Crisis and authoritarianism go hand in hand

Havva Gümüşkaya

The year 2025 was a year in which the debt spiral turned into social devastation, with high political tension and economic crisis intertwined. The ‘fight against inflation’ programme implemented by Mehmet Şimşek, who took the helm after the 2023 elections, showed its harshest face in 2025. For the AKP, which had been in power for almost the entire first quarter of the 21st century, the 2023 general elections and the 2024 local elections were the two most challenging elections. The goal in the 2023 elections was to ensure that the wheels of the economy turned as fast as possible before the elections. Economic policies were also geared towards election propaganda. And the AKP secured its power. However, the economic policies implemented were no longer sustainable. After the elections, a “market-friendly” economic management was established. As soon as he took office, Şimşek's statement that ‘Turkey has no option but to return to a rational footing’ was actually the code for the new era: the cost of the crisis would be borne by society, while “assurance” would be given to foreign capital.

The backbone of the post-2023 economic programme consisted of high interest rates, tight credit, reserve accumulation and the “desire to regain market confidence”. Entering the 2024 local elections with this programme, the AKP-MHP bloc suffered a historic defeat. The regime, which became even more authoritarian in the absence of elections, set the agenda in 2025 with political tensions and operations.

HIGH TENSION

Although the economic management sent the message that “the programme is working”, the most critical threshold of 2025 was 19 March. The arrest and detention of Istanbul Mayor Ekrem İmamoğlu, along with the markets' reaction to the ongoing process, revealed how fragile the “return to rationality” narrative was.

The Şimşek programme was attempting to attract foreign capital with claims of “rationality” and “return to the rule of law”, but the regime's political reflexes were of the kind that could turn the picture upside down overnight. After 19 March, the risk of the exchange rate shock reflecting on inflation grew, the path of interest rate cuts became controversial, and reserves were once again turned into a defence tool. At the first Monetary Policy Committee (MPC) meeting of the year, the interest rate was cut from 47.5% to 45% (in nominal terms). With the disinflation process that began in June 2024, interest rates were also eased. Immediately after the political operations, an interest rate hike was implemented at an extraordinary meeting. To prevent the rise in the exchange rate, $55-60 billion in reserves were sold. The easing was shelved until July.

DEBT-RIDDEN POOR

The government avoided raising the minimum wage twice in 2025, as it did in 2024, using the rhetoric of “expected inflation” and “targeted inflation”. Despite 45% inflation last year, the minimum wage increase of 30%, which was 15 points below inflation, remained below the poverty line in the first months of the year. While segments of society struggling to survive on low wages in an environment of high inflation and high interest rates waited for relief, the year ended with postponed targets. Official inflation, which stood at 42% in January 2025, fell to 31% in November. However, perceived inflation is much higher.

During the May 2023 elections, when monthly individual credit card interest rates stood at 1.29%, a segment of the population took advantage of the low interest rates relative to inflation to take on attractive loans and make investments, while low-income earners were forced to borrow just to make ends meet. With the rise in interest rates, life became even more difficult for those using both consumer loans and credit cards during the period of high inflation. Since Şimşek took office in June 2023, credit card debt without instalments has risen from 403 billion lira to 1 trillion 653 billion lira. A quarter of credit card spending was on groceries and food.

The increasing debt balance made it harder to repay debts. The proportion of individual debts among loans to be liquidated reached 40.8 per cent. In a country where 32.8 million people are employed, the proportion of debts to be liquidated in “negative accounts”, which reached 31.1 million users, rose from 3.5 per cent in January to 4.3 per cent in October.

The ratio of debts to be liquidated in individual credit cards, which increased by 1.5 million from January to October to reach 40.3 million users, reached 4.4%. Even media outlets close to the government carried headlines stating that high interest rates and difficulties in accessing finance were stifling production. The outspoken comments in Yeni Şafak and the criticisms published in Sabah showed that the programme was fighting for legitimacy even within its own political line.

Şimşek, however, implemented a programme that impoverished society under the guise of fighting inflation, defending himself by saying, “You cannot label me as bourgeois or capitalist”. The regime increased political pressure and attempted to divert public attention from issues such as inflation, debt problems and unemployment to allegations of corruption, bribery and espionage. Thus, the economic crisis and authoritarianism became intertwined. As 2025 goes down in history as the year of authoritarian restructuring in Turkey, with 2026 expected to be an even more challenging year, there is no alternative but to build a united struggle of labour.

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DECISIONS ON INTEREST RATES

• The Central Bank raised its inflation forecast for the end of 2025 from 24% at the beginning of the year to 33%.

• The number of unemployed rose from 11,476,000 in January to 11,890,000 in November.

• 2,074 companies filed for bankruptcy due to the crisis. Bankruptcy proceedings more than doubled in a year.

• While 90% of the population shares 67% of the income, the richest 10% alone took 33%.

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INDUSTRY SLOWS DOWN

The wheels of industry, directly affected by the economic crisis, have ground to a halt. As production declined and industry contracted, the bill was once again footed by the workers. The number of people employed in industry fell by 178,000 in one year. Labour-intensive sectors continued to bleed throughout the year. Those working in textiles, furniture, white goods and ready-to-wear clothing found themselves unemployed. Meanwhile, employers, who constantly threatened to ‘flee to countries where labour is cheaper,’ were able to obtain incentives from the government. Despite this, alarm bells rang throughout the year in an industry that could not produce, could not sell what it produced, and could not profit from exports due to the suppressed exchange rate. The wheels turned at only a quarter of their full capacity throughout the year. The manufacturing production index closed the year with a decline. The textile and clothing sector has seen a loss of approximately 300,000 jobs since 2022. The loss reached 120,000 in 2025. Although the shrinking industry showed growth performance in the following quarters of 2025's first quarter, it passed on the crisis to the new year rather than production.

• Capacity utilisation in industry: 74.4%

• Employment loss in industry: approximately 120,000 people

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AGRICULTURAL SUPPORT IS ESSENTIAL

2025 was a dark year for agriculture. Producers, who had been unable to profit from their production for almost two years, crushed by rising input costs and unable to reap the rewards of their labour, abandoned their fields and gardens one by one. Those who remained lost their crops due to unplanned agricultural policies, inadequate support and vulnerability to the climate crisis. While the climate crisis brought drought to some parts of the country this year, affecting crops, the agricultural frost that affected every city in April practically destroyed the crops. Farmers were deep in debt and even sold their tractors.

Electricity prices, one of the farmer's most important inputs, rose by 12.8% this year, while diesel prices rose by 21.9%. Fertiliser prices rose by 50% annually, and feed prices rose by 30%. Due to frost and costs, fruit production fell by 30.9% in 2025. Grain silos remained empty, and production fell by 9%. Growth data also proved the collapse in agriculture. The agricultural sector contracted by 12.7 per cent in the third quarter of the year. For production to continue in 2026, it is essential that subsidies are increased, farmers' debts are written off, and scientific public agricultural policies are implemented as soon as possible to prevent fields and gardens from lying fallow.

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THE FIGHT AGAINST WAGE ATTACKS WILL GROW

The austerity policies that began after the critical 2023 general elections and have continued to intensify for over two years have stolen from the citizens' pockets. The poverty line and the expenses required for basic living needs have reached historic highs due to the effects of inflation. Citizens have been deemed worthy of historic misery in 2025. Workers, who started the year with a minimum wage increase of 30 per cent, which was even below the official inflation rate, have lost more and more due to the lack of interim increases. Workers' wages have eroded by 2 trillion 116 billion TL in 11 months. The policies implemented by the economic administration led by Treasury and Finance Minister Mehmet Şimşek have condemned workers to misery in 2026 as well. The minimum wage increase announced in December is neither sufficient to compensate for the losses nor to cover basic food expenses. The new wage, which will only reach workers' pockets in February, remains below the October 2025 poverty line. According to a BISAM study, a household earning the minimum wage can only afford to feed itself for 9 days of the month. The only factor that raised wages to nearly twice the minimum level was union organisation. According to TÜİK data, unionised workers earned twice as much as workers not covered by collective bargaining agreements. The meagre wage increase imposed by the single leader to appease international financial circles and enforce the harsh prescriptions of the IMF, mirroring every step of its policies, has left millions in poverty. Public sector workers and pensioners, who ended the year with nominal pay rises in 2025, as well as millions of pensioners, entered the new year with poverty-level wages. The risk of low pay rises awaiting them in the second week of the year has also increased their livelihood concerns. Workers, labourers, and pensioners have already begun to warm up the squares. The labour struggle in the new year will grow even more, fuelled by the losses carried over from last year and the historical accumulation of struggle.

Note: This article is translated from the original article titled Kriz ve otoriterleşme kenetlendi, published in BirGün newspaper on January 3, 2026.