A two-sided challenge: the Turkish Lira and the Istanbul Convention

The removal of Governor Naci Agbal from the Turkish central bank exposes the government to a potential currency crisis. Erdogan’s move seems to be targeted at demolishing the hopes of those who considered Agbal the epitome of a newly obtained autonomy for the monetary institution. Erdogan, declining in consensus and struggling with an unprecedented economic crisis, might encounter difficulties in silencing mounting internal dissensus.

Latest expressions of this trend have been continuing riots in Ankara’s streets, fuelled by thousands of women revolting against Erdogan’s unilateral decision to withdraw Turkey from the Istanbul Convention. Now contested on the economic side as well, it might be harder for Erdogan to keep its grip over boiling tensions while staying afloat amidst a global health crisis and renewed US interventionism in the area.

Marked by sharp declines in exchange rates, which pushed the stock exchange to suspend all trading in liras, the national currency has come to lose up to 17 points against the US dollar, then settling at around 15%. The governor, who took office in November, had worked to try to restore the credibility of the Turkish Central Bank, steering its monetary policy choices in a direction that experts and observers had called “more orthodox”. As an example, Agbal decided to raise interest rates in an attempt to curb inflation and support the Turkish currency.

In his place, Erdogan appointed Sahap Kavcioglu, a former member of the ruling party. In addition to signalling the Central Bank’s lack of independence, the appointment of Kavcioglu, a highly contested professor of economics, has raised widespread fears among investors. The concern is that his upcoming decisions might quickly erode the improvements achieved under Agbal. This sudden change comes at a difficult time for emerging markets, under pressure due to rising funding costs in the US and other developing markets, including Russia and Brazil.

Meanwhile, thousands of women took to the streets. Entered into force in 2011 and signed by 45 countries including all EU member states, the Instanbul Convention provides for legally binding instruments to combat domestic violence, prevent abuse and prosecute culprits. The immediate reaction from women’s and opposition associations, and even words of blame from the EU and the US saying that the decision “puts the safety of women at risk” have not, however, achieved anything more than sparking limited riots.

On the contrary, conservative MPs – even within the AKP – have welcomed the idea, saying that the convention undermines the structure of Turkish “traditional families” and their system of shared values, encouraging divorce and homosexual behaviours. “National laws already protect women, starting with our Constitution,” said Family Minister Zehra Zumrut.

The president’s primary concern is the internal consensus in the country, not the external one. Two years before the elections, scheduled for 2023, Erdogan and the AKP are grappling with a vertical collapse in polls. Even by counting the votes of the allied Nationalist Movement Party (Mhp), the president would not be able to reach the 51% majority needed to govern. For this reason, despite being re-elected, the Turkish head of State seems determined to do everything in his capacity to polarize its population: from amending the electoral law to courting the most conservative movements in Turkish society.

In order to neutralize any danger, the attorney general has also submitted a request for the closure of the Democratic Party of the Peoples (HDP), pro-Kurdish and left-wing, the third political force in the country. The decision is now before the Constitutional Court, which will be called to speak on the case of Ömer Faruk Gergerlioğlu, one of the most prestigious human rights activists in the country who attempted the 2016 coup. If the HDP were to be shut down, it would be the eighth pro-Kurdish party to be banned for its alleged involvement in “terrorist” activities.

Luca Giulini

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