Why and how Turkish finance minister resigned

The breaking news that Treasury and Finance Minister Berat Albayrak resigned hit the agenda of politics and the economy on the evening of Nov. 8.

As of early Nov. 9 when this article was penned, there was still no statement from President Tayyip Erdoğan or his Directorate of Communications. State broadcaster TRT and Hürriyet, Sabah and Yeni Şafak, the newspapers close to the government, did not cover it yet. But it is obvious that this is not like the resignation of Interior Minister Süleyman Soylu, who was brought back only to return to his post stronger. Whether Albayrak, Erdoğan’s son-in-law, is accepted or he is persuaded to stay in place, the damage is done.

Albayrak was a partner to Erdoğan’s all mistakes in economy administration but he was also a scapegoat who shielded the reactions. As of Nov. 9, the Turkish economy operates under a situation that the treasury and finance minister said he couldn’t sustain. We are yet to see whether the markets will interpret the situation as “Albayrak is gone at last, and Naci Ağbal has become the Central Bank governor” or “the Treasury and Finance Minister has gone following the resignation of the Central Bank governor.”

First, let’s look at how things evolved until the Nov. 8 resignation.

The road to resignation

Joe Biden was named president-elect on Nov. 7. This means that the shield that Donald Trump has offered Turkey in key political issues such as the U.S. embargo against Ankara’s purchase of Russian S-400 missile systems or the case into Turkey’s state-run Halkbank over violating the sanctions on Iran will be removed after a while. It was written in the American media that Erdoğan’s son-in-law Albayrak’s special liaison with Trump’s son-in-law (and his Middle East special representative) Jared Kushner was effective in providing such protection.

Political rumors also said that Albayrak had agreed with then-Central Bank Governor Murat Uysal ahead of the latest monetary policy meeting on Oct. 22 to increase the key interest rate in a bid to confront the possible damage with a higher Turkish Lira value against the U.S. dollar. However, Erdoğan allegedly stepped in at the last minute and the Bank decided to keep the rate unchanged.

Early on Nov. 8, as the world was focused on Biden’s election and Trump’s departure, Turkey was also discussing Erdoğan’s decision to replace Central Bank Governor Murat Uysal with Naci Ağbal, the strategy and budget president of the Presidency. Uysal had said on Oct. 28 that the Turkish Lira was “too valueless” and that the markets did not trust the Central Bank, and he was removed from the post on Oct. 6.

War of ‘secret statements‘

It is no secret that Albayrak cannot get along with Uysal’s successor Ağbal. The main opposition Republican People’s Party (CHP) said Ağbal was not eligible for the seat in terms of independency since he is a former lawmaker and minister from the ruling Justice and Development Party ranks, but for Erdoğan it was important that he was also internationally recognized as the best economist in his team.

When Ağbal took the helm early on Nov 7, the newspapers had reported on Albayrak’s remarks at a presentation to the AKP lawmakers on “global developments” in the economy. “If we want it, we can push down the value of the foreign currency (mainly the U.S. dollar and the euro against the lira). Increase the interest rate, and the (value of) the foreing currencies will fall. But our concern is not that,” he said. Albayrak was implying that the president did not want him to take the step to increase the value of the lira.

Following that, Bülent Arınç, a former AKP heavy gun and a current member of the Presidential High Advisory Board that held its latest meeting on Nov. 4 under Erdoğan, said he objected to Albayrak’s claim that the problems in the economy were “psychological” and that he was worried about a crisis. The internal tensions became visible from the outside.

In the light of all these developments, Erdoğan’s remarks on Oct. 19 that “The media cannot act as our voice despite all the opportunities they have” gained a different meaning. Serhat Albayrak, the brother of Berat Albayrak, heads daily Sabah, the flagship of the AKP media.

Erdoğan’s delay

While most meetings were canceled due to the coronavirus Covid-19 outbreak, Erdoğan has kept addressing the provincial congresses of his party, and the broadcasters under the control of the government cover those speeches live and in full. On Nov. 8, Erdoğan was to speak at the AKP’s provincial congress in Kocaeli. And there is the news that Erdoğan left his house late and that he went to congress with a two-hour delay.

In his speech, Erdoğan did not speak of Biden’s election or the situation in the economy. He rather highlighted “how the CHP collapsed” at the Oct. 30 earthquake in İzmir, a rather irrelevant issue. Meanwhile, the news spread that Erdoğan asked Interior Minister Süleyman Soylu to investigate the claim that some 30-40 AKP lawmakers would resign and transfer to DEVA and the Future Party – the two new political parties founded by former AKP heavy guns- if Albayrak remains in office.

A few hours after these developments, the news of Albayrak’s resignation hit on the agenda, unusually, via Instagram.

Hours later, Mehmet Muş, a deputy chair of the AKP’s group in parliament, confirmed the resignation by saying that he wished the president would not accept it. After that, rumors of a cabinet shift emerged. And yet another rumor that Albayrak had been giving incomplete information to Erdoğan about the Central Bank for a while… Now eyes are on how the markets will react.

How to interpret it

The problem in the economy administration can no longer be hidden. It was seen that Albayrak’s step down did not create the impact of Soylu’s resignation move. When Soylu announced his resignation, within fifteen minutes his supporters began to hit the streets. The letter of resignation published in the name of Albayrak on social media received 600.000 “likes” within a few hours. His defenders were limited to a few officials in his entourage and a few journalists who can still write columns here and there thanks to him.

The resignation was a sigh of relief for those who did not like Albayrak, the “groom,” but could not express it because of fear, but this time the political damage is in Erdogan’s family. With his resignation, Albayrak declared that he was not responsible for what would happen in the economy from now on, concluding that “May God bless our end”. Even if he remains in his post it will be considered that he is not the source of all problems. Political rumors also say that he has complained to his close circle, saying “I wish I had remained as the energy minister and never got into this job.”

It is obvious that the economy is not managed well. Now, the psychological operation teams of the AKP government will step in and claim that even this resignation that Erdoğan was unaware of is part of a “great strategy”.
The financial crisis is gradually turning into an economic crisis, and it gives signs of turning into a political crisis. It has nowhere to hide.