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COMMENTARY

Is Turkey Thriving?
T Sabri nc

Turkeys ruling party, the Justice and Development Party or AKP, has built its fortunes by following an aggressive neo-liberal programme which has boosted the nance, real estate and tourism sectors. With the economy weakening, the AKP fears erosion of its support base; this explains why the party can brook no criticism of its economic policies.

n 27 May 2013, Jeffrey Sachs of Columbia University published a commentary titled Why Turkey Is Thriving in Project Syndicate. He argued, Long-term growth stems from prudent monetary and scal policies, the political will to regulate banks, and a combination of bold public and private investments in infrastructure, skills, and cutting-edge technologies (Sachs 2013). I was tempted to use the title Turkey Is Not Thriving for this article, but Deliveli (2013a) of Hrriyet Daily News has used that title already in his response to Sachs a few days later. I have nothing signicant to add to Delivelis arguments. There is no doubt that Turkey is not thriving. Which country is thriving these days? Structural Weaknesses Coincidentally, 27 May 2013 was also the day the Gezi Park protest, that triggered the ongoing uprising in Turkey, started. In 2006, another Columbia University professor, Frederic Mishkin, co-authored the report Financial Stability in Iceland praising the nancial soundness of Iceland about two and a half years before the Icelandic nancial system collapsed. It is difcult to say whether it was Mishkin or Sachs who was unluckier with the timing, because the economic miracle of the governing neo-liberal Justice and Development Party (Adalet ve Kalkinma Partisi, AKP) in Turkey has not collapsed yet. A related debate took place between Dani Rodrik of Princeton University and the nance minister of Turkey, Mehmet imek on Twitter. Emre Deliveli joined the debate from Hrriyet Daily News on 21 June, two days after the heated exchange between Rodrik and imek. Deliveli summarised the exchange as follows: It started when Rodrik tweeted a correction from The Economist: In last weeks brieng, we said that Turkeys GDP per person had tripled in the past 10 years. This was true only in nominal terms. In real terms, GDP per

person has risen by just 43%. Sorry, imek countered, arguing that the correct way to measure GDP was in nominal dollars (Deliveli 2013b). Delivelis humorous article Macroeconomics 101 for Finance Ministers is not only a good read humour has been the deadliest weapon of the protestors against the AKP since 31 May but also contains a screenshot of the entire exchange between Rodrik and imek. To make matters worse, another salvo came from another heavyweight economist, Daron Acemolu of Massachussets Institute of Technology. Acemolu told a small group of journalists on 22 June before a speech at stanbul Bilgi University (Kmrcler 2013),
The Turkish economy is at greater risk right now, but this is not about the countrywide protests. The Feds latest decision to end the liquidity party had been expected for a long time, and is not surprising. The expected move has affected many emerging and developing economies negatively for more than three weeks. The Turkish economy, however, has been affected most due to its structural weaknesses, particularly its high current account decit.

For Abdullah, Ali, Ethem, Medeni and Mehmet. T Sabri Oncu (sabri.oncu@gamil.com) is a citizen of Turkey currently based in Mumbai.
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But, of course, Acemolu is an Armenian citizen of Turkey and his hostility towards the economic miracle of the AKP is only to be expected. Given Prime Minister Recep Tayyip Erdoans now world-renowned search for conspirators including an interest-rate lobby who planned the ongoing protests to bring down Turkey way ahead of time, I would not be surprised if Rodrik, Deliveli and Acemolu had already been promoted by some AKP ofcials to the ranks of conspirators jealous of the economic miracle of the AKP (Kayakiran 2013). It is possible that even I may nd a place in the long list of conspirators after this article. There is another possibility. Ankara Mayor Melih Gkek, an elected ofcial of the AKP, may tweet a link to this article and accuse me of being an agent of India. I am writing in Mumbai, and both India and Turkey had been among high-growth emerging markets. Would it not be nice for India to bring down one of her strongest rivals? When Selin Girit, a Turkish reporter from BBCs Turkish service, tweeted a proposal from one of the ongoing park
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forums in stanbul, Gkek started a hashtag war accusing Girit of being a foreign agent. In a series of tweets, Gkek claimed the following:
Led by England, they are trying to collapse our economy via agents hired, both nationally and internationally. They are dreaming for Turkey to be the Sick Man of Europe once again. Here is concrete proof (Watson and Tuysuz (2013).

been an AKP fuelled credit bubble in Turkey (Goldman 2012). He is clearly a conspirator, even if he is not a foreign agent. Vulnerability to Capital Outows It does not end there. As if with the intention of adding fuel to re, Goldman Sachs and the Washington-based Institute of International Finance made public statements on the vulnerability of Turkey to capital outows on 21 June and 26 June, respectively. On 21 June Goldman Sachs said,
Brazils real, Chiles peso and Turkeys lira may fall signicantly to curtail widening current account decits. The lira, South African rand and Indias rupee would need to depreciate about 30 percent on a trade-weighted basis, while the real and peso need to fall about 20% (Xie 2013).

A large number of threatening messages were sent to Girit after Gkek named and attacked her. Of course, Girit is not the only one who has been named by elected AKP ofcials and has received life threats. There have been many more. The original tweet of Girit was this:
A proposal from the forum at Yourtu Park: Lets not be the standing man, but the man that stops. Lets stop the economy. Dont consume for six month[s] (HDN 2013).

It is the economy, stupid, as Bill Clinton coined in the 1992 presidential campaign. The question is, why is the economy so important to the AKP, despite that the AKP secured about 50% of the votes in the last election in 2011. Does not 50% of the population of Turkey comprise devout Muslims who would support the Islamist AKP under any conditions? An answer comes from another foreign agent, David Goldman (aka Spengler) of Asia Times. I leave it to Gkek to decide whether Goldman is a paid agent of Botswana, Madagascar or Belize. Whether Goldman is a foreign agent or not, he wrote this in his 3 June article, The Economics of Turkish Spring
Only a small minority of the AKP base, moreover, favours its Islamist agenda. Only 12% of Turks want Sharia to be the law of the land, according to an April 2013 Pew Institute survey, compared to 84% of Muslims in South Asia, 77% in Southeast Asia, and 74% in the Middle East and North Africa. That is why Erdoans mandate rested on economic performance. His Sunni fundamentalist agenda does not appeal to the Turkish majority. But he drew votes from secular Turks on the putative strength of his economic management (Goldman 2012).

And, on 26 June the Institute of International Finance said,


Turkey, Romania, Poland and Morocco are among the countries most vulnerable to slowing investment in developing nations because of their dependence on foreign nancing (Cao 2013). Is this not concrete proof of an interest-rate lobby consisting of national and foreign nancial institutions that want higher interest rates in Turkey?

Who knows what these Asia Times and Pew Institute are and with what intergalactic intelligence agencies they are associated? Maybe they are associated with some, maybe they are not, but Goldman has been arguing at the Middle East Forum since early 2012 that there has
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Although the rest of the world learnt of the term interest-rate lobby only after the onset of the 27 May 2013 uprising, this term is not new either in Turkey or in Wall Street. For example, about a year and a half ago on 11 January 2012 in Ankara Erdoan said, The interest-rate lobby is working on the attack right now (Bryant and Bentley 2012). The term has been in circulation in Turkey for many years if not for decades and its origins may be traced back to 1985. In 1985, the central bank nancing of the government halted in Turkey. The Turkish Treasury started auctioning government bonds only to the banks and other nancial institutions at high interest rates regularly and the then Central Bank of Turkey Deputy Governor Rd Saracolu established the interbank money market in 1986 (zgr and ala 2008). Indeed, there is an Indian counterpart of the term interest-rate lobby. It is the Indian term lazy bankers. The godfather of the Indian term lazy bankers is no other than a former Reserve Bank of India (RBI) deputy governor, Rakesh Mohan. He criticised the banks in India for being
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lazy bankers a clique consisting of bankers who buy government bonds beyond reserve requirements I presume in 2002 at the annual bank economists conference in Bangalore (Bandopadhyay 2008). Coincidentally, the origins of the term lazy bankers may be traced back to the end of the central bank nancing of the government also in India. The Indian government started to sell all its bonds to banks and other nancial institutions at high interest rates in 1994 and, in 1995, RBI direct purchases of the government bonds was banned. Yet, there was nothing wrong with what those lazy bankers were doing. They were not lazy. Is it not most rational to lend to that entity with the lowest risk, yet with very high return? When Erdoan uses the term interestrate lobby he means nothing but nance capital a term whose history goes back to Marx, if not earlier. Either Erdoan and/or his speech-writers have not read Hilferdings Finance Capital written in 1910 or they do not want to use the term for ideological reasons. Maybe, nance capital is too difcult a term to communicate to the public? Or, maybe, because interest is a sin in Islam the term interestrate lobby is better suited to the supporters of the Islamist AKP? What Erdoan possibly does not know or say, however, is that nance capital does not care about this or that country. Neo-liberal Regime Finance capital in general, and banks in particular, rose to prominence in Turkey after the ongoing neo-liberal regime was installed by the International Monetary Fund (IMF) which on 24 January 1980 approved an economic stabilisation programme in exchange for loans when a balance-of-payments crisis hit Turkey in 1979. And, the implementation of the programme was guaranteed by the Turkish military with the coup dtat of 12 September 1980. Indeed, not only the prominence of the banks, but the AKP itself is an offspring of that neo-liberal programme whose seeds were sown on 24 January 1980 and watered on 12 September 1980, although both the banks and AKPs roots go back to much earlier times. Since the implementation of the 24 January 1980 neo-liberal programme required
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an obedient workforce to ensure cheap labour, the military junta adamantly supported by the Industrialists and Businessmen Association of Turkey (TrkiyeSanayici ve AdamlarDernei, TS AD) or the stanbul bourgeoisie crushed the left brutally and suppressed the labour unions. Another tool of the junta among many others was to encourage religion against radical ideas and the left. Courses on religion were made mandatory throughout grade school and religious high schools proliferated.1 And, shortly after the end of the junta in 1983, one of the largest Islamic congregations, the Fettullah Glen Congregation started to organise in the police force and eventually captured almost all of it.2 It is this brainwashed police force associated with the Glen Congregation that has been attacking protestors around the country in the name of God since May 31. The objectives of the 24 January 1980 stabilisation programme were a reduction of state involvement in production; an increased reliance on the markets, a switch from an inward looking economy to an export-oriented one, and the attraction of foreign investment direct, I presume. After the declaration of the programme Turkey signed three standby agreements with the IMF and ve structural adjustment loan agreements with the World Bank between 1980 and 1984. While the solutions offered by the IMF programmes were short term and consisted of such recommendations as devaluing the currency to increase exports and restricting money supply to control ination, the long-term solutions of the World Bank structural-adjustment programmes aimed at transforming an inwardly-oriented economy to an outwardly-oriented one. These World Bank structural adjustments included trade and nancial liberalisation, export promotion, privatisation of public enterprises and scal restructuring, that is, austerity. This is how it all started and the main outcome was the rise to prominence of the nance, real estate and insurance sectors in Turkey, as well as of tourism. And, the game of rent collection had begun. The AKP has been nothing but the last agent of this ongoing neo-liberal transformation in Turkey.
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In a recent interview with Brasil de Fato (Viana 2013), Joo Pedro Stdile, national coordinator of the Movement of Landless Rural Workers, analysed the economic roots of the ongoing Brazilian uprising as follows.
There have been many opinions as to why these protests occurred. I agree with the analysis of Professor Erminia Maricato, who is one of our best specialists in urban issues and has worked in the Ministry of Cities under Olivio Dutra. She defends the thesis that there is an urban crisis in Brazils cities, a result of the current stage of nancial capitalism. Due to an enormous amount of housing speculation, rent and land prices have increased 150% in the last three years. Without any government control, nancial capital has promoted the sales of cars in order to send prots overseas and transformed our trafc into chaos. And in the last 10 years there has been no investment in public transport. The housing program My home, my life has driven the poor out to the periphery of the cities, where there is no infrastructure. All this has generated a structural crisis where for people, large cities have become a living hell where they lose three or four hours a day in transit which they could instead be using to spend with their family, studying or participating in cultural activities. Added to this is the poor quality of public services, especially health and education, from the primary and secondary level, where children leave without being able to write. And university education has become a business, where 70% of university students diplomas are sold on credit (Fuentes 2013).

economic value. This is pure fraud, more than a privatisation (Amin and Acconcia 2013).

Put Stdile and Amin together, and you are more or less describing the thriving Turkey of Sachs. If you see any resemblance between your country and these three countries, namely, Turkey, Brazil and Egypt, you can be certain that the elites of your country are trembling.
Notes
1 Ahmet Sik, ImaminOrdusu (The Army of the Imam), 2011, unpublished manuscript oating over the Internet because it was banned by the AKP. 2 http://fgulen.com/en/

References
Amin, S and Acconcia, G (2013): A Year of Democratic Farce, Open Democracy, 4 July, viewed on 23 July 2013: http://www.opendemocracy.net/ samir-amin-giuseppe-acconcia/year-of-democratic-farce#.UdV389zoAJ4.facebook Bandopadhyay, T (2008): Back to the Easy Old Days of Lazy Banking, LiveMint, 4 February, viewed on 23 July 2013: http://www.livemint.com/ Companies/uCzQuROgwo4cJdHqI7FyuO/Backto-the-easy-old-days-of-lazy-banking.html Bryant, S and M Bentley (2012): Erdogan Will Fight Interest-Rate Lobby in Turkey, Says Rates Should Fall, Bloomberg, 11 January, viewed on 23 July 2013: http://www.bloomberg.com/news/201201-11/erdogan-will-ght-interest-rate-lobby-inturkey-says-rates-should-fall.html Cao, B (2013): Turkey to Romania Seen at Risk as Emerging-Market Inows Slump, Bloomberg, 26 June, viewed on 23 July 2013: http://www. bloomberg.com/news/2013-06-26/turkey-toromania-seen-at-risk-as-emerging-market-inows-slump.html Deliveli, E (2013a): Why Turkey Is NOT Thriving, Hurriyet Daily News, 31 May, viewed on 23 July 2013: http://www.hurriyetdailynews.com/whyturkey-is-not-thriving.aspx?pageID=449&nID =47915&NewsCatID=430 (2013b): Macroeconomics 101 for Finance Ministers, Hurriyet Daily News, 21 June, viewed on 23 July 2013: http://www.hurriyetdailynews.com/ macroeconomics-101-for-nance-ministers. aspx ?pageID=449&nID=49178&NewsCatID=430 Fuentes, F (2013): Brazil: Joo Pedro Stdile of the MST: We Are in the Midst of an Ideological Battle, Links, 24 June, viewed on 23 July 2013: http://links.org.au/node/3411 Kayakiran, F (2013): Erdogan Casts Bankers as Villain of Turkish Protests, Bloomberg, 19 June, viewed on 23 July 2013: http://www.bloomberg.com/ news/2013-06-19/erdogan-casts-bankers-asvillain-of-turk-protest-boosting-yields.html Kmrcler, G (2013): Turkish Economy at High Risk, But Not Due to Gezi Protests, MIT Economist Says, Hurriyet Daily News, 24 June, viewed on 23 July 2013: http://www.hurriyetdailynews. com/turkish-economy-at-high-risk-but-notdue-to-gezi-protests-mit-economist-says.aspx? pageID=238&nID=49336&NewsCatID=344 Goldman (2012): Ankaras Economic Miracle Collapses Changes in Turkey, The Middle East Quarterly, 19(1): 25-30, viewed on 23 July 2013: http://www.meforum.org/3134/turkey-economic-miracle (2013): The economics of the Turkish Spring , Asia Times, 3 June, viewed on 23 July 2013: http://www.atimes.com/atimes/Middle_East/ MID-02-030613.html

And, in a recent interview at OpenDemocracy, Samir Amin, an Egyptian economist, described his views of the economic reasons behind the second revolution in Egypt, unfortunately captured by the military once again, as follows.
Millions of people signed their names after giving deep political consideration to what they were doing: something totally ignored by the international mainstream media. They represent the majority of all the electoral constituencies, but they do not have any voice. The Muslim Brothers wield political power and like to think they can control 100% of the votes. Thus, they ensured members of the movement in every public sector. Islamists have only ultraliberal answers to give to the crisis: they have replaced the capitalists bourgeois clique that were Mubaraks friends with reactionary businessmen. Moreover, their goal is quite simply to sell off public goods. It is theft to attach derisory prices to goods that are worth billions of dollars. These are not the usual privatisations that reactionary regimes indulge in, selling off goods at their
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HDN (2013): No One Can Tell Us Who to Fire: Turkish PM Erdoan, Hurriyet Daily News, 25 June, viewed on 23 July 2013: http://www.hurriyetdailynews. com/no-one-can-order-akp-government-to-remove-ofcials-from-duty-turkish-pm.aspx?page ID=238&nID=49429&NewsCatID=338 zgr, D and ala (2008): Economic Decision Making in Turkey: Financialization and the Experts, unpublished PhD thesis, John Hopkins University. Sachs, J D (2013): Why Turkey Is Thriving, Project Syndicate, 27 May, viewed on 23 July 2013: http://www.project-syndicate.org/commentary/inside-the-turkish-economic-miracle-byjeffrey-d--sachs Viana, N (2013): O signicado e as perspectivas das mobilizaes de rua, Brasil de Fato, 25 June, viewed on 23 July 2013: http://www. brasildefato.com.br/node/13339 Watson, I and Tuysuz, G (2013): Ankara Mayors BBC Spy Claims Spark Hashtag war, CNN, 25 June, viewed on 23 July 2013: http://edition. cnn.com/2013/06/24/world/europe/turkeygokcek-hashtag/?hpt=hp_t3 Xie, Y (2013): Goldman Says Real, Lira, Rand Must Weaken to Close Trade Decit, Bloomberg, 21 June, viewed on 23 July 2013: http://www. bloomberg.com/news/2013-06-21/goldmansays-real-lira-rand-must-weaken-to-closetrade-decit.html

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