Parallels between Turkey's new economic team and an old drama

Ali Rıza Güngen

Lucille Fletcher's 1943 radio play, “Sorry, Wrong Number,” begins with the character Mrs. Stevenson’s efforts to reach her husband by phone. Mrs. Fletcher is portrayed as someone living with constant anxiety who can’t understand what is going on around her because she only focuses on herself. Tired of hearing the busy signal every time she dials, Mrs. Stevenson calls the operator and asks for help. The operator accidentally connects her to another phone conversation. Mrs. Stevenson overhears two men talking; a killer named George is given instructions to kill a woman bloodlessly and quickly. Instructions are given for the jewels in the house to also be stolen so that it will look like a robbery.

Mrs. Stevenson then calls the operator again after she hears the conversation. She realizes she cannot actually find out who the callers are and calls the police. Even though she tries to explain the situation to the police, the fact that one person is about to be killed does not prompt the police to act. Whatever she remembers from the conversation does not help in identifying the callers nor the address. The police chief is more interested in the food in front of him than listening carefully to Mrs. Stevenson. He tries to explain to her that unless the person to be killed is herself, he cannot do anything. This thought bothers Mrs. Stevenson. How did the discussion come to this if the point is to prevent a murder? She has been sick in bed for years. It is because of her devoted husband that she has survived for so many years.

Our heroine cannot reach her husband. She is now at the point where she is concerned about her mental health. She calls the hospital asking for help. However, since there is not enough staff, someone will only be sent to help if a doctor gives approval. Right after this, Mrs. Stevenson recognizes that somebody is in the house. She tries to reach the police in panic. George, the would-be-killer, has been sent to the house on the instructions of Mrs. Stevenson’s husband, who she fully trusts and has no doubt that he would always be with her. George finishes the job given to him. When the police department picks up the phone, it is George, not Mrs. Stevenson, on the other end of the phone. The killer says, “Sorry, wrong number,” and puts the handset back in its place. 

This radio play was on for years; film adaptations of it were made. Its success was due to its suspense and tension, but also due to how the events of the play developed in a way that seemed both inevitable and surprising at the same time.

Is this new and normal? 

This long introduction is relevant to our sense of surprise at the developments regarding Turkey’s economy. After a foreign exchange crisis, the country’s Treasury and Finance Minister resigned on the evening of November 8 through a cryptic note on Instagram. Due to the silence of the media, which is under the control of the Erdoğan administration, nobody was able to understand what was going on for an entire day. 

On Nov. 7, Naci Ağbal was appointed as the Governor of the Central Bank; after the resignation of the finance minister, Lütfi Elvan was appointed the new Minister of Treasury and Finance. After this, the Banking Regulation and Supervision Agency (BDDK) eased swap limits. While the Turkish lira quickly gained value, expectations grew that the bank’s interest policy would be raised on November 19 and Turkey would take “normalization” steps. 

However, the build-up of these expectations is based on an inaccurate understanding of  rationality. What is expected from the “New Economy Management” group is that they take into consideration the criticisms that have frequently been voiced by neoliberal economists, capital groups and opposition parties over the past four to five years. The new team would do this to achieve stabilization and decrease Turkey’s risk premium. Those who are concerned about the economy are advised to think in a certain way: “The state’s elite, who have devoted themselves to you, are able to see what is rational, and they will do whatever is required.” 

It seems as though the fact that Ağbal was the Head of Strategy and Budget Directorate between 2018 and 2020 and that Elvan was the Minister of Development between 2019 and 2018 has been forgotten. It also looks as though it is not recognized that the President’s parliamentary speech on November 11, in which he mentioned “long-term savings and investments,” and that no concessions would be made regarding “the rules of the free market economy,” was only a repetition of the New Economy Program that has been published many times in the last three years. 

Has nothing changed? Of course, the tone of the rhetoric has changed. Most probably, assurances were given again to many investors that interest rates would not be under pressure. The discourse of the opposition advocating “regular” neoliberalism was snatched from them in a matter of days. 

However, the steps taken and the crisis itself are quite significant. The real reason behind the lira gaining value at the beginning of November is that a profitable window has been opened for international investors, as was also seen in the period following August 2018. Exchange rate crises provide a very profitable business opportunity for international funds that make double income when they invest in the financial entities of the country as the local currencies gain real value compared to the previous period. As a consequence, we currently are seeing that the Turkish lira is gaining value, as it did in the last three months of 2018. 

Previous developments should not be forgotten: in July and August, Turkey’s central government borrowed up to one tenth of its debt stock in foreign currency. New fuel was added to the recirculation mechanism, which was used to curb the loss in exchange rates. Albayrak implied that they would curb the loss of value of the lira, but at the beginning of August he started repeating his wish for a competitive exchange rate, which he had emphasized before. The loss continued. These developments were accompanied by a rapid unofficial increase in interest rates. From mid-July to mid-November, the weighted average funding cost increased by 700 basis points. 

In short, it is necessary to focus on what has been done, not on the people and on the rhetoric, and to pay attention to the positions taken by various financial actors.

The Turkish lira is gaining value not because Albayrak has resigned, but because of the dramatic loss of value in previous months and the fact that interest rates have already risen, thus creating a new environment.

The interest rates have been rising for the last four months, but not because the new Central Bank Governor wished so. It is not because of the strong planning background of the new Treasure and Finance Minister, it is because an increase in interest rates have been forecasted now and the tempo of the increase in credit volume is slowing down again. It is not because the “elite” of the state have pondered and opted for what is “rational,” but because the limit has been met for pandemic-era interventions.

The polished scenario is that the recovery, which was projected to take place in 2020 but did not happen due to the pandemic, will begin much more strongly in the coming months — not to mention that this is a very effective rhetoric for silencing the opposition.

The game continues 

The “new” economy management team is presented as people who are masters of the market. It is implied that the new staff will pursue what was not achieved because of the referendum in 2017 because of the elections and the global financial circumstances in 2018, and because of the pandemic in 2020. However, the discourse about building trust and credibility is not any different than the statements made by Erdoğan and Albayrak during the crisis and before the crisis. At each setback, they resort to the same crisis management techniques that look as though they are necessary to consolidate the base Erdoğan takes his support from. 

The anxious search for a way out and the stress of the public are quite understandable. However, the expectation created, in addition to the regular neoliberalism prescription written for every problem, invites those who are struggling due to the crisis to act like Mrs. Stevenson, who always trusted her husband no matter what, without understanding the past and what is going on.

A new recovery and collapse cycle is within the realm of possibility. However, change in this sense will not defeat the issues at hand. The expectation that the sick Turkish economy will survive thanks to a “rational” and “new” team doesn’t hold up. However, that this expectation is groundless doesn’t change the fact that an emphasis on building trust and bringing in a new team is politically effective.