Turkey’s collapsing economy and the Finance Minister that asks people to see the “shine in my eyes”

Nureddin Nebati Turkey

When asked last month by Turkey’s new Finance Minister Nureddin Nebati to give details of an initiative aimed at halting the collapse of the Turkish lira, he found an original way to explain his strategy.

“I will not give a number now,” he told the surprised TV reporter. “Can you see in my eyes? What do you see? …The economy is the shine in the eyes.”

For the man chosen by President Recep Tayyip Erdoğan to oversee and articulate the unorthodox economic policy of lowering interest rates in order to deal with rising inflation and the fall in the Turkish currency, the answer was typically unconventional.

Six weeks after taking the top job in the Erdoğan government, combining the finance and economy ministries, the 58-year-old minister has embarrassed markets by commenting on issues ranging from inflation to the US Federal Reserve.

“We have put aside orthodox policies, now they are heterodox policies,” Nebati told businesses two weeks ago, referring to interest rate cuts that run counter to the prevailing economic theory that fighting inflation requires higher interest rates.

Erdoğan insists on low interest rates.

“We will not move on a path that others have set for us, but on our own path,” he said in one of the many speeches and television interviews he has given since taking over the ministry.

https://twitter.com/NureddinNebati/status/1482335328425938945

Critics of the government, including opposition politicians and foreign economists, say the move poses a threat to Turkey and that Erdogan has further disrupted markets by appointing Nebati.

“Instead of inspiring confidence in the economy, you took measures that left everyone stunned,” ultra-nationalist IYI leader Meral Akşener told Erdoğan.

“As our nation suffers, the ‘Comet Nebati’ you put at the helm of the economy … speaks shamelessly about the ‘spark in his eyes’,” she added.

Even some sources close to the government have expressed concern, saying Turkey could choose a more market-friendly figure to head the economy in such turbulent times.

Nebati was not available for comment, and the finance ministry spokesman did not respond to questions about the minister’s role. Erdoğan’s office did not immediately respond to a request for comment.

A senior official from Erdoğan’s AKP party said Nebati took office when the global economy was “in trouble” and enforced new regulations, working closely with the president and preventing the pound from collapsing.

“Some pessimistic comments are being made and I do not think Nebati deserves it,” he said.

Nebati has made several impressive statements since his appointment.

He wrongly stated that the US Federal Reserve belongs to five families and also said that Turkey has entered a “positive vicious circle”.

Asked about the sharp recovery of the Turkish lira after Erdoğan announced last month that deposits would be protected from exchange rate fluctuations, Nebati insisted that state institutions had played no role in the exchange rate rise.

READ MORE: Turkey’s economic crisis: “People are hungry, I’m sick because I do not have heating.” 

Data from the central bank show that its foreign exchange reserves fell by almost $20 billion last month.

Although the bank did not announce any dollar sales on the day the lira recovered, analysts say half of the decline in foreign exchange reserves was due to backdoor intervention.

An AKP lawmaker said Erdoğan did not believe the deposit protection program had been clearly explained by Nebati and the government as a whole, and was concerned that although it had pushed the lira, the initial impact of the program had stopped.

Nebati, however, has said that demand for the protection program has been strong and that inflation will peak this month and fall to single-digit levels before the elections, which are scheduled for mid-2023.

Nebati was born into an Arab family of the al-Naim tribe in southern Turkey, near the border with Syria, studied political science and engaged in the family textile business.

He served on the board of MUSIAD, an association of religion-oriented businesses affiliated with Erdoğan’s government, and as a member of parliament for the ruling AKP.

Nebati was appointed Deputy Minister of Finance and Economy in September 2018 and served under Erdoğan’s son-in-law, Berat Albayrak, with whom officials say he was very close.

He remained in office after Albayrak’s dramatic resignation in 2020 and took over as minister last month.

This was following the resignation of Lütfi Elvan, the last prominent figure in the Turkish government or central bank deemed to have backed orthodox economic policy.

A person in business circles, who had dealings with Nebati during his tenure as deputy minister, described him as extroverted and a “storyteller” with little financial education.

Nebati sometimes replaced Albayrak in meetings with foreign officials that were considering investing in Turkey.

In one case, according to the businesmsan, “[Nebati] avoided an official’s questions and, instead of answering them, told stories from his childhood.”

The businessman added that the official left without making any investment commitments.

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