Is Erdoganomics rooted in Islamic Economics?

Ensuring Socio-economic Justice

Crescent International

Dhu al-Qa'dah 25, 1444 2023-06-14

Daily News Analysis

by Crescent International

After his re-election as president of Turkiye, Recep Tayyip Erdogan naturally appointed a new cabinet.

His choice of ministers for financial and economic portfolios led to loud cheers among western political and media circles.

These appointees came with mainstream economic and financial backgrounds.

For westerners, the appointment of Hafize Gaye Erkan as the Central Bank governor and Mehmet Simsek as treasury and finance minister signaled the triumph of mainstream capitalist economics over Erdogan’s so-called “Islamic” economic model.

For several years, Erdogan held the view that interest rates are the mother of all evil and cause inflation.

Thus, he kept interest rates low to boost borrowing and supposedly increase productivity.

Western conventional economists kept repeating that Erdogan’s Islam driven opposition to interest rates is what caused massive inflation and worsened Turkiye’s economic conditions.

The interest rate issue received far too much attention.

Its success could be used by Erdogan to furbish his Islamic credential.

Its failure was marketed as another example of the supremacy of mainstream capitalist economic framework.

This gave rise to the battle of narratives via headlines and bombastic declarations on the issue of interest rates in the Turkish economy.

The western media rarely mentioned that Erdogan’s view is also held by some western economists, for example Yale University economist, the late professor Irving Fisher.

Professor Fisher (d.1947) wrote many books on the nature and theory of interest rates.

During the pandemic, western regimes lowered interest rates to boost economic activity.

In some countries such as Japan, the interest rate has remained in negative territory in order to support economic growth.

So, Erdogan’s low interest rate policy is not as unusual as presented by the western media or its pundits.

It should be noted, however, that Turkiye’s economic problems are not related to only the issue of interest rates.

There are other systemic problems that are related to mismanagement and severe corruption.

For example, in 2018 some western media outlets did mention that Turkiye’s high external debt is one of the key reasons for the poor performance of its economy.

Also, some Turkish analysts explained Erdogan’s stubborn economic policies purely in local terms.

They argued that low interest rates benefited Erdogan’s cronies by providing them money at cheap rates.

So, he stuck to this policy for political rather than economic reasons.

Those holding this perspective argued that the average Turkish citizen, like people in other countries, does not suddenly wake up and start borrowing large sums of money from banks for investment purposes once interest rates are low.

Those familiar with the Turkish elite’s socio-economic set up pointed to the fact that banks lend to people with significant collateral.

In Turkiye, this segment of the population generally comprises cronies of the ruling elite, so low interest rates benefit them and garnered Erdogan their support.

If Erdoganomics was deeply rooted in the Islamic economic paradigm, there would be significant upliftment of the deprived segment of Turkish society.

Possessing all the state power, the current ruling elite in the last 20 years would have implemented some revolutionary economic policies at least at the micro-level to benefit the deprived segment of Turkish society.

It would have made some headlines in this realm.

However, if one carefully analyzes the AKP’s economic policies over its two decades rule, it becomes clear that a country like Venezuela implemented far more Islamically rooted policies than Turkiye.

Hence, all the economic wrath of cut-throat capitalist regimes, spearheaded by the US was unleashed upon Venezuela to make sure that its non-capitalist policies fail.

Linking the policies of the Turkish government to Islam is at best naïve and at worst designed to mislead.

Erdogan’s political party does not identify as an Islamic movement.

Many Muslims outside Turkiye fail to grasp this phenomenon simply because of Erdogan’s opportunistic use of Islamic symbols and slogans.

Some non-Muslims have proven to be far more prudent on this issue than many Muslims.

Prior to becoming the foreign minister of Austria, Dr. Karin Kneissl pointed out in a 2007 interview that “actually I think that this kind of government [AKP] was pushed more by the United States of America rather than by the Europeans. The reason for this is that the US wants to show that AKP party is the right model of an Islamic party. I personally don’t think that the AKP party is a typical model of an Islamic party. The US and Britain, who pushed for the AKP victory wanted to show that the path for all Islamic parties to follow was the path taken by the AKP.”

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