Parliament lived through another productive two weeks before its recess and passed important bills mostly for the economy. It also dismissed all investigation committee reports to clear the way for Mesut Yilmaz to take an active role in the Cabinet. With scars and bruises from the Yilmaz-Bahceli strife over corruption charges the tripartite coalition is embarking on a long-term development strategy stretching to 2023, the Republic’s centenary. For the challenges and pitfalls see the following article.

Mesut Yilmaz takes charge of EU affairs, but steers clear of foreign policy which is PM Ecevit’s special field of interest and which is closely watched over by the NSC anyway. This arrangement ensures the prevention of potential friction between the two coalition partners. As for relations with the third leg of the coalition, the MHP, it continues to be in the balance, and the Ecevit-Yilmaz team has all the trump cards to carry out the reforms in accordance with the Copenhagen criteria. The article below sums up the Turkish outlook of the Copenhagen criteria and briefly points out the difficulties encountered in forging Turkey’s “State policy” for the EC’s demands. What if any coalition partner falls out of step with that policy? The answer is simple: one can be the Government in Turkey, but can never be the Ruling Power in that event. And this constitutional safeguard will be preserved in this country, come what may.

More than half of Turkey’s State Budget goes to domestic debt interest payments due to interest rates that soared to over 100% in recent years. In the first half of this year, the non-interest expenditure totalled TL10.4 quadrillion for all the items in the budget excluding interest payments and only interest payments amounted to TL11.9 quadrillion. The ongoing three-year economic stability program aims at rectifying this pervert structure by reducing these interest rates along with a sharp decline in the inflation and thus relaxing the State Budget. This aim will be achieved in the fourth quarter of the year after very heavy debt servicing in August. The $40 billion that evaporated from the Turkish stock market within the last couple of months for no valid reasons is bound to return to the bourse with handsome interests after August. For the economic fundamentals today and expectations in the near future, especially for the Istanbul Stock Exchange (ISE), see the following article.