President Recep Tayyip Erdogan appointed his son-in-law as Turkey's finance minister on Monday hours after he was sworn in with sweeping new executive powers, promising a "strong government and a strong Turkey".
Abolishing the post of prime minister, the president will now form the government, appoint ministers, vice presidents and high-level bureaucrats, issue decrees, prepare the budget and has the power to impose a state of emergency.
Supporters in parliament gave him a minute-long standing ovation after he took the oath.
Earlier on Monday the lira briefly dropped more than 1 per cent after a decree removed a clause stipulating a five-year term for the central bank governor. Monday's ceremony paves the way to shift Ankara's ruling model from a parliamentary to a presidential republic.
The post of prime minister has been scrapped and the president will be able to select a cabinet, regulate ministries and remove civil servants, all without parliamentary approval.
Just as Ataturk transformed an impoverished nation at the eastern edge of Europe into a secular, Western-facing republic, Erdogan has fought to bring Islamic values back into public life and lift millions of pious Turks - long ostracized by the secular elite - out of poverty.
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The appointment of Erdogan's son-in-law "will worry a number of investors and some of the markets, because they didn't much enjoy dealing with Albayrak when he was the energy minister", Peter Westmacott, who served as former British ambassador to Turkey from 2002 to 2006 told CNBC.
The appointment of military officers will be made on Victory Day, Aug. 30, every year but this date may also be changed by the president. "In other words, Turkey will be an institutionalized autocracy". PICTURE BY SALIM HENRY/STATE HOUSE ©2018PRESIDENT Edgar Lungu was yesterday among 22 Heads of State and foreign dignitaries invited to attend Turkish President Recep Tayyip Erdogan's inauguration ceremony in the capital, Ankara. Erdoĝan has repeatedly clashed with strategic allies such as the U.S. and the European Union in recent years over the war in Syria, Turkey's accession to the EU, human rights abuses by Ankara, Europe's failure to support Turkey during the coup attempt, and rising Islamophobia in Europe.
A former Istanbul mayor, Erdogan has been at the helm of Turkey since 2003 as prime minister and then the first directly elected president since 2014.
"If we see market-friendly names being appointed (to the cabinet) we might see an even more positive response for the lira and the opposite is true as well", said Inan Demir, senior emerging markets economist at Nomura International. It stood at 4.5655 against the dollar at 1508 GMT, strengthening slightly from Friday's close of 4.5745.
The lira has been battered by concern about Erdogan's drive for lower interest rates and by comments in May that he planned to take greater control of the economy after the election, which he won on June 24.
In a speech on Saturday, Erdogan said he would tackle high-interest rates, inflation and a wide current account deficit.