As humbly foreseen in this column, Turkey's charismatic Prime Minister Recep Tayyip Erdoğan won a comfortable victory in the first round of the presidential election last weekend. Having accomplished a long and arduous political journey over the course of the last four decades from local politics to the top political spot, he will oversee the formation of "new Turkey" as president after Aug. 28. But as ever, various political and economic crisis scenarios began to be pumped up from domestic and international sources even before the official result of the election was declared.
Politically, the "crisis lobby" is playing to the hope that there will be an existential crisis within the Justice and Development Party (AK Party) stemming from problems of leadership transition. The outgoing president, Abdullah Gül, is under pressure to start a movement for intra-party opposition and damage the robust political machinery of the AK Party from within. The economic discourse of the "crisis lobby" centers around the idea that, once he is in power, President-elect Erdoğan will resort to populist interventions in economic governance and damage the prudence-based credibility of the institutions led by the Central Bank, which will trigger an economic, and probably later, a political crisis. Yet both the political and economic versions of systemic crisis scenarios are bound to fail.
It is no secret that Erdoğan's brave stance on critical foreign policy issues such as Israeli aggressions in Palestine and military coups in the Middle East, as well as Turkey's ambitious drive to emerge as an autonomous regional power, paved the way for occasional cases of divergence with U.S. and EU policies. This, in turn, seems to activate frequent calls regarding an imminent crisis by certain global actors and their local interlocutors in order to limit Turkey's policy options and personally constrain Erdoğan's critical endeavors. Therefore, it has become normal to hear comments of a potential political crisis in the immediate aftermath of a landslide by the AK Party or prophecies of a looming economic crisis when Turkey's balance of payments and debt configurations are improving.
In the final episode of the crisis mongering saga, credit rating agencies Moody's and Fitch apparently tried to intervene in the political process leading to and following the presidential election. Moody's, which has been excessively vigorous in applying its own evaluation criteria to Turkey compared to similar economies, kept the economic public opinion hostage for the week leading up to the elections and later postponed the announcement of its report, creating negative expectations. Likewise, Fitch started a game of blackmail stating that they will lower Turkey's rating if Turkey's Central Bank (TCB) lowers interest rates further, a threat which openly came on top of the politicized interest rate debate in Turkey.
The crux of the matter here is the fact that Erdoğan is a pragmatic but highly rational political leader who constructs his strategies with a long-term perspective. Under his leadership, Turkey established an open, dynamic and competitive market economy that is open to international financial flows and regulated by a prudent, highly-skilled bureaucratic cadre. Unlike the 1980s and 1990s, the current economic governance architecture has high levels of policy autonomy and capacity supported by democratic legitimacy which enables sustained resistance to artificial pressures. In his part, Erdoğan is likely to disappoint the "crisis lobby" once again by maintaining emphasis on prudence and stability in economic management despite possible changes of top-level personnel after the election. As a seasoned actor in Turkish politics, Erdoğan knows all too well that macroeconomic stability is the key to political stability, and he will preserve it with care.
