Turkey’s voters lose faith in Erdoğan

This is an audio transcript of the FT News Briefing podcast episode: ‘Turkey’s voters lose faith in Erdoğan’

Jess Smith
Good morning from the Financial Times. Today is Monday, April 17th, and this is your FT News Briefing.

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Voters in Turkey are heading to the polls next month and it could be a nail biter.

Adam Samson
Many people say this is the toughest election battle Erdoğan’s had in two decades in power.

Jess Smith
One of the biggest US brokerages lost a major shareholder in the recent banking panic. And companies around the world are biting at Washington’s industrial subsidies. We’ve got some new data. I’m Jess Smith, in for Marc Filippino, and here’s the news you need to start your day.

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Companies have committed more than $200bn to US manufacturing projects in the past year. That’s since US lawmakers passed the Inflation Reduction Act and the Chips Act. Both these laws are aimed at boosting key US industries like clean tech and semiconductors. So there’s lots of subsidies. The FT compiled data and they show that commitments in those two industries is double what it was in 2021. In the past month, several Asian companies, including Korea’s LG, have announced deals.

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The US brokerage Charles Schwab reports earnings today. And it’s an interesting one to watch because this broker is also a lender. So its shares tanked during last month’s panic over bank stability. Now during that time, one of Schwab’s biggest shareholders totally bailed. An asset manager called GQG Partners sold its entire $1.4bn stake in Schwab, and it had only recently bought those shares. Here’s the FT’s Ortenca Aliaj.

Ortenca Aliaj
It’s unusual for a company or an investment firm to buy in and sell out so quickly. Usually they tend to hold the shares for a bit longer, especially with companies like Charles Schwab. But I don’t think it’s that surprising, considering what we experienced in March when no one was expecting two banks to fail in succession. But timing the market is notoriously a difficult, difficult endeavour.

Jess Smith
Ortenca says GQG’s decision to dump its entire $1.4bn investment in Schwab may look like an overreaction. But she says the firm does manage about 90bn in assets.

Ortenca Aliaj
They also are involved in multiple other companies. They’re big in the tech space. So I think it was probably a decision for them personally to reinvest the money elsewhere. But I think it just shows that there is a lot of nervousness and investors are clearly concerned that there might still be some risks lurking around, whether that’s at Charles Schwab or regional lenders.

Jess Smith
Ortenca Aliaj is the FT’s M&A correspondent.

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In Turkey, voters are going to the polls next month and analysts say long time President Recep Tayyip Erdoğan faces his toughest challenge in years. Polls show that he’s neck and neck with his main challenger, 74-year-old economist Kemal Kılıçdaroğlu.

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Jess Smith
That’s him at a packed rally in north-west Turkey. But the FT’s Adam Samson went to central Turkey to speak with voters. He joins me now. Hey, Adam.

Adam Samson
Hi, Jess.

Jess Smith
So, Adam, I wanna play a recording you took outside your hotel window.

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It’s the sound of evening prayers from a nearby mosque in central Konya, that’s the city you visited. So and it’s also a hint of why you chose to visit the city, right?

Adam Samson
Yeah, well, the reason I went there was because it’s been just a major bastion of support for Erdoğan. It’s a very religious part of the country. It’s very conservative. And that’s something that Erdoğan plays to. Erdoğan’s a very pious politician. It’s something he talks about very, very frequently. So I went there really to take the temperature of how the people that have typically really supported the president are gonna vote this time. I don’t think people think it’s gonna suddenly, you know, turn and go for the opposition. But even if he loses a bit there, that’s an indication of how tight a race this is gonna be. You know, a lot of the polls are showing the president neck and neck with Kemal Kılıçdaroğlu. Many people say this is the toughest election battle Erdoğan’s had in two decades in power.

Jess Smith
So what are the key issues then? We’ve heard there’s a lot of anger over the way the government responded to the horrific earthquake in February. I mean, did that erode any support for Erdoğan or is the economy still the main frustration for voters?

Adam Samson
I mean, the economy is definitely a top factor in this election. Basically, it’s between that and the government’s response to the earthquake. I’d say many, many people are very frustrated about the inflation situation. You know, it’s just totally rampant, it’s out of control. For the average person in Konya, they would like the inflation issue to improve. I mean, the price of going to the supermarket and buying a chicken has shot up. So that’s a problem. But the other issue also is people’s pensions have been eroded by years and years and years of inflation. But again, not everybody necessarily blames the government. A couple of people I talked to said they were Erdoğan supporters and now they’ve sort of changed their mind. And then other people I spoke with said, actually, Erdoğan is doing the best he can. And there’s all these sort of foreign forces working against us, which is a really big government line. And what’s really interesting is one thing you didn’t hear was a huge amount of optimism about the opposition or the leader of the six-party coalition, a politician named Kemal Kılıçdaroğlu.

Jess Smith
So speaking of the opposition, is Erdoğan’s main challenger, Kılıçdaroğlu, is he doing a good job taking advantage of these frustrations?

Adam Samson
Kılıçdaroğlu — he’s not known as the most charismatic politician and he’s had trouble really pulling people in. So he’s had trouble really taking advantage of it as fully as he probably could, according to a lot of analysts. And indeed, a lot of the people I talked to who said, I’m not massively excited. He’s a guy who’s been in politics just like Erdoğan for a really long time. And people who want change aren’t necessarily gonna gravitate towards somebody who’s sort of seen as a veteran politician.

Jess Smith
Adam, It doesn’t sound, or at least from your conversations with the voters in Konya, it doesn’t sound like Erdoğan’s on the precipice. But say he did lose the election, what would that mean for foreign investors?

Adam Samson
There’d be huge ripples for investors. I think there’s this idea that if the opposition won, they would go to a much more conventional economic policy, which could see foreign money flowing back in. A lot of foreign money has flown out in recent years because people, you know, investors don’t understand Erdoğan’s policy. You know, they worry about stability, that sort of thing.

Jess Smith
So going back to voters in Konya, is there one comment that you recall, of all the people you spoke to, is there a conversation that really stands out to you?

Adam Samson
One comment I thought was really interesting that’s sort of contrary to all this, but I think is really, really important to remember. I was sitting in sort of this square and we were just sitting on a bench talking to this pensioner. He was dressed in like, incredibly nicely and he was saying Erdoğan is the greatest. He is somebody who’s a religious Muslim. And he remembers a time when it was very, very hard to be a Muslim in public institutions because Turkey was a very sort of, you know, secular republic. Some people felt they went too far with that. This guy was saying, you know, it’s amazing now to see police officers and Air Force people in turbans. And that does, that does represent a lot of Erdoğan’s base.

Jess Smith
Adam Samson is the FT’s Turkey correspondent. Thanks, Adam.

Adam Samson
Thank you very much for having me. It’s a pleasure, as always.

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Jess Smith
Before we go, Europe’s response to Russia’s invasion of Ukraine has caused all kinds of unintended pain. The latest: furious farmers in EU countries that border Ukraine. See after the war began, Brussels scrapped tariffs and quotas on Ukrainian grain imports. Now there’s a glut and grain prices in those countries have crashed. Angry farmers have staged protests and blockaded roads. So this past weekend, Poland, which is one of Ukraine’s strongest supporters, halted Ukrainian grain imports temporarily. Hungary did the same.

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You can read more on all these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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