FIRST SIX MONTHS OF AKP RULE

 

The Erdogan-Gul team has completed its first six months in office with shocking results for its benefactors who brought it to power – the Americans. This shock to a superpower is bound to affect the future performance of the AKP rule with its sizable pros and much bigger cons for itself. This development is also bound to affect the future of not only Turkey, but also world politics. For an objective analysis of these pros and cons and expectations for the future please see the article below.

 

This publication, Pulse, has been very outspoken in its assessments about, indeed attacks against the 3 November general election’s uncontested winner, the AKP and its chairman, Recep Tayyip Erdogan. These accusations went as far as hinting that Erdogan could be a dedicated American agent (by giving the benefit of the doubt of responsible journalism, of course.)

A total volte-face against AKP from Washington

Exactly a week after the elections Pulse wrote in its article entitled “Turkish Elections – Who Will Be the Final Winner,” (Link to turkpulse 84) “…Nevertheless, it was a fair, democratic election with a landslide victory for Recep Tayyip Erdogan’s moderate Islamic AK Party. These elections brought to fruition Washington’s 3-4 decades of subversive activities in Turkey in order to use religion as a kind of secret organisation patterned after freemasonry. The majority of Turkish people were clearly victims of the lack of public knowledge about the whole thing, but it does not follow that the victor, the United States, will be the final winner.”

A glance at the US-Disinformation-Mechanism-guided Turkish press today is clearly proof of the accuracy of this assessment. The majority of the Turkish media, which was blindly pro-Erdogan under American guidance before the elections, is now, since the 1 March rebuff to the American plans to use Turkey for a springboard for this region, a hawk-eyed observer of any step about his and his party’s alleged intentions to bring Sheriat to Turkey.

The aim of these accusations is obvious - to trigger off a military coup in Turkey to oust the Erdogan Government, as it has too comfortable a majority in Parliament to repeat the intrigues successfully staged against the Ecevit Government by the same sources. The London-based IISS (International Institute for Strategic Studies) was up with such a claim last week and naturally it provided good material to the disinformation mongers of the Turkish media with wide coverage from a reputable international source even though it was absurd, to put it in a single word. At the moment the media is preoccupied with trying to wedge a rift between the civilian rule and the military by speculating primarily on the words of General Tuncer Kilinc, Secretary General of the NSC, and exploiting every occasion against the Erdogan Government with far fetched claims such as its intention to replace Sunday by Friday as weekend. It is obvious that Washington is after the fourth military take over in Turkey’s 60-year old parliamentary democracy following WW II, because it has apparently come round to Pulse’s forecast that the Americans cannot possibly use PM Erdogan as a poppet for themselves. The bridges have already been blown up for such a possibility even before Tayyip Erdogan became prime minister.

The question now is how far these developments will affect Turkey’s relations with the United States and what will be its impact on this region. Naturally Turkey is keen on having good relations with the USA, but it takes two to tango. If Washington insists on Wolfowitz’s “obedient servant” expectations of Turkey for this good relationship, much less the “strategic cooperation,” it is obvious that these efforts will remain abortive. From Turkey’s angle this strategic cooperation was a myth anyway, as Bulent Ecevit once remarked when he was prime minister.      

Have the bridges been blown up irreparably?

Judging it by number twos of the Pentagon and the State Department, Paul Wolfowitz and Marc Grossman, the United States has written Turkey off as a “strategic ally” unless… This “unless” varies according to the interpreter, ranging from an apology from Turkey for the 1 March “disappointment” to blindly following the Americans in their wake in especially the Gulf and the Middle East. A Washington-based Turkish journalist close to the American administration, Yasemin Congar writes in Milliyet that a “dry apology” is not enough; Turkey should prove that it is beside the United States in the following phases of the Iraq crisis. Needless to say, it involves fouling Turkey’s good relations with all its neighbours starting with Iraq, Iran and Syria and what’s more it is totally in conformity with President Bush’s announcement to the world on his early days in power that you are either with me or my enemy.  

The answer to Congressman Robert Wexler’s query about what message FM Abdullah Gul would take to Damascus came from a one time top Turkish diplomat. Deputy Chairman of the Foreign Relations Committee, Onur Oymen (CHP, Istanbul) said in answer to Wexler in the comfort of belonging to the opposition that Turkey also wandered a lot about what they were doing there when the American government members visited Damascus “Twenty-two times” while the PKK leader Abdullah Ocalan was stirring up and guiding the Kurdish uprising in Turkey from the Syrian capital.

In other words, Turkey has taken its lessons from President Ozal’s all out support to the United States at the first Gulf War in 1990-91 and Washington’s ungrateful response to it by escalating the PKK uprising to civil war dimensions and liquidating Turkey from the Gulf markets in favour of Jordan and Israel with its new invention QIZ (Qualified Industrial Zones) and by denying to Turkey Article 50 of the UN Charter. That is why Ankara is not repeating these mistakes today and going on with improving relations with the region despite Washington’s objection. Sending the Turkish Ambassador to Baghdad and maintaining good relations with Syria and Iran despite strong objection of Washington are among these moves on the part of Turkey.

No matter how much effort Erdogan and Gul may exert it is a fact that the Americans are suspicious of some secret deals between Ankara and the Saddam team. “Rumours are rife at ISE (Istanbul Stock Exchange) that Saddam’s money is in Turkey,” speculates the daily Milliyet (18^th). “According to these rumours part of the money smuggled out of Iraq by Saddam is in Turkey and that is the reason for the excess of foreign currency here at the moment. Because the United States is displeased by this it may impose sanctions on Turkey and drop the ISE index, it is claimed. Yet it is common knowledge that the excess dollars in the market belong to the people,” writes the daily.

Economic fundamentals are strong, say economists

Unidentified American diplomatic sources told the Turkish media on the critical days before the 1 March rebuff that the Turkish economy could never take such a risk because if the American support of the Turkish economy is withdrawn the dollar would soar to TL3.5 million, interest rates would climb sharply and Turkey would fall into Argentine’s position with another financial crisis.

It all proved wrong, however, and the economy is doing quite well today. Much the opposite happened in the economy and instead of a massive devaluation increasing the dollar parity to TL3.5 million, the Turkish Central Bank had to intervene to save the dollar from dropping below the TL1.5 million parity.  Economists make the following assessments about this phenomenon and the chances of success of the possible efforts for repeating the February 2001 financial crisis in Turkey:

• Can Washington prevent the IMF from helping the Turkish economic recovery or cause havoc for it? “It is not very easy,” say economists and underline that the voting right of the United States in the IMF is only 17%. While Turkey lost Washington’s favour on 1 March, it gained the appreciation of almost the rest of the world, especially the non-coalition bloc, France, Germany, Russia. This is an enormous advantage for Turkey’s long term efforts for accession to the European Union. While Turkey needs the EU for its economy, the Union needs Turkey for becoming a match for the United States in the military field, now that the world is shocked by President Bush’s “might is right” policy in Iraq.
• Can Turkey role over domestic debts even though no aid comes from the United States? The economists’ answer is simply “yes.”  They note that the Government did not take into account any aid parcel in preparing this year’s budget. The “roleover rate,”  that is to say the “borrowing/disbursing rate” this year is 98%. It is less favourable than last year’s 81%, but nothing unmanagable. It may only cause difficulties in the government’s efforts to lower the interest rates. Even in that regard the compound interest rates have fallen below 50% and they tend to go further down. In other words, banks used to buy TL81 worth of state bonds for each TL100 that returned to them from the Treasury. It is TL98 per TL100 this year. That is all. There is no risk of failing to roleover domestic debts because of external machinations.
• May the budget deficit grow bigger due to the Iraq war and the developments thereafter?  Economists stress that even though the roleover rate exceeds the 100% limit and the budget deficit grows bigger there is no danger of a moratorium for Turkey’s domestic or external debts under the existing conditions because of the liquidity and excess in foreign exchange in the market. The total liquidity in the banking system and the market sails at TL12-12.5 quadrillion and this sum described as “Reserce money” in the Central Bank’s terminology is almost equal to the “idle liquidity ,“ i.e. the money available in the banks for placement on government bonds. Should the roleover rate exceed the 100% limit banks can use part of this money for purchase of bonds in government tenders. Indeed, the roleover rate was 109% in 1999 and it did not result in any financial default. It may only have an inflationary impact as the reserve money would then go up a little. There is no liquidity hardship in the market as certain quarters claim, observe economists.
• Is a big devaluation possible as claimed by American sources before1 March? Economists outright dismiss such a possibility under today’s trend. They say estimates for foreign exchange rates throughout the year are made on the basis of unfavourable developments with the possibility of the prolongation of the Iraq war. Today’s surprising development is that rather than the sharp devaluation of the TL because of the war the Central Bank is facing a job to keep it at the TL1.5 million parity with the dollar. The $20 million purchase by the Central Bank every day in order to stabilise forex rates is proving abortive and to prevent excessive appreciation of the TL the Central Bank is purchasing more dollars. Much less than the danger of a big devaluation of the TL,  economists are now wandering if there is an unknown game behind the foreign banks’ massive sale of the dollar to buy TL. They note that for a big devaluation certain conditions have to emerge in the economy, such as the existance of “hot money” and big current account deficits because of keeping the TL overvalued. The collapse of the exchange rate because of these factors in February 2001 is a typical example of it. Today there is the floating exchange rate system in Turkey and it prevents both the existance of hot money and artificial exchange rates. Hot money is negligible, below $1 billion,  today. The $15 billion hot money which left Turkey in the 2001 crisis has not returned to the country.  The current accounts deficit in 2002 was 0.9% and this year it was estimated to be $7 billion. The Central Bank’s latest estimates show that it may even be smaller and the TL/$ parity may not exceed TL1.8 million at the end of year, contrary to initial estimates of over TL2 million. In short, the basic foreign exchange balance of the country is quite strong.

The first six-month performance of the AK Party rule shows that, with a very comfortable majority in Parliament, Turkey may now have a very good opportunity to adopt itself to full membership to the European Union. What’s more the “Old Europe” has come round to welcoming this accession in view of the dangers involved for the world of having  a single super power ruled by some hardliners. uras@ada.net.tr   –   May 24th, 2003