Turkey’s New Cabinet

Leaving the cabinet

Prior to the announcement, it had been widely assumed that Suleyman Soylu and Hulusi Akar would retain their positions as Minister of the Interior and Minister of Defence respectively. These two individuals were regarded as the most influential min­isters in the previous cabinet, given their political capital and the importance of their portfolios. Furthermore, given that both posts are crucial for security, it was ex­pected that Erdoğan would prioritise conti­nuity.

The appointment of ministers in these positions came as a surprise and carries significant political implications. Firstly, the ease with which Erdoğan replaced these supposedly powerful figures demonstrates his complete consolidation of power within the political arena. This is particularly notable in the case of Soylu, who was the most popular AKP politician after Erdoğan. There had already been disagreements be­tween Erdoğan and Soylu, who was also locked in a power struggle with Berat Albay­rak – former economy minister, Erdoğan’s son-in-law and once seen his heir apparent.

However, Erdoğan was unable to dismiss Soylu on account of his popularity with the party’s base and, more importantly, his support from Erdoğan’s junior coalition partner, the MHP. The fact that the MHP was unable to resist Soylu’s replacement this time suggests a shift in the balance of power within the ruling coalition. Through this move, Erdoğan underlined his power his vis-à-vis his coalition partners and allies as well as within his own party.

The case of Hulusi Akar is also compelling. Akar served as chief of staff during the failed coup of July 2016. Despite many of his subordinates and close confidants allegedly being involved in the coup, Akar was not punished but instead elevated to the position of defence minister. Under the new presidential system, many powers previously held by the chief of staff were transferred to the Defence Ministry, making the force commanders directly subordinate to the defence minister rather than the chief of staff. Akar also played a significant role in shaping the post-coup military appa­ratus, with influential military figures who disagreed with him being purged or forced into early retirement. Including his tenure as chief of staff, Akar had thus been in con­trol of the Turkish military for the past eight years.

Akar’s unusually long tenure was interpreted in two ways: either as a display of his power and influence, indicating Erdo­ğan’s inability to remove him, or as a demonstration of Erdoğan’s exceptional trust and confidence in him. His removal demonstrates that he was neither as power­ful nor as trusted as previously believed. He was replaced by his chief of staff, possi­bly indicating a new tradition of the chief of staff moving on to become minister of defence.

These two dismissals also have a bearing on scenarios for the post-Erdoğan era, be­cause they were seen as potential successors. Soylu was popular among the AKP base and the wider conservative nationalist camp, while Akar was popular because of his long service as head of the Turkish armed forces and his presumed links with the West. Both of them are out of the game for now.

While these two substitutions were important for the regime’s internal power constellation, they do not entail any change in policy. Yasar Güler, the incoming minis­ter of defence was Akar’s right-hand man for the past six years. His appointment sug­gests that the transformation of Turkish military from a defensive into an interventionist force will continue. Part of the logic behind this transformation is to keep the military busy abroad and limit its influence at home. However, that process may al­ready have gone too far. Akar pursued ambitious political goals and may have overstretched the capabilities of the Turkish military in an apparent attempt to fulfil Erdoğan’s demands and polish his own political pro­file. As its poor response to the 6 February earthquake demonstrated, the military suffers serious issues with unpreparedness, planning and mobilisation failures, and lack of personnel and resources. Although Güler will have to tackle these deficits, the military will not be an important actor in domestic politics. It will continue to be actively involved in international conflicts, but will be constrained by the financial limitations of the Turkish economy.

The transition in the Interior Ministry will be less smooth. Turkey’s police force comprises competing groups that all sub­scribe to an ultranationalist ideology, but are divided by personal affiliations. The incoming interior minister, Ali Yerlikaya, does not come from Soylu’s circle. While he is expected to make radical changes in police leadership, this will not make any difference to attitudes; the police will remain ultranationalist and oppressive to­wards the opposition. Police brutality against opposition groups such as LGBTQI demonstrators continued unabated after his appointment. Only difference is that the new minister will be more loyal to Erdoğan.

New in the cabinet: Former head of intelligence

Another important change in the cabinet was the appointment of Hakan Fidan, the former head of the National Intelligence Organisation (MIT), as foreign minister. Fidan’s position as head of the MIT was filled by former presidential spokesperson İbrahim Kalın. Both are long-standing members of Erdoğan’s inner circle and have exerted significant influence on foreign policy. For this reason, both were rumoured to be in the running for the foreign affairs portfolio; in the end it was Fidan who took the big prize. The appointments suggest that intelligence and diplomacy will work in close cooperation in foreign policy­making.

Fidan is a controversial figure. He was the youngest ever director of the MIT, and held the position for thirteen years. Under his leadership the organisation’s capabilities, resources and responsibilities expanded significantly. The military’s surveillance capacities were transferred to the MIT, and the organisation’s focus shifted from domestic to foreign intelligence. The MIT has also been authorised to conduct armed operations abroad, and regularly carries out drone strikes against Kurdish forces in Iraq and Syria, targeting political leaders as well as militants. Under Fidan MIT was also in­volved in abductions of Turkish dissidents living abroad, mostly individuals suspected of links to the Gülen movement. Additionally, torture once again become widespread and normalised.

On the other hand, Fidan has also played a key role in diplomatic processes. He was a central figure in Turkey’s failed “peace pro­cess” (2012–15), which sought a peaceful solution to the Kurdish issue. On the inter­national stage, he was instrumental in Turkey’s recent reconciliation efforts with countries such as Egypt, Israel, the United Arab Emirates, Saudi Arabia, and even Syria. Initial contacts with these countries were established through intelligence coop­eration, and Fidan played a critical role – possibly even more so than the outgoing foreign minister, Mevlüt Çavuşoğlu – in the resumption of diplomatic relations. While Fidan’s appointment can be seen as an indication of Turkey’s intention to con­tinue its intelligence-driven foreign policy and reconciliation efforts in the Middle East, it also sends a message to the West that the government will play a moderate and constructive role in international politics.

Fidan possesses a significantly higher profile than the outgoing Mevlüt Çavu­şoğlu. He previously served as head of the Turkish Cooperation and Coordination Agency (TIKA), which played an important role in projecting Turkish soft power. He has a global reputation and possesses net­works among diplomatic circles as well as within the intelligence community. Despite Israeli criticism of his allegedly pro-Iranian stance when he became head of MIT in 2010, Fidan managed to establish good relations with Israel. Çavuşoğlu, in contrast, was known for engaging in heated verbal disputes with his counterparts, apparently prioritising domestic popularity over achieving diplomatic solutions. Even Erdo­ğan’s supporters have noted the need for a credible voice in international politics, a role that Fidan can be expected to fill. His previous association with abductions and torture is unlikely to tarnish his international reputation, as intelligence organizations are seldom held to high ethical standards.

Overall, Fidan appears well-suited to continue Erdoğan’s style of foreign policy based on transactional relations and brink­manship. Furthermore, his new position, which will bring greater global and political visibility, combined with the removal of other high-profile ministers, makes him one of the key contenders for Erdoğan’s succession.

Şimşek’s rational approach is not in Erdoğan’s interest

What does the appointment of Mehmet Şimşek as treasury and finance minister mean for Turkey’s economic prospects? The country’s economy is dogged by persistent inflation, current account deficits and an erosion of central bank and government credibility. In that context, Şimşek’s ap­pointment – together with Gaye Hafize Erkan’s nomination of as head of the cen­tral bank – raised hopes of a change in the government’s economic policy course. Doubts about whether this will actually occur are warranted.

Şimşek is a former banker, and is well-regarded in national and international finance circles. Unlike his predecessor Nurettin Nebati, who was closely associated with Erdoğan’s policy of low interest rates, Şimşek stands for orthodox economic poli­cies. In his first press conference he under­lined the need for a course correction in economic policy and announced strict fiscal discipline and inflation control measures.

The Turkish economy faces enormous challenges: unemployment over 10 percent, consumer inflation at almost 40 percent, a steadily declining exchange rate, and a huge and growing trade deficit. The coun­try’s foreign exchange reserves are depleted and government spending has expanded enormously.

Erdoğan is unlikely to go to the International Monetary Fund, due to the domestic political repercussions, so the country has to attract foreign direct investment and capital. He has already been attracting capi­tal from Russia and the Gulf countries, but the scale of the economic crisis and the resources required to put the economy back on track will require him to turn to the West. Şimşek will have to act quickly, with decisions required in three fields: currency reserves, interest rates and the so-called currency protected Lira-fixed deposits.

First: The Central Bank’s reserves, which eroded rapidly during the period when the exchange rate was under sustained pres­sure. Reserve assets at the end of April 2023 totalled US$114.9 billion, a decrease of 10.8 percent compared to the end of 2022. Dwindling foreign exchange reserves would have forced the central bank to stop pro­viding commercial banks with cheap for­eign exchange to support the Turkish lira. Whether Erdoğan will grant it room for manoeuvre in this respect remains to be seen.

Second: After the currency collapse of 1 December 2021, Erdoğan promised to pro­tect lira-denominated bank deposits against exchange rate losses. While this stemmed the fall in the lira for a time, currency-protected deposits now total US$121.6 bil­lion, placing enormous pressure on the national budget.

Third: Starting from the last quarter of 2021, the Central Bank interest rate declined rapidly from 19 (23.09.2021) to 8.5 percent (24.02.2023).

A rational economic policy requires the central bank to cease subsidising the banks with low interest rates, and instead to raise rates significantly. Such a drastic move would not be entirely in Erdoğan’s interest, as he faces a conflict of goals: He needs to get the economy back on track and rebuild the earthquake zone – which means at­tracting foreign investors. For that to hap­pen he will have to pursue rational eco­nomic policies that would require him in­crease interest rates and pursue fiscal dis­cipline. In the short run, this policy would lead to an economic slowdown and even recession. However, with local elections due in March 2024 he cannot afford a recession – especially since his declared aim is to recapture the city administrations of Istan­bul and Ankara. The short-term political logic contradicts any announcements of strict fiscal discipline and inflation control.

Returning to a rational economic policy is not on the table, as confirmed by Erdo­ğan’s denial that a course correction is planned. In that context, Şimşek’s appoint­ment could be interpreted as an effort to present a “moderate” image to international finance institutions, entrepreneurs, and the European Union.