It was first a conspiracy theorist and widely followed You Tube commentator, Mr Erol Mutercimler, who broke the allegation that economy czar Mehmet Simsek offered his resignation. Hours later, a member of the parliament from Democratic Party, Mr Cemal Enginyurt repeated the claim. While the office of the Presidency and Mehmet Simsek denied the rumors, by the weekend, Ankara was still debating whether it was true. The rumor hit the markets hard, with Borsa Istanbul main index dropping by 2.55% on Friday, while dollar/TL briefly catapulted 34.00, which Central Bank defend reportedly by selling dollars. But, who started the rumors and why?
Minister Mehmet Simsek firmly denied allegations of his resignation, which has been rumored on social media for a few days, on Friday, stating that such claims are unfounded.
In his X statement, the Turkish finance minister addressed circulating rumors, emphasizing that he has not resigned and that the scenarios being circulated are incorrect. He highlighted that the economic management team operates with a strong sense of collective responsibility and is committed to achieving improvements daily.
“Despite our denial, those who continue to spread these rumors cannot be acting in good faith,” the minister stated. “We will not allow false stories to impact our economy or markets. Please do not be misled.”
What does the rumor mill say?
Serkan Özcan, economic advisor to Istanbul Metropolitan Municipality Mayor Ekrem İmamoğlu, claimed that figures from AKP were behind the allegations that Treasury and Finance Minister Mehmet Şimşek resigned. Özcan said, “I think that the Minister was targeted by some elements of the government who have an eye on his seat.”
AKP member and former congressman Şamil Tayyar seconded this view by drawing attention to the civil war in side AKP, which supposedly gave rise to the rumor. Tayyar used the expression ‘masked friends inside’ without citing names. A well-known former editor in chief of Haberturk, and now You Tuber Fatih Altaylı claimed in his blog that some advisors to the President, who were no longer allowed to trade on privileged information wanted him to go.
Another suggestion is that the a.m. advisors, in collaboration with Erdogan’s crones were urging Simsek to declare a corporate tax amnesty. When he refused, arguments got heated and he left the meeting in a huff, to offer his resignation. VP Cevdet Yılmaz denied this rumor, too:
“The last tax package passed by our Parliament went through several stages of consultation and review to became law with the discretion of our Parliament. During these processes, “tax amnesty for the rich” was not even brought to the agenda at any stage. On the contrary, our esteemed President’s preferences regarding the tax package were clearly influenced by broad segments of society, whose tax burden he intends to lighten. “Our dear nation knows very well our President and those who try to spread these lies.”
According to dissident journalist Ms. Nuray Babacan, who has good contacts in AKP circles: “The fact that the economic situation is not going as desired and that the Minister of Treasury and Finance, Mehmet Şimşek, cannot take the decisions he wants, frequently brings to the fore the claims that there is a “crisis in economic management”. While the Presidency denied the news that Şimşek was on the point of resigning throughout the day yesterday, claims were made that these allegations stemmed from a tense meeting held in the Palace.
Erdogan’s advisors attended the meeting, hurling accusations at Simsek for his alleged mismanagement, as well as offering heterodox policies. Simsek refused to change his course, and left the meeting.
We will never know the truth, but it is clear Simsek is not resigning, neither does Erdogan want him to go. However, he is facing intense pressure from pro-AKP business lobbies to reduce taxes, urge Central Bank to let TL depreciate and cut rates quickly.
It will be seen soon whether Erdogan will take his side or that of the business lobby, when the main fiscal policy document, Medium Term Economic Program, is updated by mid-September. Simsek and the tiny pro-orthodoxy group behind him want substantial tax hikes and new taxes on high net worth individuals to narrow budget deficits, which will also help CB to fight inflation by reducing domestic demand.
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