His departure and a change at the central bank bring some relief to the sagging currency.
FOR SOMEONE thought to be the second most powerful person in Turkey and a possible successor to President Recep Tayyip Erdogan, it was an unseemly exit. In a statement posted on Instagram on November 8th and riddled with grammatical mistakes Berat Albayrak, the president’s son-in-law, said he was resigning as finance minister and leaving politics. A few officials confirmed the news anonymously, but the government has not yet made any formal announcement. True to form, most news channels and major newspapers have averted their gaze, seemingly awaiting instructions from Mr Erdogan’s flacks on whether and how to report the story.
Mr Albayrak, popularly referred to as the damat (Turkish for son-in-law), said he was stepping down for unspecified health reasons. Insiders said he was doing so over a feud with the new governor of the central bank, Naci Agbal, who had criticised the minister’s record. Mr Agbal was appointed to his post only a couple of days earlier, after Mr Erdogan defenestrated his predecessor, Murat Uysal, without giving an explanation. (Mr Albayrak was reportedly not briefed on the decision.) Mr Uysal is the second head of the central bank to be sacked in as many years.
Mr Albayrak’s management of the economy has been even worse than his grammar. The day after he took over as minister in 2018, the lira plummeted by 4% against the dollar. It continued to fall as Mr Albayrak and his father-in-law forced the banks to keep borrowing rates low. Under pressure from Mr Albayrak the central bank compensated by selling off its dollar reserves. Having depleted them (more than $100bn appears to have been squandered), the bank threw in the towel earlier this summer. In the two years between the damat’s surprise appointment and his surprise resignation, the lira has lost 46% of its dollar value, eating away at Turks’ buying power and pushing up inflation. Mr Albayrak made a habit of laughing off concerns about the currency’s meltdown. “For me, the exchange rates are not important at all,” he told reporters in September. “I don’t look at that.”
There is hope in Turkey and elsewhere that the departures of Mr Albayrak and Mr Uysal may signal a return to more orthodox financial and monetary policy, which could shield the lira from further pressure and the fallout from the American elections. With Joe Biden on his way to the White House, America is more likely to slap Turkey with sanctions over its purchase of a Russian defence system, something President Donald Trump was reluctant to do. Mr Trump has also been sympathetic to Mr Erdogan’s attempts to stifle an investigation by a New York court into a Turkish state bank accused of circumventing American sanctions against Iran. (Quite why is unclear.) The indictment in the case refers to Mr Albayrak, but prosecutors have not pressed charges.
Mr Albayrak was not only finance minister but viewed by many observers as Mr Erdogan’s possible successor as leader of the ruling Justice and Development (AK) party. He had the president’s ear, a power base within AK, and his own propaganda machine. He and another influential (but now also downgraded) damat, Jared Kushner, had established a key back-channel between Mr Erdogan and Mr Trump. Mr Albayrak could also count on the support of his elder brother, Serhat Albayrak, who runs several pro-government TV channels and newspapers. But he also fell foul of a number of AK bigwigs, who saw him as an opportunist who owed his career to his marriage to Mr Erdogan’s daughter. According to one MP, a group of 30 to 40 parliamentarians recently threatened to defect to the opposition if Mr Albayrak did not resign.
The damat was even less popular among normal Turks. In a poll published in August, only 6% saw him as a suitable successor to Mr Erdogan, compared with 38% for Suleyman Soylu, the hardline interior minister. Mr Soylu had handed in his resignation earlier this year, after a botched covid-19 curfew, only for his many supporters to persuade Mr Erdogan to keep him on board. Mr Albayrak’s announcement seems to have had the opposite effect. Less than a day after his bizarre resignation, more than 730,000 users had “liked” his Instagram post. The lira feels the same way. The currency strengthened by about 5% against the dollar on November 9th, its best showing for years.