Turkey: Erdogan unveils a renewed government with an economist to reassure the markets

After his victory on May 28, President Recep Tayyip Erdoğan was officially re-inaugurated as Turkey's leader on Saturday (June 3rd) for a third five-year term. In the evening, the head of state announced the composition of his government, almost completely reshuffled. As Turkey faces a severe financial crisis, all eyes have turned to the return of Mehmet Simsek to the Economy Ministry, a proponent of monetary orthodoxy.

Turkish President Recep Tayyip Erdoğan shakes hands with his new Treasury and Finance Minister Mehmet Simsek, alongside new Energy Minister Alparslan Bayraktar at a press conference where the Turkish government was unveiled, in Ankara, June 3, 2023. © Umit Bektas / Reuters

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It attracts all eyes, but also all questions: Mehmet Simsek, appointed Minister of Finance, is back in government. From 2007 to 2018, as Minister of Finance (2009-2015) or Deputy Prime Minister in charge of Economy (until 2018), this banker with an international career headed Turkish finances, reports our correspondent in Istanbul, Anne Andlauer.

In a context of falling pounds, record inflation (up to 85% last autumn) and a crisis of confidence among investors, it is not surprising that Recep Tayyip Erdoğan is calling on him again.

Problem: Mehmet Simsek advocates monetary orthodoxy... However, the main reason for the runaway inflation is the president's insistence on lowering central bank rates, contrary to what economists advocate.

Will Mehmet Simsek be able to return to more orthodox methods in a system where the president is the sole decision-maker? Will he be able to bring more rigour when Recep Tayyip Erdoğan is already focused on the local elections of March 2024? Many doubt it.

But the arrival of this former economist of the American bank Merrill Lynch should reassure the financial markets.

► Also listen: Hyper-inflation in Turkey: Erdogan's flaw

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The Keeper of Secrets Erdoğan at the head of diplomacy

Other names stand out in this new firm. Hakan Fidan, who for 13 years headed the Turkish intelligence service MIT, takes over as head of Foreign Affairs in place of Mevlut Cavusoglu. "He is the keeper of my secrets, the keeper of the secrets of the state," the president said in 2012, describing Mr. Fidan as a "very well-trained civil servant".

According to a Western diplomatic source, Hakan Fidan is "his trusted man for years" and also the one who leads the negotiations with the Arab world, Egypt, the United Arab Emirates, Libya and also Syria with which Mr. Erdoğan is trying to reconnect through Moscow.

Then, at the Ministry of the Interior, Ali Yerlikaya, until now prefect of Istanbul, replaced Süleyman Soylu. The latter, like almost all the members of the previous cabinet, has joined the benches of the Assembly.

Finally, in Defence, Chief of Staff Yasar Güler succeeds Hulusi Akar, himself a former Chief of Staff who has held this position since July 2018. Hulusi Akar was considered the architect of the resistance to the failed coup of July 2016.

>> READ ALSO: Economic crisis in Turkey: in front of record inflation, the Turks make stocks

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  • Turkey
  • Recep Tayyip Erdogan
  • Economy