What does a man who already controls pretty much everything in his country — from politics to the judiciary to defense — give to himself? How about direct takeover of his country’s sovereign wealth fund?
President Recep Tayyip Erdogan has appointed himself chairman of Turkey’s sovereign wealth fund after recent promises to exert greater influence over the economy. He’s nixed the old guard management and hand-picked their replacements, in a move his political rival, presidential candidate who lost the June election, Muharrem Ince, has aptly described as taking “public companies prisoners”.
And not to be one to break medieval sultanate tradition, he’s further named his son-in-law and Finance Minister Berat Albayrak as deputy chairman.
Calling this latest move a “crazy example” of the country’s poor management under Erdogan, Ince wrote on Twitter immediately after the news was made public: “The man who has captured the state . . . has now taken public companies prisoners”.
He continued, “This desire to control everything will in the end give way to controlling nothing. And the country pays the bill.”
Beginning in September of 2017, Erdogan indicated he would seek the wealth funds’s reorganization after dismissing its chairman over its failure to meet targets.
Bloomberg reports the bombshell, but not entirely shocking latest news in Erdogan’s long struggle to control everything under the sun:
Zafer Sonmez, head of Turkey and Africa for Malaysia’s government investment vehicle Khazanah Nasional Bhd, was named general manager. Treasury and Finance Minister Berat Albayrak, Erdogan’s son-in-law, will also sit on the board, according to a decree published in the Official Gazette.
The overhaul comes two years after the government formed the fund to capitalize on $200 billion of state assets and put a lid on market turmoil in the wake of a failed coup attempt. But the organization’s goals and strategy were never clearly defined and internal strife led to the firing of its first chief executive officer after Erdogan publicly expressed his disappointment.
Bloomberg lists the wealth fund as including stakes in Turkish Airlines, Turk Telekom, state lenders TC Ziraat Bankasi AS and Turkiye Halk Bankasi AS, and further the stock exchange, Turkey’s national postal service, state oil and pipeline companies, and the national lottery and railway.
Why keep up the charade of even signing paperwork anymore?
Funny enough it doesn’t appear Erdogan is comfortable with even his own adviser, Yigit Bulut, overseeing the fund as confirmed in FT’s quip: “The changes to the sovereign wealth fund sidelined one of the president’s own advisers, Yigit Bulut, who is renowned for once claiming that Mr Erdogan’s enemies were trying to kill him through telekinesis.”
Among the newly Erdogan-hand picked board members, per Bloomberg, are Rifat Hisarciklioglu, head of the Turkish chambers of commerce; Huseyin Aydin, head of the banking association and Ziraat CEO; Arda Ermut, the head of Turkey’s investment support and promotion agency; Erisah Arican, a professor and member of the Borsa Istanbul board; and businessman Fuat Tosyali.
Crucially, FT reports the timing of the move as coming just before a major interest rate announcement:
The latest change came ahead of a critical interest rate announcement on Thursday, a decision seen as a pivotal test of the independence of Turkey’s central bank.
Murat Cetinkaya, the central bank governor, has caused dismay among international investors by resisting calls to raise rates even as inflation has soared to 18 per cent.
Well so much for even a facade of “independence”…
Meanwhile the lira has lost about 40 percent of its value this year after Ankara’s summer long growing spat with Washington and as global institutional concerns over management of the economy have deepened.
Apparently Erdogan’s solution is as simple as… “don’t worry the Sultan is in… I got this”.
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