New parameter in Turkey’s economy: “Şimşek fragility”

(An article by Deniz Zeyrek a prominent journalist, on Sözcü Newspaper web-page)

This is what was going to happen, the government put the hope of getting out of the economic crisis after the elections of May 14, 2023 on the shoulders of the Minister of Treasury and Finance Mehmet Şimşek, as President Tayyip Erdoğan said.

A perception was created that only Şimşek’s high interest, high tax, low wage-based economic program, Şimşek’s financial policies, and the taxes, fees and fines that Şimşek introduced would get Turkey out of this crisis.

FACTS ARE MUCH DIFFERENT TO PICTURE PAINTED

However, the facts are very different. First of all, Şimşek knows better than all of us that he should cut off those hoses which are connected to the treasury’s coffers, transferring huge sums that exceed 4-5 billion dollars per year, to pro-government (favored) companies but he does not cut them, he cannot cut them. Mehmet Şimşek knows better than all of us that the real taxes should be collected from the pro-government companies that take billions and that the taxes collected by strangling poor small and medium-sized enterprises will not be a remedy for their problems, on the contrary, they will hit the economy hard, but he cannot change the situation.

Mehmet Şimşek knows better than all of us that the terrible waste of huge amounts of funds spent by the Directorate of Religious Affairs, the palace and the ministries must be stopped and that savings cannot be made in the public sector by removing the civil servant services. However, he cannot touch the unjust budgets transferred to the Palace, the Directorate of Religious Affairs, the cults (sects) and congregations. Mehmet Şimşek knows better than all of us that foreign investment will not come to a country where the constitution is not implemented and democracy, human rights and freedoms are trampled upon, but he does not even come close to these issues, using the ease of presenting them as subjects of politics.

“PERCEPTION THAT ŞİMŞEK WILL GET TURKEY OUT OF THE CRISIS”

So, in the speeches made in the meetings held under the chairmanship of the Chief Economist (Erdoğan), which perception counts; the perception that Şimşek will get us out of this crisis or the prevailing country realities? I am writing based on knowledge.

First of all, Şimşek and his staff generally draw an economic picture showing that the economic programs work with the data of TÜİK that does not reflect the truth and share the following information: exports are increasing, current account deficit is shrinking, tourism revenues are increasing, inflation is decreasing, hot money inflow to the country is increasing, public expenditures are decreasing.

“FUNDS FLOWING TO PRO-GOVERNMENT CONTRACTORS”

In some meetings, investments and public service items are brought to the agenda. It is seen that the situation in these areas contradicts the information given by Şimşek. The Minister who does not dare to touch the hoses (of finance/funds) flowing to pro-government contractors, turns into a tiger when it comes to public service and investment items and does not allow funds to be transferred, challenges them, and naturally, the environment is a little tense. Although the Ministry of Treasury and Finance denies it, the meeting that is the subject of the latest behind-the-scenes information conveyed by my colleague Nuray Babacan was a similar meeting.

After Şimşek explained that they would not meet the demands of some ministries (having to do with public projects and all) and put an end to them, there was a tense silence in the hall for a few minutes. It should not be forgotten that the chief economist (Erdoğan), stood by Şimşek. These details were also conveyed outside by the participants of the meeting.

“EVEN RUMORS ŞİMŞEK COULD LEAVE CAUSE NEGATIVE MOVEMENTS IN MARKETS”

The chief economist, namely Recep Tayyip Erdoğan, is aware of everything. Even the “rumors of Şimşek leaving”, cause negative movements in the markets. Everyone in power knows that if Şimşek leaves, things will get really messy.

As you can see, in Turkey’s economy on top of geographical problems, energy costs, global markets there is also the issue (risk in this case)  of “Şimşek fragility”.

MARKETS SHOULD BE COMFORTABLE WITH PROSPECT OF ŞİMŞEK LEAVING

The definite conclusion I reach judging on my interviews is as follows: Markets should be at ease about Şimşek.

Although Şimşek sometimes experiences tension with the cabinet members and the bureaucracy, he will continue his duty. Even if he wants to leave, the chief economist (Erdoğan), who is aware of everything, will not allow him to leave his duty.

Deniz Zeyrek Sözcü newspaper – Translated by BTT
Source: sozcu.com.tr/ekonomide-yeni-parametre-simsek-kirilganligi-p77164