Chairmanship struggle in the AKP through economy

Fresh debate has erupted, both in economy and in politics, after the deputy chair of the ruling Justice and Development Party (AKP) Numan Kurtulmuş pointed out to the Central Bank as “an institution of the tutelage to be fought, just like the military.”

Alongside with Numan Kurtulmuş’s statement he gave to daily Hürriyet, Finance Minister Mehmet Şimşek also said following Prime Minister Recep Tayyip Erdoğan’s becoming the presidential candidate, Ali Babacan may become the prime minister. These statements that came one after the other were signs showing that within the AKP, a race for party leadership has already started and how vastly economic mentalities differ.

Kurtulmuş’s statements reflect a mentality that could be defined as the “national vision movement” that wishes the Central Bank to be an institution reporting to the government, instead of an independent one; a statist mentality that when the government wants, the Central Bank should intervene with interest rates and when needed, print money even if it is contrary to market economy.

On the other hand, Babacan, Şimşek and economy bureaucrats have contemporary economy mentalities suitable to market economy, which needs independent decision-making mechanisms to maintain stability. The latter, we can say, is the dominant mentality of the AKP governments’ era up until to now. In other words, it is a continuation of Kemal Derviş’s economic understanding. The AKP has been successful because of that.

Well, the debates on the independence of the Central Bank and the interest rate discussions, fueled by Erdoğan in the recent months, have come to this stage. Erdoğan has frequently shown he is closer to...