Civilians search for survivors under the rubble of collapsed buildings in Kahramanmaras, near the quake’s epicentre, the day after a 7.8-magnitude earthquake struck the country’s southeast, on February 7, 2023.
Adem Altan | AFP | Getty Images
Life for hundreds of thousands across Turkey and Syria modified without end on Monday, as two consecutive earthquakes sent shockwaves across tons of of miles.
Nine hours apart and measuring a magnitude of seven.8 in Turkey and seven.5 in Syria on the Richter scale, the quakes were the region’s strongest in nearly a century.
On the time of writing, the death toll from the quakes is greater than 12,000, with many still missing and critically injured. The World Health Organization put the number of individuals affected by the disaster at 23 million. At the very least 6,000 buildings collapsed, many with residents still inside them. Rescue efforts proceed to be the highest priority, with some 25,000 deployed in Turkey and 1000’s more sent in from overseas — but a bitter winter storm now threatens the lives of the survivors and of those still trapped under rubble.
Syria, ravaged by 12 years of war and terrorism, is the least prepared to cope with such a crisis. Its infrastructure is heavily depleted, and the country stays under Western sanctions. 1000’s of those within the affected areas are already refugees or internally displaced people.
With the dust of the catastrophe still settling, regional analysts are zoning in on the longer-term rippling effect that the catastrophe could have on Turkey, a rustic whose 85 million-strong population was already mired in economic problems — and whose military, economy, and politics have a serious impact far beyond its borders.
A vital 12 months for Turkey
This 12 months will function a critical inflection point for Turkey, because it approaches a presidential election on May 14. The results of that election — whether current President Recep Tayyip Erdogan stays in power or not — has massive consequences for Turkey’s population, economy, currency, and democracy.
Erdogan’s response to the disaster — and potential calls for accountability as to why so many buildings were insufficiently designed to face up to such tremors — will now play a serious role in his political future.
“If the rescue effort is mishandled and other people get frustrated, there’s backlash,” Mike Harris, founding father of Cribstone Strategic Macro, told CNBC on Tuesday. “And the opposite issue after all, is the buildings and which of them have gone down. To the extent these were built under the brand new codes and the authorities didn’t impose regulations, there could possibly be some serious blowback for Erdogan. So Erdogan’s lost control of the narrative.”
Erdogan called for the early May election amid a national cost of living crisis, with local inflation above 57% — down from greater than 80% between August and November. Several analysts say that the move reveals Erdogan’s urgency to secure one other term in power before his controversial economic policies backfire.
Harris described the president created “this weird situation where inflation is running at 80%, but he needs to maintain the currency stable between now and the election.”
Through very unorthodox policies, Erdogan has “found a really creative way, a really costly way, to de-dollarize the economy, principally,” he said, giving examples like allowing Turks to maintain their bank deposits at a 13% rate of interest, then promising to cover their losses, if the currency drops further.
Harris boldly predicted: “Actually, the currency has to collapse if he wins, because there shall be no confidence and he’s created this artificial scenario that cannot be sustained for a protracted time period.”
Moreover, Erdogan’s earlier fiscal pre-election guarantees — populist moves like increasing salaries and lowering the pension age — could also be inconceivable now, as more public funds will have to be directed toward rebuilding entire cities and towns.
Economic anxiety
Turkey’s economic decline has been fueled by a mix of high global energy prices, the Covid-19 pandemic and war in Ukraine, and, predominantly, by economic policies directed by Erdogan which have suppressed rates of interest despite soaring inflation, sending the Turkish lira to a record low against the dollar. Turkey’s FX reserves have dropped sharply lately, and Ankara’s current account deficit has ballooned.
The Turkish lira lost nearly 30% of its value against the dollar within the last 12 months, severely damaging Turks’ purchasing power and hurting Erdogan’s popularity.
Turkey’s opposition parties haven’t yet put forth their candidate. The strongest potential challenger, Istanbul Mayor Ekrem Imamoglu, was arrested and slapped with a political ban in December over charges his allies say are politically motivated and used solely to forestall him from running for president.
Investors lately have been pulling their money out of Turkey in droves. One major emerging markets guru, Mark Mobius of Mobius Capital Partners LLP, stays bullish despite the earthquake disaster and economic problems.
“In relation to investing in Turkey, we still consider it is a viable place to speculate,” Mobius said. “In reality, we do have investments there. The rationale is the Turks are so flexible, so capable of adjust to all these disasters and problems … even with high inflation that with a really weak Turkish Lira … So it doesn’t scare us in any respect to speculate in Turkey.”
Mobius did note the glaring issue of Turkey’s earthquake preparation, which can soon come to haunt Erdogan’s election possibilities.
“That is one among the massive problems, the constructing codes in a few of these areas should not as much as par,” he said.
NATO and Turkey’s powerful role on the worldwide stage
Internationally, Turkey’s future affects the war in Ukraine, given Erdogan’s role as a mediator between Ukraine and Russia. Turkey is the predominant NATO member still standing in the way in which of Sweden and Finland’s accession to the powerful defense alliance.
Ankara can also be brokering the Black Sea Grain Initiative between Ukraine and Russia, which allows vital supplies of grain to be exported from Ukraine to the remainder of the world despite a Russian naval blockade on Ukraine’s Black Sea ports.
Erdogan’s response to the earthquakes — and subsequent election performance — may have an impact on all of those.
Russian President Vladimir Putin is anticipated to satisfy Turkey’s President Recep Tayyip Erdogan on Thursday.
Anadolu Agency | Anadolu Agency | Getty Images
Turkey will get some relief from Western pressure on its NATO stance within the wake of the earthquakes, but not for long, says Sinan Ulgen, chairman of the Istanbul-based Center for Economics and Foreign Policy.
“It will be temporary,” Ulgen said. “Turkey will take a look at a number of weeks of reprieve, but after that it is going to be more back to business on the foreign policy side.”
For now, Western allies and countries from world wide are sending aid and rescue teams to assist with Turkey’s disaster relief efforts. Ankara might want to roll out massive public spending to support those in need and rebuild all of the areas affected by the quakes.
“The positive side is that Turkey has fiscal space,” Ulgen said. Turkey has a public debt-to-GDP ratio of around 34%, which may be very low in comparison with the U.S. and Europe. In line with him, this “signifies that Turkey has room for fiscal spending, even when meaning a sizeable increase in the general public debt ratio.”
As a big country, Turkey has significant capability to handle natural emergencies. Still, Ulgen added, “regardless of what the capability at hand, it was going to be insufficient to answer the sort of disaster unfortunately.”