Turkey's Erdogan hints at shift in economic policy as new term begins

Turkish President Recep Tayyip Erdogan began a new five-year term on Saturday, urging citizens to set aside their differences and focus on the future after national elections.

In a swearing-in ceremony held at the Parliament in Ankara, Mr Erdogan also hinted at a potential shift in the country’s economic policy, indicating the end of a period of low interest rates.

Later in the day, the President announced a new cabinet, the composition of which was keenly anticipated as a sign of the direction of economic policy.

Speaking during an inauguration ceremony at the presidential palace, Mr Erdogan called for reconciliation.

“We will embrace all 85 million people regardless of their political views,” he said.

“Let’s put aside the resentment of the election period. ”

He said there was a need to learn from past mistakes and focus on building a better future for the country.

The ceremony was attended by global leaders such as Nato Secretary General Jens Stoltenberg, Venezuelan President Nicolas Maduro, Hungarian Prime Minister Viktor Orban, and Armenian Prime Minister Nikol Pashinyan.

New cabinet

Mr Erdogan changed almost all his cabinet members except for his health and culture ministers.

He named former deputy prime minister Mehmet Simsek, a reassuring figure with international stature, as treasury and finance minister.

Addressing the country’s economic troubles will be Erdogan’s first priority, with inflation running at 43.70 per cent, partly due to his unorthodox policy of cutting interest rates to stimulate growth.

A former Merrill Lynch economist, Mr Simsek is known to oppose Erdogan’s unconventional policies.

During his tenure as finance minister, and deputy prime minister from 2009 to 2018, Mr Simsek was well-regarded by investors.

His potential role in the new cabinet could signify a deviation from the previous strategy of maintaining low interest rates amid high inflation and exercising significant state control over markets.

He served as finance minister between 2009 and 2015 and deputy prime minister in charge of the economy until 2018, before stepping down ahead of a series of lira crashes that year.

Mr Erdogan appointed the head of the National Intelligence Organisation, Hakan Fidan, as foreign minister.

Mr Fidan has been at the helm of the MIT since 2010, and Mr Erdogan once called the 55-year-old his “secret-keeper”.

Erdogan’s triumph in election run-off

Mr Erdogan secured 52.2 per cent of the vote in a May 28 run-off, despite the prevailing cost of living crisis that many believed would dent his prospects.

The outcome extends the leadership of Mr Erdogan, who has been accused of increasingly authoritarian policies. He is expected to consolidate Turkey’s position as a regional military power.

President Recep Tayyip Erdogan’s motorcade leaves the Parliament after his swearing-in ceremony. AFP

In his third term as president, Mr Erdogan, 69, will face several pressing issues, such as managing a slowing economy and navigating complicated relationships with western nations.

Having previously served as prime minister after his party’s victory in the 2002 elections following a severe economic crisis, Mr Erdogan became the country’s first popularly elected president in 2014.

His subsequent election in 2018 granted him new executive powers following a 2017 referendum.

Addressing these challenges, Mr Erdogan acknowledged in his post-election victory speech that inflation, which reached an unprecedented 85 per cent peak last year, was Turkey’s most pressing issue.

With depleted foreign reserves, an expanding state-backed protected deposits scheme, and unchecked inflation expectations, analysts warn of economic turmoil if the current policies persist.

He called for unity in the face of these challenges.

“Turkey needs unity and solidarity more than ever,” he said.

Turkish President Recep Tayyip Erdogan acknowledges supporters in Ankara after winning re-election in a run-off vote. EPA

Mr Erdogan’s supporters celebrate in Istanbul. AP

Mr Erdogan’s supporters wave Turkish flags as they wait for him to make a speech at the Presidential Palace in Ankara. Reuters

The Turkish President won 52.14 per cent of the vote. AP

Turkey’s lira weakened to 20.05 against the dollar on Sunday after Mr Erdogan claimed victory. Reuters

Mr Erdogan said the election was Turkey’s ‘most important’ of the modern era. Reuters

The Turkish leader acknowledged that inflation was the most urgent issue for the country, but said it would also fall. Getty

Mr Erdogan was congratulated by world leaders, including President Sheikh Mohamed, US President Joe Biden, Russian leader Vladimir Putin and Ukrainian President Volodymyr Zelenskyy. Reuters

Mr Erdogan’s supporters cheer in Istanbul. EPA

Mr Erdogan speaks to Turkish flag-waving supporters. EPA

Mr Erdogan’s supporters celebrate near Taksim Mosque in Istanbul. AFP

Mr Erdogan’s supporters celebrate outside the offices of his Justice and Development Party (AKP) in Istanbul. AP

A man waves a Turkish flag outside the presidential palace in Ankara. EPA

Mr Erdogan’s supporters gather outside the AKP’s offices in Istanbul. AP

Investors are now looking for any signs that Mr Erdogan will start to relax the state’s tight grip over markets. AP

Total foreign holdings of Turkish stocks and bonds are down by about 85 per cent, or $130 billion, since 2013. Getty

AKP supporters walk to the Presidential Palace in Ankara to attend his victory speech. Reuters

Electoral officials empty a ballot box in Diyarbakir. AFP

There was a gap of more than two million votes between Mr Erdogan and his rival Kemal Kilicdaroglu. Reuters

AKP supporters after early election results were announced. EPA

AKP supporters wave flags and chant slogans. Getty

People react after the early election result. EPA

His appeal extended to all segments of society, including opposition factions, journalists, writers, civil society members, artists, and politicians, suggesting the necessity of reconciliation to meet national objectives.

Turkey’s new parliament members were sworn in on Friday after the May 14 election, with Mr Erdogan’s alliance securing a majority in the 600-seat house.