Recep Tayyip Erdogan appointed his own son-in-law to head Turkey’s powerful new treasury and finance ministry as he unveiled a cabinet composed of a mix of loyalists, technocrats and business figures drawn from the private sector.
The choice of Berat Albayrak, who married the president’s daughter in 2004, was met with alarm from analysts and foreign investors who are anxious over the health of the Turkish economy and the independence of the central bank.
During the campaign for elections held last month, Mr Albayrak warned that the plunging Turkish lira was the result of an “operation” of “overseas origins” aimed at bringing down the government. Investors argued that it was the product of concern about an overheating economy and insufficiently high interest rates.
The lira plummeted on the news of his appointment, losing as much as 3.8 per cent of its value to trade at 4.7488 per dollar.
“This is absolutely not what we hoped for,” said Nora Neuteboom, an economist at Dutch bank ABN Amro. “Markets were awaiting the cabinet appointed and the signal is clear: it is not market-friendly, but rather Erdogan-friendly.”
Mehmet Simsek, a former Merrill Lynch banker who served as deputy prime minister in the previous government, was given no role in the new cabinet, which was announced hours after Mr Erdogan was sworn in under a muscular new executive presidency that abolished the role of prime minister and handed him sweeping new powers.
Naci Agbal, the former finance minister, was also sidelined. Both men were seen as rare voices of economic orthodoxy who enjoyed good relations with foreign investors in the financial centres of London and New York and were able to smooth over concerns on Mr Erdogan’s own less conventional views.
The Turkish president has for years been a vocal opponent of high interest rates, railing against them even amid persistent double-digit inflation and a plunging currency that has lost 17 per cent of its value against the dollar since the start of 2018.
Inan Demir, an emerging markets economist with Nomura, warned that the loss of Mr Simsek and Mr Agbal meant that “voices who argued in favour of [interest rate] hikes at times of stress are no longer there”.
He added: “Their inclusion in the cabinet would have been a nod by Erdogan to the markets, signalling that Erdogan takes into account market concerns.”
Mr Albayrak has become a close confidant of the Turkish president in recent years.
The 40-year-old, who holds an MBA in financial management from New York’s Pace University, entered parliament in 2015 after a stint as chief executive of Calik Holding, a privately held company.
Later the same year he was appointed energy minster but increasingly roamed beyond his brief to act as one of the most senior figures in Mr Erdogan’s government.
His rise has drawn ire from some within Mr Erdogan’s ruling Justice and Development party (AKP), who complain that the president, who has dominated Turkish politics since 2002, has surrounded himself with family members and ultra-loyalists.
The new cabinet line-up featured other surprises, including the appointment of Hulusi Akar, the head of the armed forces to serve as defence minister. Mr Akar has grown closer to Mr Erdogan since the violent attempted coup of July 2016, when he was reportedly taken hostage for several hours by the plotters.
Fuat Oktay, a former head of Turkey’s disaster management agency, was appointed as the sole vice-president. He was one of several former senior technocrats to be elevated to a cabinet post.
Mevlut Cavusoglu, who has served as foreign minster since 2015, remained in his position. Western diplomats will hope he is able to spearhead a reset at a time of deep strain between Ankara and its one-time allies in Washington and European capitals.
Suleyman Soylu, a hardliner who joined citizens who took to the streets on the night of the coup attempt, stayed on as interior minister.
The new cabinet also included a string of figures with strong links to the private sector, as Mr Erdogan took advantage of a new system that requires ministers to be drawn from outside parliament.
The new tourism minister, Mehmet Ersoy, founded the tourism company ETS Tur and co-owns the budget airline AtlasJet as well as a group of luxury hotels. The trade minister, Ruhsan Pekcan, is chief executive of Karon Engineering, a company with interests in infrastructure, construction and energy.
Fahrettin Koca, who serves as a doctor to the Erdogan family and owns the Medipol group of private hospitals, was appointed health minster.
It was unclear whether those ministers with business interests would be forced to give them up after taking on their government roles.