Can the "Stretch your legs along the length of the blanket" texture fail?

Recently, the focus has been on Mehmet Shimshek, who has been appointed as the Minister of Treasury and Finance after a five-year gap, as discussions arise about the members of the upcoming government led by President Erdoğan. While the change in the president of the central bank was anticipated, the unexpected claims surrounding Hafize Gaye Erkan, who was brought from the United States, have drawn attention.

The situation of Hafize Gaye Erkan, who is assumed to be Elvira Nabiullina and now heads the Central Bank of Turkey, needs to be analyzed alongside the steps that Shimshek will take. During the election campaign, Tayyip Erdoğan criticized the opposition candidate by questioning the logic of their association with London usurers. On the other hand, Şimşek, who is trusted by international financial institutions, claimed that he can borrow money from these "usurers" without any issues. The question arises whether Şimşek has alternatives other than seeking funds from these lenders and what projects will be proposed to international financial institutions for borrowing.

Looking back at the past, when World Bank Vice-President Kemal Dervis was appointed as the fully authorized Minister of State for the economy in March 2001, it became evident that the government had numerous resources to secure loans and overcome the crisis. However, over the course of 20 years, the AKP government sold off these assets and generated $70 billion in revenue. It is worth noting that the State Asset Fund, controlled by President Erdoğan since 2018, has not obtained any loans from abroad thus far.

Under the leadership of Shimshek, one of the initial steps taken was devaluing the national currency by approximately 20%. Additionally, the price of tea, a crucial consumer good in Turkey, was increased by 50% (with Çaykur, the tea company, also falling under the Asset FundShimshek's call for "time and patience" from local and foreign investors to support the country's projects raises concerns. Moreover, the hope of attracting wealthy individuals from Arab, Iranian, and Afghan countries to invest in Turkish real estate is seen as an attempt to follow the path of previous politicians.

As someone who has closely followed the Turkish economy since the crisis of January 1994, when the chiller-Karayalçin coalition implemented an economic program on April 5, 1994, I can say that this crisis differs from previous ones. One significant reason lies in the conditions set by international financial institutions when Turkey sought loans in the mid-1980s, which included minimizing government spending.

During the first two terms of the AKP, between 2003 and 2011, when Kemal Dervis prepared the economic program, the government demonstrated satisfactory financial discipline. However, in the past five years, financial discipline has vanished, and the Central Bank's reserves were depleted by implementing policies contradictory to economic theories in Turkey. The Treasury even resorted to selling its gold reserves. Despite warnings from international credit rating agencies about excessive government spending, the leadership remained oblivious.

Considering the current situation, the pressing question is whether price increases and tax hikes will suffice to cover the astronomical costs incurred by the state. What alternative projects does Shimshek have apart from these measures to address the system's stagnation amid low interest rates, high devaluation, and inflation?

If foreign analysis agencies suggest a sudden 4-5 fold increase in central bank interest rates and encourage Şimşek to do so, will President Erdoğan, who holds contrary views, accept this attempt?

The main issue plaguing the Turkish economy is that the population desires a luxurious lifestyle without considering the consequences. With a six-fold difference in national income per capita compared to the United States and a twenty-fold difference compared to Norway, even the wealth from Saudi Arabia's oil or Qatar's liquefied gas cannot finance this desire. If the appetite for luxury infects the community from its leaders, combating inflation and devaluation becomes an insurmountable challenge.

During the 1990s, when Turkey experienced severe inflation and devaluation, I came across the memoirs of former Israeli Prime Minister Shimon Peres. He mentioned that his wife initially opposed the austerity policies they implemented to rapidly reduce inflation, which was at 600%. However, they persisted with these policies and succeeded in overcoming inflation. This highlights the influence state managers have on society through their behavior.

Ahmet Necdet Sezer, the former president of Turkey, is deeply disliked by Turkish political Islamists and subject to extensive criticism. For his son's wedding at the Çankaya residence, he paid for the electricity and water expenses out of his own pocket. Moreover, he returned the stipulated $30 million to the budget, refusing to spend it.

Turkey, a country inclined toward a luxurious lifestyle, now teeters on the brink of insolvency.