Turkey's New Cabinet Strengthens Erdogan

Turkey's new prime minister Binali Yildirim unveiled the new cabinet on May 24, which included deputy prime minister Mehmet Simsek and new energy minister Berat Albayrak – son-in-law of the president, Tayyip Erdogan – and nine other new ministers.

Analysts said the new line-up reflected Erdogan's aspirations to improve relations with neighbouring states but also to strengthen his own position at home, with economic reform some way down the list of priorities.

Simsek, a former economist from Merrill Lynch, oversaw the country's economy since November 2015. Finance minister Naci Agbal and foreign minister Mevlut Cavusoglu also retained their posts in cabinet. Nihat Zeybekci returned to his previous post as economy minister, having left the cabinet following November’s elections.

In his government programme, Yildirim said that his cabinet would focus on boosting the manufacturing based economy and combating the terrorism threats posed by Isis and by Kurdish separatists PKK. He also said that his cabinet will try to mend the ties with Russia, after a Russian bomber shot in Turkish airspace in late November. Yildirim also signalled the need to "earn more friends than enemies," suggesting restoring ties with Israel and Egypt as well as with Russia.

The cabinet shuffle followed a leadership change at the ruling Justice and Development Party, on May 22. Binali Yildirim, who was previously transport minister, was appointed after Ahmet Davutoglu quit as prime minister over a rift with. Erdogan, who became Turkey's first publicly elected president in August 2014.

Binali Yildirim reads the government programme (Photo: Anatolian Agency)

Reinforcing Erdogan

Analysts said that the reshuffled cabinet would focus on presidential empowerment instead of structural reforms in economy, which has stalled since 2013. "So long as the main focus is on empowering the presidency, there is no reason to expect meaningful market friendly reforms until that process is over," said Michael Harris, a senior strategist at Renaissance Capital, based in London.

"Turkey can still be successful on this different development path – the Asiatic model of strong single/dominant political party of power/leadership, but the application of rule of law tends to determine the real winners and losers, and the ultimate pace of growth," said Tim Ash, a senior economist for emerging markets at Nomura, based in London.

He also said that the decision regarding the economic team was "probably one of the most important announcements in 14-odd years of AKP rule – really signalling the future course of development. The most interesting development was the return of Zeybekci as economy minister. He has often had strong views on central bank policy. If he, with the title of economy minister is vocal in his criticism, this can again lead to a return of negative headlines in the global financial press," Harris said.

Separately, the central bank of Turkey cut a key interest rate to 9.5% from 10%, for a third consecutive month on May 24, to support economic growth, despite geopolitical issues and a sell-off in emerging markets.

Murat Basboga