Tentative Steps Towards Reconciliation in Chad

As weapons do the talking in neighboring countries, Chad is embarking on negotiations that the politicians of the central African country hope will lead towards a democratic reconciliation. Our correspondent in N’Djamena gives an insight into the chances of success.

When Idriss Déby, the long-time head of state of Chad, succumbed to his wounds obtained when he paid a visit to frontline troops in April 2021, the future of his country looked rather bleak. Not for the first time, one has to admit. General Mahamat Idriss, one of the late president’s sons, took power as the de-facto head of state and made clear his intention of pursuing those he held responsible for the death of his father, namely the Front for Change and Concord in Chad (known by its French acronym FACT). The armed group based in the north of the country, the region bordering on Libya, had attacked a border post of the government after the elections of April 11. The army confronted the rebels and during one of the altercations, Idriss Déby was killed.

With this history of violence in mind, the chances of reconciliation in Chad looked remote. But, despite this troubled outlook, the country didn’t descent into a downward-spiral of violence and retribution, but instead today is preparing for a round of negotiations due to begin later this month and scheduled to last into the month of December. The coalition of rebel groups – the Union of Resistance Forces (UFR) – in recent days agreed to take part in the talks, albeit under certain conditions.

The Making of the National Dialogue

This followed a process that involved pressure from the international community, demands from the unarmed opposition in Chad and a peace initiative by the government of Togo. Lomé organized a meeting between the Transitional Military Council and six major opposition groups that took place between June 21 and 23. The aim of the meeting was to ease the tensions between the military, the democratic opposition and the armed rebel groups in a bid to get a dialogue underway and to pave the way for a peaceful transition to democratic rule. During the talks, the opposition groups affirmed their view that it was the much-criticized electoral fraud of Idriss Déby’s government and the exclusion of the democratic opposition from power that led people to take to the arms. And, by consequence, the question of electoral fraud had to be tackled once and for all, so they said.

The discussions between the military council and the opposition and the pressure from international partners appear to have prompted Mahamat Idriss to follow up on his willingness to pursue a reconciliation process, leading up to presidential elections. He put his weight behind a national dialogue that would exclude nobody and put the organization of the national dialogue in the hands of Sheikh Ibn Omar, the reconciliation minister, and former opposition leader Saleh Kebzabo. Ex-President Goukouni Weddeye will oversee the process as the dialogue’s formal head.

General Amnesty as a Major Hurdle

In a meeting in Paris, the FACT, the Military Command Council for the Salvation of the Republic (CCMSR) and the Union of Forces for Democracy (UFDD), the country’s biggest rebel organization, met with Weddeye’s committee to discuss the preconditions for taking part in the reconciliation process. The key demands of the rebel groups are the release of prisoners, a general amnesty and the return of property taken from opposition groups.

For the government, the demand to release prisoners seems to present a major concern, despite a nod of agreement. Abdul Rahman Ghulam Allah, the spokesman of the transitional government, said the opposition first had to prove its willingness to partake in the negotiations before the release of prisoners or even a general amnesty could be considered.

Clearly, the goal of national reconciliation requires a lot of work still, from all participants. The opposition, including political parties and civil society representatives in late October met in Geneva to discuss their demands for the democratic transition process. In the so-called «Geneva Declaration» the groups described their plan for the transition, with the creation of four separate committees, including the Republican Transition Council with 15 representatives. The declaration, which was submitted to international partners and the military council of Mahamat Idriss calls for the installation of a prime minister with all necessary powers. Also, a national transition council in the shape of a proper parliament should be charged to organize free and fair elections.

The International Dimension – With a Coup in Khartoum

Apart from the usual actors such as Paris and the afore-mentioned Togo, the way towards the reconciliation process also included Qatar, where Timan Erdimi’s UFR consulted with the government, Saudi Arabia and China.

Meanwhile, the developments in N’Djamena have been overshadowed by events in Ethiopia, Sudan and Libya, where a full-blown civil war, a coup d’état and the arduous process of organizing presidential elections have taken most of the international attention as of lately. Sudan, with which Chad not only shares a long border, but where profound links and also conflicts have existed for many years, looks destined to take a major step back in its development towards democratic rule that began after the fall of long-time dictator Omar al-Bashir in 2019.

Sudan was indirectly affected by the death of Idriss Déby as the regional security structure of the Sahel region was upset. It is especially the influence of armed conflict on Darfur and the camps for Sudanese refugees in Chad that seem to weigh on the developments in the Sahel region. In general, though, the military coup has not had an immediate negative impact on the situation in N’Djamena.

Outlook for the Negotiation Process

Despite the initial signs of progress in Chad, the likelihood of success is fairly small. The army’s willingness to commit to the peace process and to yield to the demands of the rebel groups seems weak. Chances are that the military in the end will expand its control of the situation and prolong the transition period. This in turn could well prompt the opposition to leave the table and return to the field.

The factors that may help keep the negotiation alive are related to the situation in the north of Chad and the border region to Libya. The Libyan army recently had attacked the forces of FACT, which had a forceful impact on the troops and left the group exhausted and in a fragile position. With demands on Libya to boot the Chad rebels out of its territory and the willingness of some opposition groups to commit to talks should help the process.

The latter point also shows how important the international actors are in supporting peace talks. With conferences in Lomé, Qatar, Paris and Geneva, the international community has shown its willingness to help the country with its process of reconciliation./MTZ

Sudan: Months of Tension Culminate in Military Coup

The writing had been on the wall in Sudan and the events of Monday may confirm the expectations of many. But the conclusion that everybody stands to lose from the coup in Sudan is too simple. The numerous groups that are destined to benefit from the coup makes a return to civilian rule all the harder to achieve.

Waking up to the news of an ongoing coup in Khartoum was chilling in many ways. Those of us who have been following the democratic awakening of Sudan since the revolution of 2019 had been aware that all was not well in Khartoum recently. In September, the army claimed it had stopped a coup attempt by officers loyal to the old regime of Omar al-Bashir and his followers that had kept their jobs in the armed forces. Talk was of disagreements among the civilian components of the government, among the diverse groups that had kicked out the old regime, between the military and civilian members of the sovereign council and, last but not least, even among the armed forces themselves. Tension was rising, with demonstrations against and in favor of a coup.

It would go too far to discuss all these disagreements in detail at this point, but clearly the democratic transition had reached a critical point. Prime Minister Abdalla Hamdok, an economists of considerable high international standing, together (!) with army chief General Abdel Fattah al-Burhan had met with U.S. Special Envoy for the Horn of Africa Jeffrey Feltman over the weekend. The U.S. administration today said it had not been given a heads-up on the military’s intentions and suspended the $700 million aid package for the time being. The U.N. Security Council will convene to discuss the events after strong condemnations from many countries.

It’s the Money that Counts

In reality, the Sudanese transition has become an increasingly complicated story. And, as is so often the case, it is the money that has an important bearing on events. The Sudanese armed forces, which includes the Rapid Support Forces militia, owns and runs a large part of the country’s economy. The al-Bashir regime wasn’t simply an islamist dictatorship, it also, or maybe even mainly, consisted of a very strong military-industrial complex. It was this powerful element that eventually had turned its back on the al-Bashir regime and toppled the islamist government, following the street protests. It evidently expected that a collaboration with a new civilian government would be more beneficial than maintaining a status quo that had run its course and that had crumbled under the force of tough international sanctions.

The most important point of conflict between the military representatives in the sovereign council (the committee that had taken over after the revolution) – General al-Burhan and RSF General Mohamed Hamdan Dagalo – and the civilian government of PM Hamdok was the transfer of economic assets from the armed forces to the civilian administration. For the army, such a transfer threatens its economic prowess. For Sudan as a nation though, the democratic transition hinges on an improvement of the economic performance. Hamdok and his ministers had chosen the path of bringing the country back into the global fold and international economic framework. Sudan is undergoing very tough economic reforms that include a freeing of the exchange rate, the end of fuel subsidies and more transparency in public accounting. In return for the reforms, Sudan was admitted to the status of a country worthy of loans.

The reforms implemented by the team of PM Hamdok however meant that the population was feeling the pinch, with the government unable to compensate the people adequately. Under these conditions, the civilian administration urged the military rulers to forgo their assets and to put these under the control of the government, helping it to raise more taxes.

A Different International Perspective

The second crucial point in the conflict between the military and the civilian components of the shaky coalition concerned their respective international sponsors. While the civilian component had received the backing of Western democracies, including the U.S., Germany, France and other nations organized in Friends of Sudan, the army still enjoyed strong ties to Gulf states and Egypt. The latter, a neighbor with a difficult ten years behind it, is keen on stable conditions across the Arab world and in particular wants any remnants of the Muslim Brotherhood removed from the levers of power.

The Sudanese armed forces and its allied militias have been widely used to fight proxy wars across the regions, with the civil wars in Yemen and Libya prominent examples. Those wars were the second provider of resources to the armed forces and militias in Sudan. It isn’t surprising then that Generals al-Burhan and Dagalo wanted to retain not only their economic assets within Sudan but also their strong and lucrative ties abroad. And those foreign allies tend not to be particularly fond of a Western-style democracy, despite their own allegiance to the U.S. and other big powers.

It’s Complicated

When al-Burhan in his speech to the nation suggested that the army would retain power until a civilian government had been installed in 2023 following a general election, the logic wasn’t that straightforward. The logic behind taking power from the civilians and to hand it over after elections can only really mean that the army wants a civilian government elected that is to its liking – otherwise why would it remove the current civilian administration? In other words, no free and fair elections and no real handover of power but a democratic figleaf for military rule. The generals obviously feel safe enough with the backing they enjoy abroad to pursue a political course that resembles those of their friends abroad. However, the weak point in this analysis seems to be their relative lack of strategic importance compared with say Egypt and Saudi Arabia, or the UAE. It is fairly difficult for the governments in Washington, Paris or Berlin to simply abandon the politicians they have been supporting and for whom they have organized international donor conferences.

It will be really interesting to see whether the West is planning to apply more pressure on the generals. The governments in the West know full well that the population will suffer most from economic sanctions and a return to full international sanctions isn’t really an option. Getting the democratic transition back on track won’t be an easy task. It never was easy to begin with, but the army’s coup has made things very complicated indeed.

Turkey and Its Central Bank: Turning Heads

When the Turkish government in mid-October removed three members of the Monetary Policy Committee (MPC), the reaction was somewhat predictable. After all, the writing had been on the wall. But what difference does it make to Turkish monetary policy?

Recep Tayyip Erdogan, the all-powerful Turkish president, on Thursday, October 14, ousted three key members of the central policy-making committee. Two of the three were deputy governors, Semih Tumen and Ugur Namik Kucuk. The third, Abdullah Yavas, was the longest serving member on the Monetary Policy Committee (MPC) of the Turkish Central Bank (TCMB).

Following the removal of the three, the lira fell against the major trading currencies. It has since reached a level of about 9.30 to the dollar, a record low for the currency of Turkey. Naturally, this will make products made in Turkey and holidays on the Mediterranean cheaper for buyers from other currency regions. The flipside of the coin is the increase in the price of foreign goods – and that includes anything Turkish companies need to make their end-products.

Attracting Tourists Through Lower Prices

The pandemic has left a gaping hole in the Turkish economy due to several separate reasons. Perhaps the most important one was the collapse of tourism. With a fall in the lira, Turkey will boost its allure to tourists, especially from Europe and Russia, who have an additional incentive of choosing Turkey over rival destinations such as Greece, which uses the euro.

The president and his AK Party are preparing the ground for the next elections, due in 2023. The surprise victory of Ekrem Imamoglu of the CHP over his AKP rival, Binali Yildirim, in the 2019 Istanbul mayoral elections has highlighted the potential hazards of the coming elections.

Erdogan and his team are making conscious decisions about economic policy. That includes rate cuts when inflation tends to rise and the hiring-and-firing of central bankers – Erdogan got rid of three central bank governors in a little over two years. He is evidently not impressed about the concept of central bank independence and has moved to do to the monetary policy authorities what the government has done to other institutions as well, namely to toe the line.

Loss of Experts May Come Back to Haunt the Country

Erdogan seems adamant that he and his team are  better equipped to run the central bank’s business than the orthodox monetary policy experts who held sway over the TCMB for almost two decades. And, obviously, if you are going to run the central bank from the offices of the government, you don’t need much of an independent MPC either.

Still, the question is what it does to staff morale at the bank. The TCMB has already lost many of its experts to jobs abroad and the latest developments may lead to further departures of key staff in the back offices. The government seems unfazed and it didn’t provide a reason for releasing the three MPC experts. But for the sake of international cooperation and investor confidence, the loss of such talent is not a good sign.

Coup Attempt in Sudan Serves as a Reminder of the Country’s Fragility

When the news about the attempt coup d’état in Sudan broke, all fingers automatically pointed toward the Muslim Brotherhood. Indeed, frustrated islamists seem a likely source of taking to such drastic steps, but they are not the only ones.

From what has emerged so far about the military coup attempt in Khartoum on Tuesday it seems to have been a comparatively low-key event, with no bloodshed being reported and few arrests made. Business was swiftly resumed and people seemed not too impressed. The fact that no harm was done is the good news about the event that rattled nerves of observers. From what was said in the local media, the intelligence about the impending coup had been made available in good time for other parts of the army to step in and stop the tanks from rolling over the bridge into downtown Khartoum.

According to a report by Reuters, the commander of the armored corps, Major General Abdalbagi Alhassan Othman Bakrawi, had worked with some 22 other officers in a bid to overthrow the government. Elements from different regiments, and mainly from the armored troops, had planned to move into Khartoum from Omdurman and had been prevented by other security forces from doing so. The armed forces controlled by army chiefs Abdel Fattah Al-Burhan and his colleague at the Rapid Support Forces, General Hemeti, have made several arrests and are looking for more perpetrators.

Abdel Fattah al-Burhan, the head of the armed forces, after the coup had failed told his troops that the army was there to turn the country over into the hands of the public, to free and fair elections.

A Government Under Pressure

So, what should the international community make of it, and, more specifically, what does it mean for the democratic transition in Sudan? For the government it was clear that the remnants of the old regime of Omar al-Bashir had tried to fight their way back into power.

According to this narrative, the old foes of the current military-civilian government have tried to exploit a sense of growing unease with the achievements of the government. The implementation of tough economic measures in the earlier parts of the new government’s tenure had left many people worse off. A cut in subsidies and the currency reform pushed an impoverished populace to raise their voices again, even if in a fairly muted fashion.

The civilian part of the sovereign council, led by Prime Minister Abdalla Hamdok is under intense pressure from several corners. It urgently needs to increase its revenues from taxes to pay for its reforms and thus remain true to its commitment to the people. But, inherited from the decades spent under Al-Bashir, the military is holding many of the country assets and has not been forthcoming in handing over control over those companies to the government, local observers have said. Other vital sources of income, such as from the production of gold, is going straight into the pockets of companies that are less than eager to pay their taxes. The name of General Hemeti is often mentioned in this context, as his brother is head of a known gold company (see: https://www.globalwitness.org/en/campaigns/conflict-minerals/exposing-rsfs-secret-financial-network/)

But, to his credit, Hemeti had eventually sided with the revolution and helped getting rid of Al-Bashir. Hemeti is an important member of the sovereign council running the country and, through his RSF troops, he is a key component in Sudan’s military setup. While Hemeti and Al-Burhan have their disputes with the civilian part of the government and seem reticent about handing over economic assets, they also are firmly opposed to the islamist groups that still feature strongly in the country – and in the army. The army chiefs are said to have strong affiliations to Egypt and the gulf states. Experts are saying that Egypt, the old colonial power, is strongly in favor of a powerful army in Sudan and has urged the generals to evict members of the Muslim Brotherhood from its ranks.

A Fragile Situation

In a way of speaking, the armed forces face similar struggles as the civilian part of the government. They both have huge challenges to tackle and – one is tempted to say – both need the occasional success story. A coup that the army has foiled certainly seems to fit the bill, and foiling an islamist coup d’état is certainly a top priority for both army and government.

Some observers therefore went as far as to suggest that the coup, unbloody as it was, may have been fabricated, not least as it has helped the reputation of the army. There is no proof available to back up this theory of course.

What does the coup attempt mean for the transition though? From a very basic point of view, the events of Tuesday past suggest that the situation in Khartoum is relatively fragile still. Through the swift action by the armed forces, the country was kept on its transitionary course, while strengthening the hand of the army as guardian of the state. It also reemphasized the importance of reforms to help the populace economically and prevent them from turning their backs on the government. For that, PM Hamdok needs help from abroad and help from the army.

Talking About President Erdogan’s Health Won’t Make Much of an Impact

Turkey has seen a wave of speculation about their president’s health recently, not for the first time and presumably not for the last either. This may come as little surprise given the importance of Recep Tayyip Erdogan for Turkey – but some observers argue that the whole debate amounts to little more than idle gossip.

It goes without saying that President Erdogan is the key person in Turkey and that public, economic  and foreign policy, not to mention security policy are ultimately subject to his point of view. Since his ascent to power some two decades ago, first in the role of prime minister and later as president of Turkey, Erdogan steadily expanded his influence over the many realms of the state and has certainly made this an iron grip in the aftermath of the failed coup d’état staged by part of the armed forces five years ago.

In taking such a strong position, Erdogan has as a person become the focus of attention in the country that has a lively political landscape and culture of discussion. Speculation about the president’s health has surfaced on and off over the years. A decade ago, Turkish media was abuzz with talk about an alleged cancer treatment, a rumor that he himself later denied. And, with the benefit of hindsight, and given his grueling schedule as the country’s top politician over the past ten years, the rumors sound slightly absurd.

There Is No Health Issue

When the latest round of talk began in July, it focused on a taped video message to the population where he was alleged to have slurred his speech. My sources are telling me though that Erdogan has no problems with his health and that the talk is just gossip.

The question arises thus whether we should really report about this? Naturally, in countries with such a strong focus on one politician, the attention on his every step is a given. With his pronounced interest in monetary policy and his influence over who is running the central bank, economists tend also to look closely at what he is doing and saying because of the potential effect this has on markets.

The same of course is true about security policy, with Turkey involved in countries such as Syria, Libya, Cyprus and even as far away as Afghanistan. The country is home to as many as five million Syrian refugees and has helped the Libyan central government fight a war against the rebel-army of General Haftar. Turkey is also said to have been the key player helping Azerbaijan win its war against Armenia a year ago. Ankara has also taken a role in securing the airport of Kabul after the departure of the international coalition troops. So the argument goes that the personal wellbeing of the president is a key issue for political observers too.

Well, it is, of course. But it is also based on a simplistic an approach to politics and economics to pay such intense attention to this one issue. New politicians emerge to take over the reigns once the top person leaves stage, in whatever way that may be. They may not be able to do so during the reign of the person at the top, because there is too little room to flourish. But that doesn’t mean they don’t exist.

Therefore, it makes much more sense to focus on the government’s performance, it policies and projects, failures and successes. And not so much can be gained from speculating about the personal health of a president.

A Study of the Past for Understanding the Sudan of Today

The Economic and Political Development of the Sudan
by Francis A. Lees and Hugh C. Brooks

The Sudan is one of the (few) exciting cases of democratic transition and as such has featured strongly not only on the frontpages across the world but also as a key factor for international development. Testimony to which was the May 17 International Conference on Sudan hosted by President Emmanuel Macron in Paris.

With hopes running high for turning what the U.S. deemed a state sponsor of international terrorism into a democratic country of more than 40 million people, the world’s powerful players flocked to the French capital to promise economic help in exchange for new policies implemented by the government of Prime Minister Abdalla Hamdok.

As so often is the case with such give-and-take deals, the measures implemented by the government are hitting the poor the hardest. Eliminating subsidies and devaluing the Sudanese pound affected those with small pockets directly. The consequence of the measures, deemed necessary to gain pledges of debt relief, are a growing anger among the general population. The people who took huge personal risks to kick out the old regime of Omar al-Bashir some two years ago are now struggling to see the economic dividend of their fight. This is putting additional pressure on the civilian part of the government of Sudan.

For a thorough analysis of the current economic situation one needs to take a close look at the past and the development of the economy in case. One study that provides the necessary insight and detailed approach is “The Economic and Political Development of the Sudan” by Francis A. Lees and Hugh C. Brooks. Published originally in 1977, Routledge recently re-released the book, which gives an excellent overview of Sudan in its early decades of independence.

With a keen eye on detail and relevant statistic, Lees and Brooks provides the reader with a wealth of background about the emerging country bordering today on the Red Sea, Egypt, Libya, Chad, Central African Republic, South Sudan, Ethiopia and Eritrea – giving it a central position in Northeast Africa. The work by the two authors covers geographic, ethnic and political dimensions, complete with an account of the colonial past, a period of domination by Britain and Egypt that ended in 1956.

Published by Routledge in 2018./abr

Sudan Investment Conference: Are the Hopes of the Democratic Government Justified?

When Sudan’s Prime Minister Abdalla Hamdok today addresses the investment conference initiated by French President Emmanuel Macron, he can be sure of the full attention not just of the other heads of state and dignitaries, but also of the wider population in his country.

With fuel and food supplies reportedly under stress and rising prices hitting consumers in their pockets, the democratic transition in the vast sub-Saharan country risks to unravel. The weight of hopes and expectations for a democratic dividend in the form of economic progress are palpable.

But even with the best of intentions, the international community may hesitate to open the pockets given the economic uncertainties as a consequence of the pandemic. The potential investors would however be ill-advised to stop short of substantial help as the PM Hamdok and his transitional government are under pressure to provide the goods.

The donor conference organized by the Friends of Sudan (EU, France, Germany , Norway, Saudi Arabia, Sweden, United Arab Emirates, United Kingdom, and the United States) is surely well aware of the alternatives eager for a bigger stake in the country.

Libyan Firms Face Plethora of Challenges

The Private Sector Amid Conflict
The Case of Libya by Aminur Rahman and Michele Di Maio

The visit of Italian Prime Minister Mario Draghi to Libya in early April 2021 highlighted the hopes of some of the many actors with a stake in the Libyan drama of escaping the dark years. Italy in particular is keen to get the ball moving again, not least due to the geographical proximity – making the country a gateway for migrants.

Also, Italy and Libya enjoy ties that date back to the colonial years of 1911 through 1943. Making his first trip abroad the visit of his newly elected counterpart,  Abdul Hamid Dbaiba, signalled Draghi’s intent to make this hotspot a priority for his government.

Business leaders in Italy will have told him that any improvement in the trade between the two countries will hinge on Libya achieving some progress with respect to how its businesses are performing. Aminur Rahman and Michele Di Maio have compiled a comprehensive list of facts and figures showing in detail how the country has achieved its notoriety as a country with difficult economic conditions.

Their book, “The Private Sector Amid Conflict”, published by the World Bank Group, is based on a survey of 400 companies dating back to 2018. Although the groundwork was thus laid three ago, the work presented will go a long way in explaining the huge task the new government of unity is facing.

Having traditionally relied heavily on the (state) production of oil, Libya started into the troubled years after the fall of the Ghaddafi regime with a weak private sector. Businesses were naturally hampered in their development by conflict, but also by an absence of a reliable policy framework, a lack of skilled labor, a proper infrastructure and access to finance.

The conflict that escalated in recent years made life even harder for the private sector. It made letters of credit harder to get, increased uncertainty of economic and political conditions and further aggravated corrupt practices, according to the authors of the study. Furthermore, there is an acute concern about so-called “elite capture”. The concept describes a situation whereby the well-connected have preferential access to public contracts, foreign currencies and letters of credit.

The difficulties the Libyan economy is facing are substantial and any progress will not only hinge on a domestic push for reform but also international support. Rahman and Di Maio suggest that the government would be well advised to get started with a public-private dialogue. They refer to similar efforts launched in Bosnia and Herzegovina, Iraq or Sierra Leone as examples for how such a dialogue can help rebuild the private sector. Their work provides a good basis for any actor potentially involved in such an enterprise.

Published by The World Bank Group in 2020. /abr

Turkey and the European Union

The government of President Erdogan and the EU agree that they should talk again. A good step for sure. But will it amount to much? It is too early to say, but some observers say that both sides have lots to gain.

For one politically open-minded friend in Istanbul, one thing is certain: Turkey’s advances toward the EU are not to be taken seriously: “You know, he likes to play his games. Nothing will come of it.” This view is due not least to the abysmal frustration over an increasing alienation of Turkey on the one hand, and the EU on the other. The Western-influenced elite, excellently educated and in lively exchange with partners in Europe, are caught between the open rejection that Turkey faces from Europe and the aggressive policy against everything that does not toe the AKP line at home.

The crazy thing about the story, and just about the recent willingness to talk, is the acceleration of the decline of the common relations that preceded it. A few examples to illustrate this decline: the Turkish army launched an offensive against Syrian Kurdish formations in northern Syria in 2019 – against the YPG militias and their affiliated Syrian Democratic Forces (SDF). The offensive against Syrian Kurdish forces, described as offshoots of the PKK, came after U.S. troops withdrew from Syria. The Europeans, who maintained close contacts with the Kurds, had to stand idly by.

The situation in Libya was no less precarious for years, even if it was less visible to a broader European public. There, the east and west of the country, or in some respects their supporters, were at war. Erdogan found himself supporting the country’s legitimate government and sending mercenaries from Syria to repel General Chalifa Haftar’s attack on the capital Tripoli. Erdogan finds himself siding with most of the European countries here (plus Qatar), while on the opposite side the Russians and France, as well as Egypt, the Saudis and the United Arab Emirates, backed the anti-government forces.

As if this were not enough of military adventures, Erdogan helped his allies in Azerbaijan in 2020 to retake territories controlled by the Armenians in a what became a blitzkrieg. Armenia is known to be leaning toward Russia.

And – last but not least – Turkey fueled the age-old conflicts in the Mediterranean, on the one hand with the search for gas deposits in zones with disputed sovereign rights, on the other hand in the Cyprus conflict.

It’s all a bit much for a charm offensive, but apparently there are nevertheless solid reasons for a rapprochement. Ozgur Ozdamar, a professor of international relations at Bilkent University in Ankara, believes the chances for the talks are intact. “The drive for re-engagement is not one-sided. Both Ankara and Brussels, as well as most EU member states, want to re-engage after years of confrontational relations.”

The political scientist, a renowned expert in Turkish European politics, sees two main reasons for the advances on Turkey’s side. The immediate trigger may have been the convincing election of Joe Biden as president of the United States. It is true that relations with the U.S., a NATO state, have been under strain – especially also because of the purchase of a Russian missile defense system – but at the same time, the U.S. pursued a less interventionist policy under Donald Trump. This is the only way to explain why they dropped the Kurdish allies in Syria rather abruptly.

Under Biden, the tide could turn again, as he is likely to pursue a reliable and at the same time probably more classic foreign policy. Here, Erdogan’s position could quickly become difficult. Compared to Europe, the U.S. has much less to lose in dealing with Erdogan. The Turkish president’s cleverly played Damocles sword of waves of refugees, which only he can hold back, is completely irrelevant for the U.S.

The second point, probably no less important, is Turkey’s difficult economic situation. The AKP government had maneuvered itself into a very difficult position after what observers described as a poorly thought-out departure from a classic independent central bank policy. Instead of raising interest rates, as was urgently indicated, and thus strengthening the lira, the government stiffened its resolve to lower interest rates and keep them low. With drastic consequences for Turkey. The lira plummeted, the central bank used up its reserves and had to ask for help from friendly states (Qatar).

Nevertheless, when the pandemic broke out, the political situation soon changed and Erdogan had to pull the emergency brake rather abruptly in the fall. The president’s close confidant and son-in-law, Berat Albayrak, had to vacate his post as finance minister, as did Murat Uysal, head of the central bank. In the meantime, interest rates have been raised twice to stabilize the situation – but this amounted to quite a loss of face for the powerful head of state.

Ozdamar sees Turkey’s economic situation as a major driver of the change in strategy toward the EU. According to the politics professor, however, a change for the better requires a less confrontational attitude toward the EU and the United States.

And yet – the new tones from Ankara and Brussels are still not very solid. Any expectations that Turkey and the EU will return to a genuine dialogue may be premature, however. Ankara’s willingness or ability to compromise is extremely limited, and the first thing to do is to hold talks to contain the danger of a conflict with Greece.

Ultimately, the Europeans, and especially the key figures in Berlin, must also recognize that the AKP does not operate entirely free of political constraints. It needs the support of the nationalist MHP for a majority in parliament. And the latter is at least on the same line as Erdogan’s party with regard to policy in the Mediterranean and also with regard to Cyprus.

Ray of Hope for New Economic Policy in Turkey

The change was rather abrupt: Recep Tayyip Erdogan exchanged his central bank governor and the finance minister both within a few days in November. Shortly after, interest rates were dramatically hiked to halt the fall of the Turkish lira. If he had planned to surprise the markets, he has succeeded, but observers still question his motivation behind the moves.

Frustration had mounted for months about the unorthodox economic policies pursued by the Turkish government. The country’s lira was in freefall, continuing the slide that had begun some ten years ago, which weighed heavily both on the economy as well as private investors.

For them, debt held in foreign currency became ever more expensive, at a time, when the pandemic had affected demand.

The Turkish state also was struggling with the effects of the weak currency. Together with the hazardous political stance of the government, it meant that capital markets would keep more than just a close eye on the economy, with the combination being a poisonous cocktail for investors. Under such conditions, capital markets infallibly will place an extra-high premium on investments. The problem was that the central bank no longer had (has) enough currency reserves to intervene in the currency market in an attempt to shore up the lira.

Faced with this dynamic, observers despaired about Erdogan’s insistence on low interest rates. After all, the orthodox reading of market economy dictates that high rates shores up your currency because investors will get a higher return in exchange for the bigger risk that they are taking. A rate increase reduces the availability of cash and therefore has a dampening effect on inflation.

Back in spring of 2020, the president had attacked foreign capital for what he claimed was damaging speculation against the country’s currency. This was in no small part aimed at a domestic public, but the effect of the measures, which also were directed at Swiss giants UBS and Credit, was soon to evaporate.

The Turkish leader in the autumn had few options left. The slide of the currency, lower income from tourism and a drop in exports – both in no small part a direct consequence of the pandemic – soaring inflation, currency reserves reaching rock-bottom: it was high time to act.

Some sensible advisers among the top echelons of power assembled and decided to make a push for change. For such change to go through, two key players had to go. The first to lose his position was Murat Uysal on November 7. The head of the central bank, who had been installed only in July of 2019 to take the place of Murat Cetinkaya, had to go because he wouldn’t be a credible source of change. After all, he was the man who had enforced Erdogan’s choice of low-interest monetary policy, which had belied all orthodoxy.

But it was the second change that made it clear just how deep the rift had become. Erdogan’s son-in-law and finance minister, Berat Albayrak, stepped down on November 8, claiming ill health. Albayrak was the person who had protected the president from advice he didn’t want to hear and who had been the figurehead of economic policy in a government that increasingly lacked proper expertise.

It was clear from the beginning that Albayrak wouldn’t be able to work with Naci Agbal, the new governor of the central bank. Agbal is well respected among economists in Turkey, and they trust him to fulfill his promises, steering the central bank into calmer waters. His counterpart in the government now is Lutfi Elvan, another trusted and experienced government official.

On November 19, the central bank followed through with a rate hike of 4.75 percentage points to 15 percent, which was in line with market expectations. Observers agree that though this will help, it will hardly suffice to steady the ship. The economy was moving close to collapse and the rate increase and changes of personnel did come at the last moment possible.

The key question to ask is why exactly the president decided to undertake this change of course – after all, for years he had subscribed to a policy that ran counter to what he signed off now, and he had rejected all the good advice by experts in Turkey. To get a better understanding of why he changed course, one needs to take a close look at politics.

In a situation that isn’t entirely unlike that of the U.S. under Donald Trump, there are two important trends in Turkey. First of all, there is the government’s attempt to make elections more predictable and less precarious (for itself) and second, despite this first point, elections remain a difficult beast – in other words, some of the institutions have survived the more authoritarian tendencies prevalent in Turkish society, both from the side of the military and the government’s concentration of power in the hands of the presidents. The most glaring rebuke for the policies pursued by Erdogan was issued by Istanbul’s voters, who elected Ekrem Imamoglu in June 2019 as their new mayor. The victory for the opposition candidate was a major blow to Erdogan, because he started his career as mayor of that same city.

The next general elections in Turkey are slated for 2023 and all the current surveys are showing in all clarity that citizens no longer support their “sultan” unreservedly. He risks being ousted and with him his party, the AKP. They have lost some 10 percentage points in support since the elections of 2018 and today are backed by some 35 percent of voters. Observers say that the main reason for this decline is the poor economic performance. One has to keep in mind that Erdogan’s AKP helped Turkey generate a reasonable degree of welfare and growth, something that has propelled him in earlier elections. Now though, his success is fading like old photography and so is the support he enjoyed among ordinary Turks.

Faced with the options of being ousted at the next elections or changing his economic policies, Erdogan chose what any successful populist would do – he adapted his strategy in a bid to consolidate his powerbase. Whether it will suffice to retain and boost the body of voters remains to be seen.

The economists in Turkey are keen to see the change as a sign of hope, but they can’t be sure that Erdogan actually supports the moves wholeheartedly. For too long, the president preached something entirely different. Scientists agree that the basic problem facing the country are systemic. The presidential system has led to a concentration of power in the hands of Erdogan and the centralistic approach has excluded the checks and balances typically in place in a European-style democracy. Institutions such as the central bank can’t properly do their job because they are exposed to the whims of the government.

Many therefore believe that a true change for the better isn’t possible as long as the political system remains as it is. Central bank experts say that the reserve bank needs at least three years to first stop the capital outflows and then to begin replenish the stock of foreign reserves to reach a minimum level necessary for its operations.

This will only be possible if Turkey again becomes a reliable partner for foreign investors by reinstituting the rule of law and once the economy is gathering pace. Should the combination of higher interest rates and a Covid-19-induced contraction lead to a renewed economic slump, Erdogan might be tempted to again pull the strings. That would make Abgal’s position untenable, even as he only just became Erdogan’s key economic adviser.

Turkish economists are pretty pessimistic about the durability of the new strategy, because Erdogan has invariably disappointed the scientific community. Not to be forgotten are his activist foreign policy operations near and far that have become a source of constant uncertainty.

In Libya, Erdogan has sponsored the central government against the attacks of General Haftar’s army (and Russian elements), in Syria, he fought the Kurds and the government of Bashar al-Assad (and his Russian allies), and in the battle between Azerbaijan and Armenia, Erdogan supported the attack of Baku against Armenia (which enjoyed a degree of protection by Russia). In other arenas, Erdogan’s Turkey confronted Greece (and the EU) over the refugee policies, and in the Eastern Mediterranean, his exploration ships are looking for gas reserves in disputed waters.

A long list of disputes near and far showing how delicate the situation of Erdogan’s Turkey has become. It also witnesses of a dogged and stubborn pursuit of his strategic goals.

Changing economic tack probably was the easiest of the ills. Experts say that he now is likely to introduce a phase of consolidation and calm that may last some 6 to 12 months to allow the economy to recover. They also say that without real reform, political reform, the situation will remain fraught.

Monetary policy requires more than just stability, it thrives on transparency, independence from political influence and a clear plan for how inflation (currently at about 12 percent) can be tamed and reserves replenished. The bank had enjoyed a period of independence after the turn of the century. It was lost two decades later. Erdogan replaced Cetinkaya in July of 2019 because he had, against the president’s wishes, increased rates to stop the fall of the lira.

The economists who were trained in the period of central bank independence hope that this key ingredient of modern monetary policy shall be restored in due course, helping the bank again take the place it ought to as guardian of the currency. But they also realize that the latest twist in AKP’s economic policy won’t likely include letting the bank regain independence.