Treasury and Finance Minister Mehmet Şimşek spoke at the "Fighting Inflation and Central Banking" programme organised by the Financial Accountants Foundation (HUV) in İstanbul. In a week's time, he will have completed his first year in office, so his speech was to some extent a review of that year. But it was more than that. With great confidence, he also made predictions about the 'future'. This confidence is important. Because it shatters the still somewhat prevalent but weakening empty belief that "Erdoğan will eventually tell Şimşek to stop" because of the political consequences of the bitter medicine he has forced the public to swallow. His rhetoric and attitude are quite forceful. He doesn't mince words, he doesn't back down. He even makes you think about who is keeping whom in office.
The second important point related to this confidence is that Şimşek's speech is perfectly in line with the recent rhetoric of big business. If you closed your eyes, you might think you were listening to an official from TÜSİAD rather than Erdoğan's finance minister. Phrases like green and digital transformation, the rule of law, integration with the European Union and sustainable growth are used, mixed with current economic data and policy recommendations, as in the mantras of the big bourgeoisie.
These two points will have to be revisited on various occasions. But it should be said from the beginning that the "Şimşek programme" continues its way with the support of a big and international class. This is precisely what strengthens its personal confidence and rhetorical twinship.
Şimşek has two main points.
First, he says, they are implementing a disinflation programme and it is normal that it will have some "bitter" results. "Of course, in the short term, the measures we have taken will have side effects," he says, "Do you know any medicine without side effects, any treatment?" This rhetoric is not aimed directly at those who have to swallow the pill. It is aimed mainly at journalists and economists, the 'policy makers'. He even goes on to say: "If you read the inserts of these drugs, the small print, no one would take these drugs. In other words, if you ask the 'patients', they wouldn't take the medicine, but they have to take it to get better, he says, don't mind their objections. Indeed, despite the broad class consensus, his programme needs social legitimacy. But one of the main characteristics of all his rhetoric, not only yesterday's, is that Mehmet Şimşek does not speak to the public, he does not address them, he does not take them into account. In his long speech, there are only two words for the public: Time and patience!
Referring to the February 6 earthquakes and the May 14-28 elections, he says that an extreme period has been experienced that was crucial, but its effects have faded and therefore the one-year transition period they designed is now over. "It takes an average of 3-4 years to bring inflation down to pre-shock levels... We defined our first year as a transition period. That transition period ends this month." In a sense, he says, "it really starts now". He says confidently that domestic demand is still high, but will be more under control in the third quarter. By suppressing domestic demand, they mean reducing the incomes of wage earners and small producers and thus weakening their purchasing power. A further reduction in domestic demand in the third quarter means a rejection of the July pay rise demanded by minimum wage earners, pensioners and all workers. He is actually speaking quite clearly. Those he is addressing understand him. After all, he said somewhere at the beginning of his speech: "The qualified participants here will understand, but there are citizens watching us on their screens..."
The second emphasis is that there are significant problems all over the world, "we are not in the world of 2008", etc., but nevertheless their programme is working successfully. In these parts he speaks directly to the capital class and "market actors". Now it is time to promise!
- Central bank reserves will soon be positive without swaps... Reserves concerns will largely be off the Turkish agenda...
- The decline in Turkey's risk premium is significant. Don't just look at it as everybody's risk premium is going down, ours is going down more, it wouldn't have been this way if we had taken a different path.
- Growth is slowing around the world, in 2008 the average forecast for developing countries was around 7 per cent. Now it's at its lowest level. But we will still grow. Disinflation is not incompatible with growth.
- There are two factors that will drive growth: high productivity through artificial intelligence technologies and structural reform. Thanks to me, we have the second and we are not bad at the first.
- The concept of a new industrial policy is in vogue around the world. We have a new industrial policy too. (As TÜSİAD also says) Double transformation: Digital and green transformation.
- We are reducing the budget deficit and the current account deficit, we are easily finding external resources. Our programme is working!
These are all promises and statements aimed at the capital segment. Information addressed to the real owners of the programme.
Remember, Şimşek has classified those in front of him as qualified participants and citizens watching on their screens... For his programme to work, he needs the contribution of qualified participants and citizens to stay in their seats and not to get up. Because this programme will not be tested by data and statistics, but by the possible attitudes of these masses. He is one of those who know this best.
"WE DON'T TAKE INTO ACCOUNT BLACK SEA GAS AND GABONESE OIL".
There was an interesting point in Şimşek's speech yesterday. He spoke with irony, almost mockery, about some practices and concepts to which previous economic administrations and Erdoğan attached great importance. The first of these was the Currency Protected Deposit (KKM). When he mentioned that they were reducing the KKM, he said with a mocking smile, "How are we going to explain this to foreign guests now?" and even offered a translation himself. He joined in the laughter that erupted in the room.
Secondly, while talking about the importance of alternative energy sources to reduce the current account deficit, he brought up the Black Sea gas and the oil reserves allegedly found in Gabar. As you know, these are strong cards that Erdoğan often puts on the table. "We don't take them into account in the medium-term programme," said Şimşek, "If they come, they will be added out of the blue, so to speak."
Hakkı Özdal
Yusuf Karadaş