Hafize Gaye Erkan’s stint as Turkey’s central bank governor was ended after the country’s finance minister Mehmet Simsek asked President Recep Tayyip Erdogan to remove her, Bloomberg reported on February 7.
Announcing the end of her time at the central bank, ex-Wall Street banker Erkan on February 2 said she had quit because of a “smear campaign”. However, the Official Gazette showed Erdogan had dismissed her with a presidential decision.
Bloomberg said its story on what lay behind the departure of Erkan was based on conversations with people with direct knowledge of events who all requested anonymity to speak freely about a sensitive matter.
Prior to Erkan’s exit after eight months at the helm, tensions, according to the news service’s sources, were running high between her and Simsek and other policymakers. “Increasingly,” read the Bloomberg report, “Simsek and other policymakers worried the tensions would call into question the credibility and reputation of the central bank. The finance minister eventually told Erdogan about the situation and asked the president to remove Erkan, people said.”
Erkan, Turkey’s first female central bank governor, who spent nearly a decade at Goldman Sachs Group, complained of “a major character assassination campaign” and said she resigned to protect her family and young child.
The sudden ending of Erkan’s time as central bank chief is awkward for Turkey in that the last five governors of the regulator, including Erkan, have all departed before completing a single term.
Erkan was brought in to be part of a supposedly stable new economic team asked to address dire difficulties of Turkey’s economy, such as the fact that foreign holdings of the country’s local debt crashed by about 96% in just over a decade amid concern over Erdogan’s previous demands for unconventional economic policy.
Bloomberg’s report noted that there may well be questions about the role gender played in Erkan’s downfall, “and more broadly the status of Turkish women in an economy where their participation rate in the labor market is the lowest in the 38-nation Organisation for Economic Cooperation and Development”.
One major source of tensions between Erkan and colleagues ahead of her leaving the central bank were allegations published by a local newspaper in January of her family’s role in the central bank’s affairs.
Bloomberg reported: “People with knowledge of the matter told Bloomberg at the time that Erkan’s father was a constant presence at the bank and confirmed his involvement in its affairs — especially personnel decisions — despite having no official role at the institution.
“Erkan’s father would often participate in work events, including a meeting at the Istanbul Chamber of Industry. Simsek was among those taken aback by his involvement, the people said.
“Days after the allegations came out, Erkan denied them and vowed to take legal action.”