December 5, 2020

Market and Financial News Aggregator

Erdogan accepts son-in-law’s resignation as finance minister

3 min read

Recep Tayyip Erdogan has accepted his son-in-law’s decision to resign from as Treasury and finance minister following months of mounting criticism over his management of Turkey’s economy and a plunge in the value of the lira.

After more than 24 hours of silence following Berat Albayrak’s announcement, a statement from the Turkish president’s communications directorate said Mr Erdogan had agreed to his “request to be relieved of his duties”.

The statement, which praised Mr Albayrak for ensuring that Turkey had suffered “the minimum amount of damage” during the coronavirus pandemic, did not say whether he would be given another job in government.

The Turkish president appointed Lutfi Elvan, a former deputy prime minister and development minister who studied economics, to replace him as steward of the country’s $740bn economy.

If Mr Albayrak is sidelined from politics it would mark a spectacular fall from grace for the 42-year-old and could trigger a significant shift in the power dynamics within the Turkish state.

The former business executive, who entered parliament in 2015 and joined Mr Erdgoan’s cabinet that year, had gained huge responsibility and influence across government as the Turkish president consolidated his power in recent years. 

Many in Mr Erdogan’s Justice and Development party (AKP) had believed that the 66-year-old Turkish president, who swept to national power in 2002, was grooming his son-in-law as his political heir.

Yet tensions within the AKP over the state of the nation’s economy — and a slide in the lira that had seen the currency depreciate as much as 30 per cent against the dollar this year — appear to have caused a rupture within Turkey’s most powerful dynasty.

While Mr Albayrak cited his health as the reason for his stepping down, his resignation announcement came a day after the Turkish president sacked the governor of the central bank and replaced him with a critic of his son-in-law’s economic policies.

In his resignation statement, Mr Albayrak alluded to conflict within the government and made only a cursory reference to his father-in-law, whom he did not thank.

The country’s most senior economic official had faced growing criticism from the Turkish opposition and from within the AKP.

Under his direction, the central bank had burnt through $140bn in an attempt to support the Turkish lira over the past two years, according to a Goldman Sachs estimate. The currency intervention, which has taken a heavy toll on Turkey’s foreign exchange reserves, failed to prevent the lira’s decline. Prior to Mr Albayrak’s resignation, it had tumbled through a succession of record lows against the dollar — the second sharp depreciation in two years. 

The weak currency has fuelled double-digit inflation, eroded living standards and placed strain on Turkish corporates burdened with foreign currency debt, as well as the banks that lent them money.

Mr Albayrak continued to insist in recent weeks that the economy was outperforming those of many other countries amid the coronavirus pandemic, and that the weaker exchange rate would make Turkey more competitive. He repeated that message in a meeting with AKP members of parliament last week, according to Turkish media reports.

Bulent Arinc, one of the few AKP founders to remain in the party, broke cover on Saturday with a rare public rebuke of Mr Albayrak from a serving ruling party member. “There are absolutely problems in the economy,” he said, adding that he had objected to the finance minister’s claims to the contrary. 

Following Mr Albayrak’s resignation announcement, the Turkish lira enjoyed its strongest rally in more than two years. 

As well as running the nation’s economy, Mr Albayrak had built up influence across government, within the ruling party and in the judiciary, according to current and former ruling party officials.

His elder brother, Serhat, heads an important media group and also holds sway over the entire network of pro-AKP newspapers and broadcasters that have come to dominate the Turkish news landscape.

Additional reporting by Funja Guler in Ankara

2020-11-10 01:51:46

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