April 23, 2018

Key economy figures kept in new Turkish cabinet, Erdogan keeps influence

Turkey’s new Prime Minister Yildrim greets members of parliament from his ruling AK Party (AKP) as he arrives for a meeting at the Turkish parliament in Ankara

Key members of Turkey’s economic management team kept their posts in a new cabinet announced on Tuesday, reassuring nervous financial markets, but around half of the government was reshuffled as President Tayyip Erdogan tightens his grip.

Sources in Erdogan’s office said he would chair the first meeting of the new cabinet in his palace on Wednesday.

Deputy Prime Minister Mehmet Simsek, an anchor of investor confidence, was again named as one of five deputy prime ministers, although it was not immediately clear whether he would retain overall responsibility for the economy. Finance Minister Naci Agbal also kept his position.

The lira firmed to 2.98 against the dollar after the announcement by new Prime Minister Binali Yildirim, from below 3.00 beforehand, reflecting investor relief that Simsek had retained his position.

“Logic prevails – why would Erdogan not keep Simsek, so as to keep markets and investors on side for the time-being,” Timothy Ash, a strategist at Nomura, said in an e-mailed note, but sounded a note of caution:

“This is not to say that Simsek will have that much leverage to deliver on his structural reform plan. The power is moving to Erdogan and his less orthodox policy advisers.”

Nihat Zeybekci, a close Erdogan ally, returned as economy minister, a post he had held until last November. Erdogan’s son-in-law Berat Albayrak kept his position as energy minister.

Foreign Minister Mevlut Cavusoglu also remains in post, but former AK Party spokesman Omer Celik becomes the new EU minister at a critical time in Turkey’s relations with Europe.

Erdogan on Sunday confirmed Yildirim, a close ally for two decades and a co-founder of the ruling AK Party, as his new prime minister, ensuring government loyalty as he pursues constitutional change to replace Turkey’s parliamentary democracy with an executive presidency.

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