Special Brief: Notes from NYC visits

TURKEY - In Brief 25 Jul 2023 by Atilla Yesilada

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Introduction and Summary The politics author (from now on I) has spent last week in NYC, visiting members of our GSP audience in the company of my NY office colleagues. In three days, we visited 10 institutions, speaking to another 12 in a luncheon hosted by Standard Chartered Bank, for which I’m deeply grateful to them. This Special Brief summarizes the story I have told, my impressions from the audience responses as well as comments and opinions I found interesting. For those who don’t have the time for tall tales, this is the executive summary in one sentence: Everyone we visited exhibited great interest for the new Turkey story, but conviction level was very low. In specific, out of 40 or so people I conversed with, only 3 expressed views I’d call bullish or optimistic that Simsek’s so-called stabilization program will achieve results. The most frequent question I was faced with was: “When will he be fired?” I told my audience that this program was doomed to collapse, because monetary policy settings, which should serve as its anchor, were likely to remain misaligned with inflation fundamentals. This being said, I also outlined a moonshot scenario where “everything comes up roses”. My story The stabilization program will prove a failure in less than a year.Erdogan will switch back to innovations and restrictions, such as new capital controls and wide punitive/administrative measures to deal with currency instability and soaring inflation.He is determined to win March 2024 local elections, but fiscal-monetary policy settings are not sensitive to AKP’s popularity in the polls. Erdogan can simply purge viable opposition candidates or resort to fraud to win. Even if th...