Bending and damaging Turkey's institutions

What happens when the political will suppresses public institutions? We have had an experience of this in Turkey in the past week.

I am indeed talking about the interest rate and the flight of foreign currency. Let us leave the technical side of the issue to the economists and instead simply look at the institutional side.

President Recep Tayyip Erdo?an has long wanted the Central Bank to lower interest rates. Moreover, he does this with a loud voice in public meetings.  

However, the Central Bank, even though it staggers from time to time, manages to maintain its ?independence.? Deputy Prime Minister Ali Babacan and Finance Minister Mehmet ?im?ek may not speak with such loud voices, but they determinedly defend the independence of the Central Bank.

Let?s look at the past week: On Jan. 27, Central Bank Chair Erdem Ba?ç? did not take a backward step in the face of pressure, but he did give signals of softening and said that if the January inflation fell by more than 1 percentage point he would call an extraordinary meeting and cut interest rates. When the U.S. Federal Reserve?s statement was added to this, the value of the dollar climbed. Investors who thought it would be more beneficial to invest in the U.S. dollar rather than collecting interest from the Turkish Lira rushed to the dollar.

On Jan. 31, President Erdo?an criticized the Central Bank, saying ?it will drive people mad.? According to Erdo?an, if interest rates are low then inflation will also fall and the markets will rejuvenate. ?Is it appropriate to pay $2.5 billion for the sake of 1 percent of interest?? he asked.

The markets thought Ba?ç? was giving in and Erdo?an was continuing to pressurize, which boosted the dollar up to a record-breaking 2...