Turkey's Jared Kushner — With Even More Power

Turkey's Jared Kushner — With Even More Power

Turkish Energy and Natural Resources Minister Berat Albayrak makes a speech as he attends the 9th Energy Efficiency Forum at the Lutfi Kirdar International Convention Center in Istanbul, Turkey on March 29, 2018.

SourceIsa Terli/Anadolu Agency/Getty

Why you should care

Because this Turkish “crown prince” is running the economy.

From the moment he entered politics just three years ago, it was clear that Berat Albayrak would not be constrained by the limits of his official energy brief. As the son-in-law of President Recep Tayyip Erdogan, the former business executive soon found himself setting out the Turkish government’s position on military operations, joining high-level overseas visits and accompanying his wife’s father on the campaign trail.

Few expected, however, that Erdogan would be bold enough to put his 40-year-old protégé in sole charge of the economy at a time of mounting concerns about its health. As he formally adopted his new role as combined treasury and finance minister last week, Albayrak promised to “work night and day” to maintain fiscal discipline and bring down the country’s soaring inflation.

But foreign investors — who for years were soothed and reassured by slick former financiers appointed to senior government positions — remain nervous about how the economy will fare in the hands of a member of the Erdogan family who is a largely unknown entity.

Many believe that Albayrak is being groomed by the 64-year-old president as his successor.

After the announcement of Albayrak’s appointment, the Turkish lira, already down 17 percent from the start of the year, suffered its biggest one-day slide since the violent coup attempt of July 2016.

“Foreign investors don’t know him very well,” says Andressa Tezine, a senior sovereign analyst at Fidelity International. “We don’t know about his proposals for a new economic model — if there is one. We don’t know what he thinks about the exchange rate or interest rate levels.”

The son of a prominent Islamist writer and long-standing friend of the Turkish president, Albayrak married Erdogan’s daughter Esra in 2004 in a lavish ceremony in Istanbul that was attended by more than 7,000 guests. In subsequent years, he has become one of the Turkish leader’s closest confidants.

Before entering Parliament in 2015, Albayrak spent most of his professional career at Calik Holding, a conglomerate owned by another Erdogan family friend.

One of his first acts after becoming chief executive in 2007 was to buy a prominent media group whose outlets became among the government’s most important mouthpieces. That purchase — a $1.1 billion acquisition funded mainly by state-owned banks — led to a downgrade by the rating agency Fitch.

Promoted to the Cabinet almost immediately after becoming an MP, Albayrak endured a mixed reputation during his three years as minister of energy and natural resources. Businessmen, including senior figures in the energy sector, would complain that he was haughty and would rarely grant appointments.

“He is difficult to deal with,” says a businessman who has known Albayrak for years. “He has a very high opinion of himself. He presents himself as crown prince in the making.”

Many believe that Albayrak is being groomed by the 64-year-old president as his successor.

Within government, Albayrak gained a reputation for run-ins with other ministers. He was accused by allies of former Prime Minister Ahmet Davutoglu of gradually undermining Davutoglu until he resigned. Later, he clashed with Davutoglu’s successor, Binali Yildirim, as well as with the interior minister, Suleyman Soylu.

In public, Albayrak subscribes enthusiastically to Erdogan’s narrative that foreign powers are seeking to bring down Turkey. During the campaign for last month’s election, as Erdogan resisted investor pressure to raise interest rates, Albayrak warned that the currency crisis was being caused by an “operation” of “overseas origins” aimed at bringing down the government.

Such remarks are unlikely to reassure investors clamoring for a fresh interest raise rise at the next central bank meeting on July 24, which they say is needed to curb soaring inflation that reached 15 percent in June.

Those looking for positives argue that Albayrak speaks fluent English, has an MBA from an American university and has business experience.

While the sidelined former economy chief, Mehmet Simsek, a former Merrill Lynch banker, was respected by foreign investors, he was also seen as having little power to change the mind of the president. The influence of Albayrak, by contrast, is indisputable.

“Erdogan has 100 percent trust in him,” says Ozgur Yasar Guyuldar, head of global emerging markets sales at Austria’s Raiffeisen Centrobank. “Therefore, whatever international feedback [Albayrak] brings to the table, there is a high chance that Erdogan will take it seriously.”

Others see the appointment of Albayrak as a worrisome sign that the Turkish president meant what he said when he told investors in London in May that he would take greater control of economic and monetary policy. The muscular new executive presidency that came into force last week has given Erdogan vastly enhanced powers. His new Cabinet, which includes the Erdogan family doctor as well as his own son-in-law, is seen by critics as a sign that the president is increasingly running the country as a family business.

Turkey’s heavy reliance on foreign financing led some analysts to believe that the economy would be the one area where Erdogan would retain a pragmatic streak. But after Albayrak’s appointment they were left questioning that view.

“I’d have expected Erdogan to have learned the bitter cost of messing with markets,” says Atilla Yesilada, an Istanbul-based adviser at the consultancy GlobalSource Partners. “Apparently, he does think that with his new powers he can best the markets. Good luck to us all.”

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By Laura Pitel

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