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To Turn Turkey's Economy Around, Erdogan May Have To Loosen Control


It's about the economy for Turkey's President Recep Tayyip Erdogan. His government is turning its focus to boosting the economy after faring poorly in recent local elections in Turkey's biggest cities. But fixing Turkey's economy could require Erdogan to do something he is not exactly known for, loosening control. Here's NPR's Peter Kenyon.

PETER KENYON, BYLINE: Steady economic growth has been one of the keys to President Recep Tayyip Erdogan's continued political success. But these days, the picture is less rosy. Two consecutive quarters of negative growth - a sign of a possible recession - forced the government to downgrade its economic outlook and promise to tackle the economy as a top priority. But when Erdogan's treasury and finance minister, his son-in-law, Berat Albayrak, recently announced a series of economic reforms starting with the banking sector, the public reaction was lukewarm. Murat (ph), a 35-year-old Istanbul customs broker, says he's willing to speak if his last name isn't used. He thinks the government is overselling its ability to bring about economic improvement. He says the government needs revenue, and he's afraid he knows where they'll go looking for it.

MURAT: (Through interpreter) The first phase, as usual, would be to target the working class. The taxes will go even higher. We're really not expecting serious structural reforms.

KENYON: He says the government has been too reactive and short-term in its thinking. For instance, when people started complaining about rising food prices, the government set up tents where it sold produce at a loss, further damaging retailers. Instead, Murat says, they should be looking for more long-term solutions.

MURAT: (Through interpreter) It is unheard of, these prices. So they have to start with agriculture. We were a food export country. Now we've become an importer. So agriculture, and also the industrial and tourism sectors, they need attention.

KENYON: Candidates from Erdogan's ruling party suffered some stinging defeats in last month's municipal elections. But it's not clear how quickly the government can turn things around. Economist Atilla Yesilada says promises of economic reform may sound good, but Turkey already has a largely business-friendly system in place. He says reforms are unlikely to amount to much, as long as Erdogan and his government remain free to exert political pressure on Turkish institutions such as the judiciary and central bank.

ATILLA YESILADA: It is not that we need reform. We need a change in mentality. We need to understand that this is a country based on institutions and rules.

KENYON: That's a fundamental problem, says Yesilada. Real reforms, like making the independence of Turkey's central bank part of the constitution, would mean limiting Erdogan's power, something that doesn't seem to be on the agenda.

YESILADA: He needs to understand that for him and Turkey to have a bigger pie, he needs to share some of his powers. You can't really change Turkey's fate by pouring money over favored industries.

KENYON: Yesilada also thinks Erdogan is courting trouble by allowing tensions with Washington and NATO to increase, primarily by trying to buy Russian anti-aircraft missiles at the same time they're seeking American F-35 fighter jets. Losing the American warplanes is only one potential downside, he says. Turkey risks provoking a concerted campaign of international pressure that could trigger another currency crisis, at which point, he says, the country could find itself in economic trouble. Peter Kenyon, NPR News, Istanbul. Transcript provided by NPR, Copyright NPR.

Peter Kenyon is NPR's international correspondent based in Istanbul, Turkey.