It was a rather eventful and tumultuous weekend for Turkey’s economic management as it brought the firing of the central bank (TCMB) governor and the resignation of the finance minister. The former was dealt with the brutal efficiency of a presidential decree, and a new governor was quickly appointed. The latter remains a mystery. It took a few hours to get official confirmations that the unusual resignation statement posted on Instagram was true and not some hackers’ work. It is also unknown why President Recep Tayyip’s Erdogan son-in-law suddenly decided to step down as finance minister. More puzzlingly, almost 24 hours later, the presidential palace has still not commented on the issue. Unsurprisingly, Turkey’s state-owned and pro-government media have barely reported the news of the resignation.
It remains unclear whether President Erdogan will accept the resignation, sanctioning a politically embarrassing departure for him, given the unprecedented power he granted to the son-in-law. Solving the family dispute will not be easy but finding a credible candidate for the portfolio will be even harder, if not impossible. If Erdogan decides to pick somebody from the AKP ranks, the small poll of candidates is composed of some old faces, with limited or no political standing, whose main credential for the job is their loyalty to the president. A less likely option is an “external” candidate given Erdogan’s known reluctance to appoint “independent” figures to powerful positions. Not to mention that anybody contemplating to take the job would need to contend with Erdogan’s constant interference.
The bottom line is that the idea that the president’s son-in-law’s departure will somehow lead to a significant overhaul in Turkish economic policy is unrealistic unless Erdogan decides to embrace such an overhaul. It is not about individuals; it is about President Tayyip Erdogan. Else is mainly choreography – just as the likely rate hike that Erdogan will greenlight ahead of the monetary policy committee’s 19 November meeting. As seen in the past, a rate hike does not certainly mean that a return to economic orthodoxy is next.