Turkey’s Tough 2021

A dismal economy, climate disasters, and political headaches are likely to persist in 2022 as well.

By , a freelance journalist based in Istanbul covering Turkey, Syria, and the wider Middle East.
Turkish President Recep Tayyip Erdogan arrives to give a press conference.
Turkish President Recep Tayyip Erdogan arrives to give a press conference.
Turkish President Recep Tayyip Erdogan arrives to give a press conference in Ankara, Turkey, on Sept. 21, 2020. ADEM ALTAN/AFP via Getty Images

For Turkey, 2021 was a year marked by its plummeting currency, soaring inflation, and destructive climate change events. The terrible year has fueled the steady erosion of confidence in Turkish President Recep Tayyip Erdogan’s stewardship, whose poll numbers are low and who faces some of the toughest challenges to his leadership. 

We take a look at one of the most difficult years for Erdogan’s Justice and Development Party and look ahead to 2022, which is set to be even tougher. 


1. Turkey’s economic meltdown

Even before the pandemic, Turkey was teetering on the edge of financial catastrophe and trying to ward off a recession. It was struggling with huge debt, currency depreciation, and rising inflation. 

For Turkey, 2021 was a year marked by its plummeting currency, soaring inflation, and destructive climate change events. The terrible year has fueled the steady erosion of confidence in Turkish President Recep Tayyip Erdogan’s stewardship, whose poll numbers are low and who faces some of the toughest challenges to his leadership. 

We take a look at one of the most difficult years for Erdogan’s Justice and Development Party and look ahead to 2022, which is set to be even tougher. 


1. Turkey’s economic meltdown

Even before the pandemic, Turkey was teetering on the edge of financial catastrophe and trying to ward off a recession. It was struggling with huge debt, currency depreciation, and rising inflation. 

Erdogan has only made the crisis worse by doubling down on unorthodox economic policies—such as insisting on lowering interest rates despite rising inflation—working against the advice of economists, who suggested the exact opposite. The Turkish lira and the Turkish public have paid the price. On Jan. 1, the lira traded at 7.4 to the U.S. dollar. At its lowest point on Dec. 20, the lira had dropped to 18.36 to the U.S. dollar. Since then, thanks to a multibillion-dollar government intervention, the lira has shored up some, but it is still far off its value from the beginning of the year. 

Part of that roller coaster is due to Erdogan’s meddling in Turkey’s central bank, which is charged with setting interest rates and keeping inflation in check. But Erdogan has repeatedly shown that if bankers and finance ministers don’t do what he wants, they’re gone. He has fired three central bank governors in two years, including Naci Agbal in March, as well as a number of deputy governors and top officials over the course of the year.

The lira’s plunge has fueled inflation, which is officially running at 21 percent year-on-year but is believed to be much higher. (Even officially, it may soon go much higher: Some experts expect after a brutal December that Turkey’s official inflation rate will hit 30 percent when new numbers are announced in early January.)

That economic pain, which has raised prices for everyday goods and caused long lines for government-subsidized bread, could start to be a threat to Erdogan’s grip on power. 


2. Making friends with old foes 

Turkey’s economic troubles have also prompted it to mend ties with Armenia and the United Arab Emirates, motivated in part by its need to generate income.

In November, Erdogan and Abu Dhabi’s crown prince oversaw the signing of several investment and cooperation deals. In recent years, tensions over Turkey’s support for the Muslim Brotherhood, which the UAE sees as a security threat, has roiled the region. Ankara has also accused Abu Dhabi of backing Turkey’s failed 2016 coup attempt, and the two were at odds in the Libyan conflict. Now, however, the UAE is set to establish a $10 billion fund to support mainly strategic investments in Turkey, including in health care and energy.

Meanwhile, Turkey and Armenia, with differences stretching back more than 100 years to the Armenian genocide by Ottoman Turks (which Ankara has not officially acknowledged), have pledged to appoint special envoys to normalize bilateral relations. They cut ties and closed borders around three decades ago over the first Nagorno-Karabakh conflict in the 1990s, and they were on opposing sides in the most recent fighting over the disputed enclave. 


3. A nation in flames

Over the summer, Turkey’s run of hardship extended to its forests as the worst wildfires in living memory tore along its southern coastline, burning more than 656 square miles in July and August. They were fueled by months of drought caused by climate change and the misuse of water resources.

Few Mediterranean countries have been hit harder by climate change than Turkey. In May, an explosion of “sea snot” left the Sea of Marmara covered in sticky slime—an overproduction of phytoplankton caused by warmer waters. In August, floods killed 82 people in the western Black Sea region. Despite the devastation, the government has yet to make any specific moves to protect the environment from further damage.


4. A further slide in human rights 

Women, LGBTQ+, and minority rights slid further in 2021, when the country pulled out of the Istanbul Convention, the largest international agreement to protect women’s rights in March. That same month, a politically motivated move to close the country’s third largest political party, the pro-Kurdish Peoples’ Democratic Party, was taken to court, with a decision still pending. 

In November, an Istanbul court ordered the continued detention of philanthropist Osman Kavala, despite a binding judgement by the European Court of Human Rights over his release in 2019. He is accused of charges relating to anti-government protests in 2013 and involvement with Turkey’s failed coup—charges he has called “preposterous.”


5. What to expect in 2022

The biggest issue for Turkey will remain the economy, which is expected to worsen even further. That could even force Erdogan to call an early election, currently scheduled for 2023. 

“I’m very worried about Turkey. I think the risks of a systemic crisis are closer now than I think they’ve been in 20 years,” said Timothy Ash, senior emerging market strategist at BlueBay Asset Management. He expects inflation will peak around 50 percent, with the currency falling another 25 to 30 percent.

“With a return to some kind of normalcy and orthodoxy and policy, I think it can be addressed,” he said. “But if Erdogan wants to continue the current policies, eventually, it’s going to be at breaking point.”

Turkey has tried some Band-Aid fixes, including boosting the minimum wage and introducing a new deposit protection scheme meant to shield savers from falling currency values. But higher wages mean higher costs for businesses, which will percolate back into higher prices for consumers, and printing money to pay for the savings scheme will only add to inflationary pressure. There’s even a political component to the economic fixes, Ash said, with some 8 million Turks receiving government benefits, such as subsidized utilities.

“I would imagine that Erdogan will make sure that there’ll be a lot of spending to try to insulate that group from the worst effects of the downturn to win over that part of the vote,” Ash said. 


6. Will there be an early election?

The question was debated fiercely all year, and opinions are still divided as to whether it is a good idea. However, if they are called, it is likely to come after the economy has had time to stabilize but before the opposition can court too much of the electorate, said Berk Esen, a political scientist at Turkey’s Sabanci University.

“Some of the new policies, such as the increase to minimum wage, will need to first bear fruit for Erdogan to call for elections,” he said. “The longer he waits though, I think the higher the opposition chances will be.”


7. A pivotal moment for the opposition 

Perhaps the most important step for the opposition in the coming months will be the selection of a candidate to run for a coalition of parties, including the Republican People’s Party (CHP). While CHP leader Kemal Kilicdaroglu has voiced interest in standing, the most likely candidate is Istanbul mayor Ekrem Imamoglu, who re-won the seat in 2019 in a significant local election defeat for Erdogan’s party. Erdogan formerly held the role himself in the 1990s. 

“Imamoglu is so wildly popular, almost like a rock star,” Esen said. He’s also a target of increasing government vitriol, with calls from Erdogan allies for the popular mayor to stand trial on terrorism charges. 

The big dynamic will be the extent to which opposition parties can unite and try to lure away voters who have backed Erdogan’s Justice and Development Party (AKP). 

“I think next year, we are going to see opposition politicians go directly to court AKP voters in various Anatolian provinces and major cities,” Esen said. “And it is already happening. But they need to come together in criticizing the AKP’s economic model because it’s clearly not working.”

Liz Cookman is a freelance journalist based in Istanbul covering Turkey, Syria, and the wider Middle East.

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