In an effort to reassure investors, Turkey is set to introduce new measures, with the first step being judicial reform. Following a series of changes in the country’s economic management after the elections held between May 14 and 28, an analysis by Reuters highlighted the need for reforms in order to restore confidence in the economy. Senior officials from the ruling AK Party stated that the new cabinet would soon take actions to address the perceived damage in the judicial system, emphasizing the critical importance of implementing judicial reforms to ease concerns among foreign investors.
The analysis published by the British news agency noted that the appointments of Mehmet Şimşek and Hafize Gaye Erkan to key positions in the economic management might not be sufficient to attract international investments. It underscored the need to restore the rule of law and predictability, using examples such as the Istanbul Convention, the case of imprisoned MP Can Atalay, and the trial of Osman Kavala.
Speaking to the agency, Prof. Howard Eisenstaat, an expert in Middle Eastern History and Politics at St. Lawrence University in New York, stated, “Without significant steps taken by Turkey, a substantial increase in foreign direct investment is unlikely.” The article emphasized the importance of stability, accountability, and transparency brought about by legal reforms in rebuilding investor confidence.
The analysis expressed skepticism about major changes in the investor portfolio of Turkey, considering that President Recep Tayyip Erdoğan was not expected to implement radical reforms due to years of unpredictable lawmaking processes and erosion of freedoms.
Mehmet Gün, the President of the Better Justice Association, stressed the necessity of a system that upholds the law rather than individual interests for sustainable foreign investments. He emphasized the need to strengthen the legal infrastructure to ensure that future decisions made by Şimşek’s successor are in line with the principles of justice, also advocating for the limitation of the President’s powers.
The President’s decision to withdraw from the Istanbul Convention, an international agreement combating gender-based violence, was highlighted as sending a negative message to international markets. According to the Association’s President, this move indicated that any international agreement could be rendered invalid arbitrarily through presidential decrees.
In his post-election speech, President Erdoğan stated, “We are designing a financial management focused on international reputation, investment, and employment based on a production economy.” The analysis featured the opinions of senior AK Party members as well.
Speaking to Reuters, two officials stressed the critical importance of implementing judicial reforms to reassure foreign investors. They mentioned that the new cabinet would soon make statements regarding taking steps to address the perceived damage in the judicial system. One senior official stated, “Legal consistency is essential to restore economic confidence.”
The analysis highlighted the cases of Osman Kavala, who received an aggravated life sentence for allegedly financing the Gezi protests, and Can Atalay, a newly elected member of the Turkey Workers’ Party who remains in detention on similar charges. Emma Sinclair-Webb, the director of Human Rights Watch in Turkey, warned that a compromised justice system was a cause for concern, particularly among European investors. She stated, “An investment environment is generally negative without a free press and independent judiciary.”
The article also addressed the record decline in foreign currency reserves at the Central Bank and the historically low levels of the Turkish Lira against the US Dollar. The appointment of Mehmet Şimşek as the Minister of Treasury and Finance was seen as raising expectations for a decrease in pressure on foreign exchange, credit, and debt markets. However, analysts warned that in the long run, the influence of President Erdoğan on autonomous institutions such as the Central Bank might deter foreign direct investment.