Erdoğan slams business group for criticising policy on Sweden, Finland

Turkish President Recep Tayyip Erdoğan slammed comments made by a top business group questioning his government’s handling of the NATO membership bids of Finland and Sweden.

Erdoğan spoke in a televised speech on Wednesday after the chairman of the Turkish Business and Industrialists Association (TÜSİAD) Orhan Turan also voiced strong warnings about the state of the country's economy. Another top official of the group urged the government to seek the advice of experts on economic affairs.

“We will not change our stance on Finland’s and Sweden’s NATO bids until they take concrete steps," Erdoğan said. "Hey, you, new head of TÜSİAD! You cannot teach us a lesson in foreign policy... Unless they (TÜSİAD) change their mind, they won’t be allowed to maintain contact with the government.”

Turan said in a speech in Istanbul earlier in the day that the NATO membership applications of Sweden and Finland could be resolved through negotiations and mutual understanding in accordance with the spirit of the alliance.

“Of course, it is Turkey's right to demand that friendly and allied countries pay more attention to the sensitivities of a country that has suffered much from terrorism,” he said. “However, the method we adopt while protecting our interests where we are right should be formulated in a way that will facilitate us to reach the goal."

Erdoğan said he would not approve the membership of the countries until they dropped support for terrorism.

“Why do we take a stand against Sweden and Finland? Are we going to open our doors to them while terrorist organizations are freely walking down their streets?" he said. "TÜSIAD can stand with them, we will revenge on the blood of our martyrs. Terrorist organisations are marching on the streets in Germany. If TÜSİAD continues like this, our doors will remain closed to the group.”

Erdoğan, who says Sweden and Finland are supporting and harbouring members of the Kurdistan Workers' Party (PKK) and an affiliate in Syria, said the business group was pursuing policies in foreign affairs advised by the main opposition Republican People’s Party (CHP).

The PKK, which is seeking autonomy for the country's 12 million Kurds, has fought a four-decade war with the Turkish military at the cost of about 40,000 lives, most of them Kurdish. It is labelled a terrorist organisation by the United States and European Union. Sweden and Finland deny that they support the group.

Tuncay Özilhan, head of Anadolu Group and chairman of TÜSİAD’s High Advisory Council, said at the same meeting with Turan that the government should listen to experts to put the economy back on track after inflation spiralled and the lira sank.

“In order to put the economy on a stable and sustainable path, it is necessary to listen to the opinions of experts, technicians and academics," said Özilhan, local media including the Gazete Duvar reported.

Inflation in Turkey has skyrocketed to 73.5 percent, the fastest in emerging markets and developed economies, after Erdoğan ordered the central bank to cut interest rates despite accelerating price increases. The political intervention late last year provoked a currency crisis. The lira lost 44 percent of its value in 2021 and has dropped by more than 20 percent this year.

Inflation is getting out of control and the priority should now be to prevent and reduce it, Özilhan said. “The rate of increase in inflation is at a level we have not seen before,” he said. “This will further increase income inequality.”

Erdoğan, who says he is an economist, has sought to dictate economic policy in Turkey, matching his approach in other areas of the country’s social affairs and politics since he acquired vast new presidential powers in 2018. He has replaced three governors of the central bank in three years by overnight presidential decrees, along with nearly all the members of its Monetary Policy Committee.

Last week, Erdoğan said Turkey would be cutting interest rates, not hiking them. His comments provoked more losses for the lira. The country has set aside the prescriptions made by “imperialist financial institutions” that make the rich richer and the poor poorer by increasing interest rates, he told reporters after a meeting of the cabinet.

Economists and strategists following Turkey have also expressed dismay and concern about the direction of the economy. Earlier this week, Tim Ash, senior emerging markets strategist at BlueBay Asset Management in London, said Erdoğan’s “crazy policies” meant the lira had remained in a “state of constant crisis in recent years”. Turkey also suffered a currency crisis in 2018.   

The country’s risk premium is also increasing due to global developments and the economic policies that Turkey is implementing, Özilhan said. Turkey’s credit default swaps, which investors use to insure against possible sovereign default by a country, hit a 19-year high on Tuesday.

Interventions in the free functioning of the market are further disrupting the country’s economy, he said. Investments do not occur just with a low interest rate policy, he added.

Turan said that the government's economic policies were incompatible with global developments and did not produce the desired results.

"While the whole world is increasing interest rates in the fight against inflation, we follow the opposite policy,” he said. “The increasing level of risk is unsustainable. We must return to traditional policies... Our incomes are melting with the economic policies that are being followed.”

The lira was trading little changed at 17.28 per dollar on Wednesday. It had traded at 3.78 per dollar at the start of 2018.

This block is broken or missing. You may be missing content or you might need to enable the original module.