A Lesson from Turkey: Economic Crises as Steppingstones, but not Exit Routes for Authoritarian Populists

It is evident that populist politicians, even if they come to power through free elections, deviate from the same path when they stay in power for an extended period and transform the regime. Turkish President Erdogan’s prolonged tenure in Turkey allowed him to skillfully reshape the political regime into a one-person rule. By monopolizing the achievements of his ancestors and emphasizing religious values in opposition to ultra-secularist elites, whom he portrayed as foreign puppets and defenders of the oppressive status quo that insulted the way of life of ordinary citizens, Erdogan successfully created a deep polarization in society to maintain his grip on power.

By Ibrahim Ozturk

In my Project Syndicate piece titled “Erdogan’s Success Story” (June 14, 2011), I provided a positive assessment of Erdogan’s remarkable economic achievements over the past decade, highlighting Turkey’s expected entry into higher-income country status during his third term. However, I concluded the article by posing the question: “How will Turkey utilize its rapidly growing economic power?”

In a notable departure from the initial period (2003-2011) when Erdogan strengthened his position and reformed the regime, he veered away from the essential factors that contributed to his success. The period following the 2011 election victory witnessed a shift towards a process of power intoxication, culminating in the complete consolidation of the presidential government system (PGS) in 2018. This marked a departure from the so-called “orthodoxy,” replaced by a more arbitrary approach characterized by learning by doing and trial-and-error, which Erdogan referred to as “heterodoxy.” Although this era resulted in unprecedented economic and political turmoil, Erdogan’s election for a third term as president raises the question of why a populist government that initially came to power amidst an economic crisis did not encounter more significant challenges.

However, empirical evidence suggests that populists often come to power through relatively “free,” if not entirely “fair,” elections, yet only a few of them are consistently able to exit power. This usually occurs through being voted out of office, primarily if they manage to stay in control long enough to transform the system into a more authoritarian one. Consequently, the modes of departure often involve scandals, impeachment or resignations, constitutional crises, refusals to step down, coups, suicides, or tragic accidents. The recent elections in Turkey have demonstrated that in cases of democratic backsliding, an economic crisis alone is a necessary but insufficient condition for an authoritarian leader to change course. The positive case of successfully defeating an authoritarian populist in Brazil in March 2013 highlights that the sufficiency condition lies in the opposition’s ability to employ and manage various factors more effectively than the government, even when the latter abuses state power.

Erdogan as a Mastermind of Populism

Engaging in debates about the fairness or fraudulence of Erdogan’s election victory at this stage does not provide significant insights. As highlighted by Funke et al., when populists manage to remain in power for a decade or longer, they often shape their country’s political destiny in negative ways. After Erdogan’s prolonged tenure, Turkey has regressed from being considered a “free” country, as indicated by the Freedom House Index of 2023, and the elections can no longer be deemed fair. In a country like Turkey, where the general election results show that the opposition party (Republican People’s Party, CHP – 25%) consistently lags behind the ruling party (Justice and Development Party, AKP – 35% on May 14, 2023) by approximately 10 percentage points for nearly 21 years, the transfer of power appears unlikely, regardless of the coalition formed.

While the definition of populism may vary, as the Pope declared, it is commonly viewed as an “evil” that tends to lead to undesirable outcomes. Erdogan’s brand of populism aligns perfectly with a Machiavellian approach, where any means or methods to secure victory are deemed permissible or legitimate. Engaging in a political game with a leader like Erdogan, who does not hesitate to employ divisive tactics and polarize society through the creation of antagonistic groups such as “us vs. them,” “the people (ordinary, virtuous citizens) vs. the elite (pro-statuesque, corrupt, self-serving),” “true believers vs. infidels,” and “nationalists vs. traitors,” is a recipe for a nightmare scenario. He consistently invents and substitutes (foreign or domestic) enemies, identifies (internal or external) scapegoats, stokes security concerns within society, and perpetuates a state of conflict to solidify his hold on power.

Populism, with its rhetoric in defense of the rights of the “innocent and silent majority” against the perceived beneficiaries of an establishment or elite, implies that political power should not be held by economic, financial, intellectual, or political elites, but by a homogenous and virtuous “people.” This perspective, as highlighted by Arnesen and Peters, draws from Norris (2018) and encourages the emergence of a charismatic leader who presents themselves as an outsider to the establishment and claims to understand the “true desires” of the people, representing their voice and serving their interests. Consequently, this discourse undermines the significance of “mediating institutions,” particularly in the countries dominated by a paternalistic or patrimonial culture like Turkey. As a result, modern governance institutions, norms, and values, such as the division of labor and expertise, lose their relevance. Merit is increasingly replaced by loyalty and militant advocacy, and professional, autonomous specialized institutions are either weakened or filled with supporters. Erdogan’s era exemplifies the harm inflicted upon institutions and the economy as populists remain in power. It is important to note that Erdogan’s “populism” is not a learned, an acquired or imported ideology but an original synthesis deeply connected to geography, culture, history, and the cult of his leadership personality.

Several factors play a decisive role in Erdogan’s populist discourse:

1. A multipolar world in power transition without an omnipotent hegemonic power dictating its unilateral will to the “rest.” 
2. Geopolitics, which can be negotiated and marketed in such a world, just like the geography of Turkey. A situation that brings both high risk and return. 
3. A majority population whose “memory” has been manipulated and updated with an older version of the software, ancestors, and religion being the two strategic tools. 

In such a geostrategic location of great power rivalries, Erdogan’s situation can be likened to a person who owns few rooms but several keys to open them. Obviously, it is almost impossible to find the right key and open the door in time always quickly. But he doesn’t waste time opening the door; either he breaks it in an emergency or uses the only lock in this geography to open all the doors with a magical capacity; culture! In that regard, Erdogan can be called the “inventor of populism” in the 21st century when it comes to the creation and exploitation of a nostalgic “populist heartland” that corresponds to a retrospectively imagined utopia built on an abandoned but undead human based past. 

As Yilmaz and Morieson put,“the addition of religion has made populism a formidable force capable of producing a range of emotions among segments of the public, thereby increasing the demand for populism.” Keeping society intact with his constantly renewed agenda, Erdogan’s emotional populism allows him to employ the elements of religion-history-culture and friends-foes antagonism.

An additional defining trait, and perhaps surprising to some, is Erdogan’s religious belief, encapsulated by the motto “After you have done all you can, leave the rest to God and trust it.” This philosophy stems from the recognition that in the face of complex and ever-changing circumstances, risks are amplified by deteriorating institutions and declining human capital. Such challenges reflect the vulnerability of the “one-man system,” where even an omnipotent dictator cannot single-handedly handle significant challenges. In such situations, prayer becomes the only recourse, driven by the conviction that “the new day will come with new hopes or opportunities!”

Erdogan’s approach to economic management serves as a field where his populism is exemplified through the stylized characteristics outlined above.

The Transformation of Turkey’s Economy: From Orthodoxy to Heterodoxy

In countries with strong institutions, an orthodox economy signifies a market that operates based on its internal dynamism, guided by market-friendly rules that address potential market failures. Conversely, in a country dominated by authoritarian populism, a heterodox economy implies arbitrariness and uncertainty. Both of these approaches were tested and experienced in Turkey from 2003 to 2023. In this article, Erdogan’s economic management can be examined within three distinct periods: the first period (2003-2011) characterized by the application of good governance principles to a reasonable extent, the second period (2011-2018) marked by a turbulent transition to a completely different regime, and finally, the consolidation of the authoritarian PGS since 2018.

In the following discussion, I will summarize the key achievements and highlight unresolved problems that have spiraled out of control, particularly with the consolidation of the single-man regime under the PGS.

During the first period, the orthodox approach primarily involved:

(i) the establishment of quality institutions such as central bank autonomy and the rule of law,

(ii) fostering peaceful coexistence and regional relations through the “zero problems with neighbors” policy, and

(iii) pursuing integration with the EU, the global community, and global governance institutions.

Except for the global economic crisis of 2008-2009, the first period witnessed domestic reforms, solid institutional capacity, and comparable long-term growth performance to similar countries. The economy expanded by an average of around 5.8 percent, as depicted in Figure 1, although with a visible loss of momentum. By 2013, national income surpassed the trillion-dollar threshold, and per capita GDP reached $12,500, propelling Turkey to the status of an “upper middle-income country” for the first time.

Figure.1 Economic Growth in Turkey (2003-2022)

i) According to Acemoglu and Üçer, a notable development during this period was the dominance of overall productivity growth over factor inputs, marking a significant shift. Additionally, the implementation of monetary and fiscal discipline contributed to a decrease in inflation from 55% in 2002 to single-digit figures by 2005.

ii) In terms of financing economic growth, there was a notable increase in capital inflows across all categories and terms, which facilitated a smooth expansion. Furthermore, thanks to fiscal and monetary discipline, interest rates experienced a significant decline across all categories and terms. This period also witnessed a reduction in the budget deficit and a decrease in the share of interest burden on the budget.

iii) According to World Bank data, there was a striking improvement in income distribution during this period. This was evident in the decrease of the Gini Coefficient from 0.45 in 2005 to 0.38 by 2007, indicating a more equitable distribution of income.

On the downside, despite positive progress in leading economic indicators and relative macroeconomic stabilization, the following aspect remained fragile, with long-term implications:

i) While the population increased from nearly 65 million to 85 million as of 2023, primarily due to the influx of millions of unorganized refugees, GDP receded to nearly 800 billion dollars after 2019. As a result, per capita GDP also declined by 8000-9000 dollars, indicating Turkey’s middle-income trap status as of 2022.

ii) Turkey’s potential for growth did not improve, primarily due to a decline in productivity growth resulting from the discontinuation of reforms after losing external anchors, such as Turkey’s full membership negotiations process with the EU.

iii) The halted structural transition led to the persistence of a growth model based on classical low-value-added, capital-labor intensive industries. Moreover, the share of upper-middle-income technology in production and exports remained stagnant at around 2.5% until 2022, showing no improvement over nearly two decades. It is worth noting that countries like South Korea and China achieved a share of 35% at a similar development level.

iv) Reflecting the insufficiency of national savings and structural weaknesses, Turkey’s reliance on imports and capital inflows for growth persisted. As a result, each period of economic growth led to a significant increase in the current account deficit, which reached approximately 5-6 percent of GDP in 2022.

In his third term, which began in June 2011, Erdogan exhibited an increasing authoritarian tendency, reflecting a sense of power intoxication. Unfortunately, this period saw a decline in the gains that had been achieved. The process was initiated by the corruption operations on December 17-25, 2013, and further exacerbated by the self-orchestrated coup attempt by “the team Erdogan” on July 15, 2016. It culminated in a complete overhaul of the system in 2018, leading to a severe economic downturn referred to as a “free fall.”

Throughout the years, Erdogan systematically politicized and undermined the independence of key judicial institutions, including the Council of State, Court of Cassation, Court of Accounts, and the Constitutional Court. He also exerted control over institutions such as the Central Bank, Statistical Institute, Competition Authority, and banking supervision and regulation bodies. This process resulted in a loss of control over inflation, unemployment, domestic and foreign deficits, and the accumulation of national debt. Official figures indicate that annual inflation reached 86% in 2022, significantly higher than the global average rate of less than 8%. These macroeconomic imbalances were primarily causedby the excessively low policy rate pressure imposed on the Central Bank of Turkey and excessive monetary expansion, which became rapidly unsustainable. Moreover, these policies enabled Erdogan-backed speculators to generate exorbitant profits.

Then Why and How Erdogan Wins: A Hate and Hope Paradigm

In a country the size of Turkey, lacking abundant natural resources, it is impossible to conceal economic facts and failures from the public and international community for an extended period. Manipulating data through Soviet-style fabricated politburo methods or exerting strict militant control over autonomous policy-making authorities like the statistical institute is ineffective. This is because the impact of these developments is directly felt in people’s daily lives.

This finding aligns with the overall understanding that populist economic policies have a short lifespan and are not sustainable. Furthermore, it predicts that such a government either loses power or transitions into complete authoritarianism. Unfortunately, Turkey currently teeters on the brink of such a development following the May 2023 elections.

Does Erdogan’s continued stay in power, particularly with the main opposition party CHP trailing the ruling party by almost 10 points, imply that economic factors have lost importance in authoritarian regimes during elections? While the literature suggests that populist parties often come to power after a macroeconomic crisis, the reverse is not necessarily true. These elections demonstrated that an economic crisis is necessary but insufficient to dislodge an authoritarian government. It also indicates that Erdogan skillfully constructed an ‘uneven playing field’ and relied on a dependent electoral majority. The opposition made every effort to win the rigged game, even adopting the populist-ethnonationalism strategies of its adversary, but ultimately failed. In addition to Erdogan’s “success” in providing livelihood security to a significant portion of the electorate, he also stoked security concerns and fear of a return of the old status quo elites, known as “White Turks,” who previously threatened and humiliated the lifestyle of ordinary citizens.

The most crucial factor that neutralized or balanced the devastating economic crisis, as indicated in Table 1, is the extensive and effective use of the "Welfare regime." Despite Turkey’s unfavorable rankings in all categories compared to similar authoritarian populist countries like Argentina and Brazil, it excelled in implementing widespread social support programs, including those targeting the most vulnerable families. Furthermore, these measures were presented skillfully within the framework of culture and religion, yielding profound political consequences. Culture matters. In a region where the notion of citizenship demanding justice and the rule of law as a public good has remained premature for centuries due to the culture of patrimonialism, citizens perceived “social support” not as a constitutional guarantee but as a benevolent offering from the Sultan. Their “loyalty” was consequently secured through a minimum level of economic security, protecting those who felt neglected and left behind.

Table.1 Governance in Selected Populist/Authoritarian Countries

The second decisive factor is the utilization of immigrants as a source of cheap labor and a voting reserve for the ruling AKP. Despite having to work informally in low-wage sectors without social security protection, Erdogan adeptly leveraged foreign funds, primarily from the EU, to compensate for their losses, including providing social protection. In the midst of a deteriorating economic environment, the opposition’s discourse of repatriating immigrants did not resonate, particularly among small and medium-sized companies, due to this practice that alleviates labor costs for millions of refugees and grants a comparative advantage to low value-added sectors.

In addition to financial support, Erdogan fostered a strong emotional connection and sense of belonging among the immigrants by invoking a highly susceptible concept from religious literature known as “ummah” or “Ansar brotherhood.” Moreover, he transformed this imaginary notion into tangible expectations that shape the minds of millions of people. Depicting a mythical “global land of brotherhood” based on religious commonalities and historical memories, Erdogan conveys the message: “Just like our esteemed ancestors, it is time to reclaim our history as the worldwide Muslim diaspora eagerly looks to us as protectors.” As a result, sympathy towards Erdogan among the average person on the streets of any Muslim country may be higher than in Turkey itself.

While these “pull factors” served their economic purpose, Erdogan also strategically employed “push elements” in his rhetoric. Believing in the power of media under his control and the limited memory of the people, Erdogan not only took credit for past successes but also shifted blame for past failures onto present-day politicians who were not in power at the time and never governed Turkey. In a country with low levels of political, religious, and economic literacy, he manipulated the decision-making capacity of the electorate through the media he seized. The production of manipulated statistics, inventions, and innovations within this context instilled a sense of pride and superiority in a society yearning for a return to the glory days of the past.

Conclusion

Therefore, it is evident that populist politicians, even if they come to power through free elections, deviate from the same path when they stay in power for an extended period and transform the regime. Erdogan’s prolonged tenure allowed him to skillfully reshape the political regime into a one-person rule.

By capitalizing on and monopolizing the achievements of his ancestors and emphasizing religious values in opposition to ultra-secularist elites, whom he portrayed as foreign puppets and defenders of the oppressive status quo which oppressed and insulted the life patterns of ordinary citizens, Erdogan successfully created a significant divide that was crucial for maintaining control.

To secure the loyalty of the people, with whom he had “connected with heart and imagination,” particularly those who were likely victims of economic difficulties, Erdogan employed a combination of cultural and economic transactional policies. He not only provided various economic benefits but also manipulated them by instilling fear of losing their privileges and fostering a sense of national security, sovereignty, and even independence. When one considers the opposition parties’ leadership, policy quality, and communication skills with the public, it becomes clear that Erdogan would not be replaced with the configuration of such a coalition.