The 15th BRICS (Brazil, Russia, India, China, South Africa) Summit convened in Johannesburg, South Africa. While the final declaration of the Johannesburg Summit may not yield immediate results, it holds critical long-term importance. During the summit, the current BRICS members made significant decisions concerning the future and evolution of the BRICS group.
Notably, discussions about expanding the BRICS membership, with a focus on India, were initially met with hesitations. However, Indian Prime Minister Narendra Modi's statement expressing support for increasing the number of BRICS members helped dispel these hesitations.
The foundations of the BRICS project, once rumored to include Turkey and even be renamed as BRICS-T, were established in the aftermath of the U.S. intervention in Afghanistan following the September 11 attacks. During this period, American economist Jim O'Neill predicted that rising powers like China, India, Brazil, and Russia would assume significant roles in the future. Russia embraced this perspective and initiated cooperation with these countries. The first BRICS meeting was convened in 2006.
The current BRICS countries collectively account for 40% of the world's population, a stark contrast to the industrialized G7 countries, which represent only 10% of the global population. Furthermore, this economic alliance constitutes a quarter of the world's total GDP.
Should oil-rich nations like Saudi Arabia, Iran, Algeria, and countries with substantial populations such as Malaysia, Indonesia, and Egypt join the BRICS, the alliance has the potential to strengthen even further.
The world financial crisis of 2008 shook the existing system and increased interest in alternatives. The BRIC countries (South Africa had not yet joined the Union at the time) came together for the second time to demand a fairer global economic order. In the process, despite the differences between the member countries, the BRICS countries began to gain economic and political power.
The fact that Turkey is not mentioned among the new members of BRICS clearly shows what kind of foreign policy and international trade system it should aim for.
Surprise Interest Rate Decision
On August 24, 2023, the Monetary Policy Committee (MPC) of the Central Bank of the Republic of Turkey convened under the leadership of Hafize Gaye Erkan and made a surprising policy rate adjustment. They increased the rate by 750 basis points (bps), raising it from 17.5 percent to 25 percent. Prior to the meeting, the market's median expectation for a rate hike was 250 bps. This unexpected decision by the MPC underscores their strong determination to raise interest rates.
In our previous bulletins, we emphasized that the more the Simsek-Erkan duo departed from President Erdoğan's 'interest rates are the cause, and inflation is the effect' narrative, the greater their chances of success. Otherwise, the credibility of economic and financial management could be compromised. In fact, the interest rate hikes in the two prior meetings of the Monetary Policy Committee fell short, leading to a significant credibility issue for this team.
Subsequently, three renowned and competent economists were appointed as deputy governors of the Central Bank. The fact that this rate hike became possible after their appointments undoubtedly had a positive impact on their credibility.
2 Venedik Komisyonu, Türk Ceza Kanunu’nun (TCK) 216., 299., 301. ve 314. Maddelerine İlişkin Rapor, 2016, https://www.venice.coe.int/webforms/documents/?pdf=CDL-AD(2016)002-e , ayrıca bkz. Venedik Komisyonu, Son Dönemde Çıkarılan Kanun Hükmünde Kararnamelerde Yer Alan Medya Özgürlüğüne İlişkin Tedbirler Hakkında Görüş, CDL-AD(2017)007, 10-11 Mart 2017.
3 Dunja Mijatovic, Türkiye Ülke Raporu, Şubat, 2020, https://rm.coe.int/avrupa-konseyi-insan-haklari-komiseri-dunja-mijatovic-1-5-temmuz-2019-/16809c5187
4 Avrupa Komisyonu, Türkiye Raporu 2020, https://ec.europa.eu/neighbourhood-enlargement/sites/near/files/turkey_report_2020.pdf
5 Ömür Çağdaş Ersoy/ Türkiye, no. 19165/19, 15.06.2021
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10 Selahattin Demirtaş/ Türkiye (no.2) [GC], no. 14305/17, 22.12.2020.