President Recep Tayyip Erdogan has ousted the entire management staff of Turkey’s sovereign wealth fund and appointed himself chairman.

The shake-up, which includes giving a board seat to Erdogan’s son-in-law Berat Albayrak whom the strongman made finance minister in July, was announced in a decree published by Turkey’s Official Gazette on September 12. Zafer Sonmez, head of Turkey and Africa for Malaysia’s government investment vehicle Khazanah Nasional Bhd, was named general manager of the Turkey Wealth Fund (TWF), said to have assets of around $50bn in value.

The TWF has achieved nothing of note since it was formed two years ago. Those looking for a lion, instead encountered a mouse. Upon its formation, the fund invited a lot of scepticism. The traditional model for a sovereign wealth fund, in which a country piles up earnings made on substantial natural resources such as oil and gas, is not possible for Turkey given its lack of such resources. Nations famed for running successful wealth funds, such as Norway and Saudi Arabia, normally have wide current account surpluses. The complete opposite is the case with Turkey.

The TWF—envisaged as financing mega infrastructure projects to fire up the economy—has stakes in assets including Turkish Airlines, Turk Telekom, state lenders TC Ziraat Bankasi and Turkiye Halk Bankasi (Halkbank), state oil and pipeline companies, the national postal service, the Istanbul stock exchange, the national railway operator and the national lottery.

Erdogan fired the first CEO of the fund after outlining his disappointment at its lack of progress.

Objectives not yet clear
The TWF’s objectives are as yet unclear. Some commentators have said that its company stakes should be managed to add value, and others have argued that its assets could be deployed to quell market strife. There have also been calls for the assets to be securitised, with the state then borrowing against them.

Erdogan’s move to take the reins of the wealth fund may turn up the volume on criticisms that he is more or less becoming an out and out autocrat. After winning the late June presidential election, he embarked on Turkey’s first ever executive presidency which gives him beefed up and sweeping powers. Prior to that, for two years he was entitled to rule by decree under a state of emergency brought in after the failed coup of mid-2016.

A key cause of Turkey’s ongoing currency crisis is anxiety across the markets that Erdogan, as executive president and a populist leader, has stripped the Turkish central bank of its monetary independence and has stood in the way of interest rate hikes in favour of following his own brand of unconventional economics. He has regularly pushed for cheaper money, arguing that monetary tightening can exacerbate high inflation.

The executive presidency has given Erdogan the sole authority to make appointments at the central bank and other state organisations.

After the election, investors were disappointed to see the departure from government of Mehmet Simsek, the ex-Wall Street banker who served as deputy prime minister and headed Turkey’s economic team. He was seen as an important, conventional restraining influence on Erdogan.

As part of the sovereign wealth fund shakeup, Erdogan rid its board of one of his own advisors, Yigit Bulut. The new board members include Rifat Hisarciklioglu, who heads the Turkish chambers of commerce, Huseyin Aydin, the Ziraat CEO who is also head of Turkey’s banking association, Arda Ermut, who heads up the country’s investment support and promotion agency, Erisah Arican, a professor and a member of the Borsa Istanbul board and entrepreneur Fuat Tosyali.

Late last year, there were reports that the TWF planned to link up with the sovereign wealth funds of China, Russia and Singapore to deliver joint financing for projects.