President Recep Tayyip Erdoğan backs new economy team and inflation control measures

President Recep Tayyip Erdoğan on Thursday reiterated his backing and said he “believes” in his new economy team of respected technocrats and the steps that have been taken to rein in inflation.

Speaking to reporters in New York, where he addressed the U.N. General Assembly, Erdoğan said he “hoped” they would start seeing the results of the new economic policies in the first quarter of 2024.

“I think we will start seeing positive developments regarding the inflation in the first quarter of next year. There are good signs right now,” he noted.

Annual inflation rose to nearly 60% in August and is expected to increase further toward the end of the year. It had reached a 24-year high of 85.5% last October and stood at 47.83% this July after regressing to as low as 38.21% in June.

After winning reelection in May, Erdoğan named a new Cabinet, including two accomplished bankers, Mehmet Şimşek as treasury and finance minister and Hafize Gaye Erkan as the governor of the Central Bank of the Republic of Türkiye.

Under Erkan, the central bank launched aggressive interest rate hikes in a bid to tackle the country’s long-term inflation issue.

The bank on Thursday raised its key interest rate by a lofty 500 basis points to 30%, marking a second month of aggressive tightening after Erdoğan expressed his strongest pledge of support for the economy team’s policy overhaul.

The bank reiterated it is ready to raise rates further as needed to rein in inflation.

Earlier this month, the government lifted its year-end inflation forecast to 65%. Erdoğan said at the time: “With the support of tight monetary policy, we will bring down inflation to single digits again.”

On Thursday, he said the officials told him that “we will start to get positive results as of the first quarter of next year.

“We trust them, we believe in them,” Erdoğan said.

He stressed the fight against inflation was among the top priorities in the new medium-term program, unveiled earlier this month.

“How are we going to do this? With fiscal discipline, structural reforms, we will make our economy resistant to all kinds of storms,” Erdoğan said.

“We’ve done it before, we’ll do it again.”

The new economic road map has garnered appetite among foreign investors, Erdoğan said.

“A crucial pillar of our program is attracting foreign investment to our country. Just preparing and announcing the program has already generated appetite among foreign investors,” he noted.

“By harnessing this momentum, we will quickly move towards our goals.”

Steps in energy drilling with Israel

Erdoğan also said Türkiye and Israel would soon begin taking joint steps in energy drilling, adding the two countries would also operate energy networks to Europe through Türkiye.

The statement came after Erdoğan met Israeli Prime Minister Benjamin Netanyahu in New York, marking their first in-person talks, in a milestone as the two countries have been working to repair relations long strained by disputes over policies toward the Palestinians.

A visit to Türkiye by Israeli President Isaac Herzog in March 2022, followed by visits by both foreign ministers, helped the thaw, but a planned visit by Netanyahu in July was postponed due to the Israeli premier’s health issues.

The meeting in New York was primarily focused on potential energy cooperation between the two countries.

Erdoğan said the two leaders had agreed on mutual visits in the coming period, and that energy cooperation would ramp up after these.

“God willing, we will take this step without much delay and we will start energy drilling operations with Israel. We will also start operating energy transfer networks not just to Türkiye, but also from Türkiye to Europe,” he added.

The meeting also focused on increasing bilateral trade volume between Türkiye and Israel.

“At the moment, our total trade volume is $9.5 billion,” Erdoğan said.

“We agreed to raise this $9.5 billion trade volume to a minimum of $15 billion in the first phase,” he noted.

Erdoğan added that he and Netanyahu had discussed forming a mechanism between their countries, including some ministries, to increase cooperation in energy, tourism, and technology.

‘Hopeful’ about restart of grain deal

Meanwhile, Erdoğan said he remained “hopeful” that a solution could be found to revive the Black Sea grain deal with Russia and Ukraine.

He said he does not agree with the negative approach other leaders are showing toward his Russian counterpart Vladimir Putin, adding Russia could not be disregarded.

Russia quit the grain deal, brokered by the U.N. and Türkiye in 2022, saying that its own food and fertilizer exports, while not subject to Western sanctions, faced obstacles and that not enough Ukrainian grain was going to countries in need.

Ukrainian ports across the Danube River have since become a vital export corridor for grain, and Russia has targeted the route with regular air strikes.

Ukraine last month announced a “humanitarian corridor” to release ships trapped in its ports and to circumvent a de facto blockade.

Erdoğan earlier this month met with Putin in the Black Sea resort of Sochi to try to convince Moscow to reconsider its abandonment of the grain deal.

On Thursday, Erdoğan said he would again discuss the initiative with Putin, without mentioning a potential time frame.

Elon Musk to visit Türkiye

Furthermore, the president said Tesla and SpaceX founder Elon Musk would “most likely” come to Türkiye soon and visit the country’s largest aviation and technology festival.

Teknofest is set to kick off in the Aegean province of Izmir on Sept. 27 and last through Oct. 1.

Erdoğan and Musk have held a string of meetings both in Türkiye and on the sidelines of international forums, developing a friendship that they extended on Sunday in New York.

Erdoğan invited Musk to establish a Tesla factory in Türkiye.

For his part, Musk said that many Turkish suppliers are already working with Tesla and that Türkiye was among the most important candidates for its next factory.

Erdoğan also said Türkiye was open to cooperation on artificial intelligence and Starlink, the satellite internet venture of Musk’s SpaceX.

“We discussed with Musk both Tesla’s investment in Türkiye and taking joint steps in space studies. I hope they will conduct a joint study with our friends,” he told reporters.

“I invited him to Izmir Teknofest. He will most likely come to Izmir Teknofest as well,” Erdoğan said.

“If he comes to Izmir, there will be an Izmir Teknofest that will attract our young people very much.”

Erdoğan said Musk had told him that he has been following Türkiye’s breakthrough in combat drones and “found them successful.”

“He is aware of the achievements of our country in the field of technology in recent years. This will also be a driving force for him to move his investments to Türkiye.”