Draft election program of the Justice and Development Party (AKP). Recep Tayyip Erdogan marks a return to a more “orthodox” free-market economic policy, according to four sources cited by Reuters.

His presidential and parliamentary elections Turkey scheduled for May 14, and polls show Erdogan faces his biggest election challenge in his two decades in power.

The Turkish president’s popularity has declined largely due to declining living standards as a result of the devaluation of the Turkish lira as Ankara adopted a controversial economic model based on low interest rates.

In 2021, against the background of high inflation, the process of lowering interest rates began, contrary to the traditional monetary policy and the global trend of rising borrowing costs. Turkey’s central bank cut its benchmark interest rate by 500 basis points in 2021 and 2022 in response to Erdogan’s calls for rate cuts.

Combined with soaring energy and food prices following Russia’s invasion of Ukraine in February 2022, inflation in Turkey topped 85% last year.

The financial situation was also worsened by a massive earthquake in southeastern Turkey on February 6, which left millions homeless and caused billions of dollars in damage.

“AKP returns to its roots”

According to sources familiar with the project, the AKP’s election manifesto will not mention Ankara’s recent economic policies, but will adopt a more orthodox approach. The sources, who asked not to be named because they are not authorized to speak on the matter, also said that Erdogan wants to give former Deputy Prime Minister and Finance Minister Mehmet Simsek, who is highly regarded in international circles, the main role in managing the economy.

Inflation hit a 24-year high, surpassing 85% in October, also helped by a succession of “unorthodox” interest rate cuts that caused the pound to collapse in late 2021. Since August, the currency has stabilized due to the intervention of the authorities in the foreign exchange market.

“The approach to the economy is similar to that adopted by the AKP in its 2002 election manifesto. In other words, the SEP is returning to its roots,” a government official said of the project, adding that the project is in its final stages. stages. .

The AKP declined to comment on the matter, and Simsek was unavailable for comment.

The key role of Mehmet Simsek

A senior AKP official said the manifesto does not mention a new economic model, but highlights principles the party has previously supported, such as fighting inflation, public sector accountability and transparency in tenders.

He added that Erdogan himself, who has so far made no objections, will have to approve the manifesto. “If he finally accepts it, it will lead to radical changes both in the government and in the management of the economy,” he said.

One of Erdogan’s goals is to use Simsek. “All of Turkey knows Simsek’s approach and success. If he takes office, a radical change in economic policy is inevitable. Bureaucrats and members of the government will work harmoniously with him, ”said the party functionary.

Another source with knowledge of the matter said that in addition to the AKP, three more opposition coalition parties want to work with Simsek, who was deputy prime minister until 2018, when the position was abolished.

Four sources in the opposition alliance previously told Reuters they plan to appoint former Deputy Prime Minister Ali Babacan as vice president for economics if they win the presidential election. Babajan, like Simsek, is respected by foreign investors.

^{Source: APE-MEB, Reuters}