Recep Tayyip Erdogan might see a sultan when he looks in the mirror, but he’s no Andrew Jackson—he’s about to lose a bank fight. The Financial Times reports:
President Recep Tayyip Erdogan of Turkey has backed off in his battle with the country’s central bank after weeks in which the Turkish lira has fallen more than 10 per cent against the dollar.
As national authorities across the world seek to respond to the rise in the US currency, Mr Erdogan held what appeared to be a reconciliatory meeting with Erdem Basci, central bank governor, whom he last month called a traitor for not cutting interest rates more aggressively.
While his public reasoning was more than a bit muddled, Erdogan seems to want to keep interest rates low in order to keep a construction-industry bubble inflated. This is not surprising: the building industries have been responsible for a lot of Turkey’s recent economic growth, which has fallen off sharply lately. Erdogan’s fear is that AKP’s support, which was built largely on a record of economic success, might similarly fall off sharply.
Not only did the head of the central bank successfully stand up to the President, but as the FT reports, there was significant disagreement between Erdogan and his hand-picked successor, Prime Minister Davotoglu, on the issue as well. It appears Turkey is not (yet) a one-man state.