Erdogan’s new cabinet should improve ties with the west

Surprising many, he retained only two ministers from the previous administration, choosing to shake things up in what seemed to be a departure from his usual approach.

As soon as Erdogan announced his election victory, he launched his party’s campaign for the municipal elections scheduled for next March. The Justice and Development Party (AKP) has set its sights on regaining control over major municipalities, especially Istanbul and Ankara, which were lost in the 2019 elections.

To achieve this ambitious goal, Erdogan must deliver on his campaign promises, with the most pressing issue being the current economic crisis.

Over the past five years, the Turkish lira has lost a staggering 80 percent of its value, while in October, the country experienced its highest inflation rate in a quarter of a century.

To make matters worse, Turkiye’s foreign currency reserves have been steadily depleting, with $26 billion expended this year alone to support the struggling lira and finance the country’s substantial current account deficit.

This dire economic situation highlights the crucial role of Erdogan’s new treasury minister, who will be tasked with navigating one of the most challenging financial crises in Turkiye’s history.

The British banker and former Wall Street exec

The appointment of Mehmet Simsek, the former Minister of Economy, as treasury minister highlights Erdogan’s attempt to improve relations with the west. Simsek’s impressive background reveals his ties to western institutions.

Having studied at the University of Exeter in the UK and possessing British citizenship, he brings a unique perspective to the table. His previous roles as an economist at the US Embassy in Ankara, equity analyst at UBS, economic advisor at Deutsche Securities, and his tenure at Merrill Lynch, one of the world’s largest wealth management firms, have equipped him with invaluable experience.

The appointment of Simsek as Minister of the Treasury reflects two trends. The first is a return to more conventional economic policies after a long period of Erdogan’s unconventional approach.

Contrary to most economists, Erdogan believes that high-interest rates stimulate inflation. As a result, his administration reduced interest rates from 19 percent to 8.5 percent in 2021. This caused the runaway inflation in the past two years Erdogan had sought to avoid.

It is expected that one of Simsek’s first decisions will be to reverse that policy. Furthermore, Simsek has emphasized the need for decision-making autonomy, highlighting his intention to exercise freedom in his new role.

Second, Simsek’s appointment carries broader implications for Ankara’s relationship with the west. Seen as someone with western sensibilities, his presence may help rekindle foreign investment in the country. After all, who better than a British banker to engage with western institutions? It was noteworthy that he first chose to tweet in English instead of Turkish, upon assuming his position.

Considering Simsek’s past experiences and the latitude given to him, there is potential for improved economic ties with the west. This sentiment is reinforced by the appointment of Hafize Gaye Erkan as governor of the Central Bank, making her the first woman to hold this esteemed position.

With her background at Goldman Sachs, one of the largest investment banks in the world, and at the American First Republic Bank, the financial sector in Turkiye is now being led by a British banker and a former Wall Street executive, two personalities with the expertise and experience favored by western institutions.

Improving relations with West Asia and the west

Erdogan’s selection of new ministers for foreign affairs, defense, and interior came as a surprising twist, deviating from the expectations that the previous ministers would retain in their positions.

Hakan Fidan, the Director of Intelligence, was chosen as Minister of Foreign Affairs, while Yashar Guler, Chief of the General Staff of the Army, became Minister of Defense, and Ali Yerlikaya, the governor of Istanbul, assumed the role of Minister of Interior. Ibrahim Kalin, the presidential spokesman, took over Fidan’s position as intelligence chief.

Between 1986 and 2001, Fidan served in the NATO Rapid Intervention Unit and worked in the Rapid Information Collection Branch in Germany. After 15 years in the Turkish Armed Forces, he resigned in 2001 and worked as a political and economic advisor at the Australian Embassy in Ankara.

His tenure as Director of Intelligence since 2010 brought him into contact with the decision-making process on key foreign policy issues, allowing him to gain Erdogan’s trust. Importantly, Fidan played a key role in the purges that followed the failed coup attempt in 2016. He is credited with being the first to uncover the conspiracy.

The deterioration of Turkiye’s relations with a number of West Asian countries over the past years, such as Syria, Egypt, the UAE, and even the occupation state of Israel, has allowed Fidan to lead Turkish foreign policy from behind the scenes.

Ibrahim Kalin’s appointment as Fidan’s replacement signifies a continuation of the institutional changes the latter initiated in the intelligence agency to diminish the army’s influence.

Kalin is a proponent of using the “power of persuasion” rather than hard power or coercion, which is expected to contribute to resolving many issues between Ankara and its neighbors.

He is also an advocate of a larger geopolitical “strategic conversation” with the US. He was one of the main figures working to coordinate Turkish policy with the US, the EU, Russia, and Iran. Kalin’s ability to maintain balanced relationships with these powers positions him well in establishing positive ties. The Fidan-Kalin team is expected to play a major role in the coming period in improving Turkiye’s relations with West Asia and the west.

Incorporating the deep state into the AKP

Regarding the Ministry of Interior, Erdogan’s decision to replace the former minister, Suleyman Soylu, despite his affiliation with the nationalist right that supported Erdogan in the recent elections, indicates a shift away from Soylu’s harsh rhetoric against the west and the US.

In February of this year, Soylu hit out at the US envoy to Turkiye, demanding “take your dirty hands off Turkiye” and accused Washington of meddling in the country’s internal affairs. Viewing Soylu as a potential liability, Erdogan substituted him with Ali Yerlikaya, the governor of Istanbul who has previous experience in governing various Turkish cities.

Yashar Guler, the newly appointed defense minister, has held the position of chief of staff since 2018, playing a crucial role in solidifying Erdogan’s control over the army after the failed coup attempt. With prior experience as Deputy Chief of Communications for NATO Southern Regional Command, Guler maintains good relations with his government colleagues and has established rapport with the west.

Overall, Erdogan’s aim to reduce the political influence of the military has been a long-standing goal, and he has made significant progress in achieving this objective. The inclusion of intelligence and military leadership in the government, along with the appointment of a bureaucrat to head the intelligence apparatus, represents a step towards integrating the deep state into the ruling party.

Erdogan’s choices for ministers aim to mitigate the strain in Turkiye’s relations with the west. In the financial realm, he selected individuals with experience in major western financial institutions, despite their views on resolving the economic crisis, which differed from his own.

For foreign affairs, Erdogan chose Fidan, who effectively shaped Turkish foreign policy behind the scenes. In defense, he appointed someone with NATO experience, while for intelligence, he opted for a proponent of a “geostrategic” dialogue with Washington.

However, the question remains: Will Erdogan’s chosen team succeed in resolving the internal and external challenges facing Turkiye?