With a Presidential decree No. 2019/159, published on the Official Gazette on July 6th, President Erdoğan removed Central Bank (TCMB) Head Murat Çetinkaya. Asserting that interest rates and inflation are directly proportional, Erdoğan had a five-year argument with the Central Bank. With this act, however, the argument reached a whole new dimension. For the first time in history, the political execution removed the Central Bank Head.
TCMB had previously been made operationally and instrumentally independent following the financial crisis in 2001. It therefore has a special legislation and a – debatably – independent status. This removal revealed once again that Erdoğan’s decisions take place even above the law in this “Turkish-type” Presidential regime that gathers all powers of decision in one hand. In this structure of decision, legal norms are replaced with arbitrariness. Now a special legal provision may be ignored with a simple decree from the execution. Erdoğan’s decrees are even above the law.
According to the TCMB law (Article 27-28), the head can’t be on duty outside of the Central Bank, can’t execute commercial activities and can’t hold assets in other banks or companies. The head may only be excused from duty through the method he was assigned there, in case he violates these rules or he can’t perform his duty due to illness etc. With an amendment in this law after Erdoğan was elected as President in 2014, the authority to assign the TCMB Head was transferred solely to the President.
When we came to the State of Emergency period, an amendment was made with the Statutory Decree No. 375 and Erdoğan was assigned the authority to remove high ranking public officers from duty based on “not reaching institutional targets,” outside of the rules and reasons stated in the law. Çetinkaya’s removal was based on this regulation exactly. Erdoğan described his reason to remove him with the statements, “We have told him many times in economy meetings that he has to decrease interest rates. We told him that if interest rates fall, inflation falls as well. He didn’t do what was necessary. We weren’t on the same page.”
Steps taken by the government on the recent negative trend in economic data proved that Central Bank didn’t have that much of neither theoretical, nor practical “independence.” Likewise, the bank couldn’t show any resistance against the 2018 interests of the bank being transferred to the budget four months early as well as preparations on reserve funds to be transferred to the budget, which were not touched by the government for 59 years. As a result, the independence of the Central Bank, however illusory, was removed with the head being removed. What’s more important is that this act revealed that there is no more legal guarantee on any organisation or person in Erdoğan’s Presidential system, that all norms are bound to the decision and signature of one person only.