the Blog Papers of Dr. Michael Sakbani; Economics, Finance and Politics

Dr. Michael Sakbani is a professor of economics and Finance at the Geneva campus of Webster-Europe. He is a senior international consultant to the UN system, European Union and Swiss banks. His career began at the State university of NY at Stoney Brook,then the Federal Reserve Bank of New York followed by UNCTAD where he was Director of the divisions of Economic Cooperation, Poverty Alleviation, and UNCTAD`s Special Programs. Published over 100 professional papers.

Monday, June 10, 2013

Mr. Erdogan and the Turkish Malaise

                  Erdogan and the Turkish Malaise


                  Dr. Michael Sakbani

The riots that have gripped Turkey in the past 10 days were a great surprise to a lot of people inside and outside the country. That the formidable Prime Minister Receb Tayeb Erdogan be contested by rioters over a controversy about a building site in Taksim Square, followed by demonstrations in 49 Turkish localities was at first instance incomprehensible. However, those who follow the general mood in Turkey could discern frustrations with the Government and the increasing authoritarianism of Mr. Erdogan building up over time. This frustration reflects in part the despair of a large segment of the Turkish society that there is no alternative to the Prime Minister among the parliamentary opposition of the political establishment and a suspicion, no matter how unfounded, that Mr. Erdogan is surreptitiously  planning to convert the Turkish state into an Islamic Khilafet.

There has been no leader since Mustafa Kemal that has marked Turkey as has Mr. Erdogan. His achievements in the economic era are, despite their vulnerability, really impressive[1]. Turkey has averaged a rate of growth of more than 6 % from 2002 to 2008. It went negative in 2009 but recovered in 2010, to 2012 to its previous average pace despite the crisis in Europe, its biggest trading partner. The financial sector withstood quite well the financial crisis of 2008. Mr. Erdogan quadrupled Turkish exports since 2002 to reach $154 billion by 2012. Turkey’s exports went to a much wider group of importers than before. During the past 12 years, the Turkish per capita income has doubled in real terms to $15,000[2]. The Turkish new lira stabilized and there has been considerable improvement in health, housing and infrastructure. He has launched a successful social anti-thesis to Ataturk’s secular- Western thesis and brought to power and wealth the Anatolian Bourgeoisie who was trapped in the contempt and dismissal of the Ataturk elite establishment. He launched a series of reforms in the institutions of the state and its legal system, which won the nod of the Europeans to start EU membership talks. Mr. Erdogan is the only political leader who clipped the hidden state in Turkey and stopped the meddling of the Generals in Turkish politics. Lately, he began the long-delayed dialogue with the Kurdish nationalists. And above all, he mapped out a vision for Turkey that has begun to transform its face. In foreign policy, he gained the amity of all his neighbors after decades of estranged coexistence.

But Mr. Erdogan is not the first leader who fell victim to his success and consolidation of power. Absolute power might not have corrupted him absolutely, but nearly blinded him absolutely. The moderate and pragmatic Islamist of the early years could not shed the social conservatism of his background and ideology and instead of evolving with the Turkish society he helped to advance, he got stock in hubris and received values. As he accumulated successes and sealed the chances of political opponents, he abandoned skepticism and gave in to his authoritarian impulses. Silly things not befitting a big man started to mark his public perception: banning alcohol in universities, restricting the hours of alcohol sales when Turkey has no drinking problem, masking kisses and amorous gestures on media and dragging the Turkish urban population into the shade of his own piety. All of this creeping Islamization amounted to intolerance regarding the views and values of the others and registered a great dissonance with liberal democracy.

 As Mr. Erdogan, got more self-assured, his very good idea of changing the Constitution written in 1982 by the Generals, got mixed up with his Putin’s game: changing the Constitution to establish a Presidential system for his next term.

More ominously, in the last few years, he has brooked no tolerance with his critics and threw into jail eight hundred prisoners of pen and thought. When the riots erupted, instead of reaching out to the youthful protesters, he treated them as political opponents, hooligans, and alcoholics, a tune reminiscent of Kaddafi and other despots. This was harder to condone than even the police brutality in Taksim square. It is evident that Erdogan began to confound Democratic legitimacy with majority authority and rides his three Democratic election victories over a shallow and ineffectual opposition into the singular verity of his vision. Liberal democracy cannot function if minority interests and views are not incorporated into the majority decision making and public opinion is not headed and communicated with by the governing party.

Adding to all these domestic problems, his foreign policy fired back. His involvement in the Syrian civil war damaged his achievements even though for no moral or political fault of his own. And that demonstrated the danger of operating in a bubble and only seeing what he wants.
Finally, recently, many newspaper stories have floated about the corruption in his political circle, including his own son, Bilal. Mr. Erdogan has done nothing to pursue and investigate these reports. In fact, he has gone on a campaign of suppressing Press freedom which increases his discredit.
The present troubles have shown some sunlight between Mr. Erdogan and some leaders in his party, eg., the mayor of Istanbul. Whether they can replace him as a party leader remains an open question. But there is little doubt in the views of many observers that his project of Presidential executive is dead. If that is the case, he might be serving his last governmental term.

In his book on his years in the White-House, Henry Kissinger recommended to all politicians to exit from the scene to rebuild their depleted political and intellectual capital. Kissinger thought of one or two four year terms. Mr. Erdogan has governed for 11 years. It is time for him to hand the wheel of direction to somebody else. If he does, his place in Turkish history will be great and Turkey will be spared an unnecessary crisis.

Geneva, 10/6/13.

[1] Turkey does not have the typical debt problem of the EU members. Its debt to GDP ratio is less than 40 percent and its public deficit is around 2. 6 percent of the GDP. This is better than all EU members. However, Turkey runs a deficit in its current account of $ 65 billion. Thus, it needs to continue financing that deficit by foreign capital inflows and borrowing from the financial markets. Such capital inflows would be stable if they were in the form of foreign direct investment. Today, a huge chunk of capital inflows is Arab investments many of which are hot money investments. Should the current troubles of Mr. Erdogan continue, these inflows would reverse themselves and the country might face a currency crisis followed by a banking crisis. Moreover, Mr. Erdogan’s gigantic future projects would entail significant future increases in foreign indebtedness as he has already sold most of the state owned assets.
[2] All the statistics are from CIA, fact book, turkey, consulted on 9/6/1913.