One thing that has characterized Turkey’s financial crisis so far is the seeming lack of government response. The central bank has moved to ensure liquidity for the banking system, but the big steps that Ankara ordinarily would have ordinarily been expected to take, such as in interest rate hike or capital controls, have not even been hinted at. Assuring statements by the country’s leaders have also been in short supply.
Yet the government has been hard at work and President Recep Tayyip Erdogan has done his fair share of talking.
Among other things, the Istanbul prosecutors office has opened an investigation into social media accounts that spoke about lira in what it termed a “provocative way.” The government has ordered a bizarre boycott of imported American electronics, while leading companies like Turkish Airlines and Türk Telekom have vowed not to advertise in the U.S. media. Erdogan, meanwhile, is urging Turks to sell their gold and dollars and increase imports.
If all of this seems to be irrelevant to Turkey’s very real problems of a sinking lira and excessive debt, just listen to Erdogan himself and you will understand the logic.
“There are various campaigns being carried out. Don’t heed them,” Erdogan told a rally of his supporters last Friday.
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“Don’t forget, if they have their dollars, we have our people, our God.” In other words, Turkey isn’t suffering from bad policies or changing global economic conditions. It is fighting enemies conspiring to ruin the country.
This kind of talk isn’t new to the Turkish leader. He had, for instance, the same response when the international credit rating agencies downgraded Turkish debt to junk status.
“You’re a firm in such an important position and you take steps saying ‘How do I stain Turkey? How do I put them in a tough position?’" he said, railing against Moody’s in June as if the agency was out to get Turkey, rather than because Turkey’s number looked so bad.
Erdogan’s paranoid approach to economics isn’t unique. Iran’s leaders, who are facing the consequences of an American boycott as well as decades of shambolic policies have also adopted the strategy of blaming enemies inside and outside Iran and sickening the legal system. Over the weekend Reuters reported that new Islamic revolutionary courts will be set up for two years to impose stiff sentences on Iranians “disrupting and corrupting the economy." The right to appeal will be limited, judiciary chief Amoli Larijani said in a letter read on state television.
Other countries in economic crisis have resorted to similar strategies. Vladimir Putin has framed Russia’s economic woes as a war being fought against the country by the West. Venezuela’s Nicolas Maduro has down the same, as did Zimbabwe’s Robert Mugabe in his day.
Of course, United States and/or European sanctions and/or tariffs also contributed all of these countries’ problems. But their role was marginal compared to how much damage these countries’ leaders did themselves.
It’s easy to dismiss the paranoia and talk about “economic war” as a cynical campaign by these countries’ leaders to deflect blame away from themselves and on to a fictional someone else who very handily can never be apprehended and thereby solve the crisis. The enemy in this “economic warfare” serves the role of Emmanuel Goldstein in Orwell’s “1984,” the every-plotting, ever-elusive enemy of the people and all-purpose scapegoat.
Surprisingly, this paranoid approach to economic policy often works, in terms of convincing the public. The nuts and bolts of economics are a mystery to even the most intelligent and informed citizens, and the sudden onset of a crisis when everything has seemed to be just fine naturally arouses paranoid instincts. Why now? Someone must have done something to cause it.
Worldview of conspiracy
But I think it would be wrong to dismiss the policy of paranoia as cheap propaganda. Authoritarian regimes, like the ones in Turkey, Iran, Russia and Venezuela, are in variably obsessed with enemies or conspiracies, whether they are political rivals, foreign powers, or minorities at home. It’s not a game: it reflects the worldview of leaders who don’t believe in sharing power, respecting other points of view, or in transparent institutions.
That goes a long way to explaining why Erdogan, watching Turkey drowning in a major financial crisis, can’t bring himself to throw a lifeline. Instead, he draws on the bank of unseen enemies and calls on loyal Turks to go into battle to fight the enemy by stepping up exports, changing their dollars into liras and boycotting iPhones.
Erdogan’s paranoia combined with his vast powers over the government is a big danger to Turkey, unless he (uncharacteristically) decides to cede power of economic policy.
Economic warfare won’t solve Turkey’s problems and, in any case, is a lost cause if Turkey plans to go up against the U.S. Counting on Turks to patriotically buy the liras that they had been dumping until now for perfectly good economic reasons is no more promising. Setting up your own credit rating agency, which Erdogan threatened to do when he blew up at Moody’s, isn’t going to enhance the country’s credibility with investors.
Turkey’s ability to grapple with its problems will require not only adopting the right policies but restoring the democratic institutions that have eroded badly in the Erdogan era. If it doesn't, Turkey will find itself in chronic decline, like the economies run by the authoritarian regimes of Iran, Russia and Venezuela.