 percent this year.

The unorthodox approach has been championed by President Recep Tayyip Erdogan. who has installed loyal officials in the Turkish Central Bank to see the policy through. His bet: that cheaper money will spur economic growth while a weaker lira makes Turkey more competitive on the global stage.

“The massive gamble he is taking, when he is slipping in the polls because of the worsening economy, involves additional short-term pain for long term gain,” Bulent Aliriza, a Turkey expert at the Center for Strategic and International Studies, told Foreign Policy. “The master plan, as he has stated, is to emulate the Chinese model by supplanting, or at least replacing part of, China’s exports to the West based on low wages.

“In the wider context, this can be seen as further evidence of Erdogan’s growing detachment of Turkey from the liberal Western democratic model which he previously embraced.”

That pain is evident on the ground, where residents form lines to purchase government-subsidized bread, other staples such as milk and toilet paper skyrocket in price, and gas stations run dry.

The eccentric strategy is assisted by not only Erdogan’s de facto oversight of monetary policy but also an increased centralization of control ever since a 2017 referendum gave the Turkish presidency sweeping new powers. His grip on the police, military, and judicial system make pushback difficult. With no election scheduled until 2023,  the country’s opposition, rising in the polls, cannot do much to stop the leader from acting on his whims.

The situation has prompted Turkey’s opposition to back a return to a parliamentary system as they campaign for early elections, but as FP columnist Steven A. Cook explained earlier this week, switching systems would not immediately solve Turkey’s ills.

In the meantime, Erdogan continues to lead Turkey in whatever direction he and his increasingly small inner circle chooses. “It’s a classic end of an era period,” Aliriza said. “I don’t think the man’s got any more rabbits to pull out of the hat, but you can’t count him out, because he’s got all the power.”

Omicron wave hits the U.K. British health officials have told residents to prepare for a “staggering” increase in COVID-19 cases in the coming days as the omicron variant spreads throughout the country. On Wednesday, 78,610 new coronavirus cases were reported—a record daily number since the pandemic began. The latest wave is also driving a political rift in British Prime Minister Boris Johnson’s Conservative Party, with almost 100 members of his parliamentary party refusing to back his proposal for vaccine checks at nightclubs and other large gathering areas. The measures passed thanks to support from the opposition Labour Party.

Johnson faces a crucial by-election in North Shropshire today; political analysts have warned that a loss of the historically safe Tory seat could mean that the prime minister’s days are numbered.

The EU leaders summit. European Union heads of state and government meet today for a two-day summit in Brussels. The leaders will have plenty to discuss, with energy prices, the rise of the omicron variant, and recent tensions with Russia over Ukraine all expected to feature on the agenda. The meeting is the first for Olaf Scholz since he assumed the post of German chancellor earlier this month.

Iran’s nuclear program. Iran has agreed to replace monitoring cameras at a key nuclear facility, ending months of negotiations with the International Atomic Energy Agency (IAEA). Cameras at the facility were damaged during a sabotage attack in June. Although IAEA officials will be permitted to replace the cameras, Iran said the recorded footage will not be made available until U.S. sanctions are lifted.

Migrant boat capsizes in Malaysia. At least 11 people have died after a small boat carrying migrants from Indonesia capsized near the Malaysian coast. Fourteen people survived, and 25 remain missing. The vessel was found 60 feet from the shore in Johor state, according to Malaysia’s national news agency. “We would like to advise people, especially the undocumented migrants … to use valid routes to prevent such incidents from recurring,” a Malaysian official told Reuters.

South Korea’s largest milk company has apologized over an ad it released featuring women depicted as cows. Seoul Milk’s 40-second spot features a man with a camera exploring a forest before coming across a field of yoga-practicing women who suddenly turn into dairy cows—a trick intended to highlight the purity of the product. Seoul Milk’s parent company apologized to “everyone who felt uncomfortable” viewing the ad, which has ignited debate over sexism in the country.