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Battered Turkish Economy Puts a Powerful Erdogan to the Test

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ISTANBUL – Affected by the restrictions on his tobacco shop, Ozgur Akbas helped organize a demonstration in Istanbul last month to protest the rules he called unfair and imposed on traders during the pandemic.

“There are a lot of friends who have made,” he said in an interview. “And some are on the verge of suicide.”

The Turks struggled with a falling currency and double-digit inflation for two years when the pandemic broke out in March, greatly worsening the country’s deep recession. Nine months later, when a second wave of the virus swept through Turkey, there are signs that a significant segment of the population is overwhelmed by debt and is increasingly starving.

MetroPoll Research, a respected polling organization, found in a recent survey that 25 percent of respondents said they couldn’t meet their basic needs. Mr Akbas said he sees it with his customers every day.

“People are at the point of explosion,” he said.

For President Recep Tayyip Erdogan, who had drawn attention to himself this year with an aggressive foreign policy and military interventions at home and abroad, things suddenly came to a head in November.

The government admitted it had underestimated the scale of the Turkish coronavirus outbreak by not recording asymptomatic cases, and new data showed record rates of infection in the country.

The Turkish lira was hit by a record devaluation – a fall of more than 30 percent against the dollar this year – and foreign exchange reserves were depleted. Coupled with double-digit inflation, the country is now facing a balance of payments crisis, Moody’s Investor Service said recently.

The crisis comes as Mr Erdogan will lose a powerful ally when President Trump leaves office next month. Turkey is already facing sanctions from the United States for the purchase of a Russian anti-missile defense system and the European Union for gas drilling in waters claimed by Cyprus. Mr. Trump was instrumental in halting Washington sanctions by this month.

Mr. Erdogan was slow in congratulating President-elect Joseph R. Biden Jr. on his victory. Analysts believe that a Biden government will tighten Mr Erdogan’s moving balance sheet on human rights and democratic standards.

To cope with the changing Turkish economy, Mr Erdogan recently moved with a ruthlessness that is usually carefully hidden. He appointed a new head of the central bank, and when Mr Erdogan’s finance minister, who is also his son-in-law and heir, resigned, the president surprised many by accepting the resignation and replacing him.

Then the president promised economic and judicial reforms, and even gave the option to release political prisoners – something some in his own party advocate to improve relations with Europe and the United States.

In mid-December, Mr Erdogan announced a new aid package to surprise small businesses and traders for three months. Last weekend he went to a bakery to do some shopping to help out the dealers.

However, critics have described Mr Erdogan’s various maneuvers as too little, too late.

Former Treasury Secretary Berat Albayrak may have been a convenient scapegoat – little is known about what really happened in the presidential palace – but his dramatic fall from grace and total disappearance from public life suggest a more serious course correction. It seems that the economic crisis and the consequences for Mr Erdogan’s own fate have become primary concerns.

Updated

Apr. 27, 2020 at 1:48 am ET

Mehmet Ali Kulat, who conducts opinion polls for political parties, including Mr Erdogan’s Justice and Development Party, said the president is closely monitoring the polls.

“What he’s paying special attention to is how things affect society,” said Kulat.

Recent opinion polls show that Mr Erdogan’s AK party has fallen to its lowest level in the 19 years in which it was at the forefront of Turkish politics and, according to MetroPoll, is around 30 percent. This figure suggests that the party’s alliance with the Nationalist Movement Party would not secure Mr Erdogan the 50 percent of the vote required to win a presidential election.

“The next elections are not a big deal,” said Asli Aydintasbas, Senior Fellow at the European Council on Foreign Relations. “There’s a good chance he’ll lose if he doesn’t either expand his coalition or manage to reach people who voted for the opposition.”

“His chances of being re-elected are under 50 percent,” she said. “So finally,” she added, the question is, “is he smart enough?”

The MetroPoll poll found that the majority of Mr Erdogan’s supporters and 63 percent of respondents overall believe that Turkey is going in a worse rather than a better direction.

These numbers are confirmed by what aid organizations see on the ground.

Hacer Foggo, founder of the Deep Poverty Network, a group that helps street vendors and informal workers, said she had never seen a plight like this in her nearly 20 years working to tackle urban poverty in Turkey.

When the first lockdown began in March, she received calls from people begging for help with feeding their families. Street vendors and scrap collectors were particularly hard hit.

“When they say there is no food at home, it means there is no food at the neighbour’s either,” she said.

Their network has helped 2,500 families in Istanbul and matched donors with families to help them purchase food and diapers for children. Her voice cracked when she described a mother who said her baby got a size smaller in diapers.

“A baby should be gaining weight, not getting smaller,” said Ms. Foggo. Other women were unable to breastfeed because they lacked food, and more people were forced to look for food that was already scarce in the trash.

“I’m 52 years old and this is the biggest crisis I’ve ever seen,” she said.

The economic problems started before the pandemic, she said, but she blamed local and national governments for lacking a strategy to tackle growing poverty and failing to improve social services.

Indeed, the economic boom came after Mr Erdogan tightened his reins on the country, including the economy, by gaining far-reaching new powers under a new presidential system launched in 2018. International observers cite these changes as the main reason for their concern about the country’s economic collapse.

“Turkey’s weak and deteriorating governance is a major credit weakness that underpinned our decision to downgrade Turkey by several notches since the presidential system was launched in mid-2018,” Moody’s said in a report earlier this month.

Mr Akbas, the trader who runs the tobacco shop, described two elderly customers who came to his store for a day last week in an affluent part of the capital, Ankara, to illustrate how inflation has shot people up.

A woman asked if she could buy a single egg. The second woman, who had become tidy, asked if he had free bread. Stunned, he filled a bag for her.

“Retirees are in a very bad position,” he said. “What I hear from people is, ‘Enough is enough. We made it up to our necks, we can’t make any money, ”and the 70- and 80-year-olds say they will throw themselves on the street.

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