Economic discontent deepens, so as misconception of Turkish gov't

Unlike what those in Ankara who are managing the economy believe, 51 percent of the economy is not psychological perception, it is trust. Empires of fear do not generate trust.

While the pandemic is at the verge of its second wave, economic concerns are rising. Why, people are wondering, the government is responding to these concerns with several political maneuvers that do not exactly correspond to the existing economic issues. 

It may look like a surprise that the political rhetoric and actions in Ankara are increasingly focusing on moves that appeal to the core conservative segments; one of these moves was the reconversion Hagia Sophia into a mosque. Actually, recent opinion polls reveal why this is so. 

It was exactly one year ago when President Erdoğan took a firm stance against those citizens who demanded that Hagia Sophia be converted into a mosque. He snapped, “The toll we need to pay for such a move is very high. As a political leader, I will not be fooled by this game. I have not lost my direction this much.”  

What has happened that this stance has changed 180 degrees? 

According to research company MetroPOLL, the results of August polls convey that it is the economy that causes the government to focus their political discourse and actions on core conservatives.    

In a survey titled, Turkey’s Pulse, Turkey’s Economy and The Istanbul Convention, 62.3 percent of respondents said the state of affairs in the country was bad. MetroPoll Research pointed out that this was one of the highest values since 2011. It should also be noted that this rate has gone to its highest levels in the past years, since Turkey’s regime was changed to the presidential system in 2018.

It is also worth noting that the rate of those who consider that the state of affairs in the country is “good” is only 23 percent. 

Those who responded to the question "What is Turkey's biggest problem?" as “economy,” make up 47 percent, while those who answered “unemployment” were 14 percent. In total, economic issues was at the top with 61 percent, while pandemic followed with 13.6 percent. 

In the next question in the survey, it was asked what was the most important issue the responders encountered individually. The percentage of answers given as “economy” and “unemployment” has been increasing since 2016. This rate hit its highest level with 69.8 percent in February before the pandemic. Answers of “pandemic” and “health” make 19.9 percent and 8.3 percent in April respectively, adding up to 28.2 percent. They have become the second biggest problem while the combination of “economy” and “unemployment” decreased to 52.2 percent. At the end of June, the economy rose again as the biggest problem. 

Issues such as loss of income and high inflation rate cause welfare loss. The reflection of this can be seen in the society through the responses given. The rate of negative answers given to the question, “How was the change in your or your family’s standard of living or welfare in the past year?” has been at record levels with 63.4 percent. This rate has been deteriorating since Turkey adopted the presidential regime in the second half of 2018. 

Among those whose lives were negatively affected economically, 66.6 percent will change their voter preferences in the next elections. Among those who have voted for the ruling Justice and Development Party (AK Party) in June 2018 elections and whose standards of living have deteriorated, 56.1 percent declare their electorate behavior will be affected. 

Pessimists gather strength  

Regarding the future of standard of living or welfare, pessimists are in the majority. Those who say it will get worse are 56.6 percent; those who believe it will get better are 14.4 percent. The striking aspect is that this rate has rapidly fallen from May to August. The rate of those who said things would worsen was 39.5 in May; this figure went up to 42 in June and 56.6 percent in August.  

Most probably, after the lockdown conditions were eased, people were not able to detect a normalization that would eventually provide hope for the future regarding their economic lives.   

Roughly, one third of the electorate that voted for AK Party and its ally the Nationalist Movement Party (MHP) in the 2018 parliamentary elections regard the future of their own or their family’s standard of living or welfare as going for the worse. 

A similar situation can be seen when responses to the question “How will Turkey’s economic situation change next year” are reviewed. Only 23.6 percent of respondents have answered “for the good” while 58 percent saw a change for the bad. This negative view is at its highest level of the past five years. Roughly one third of the AK Party and MHP electorate think the state of affairs are worsening in the country. 

Another question is whether the citizen is happy with the management of the economy and the manager. Upon the question “Do you think the national economy is managed well or badly in the last period,” 26.6 percent answered it was managed well while 68.3 percent answered it was poorly managed. 

The key point here is that out of those who voted for AK Party in the June 2018 elections, 54.5 percent thought the economy was managed well, while 38.3 percent said it was managed poorly. Among those who voted for MHP, 57.8 percent think the economy is poorly managed. 

When the question “How successful do you think Treasury and Finance Minister Berat Albayrak’s economy management is,” was asked, 6 percent said he was “very successful,” 21.7 percent said “successful,” adding up to 27.7 percent. However, 29.5 percent found him “unsuccessful,” while 34.8 percent “very unsuccessful.” A total of 64.3 percent pointed out that he was unsuccessful. 

The rate among the participants who have voted for AK Party in 2018 who think he is successful is 56.1 percent, while those who think he is unsuccessful is 32.9 percent. Some 11.1 percent did not respond or said they did not have an idea. 

The supporting party of the government, MHP’s electorate said he was successful at a rate of 35.5 percent while 54.8 percent said he was unsuccessful. 

The state of the dollar 

The public’s perspective on the rise of the current forex rate contains interesting aspects. This could be a good explanation for the daily political discourse and the exaggerated heroism/epicness. 

In the survey, there are two options as an answer to the question, “Which one of these views is closer to you regarding the rise of the dollar?” First option is “The wrong economic policies of the government,” while the second one is “Games played on Turkey by foreign powers.” 

The rate of those who think the rise of the dollar is because of the government’s wrong policies is 48.2 percent. Those who think it is the game of foreign powers that raises the dollar have a rate of 43.2 percent. Those who have not responded or who do have an idea is 8.5 percent.  

I thought some details in the responses to this question were interesting. For instance, those who have voted for AK Party and who think the mistakes of the government have caused this situation are 19.4 percent, while this figure is 30.5 percent among the MHP electorate. On the other hand, among the main opposition party, the Republican People’s Party (CHP) electorate, those who believe in the “game of foreign powers” is 18.9 percent.    

This is the reason the government continues to present to the public that it is the “game of foreign powers” that have caused the government’s own failures and the mistakes in economic policies. This rhetoric works like a recirculation machine. They distort the fact that the IMF asked for commitments for a potential contingency fund from all countries. They said, “IMF asked for money from Turkey. When we said we will give it, they decided not to take it.” They repeatedly told that to the public, somehow achieving small daily scores in politics. This “foreign powers” rhetoric seems to be bought by a portion of all opposition parties, including the CHP electorate.  

Who cares about the dollar? 

The question is “Does the rise of the dollar concern you?” Those who responded positively are 77.9 percent. Among those participants who voted for AK Party, 59.7 percent answered positively while 40.3 percent said they were not worried. Among the MHP electorate, 27.1 percent said they were not concerned with the rise of the dollar. This rate is below 10 percent in all other parties. 

To the question, “Who in the country should be worried about the rise of the dollar,” there are two options. First is “everybody,” the second is reflecting the viewpoint of the minister managing the economy: “Those who earn dollars and who do business with dollars.” Those who have chosen the second option is only 21 percent while a vast majority of 75 percent has marked “everybody,” which is the correct option. 

Those who have marked the second option are 38.3 percent among AK Party electorate and 29 percent among the MHP electorate. In opposition parties this rate is not above 5 percent. 

Perspectives on the street

The question that suffocates economists, analysts and those working in the financial sector is “What will happen to the dollar?” The question in the MetroPOLL survey, “At what direction do you think the dollar will move in coming months,” is answered by 18.8 percent as, “it will go very high.” Another 49.3 percent though it would rise, while 12.2 percent said it would not change. Those who thought the dollar would sharply fall is 1.6 percent and those who thought dollar “would fall” is 10.2 percent while the rate of those who did not have an answer or an idea was 7.3 percent. 

As a total, the situation is 68.1 percent versus 12.5 percent. 

Interestingly, 47 percent of the AK Party electorate and 52.6 percent of the MHP electorate have marked the option that the dollar would rise. 

When the situation is like this, then the next question becomes how people will be able to save. While 79 percent of the respondents said they were not able to save, 8.7 percent said they invested in gold. Another 2.6 percent said they invested in foreign currency. Two other slices of 3.4 percent said they preferred “alternative investment tools” and bank accounts. 

Keeping in mind that those who invest in gold and foreign currency are 11.3 percent of the participants, when we look at the breakdown of parties, we see that out of those who voted for AK Party in 2018 elections, 12.9 percent invested in gold while 2.9 percent invested in foreign currency, which makes a total of 15.8 percent who have chosen investments other than the national currency. This rate is 6.1 percent and 2.6 percent in the CHP electorate respectively, with a total of 8.7 percent. In other words, this corresponds to half of those who have voted for the AK Party. Among MHP voters, the same figures are 10.4 percent and 3.2 percent respectively, totaling to 13.6 percent. 

In fact, any investment in gold is actually the gold that has been imported by paying in foreign currency. Any additional gram of gold investment means importation. Importation means the need for foreign currency. The demand for foreign currency would mean the rise of the forex rate in the case there is no adequate forex supply.  

Quite a large group of the electorate considers that the rise in forex rates is the result of foreign powers; but at the same time, they invest their savings in gold and foreign currency. 

According to Central Bank data, from the beginning of the year to the week of September 4, the amount of foreign currency that residents hold in the banking system has increased 24 billion dollars, with 15 billion dollars of it being gold (254 tons). 

Also, there are record highs in physical gold imports. In the first seven months of the year, 136 tons of gold have been imported, with a 93 percent increase compared with the same period last year. 

Mint and Stamp Printing House (Darphane) has coined 44.5 tons of gold coins in the first seven months of the year, an increase of 117 percent compared to the same period last year. The amount of gold excavated from mines in Turkey is half of this amount.  


As a result, the government is aware of the economic unhappiness of the electorate. To curb the increasing discontent, they continue with the rhetoric of “foreign powers” aimed at externalizing the incompetence of the administration. 

On the other hand, to prevent the economic failures from causing dissociation in the core nationalist-conservative segments in the grassroots, they resort to maneuvers such as Hagia Sophia and diplomatic tensions with neighbors. 

The response given to economic concerns, which have increased with the pandemic, is maneuvers and tensions. There is no capacity left institutionally and politically, to properly respond to economic issues. Any recipe that may be brought up will not be “bought” by anyone. 

The comprehensive and cross questions and answers of the MetroPOLL survey demonstrate that the society is aware of everything. Expectations are pessimistic. There is no trust in the economy administration either.  

It is also obvious that Ankara’s voicing of the rhetoric - every day - of “we are better than yesterday and better than last month,” believing that “51 percent of the economy is psychology and sociology,” does not work anymore. 

The government is controlling all media channels, jailing journalists because of their reporting and making laws hastily to be able to control the social media. It has built an empire of fear where even the smallest economic unit refrains from voicing its economic issues. The government has to ask itself why, even its own electorate, does not believe in them. 

Unlike what those in Ankara who are managing the economy believe, 51 percent of the economy is not psychological perception, it is trust. Empires of fear do not generate trust. 

What the opposition has to do is to show the light at the end of the tunnel in this pessimistic environment created by the government.  

September 10, 2021 Central Bank's Beştepe problem