Recep Tayyip Erdoğan’s authority to fire Turkey’s central bankers ruled unconstitutional

Turkey’s constitutional court has struck down part of a decree signed by President Recep Tayyip Erdoğan that authorised him to sack central bank governors — a power he has wielded five times in as many years as he has sought greater control over the economy.

The country’s top court on Tuesday found parts of a sweeping executive order that included the president’s right to curtail the tenures of bank governors and deputy governors violated the constitution.

The finding came in response to a lawsuit brought by the main opposition party in 2018, when the decree was issued. Such presidential authority required legislation, judges wrote.

The ruling may address the concerns of foreign investors wary of Erdoğan’s interventions at the central bank, where he has fired policymakers for failing to lower interest rates fast enough.

Since last year, however, he has switched gears, promising “rational policies” to fight Turkish inflation. The country has one of the highest rates in the world, standing at an annual 75 per cent in May.

The most recent change at the bank was in February, when Hafize Gaye Erkan, the bank’s first female governor, who raised interest rates by a cumulative 36.5 percentage points, was dismissed by Erdoğan after eight months in the job after newspapers said she had abused her office. Erkan denied the allegations and said she had resigned as governor because of what she called ‘smears’.    

Her successor has pledged to retain the focus on slowing inflation and has raised the policy rate by another five points to 50 per cent.

The constitutional court’s ruling is a rare challenge to presidential authority in Turkey, where Erdoğan, now in his third decade in power, has cemented control over state institutions including the judiciary. He appoints most of the justices on the constitutional court.

The president did not mention the ruling in a speech after a cabinet meeting on Tuesday. His adviser Mehmet Uçum later said in a post on social media platform X that the annulment was not about “the substance” of the rule but how it was mandated. “The constitutional court did not revoke the president’s authority to appoint [or] dismiss the central bank governor,” he said.

Last year Erdoğan criticised the same court for ordering the release of a lawyer who had been elected to parliament while he was in prison for political activities, and said a criminal investigation into the judges should proceed. The lawyer remains in jail.

More recently, Erdoğan has promised a political “softening” after his ruling party suffered significant losses in local elections in March.

Some analysts doubted the constitutional court would risk another confrontation with Erdoğan.

“Conditions that would allow the constitutional court, or other courts, to act independently are still not apparent,” said Ersin Kalaycıoğlu, a scholar at Sabanci University’s Istanbul Policy Center.

“The softening or normalisation that the president has spoken of would require greater rule of law, and this may be a step in that direction.”

This article has been amended to clarify that Hafize Gaye Erkan said she had resigned