Turkish economy headed towards further crisis under unorthodox management
Turkey’s economy is facing a gloomy period, according to leading indicators such as exports, tourism revenues, its external dependence on energy and depleted foreign currency reserves. The country has failed, though wrongful policies, to turn the global crisis surrounding the COVID-19 pandemic into an opportunity.
Turkey may be approaching a debt crisis. The Turkish government is trying to keep the ship afloat with unorthodox financial tools and is closing its eyes to the fact that funding the economy with credits will create a burden on banks as well as society at large. The loans cannot be repaid without taking steps to increase employment and income.
While providing credit expansion through public banks via presidential decrees, the government is also gradually closing Turkey’s markets and economy to the world with decisions that shackle foreign investors and banks. As a result, foreign capital inflows are drying up and reversing, depriving the country of a vital source of revenue.
The latest economic trick of the ruling Justice and Development Party (AKP) was to force banks to postpone loan repayments for their clients until the end of the year. All involved in the matter know that these debts cannot be paid back. While the government is trying to put a brave face on things by making use of the most questionable economic tools, foreign investment is leaving the country or recoiling.
On July 1, German auto giant Volkswagen announced the cancellation of plans to build a factory in Turkey. This decision comes as a direct result of the Turkish government's unorthodox interventions in the economy and is a stark reflection of the emerging conflict between the government and foreign capital interests.
Per capita national income in Turkey, which rose to $12,480 in 2013, has declined to $9,128 in 2019. The growth rate in 2019 was 0.9 percent, the worst since 2009.
The AKP, similar to other governments around the world, focuses on putting the financial burden of the crisis on society's back and continues to perform "the art of state management" by silencing critics with police brutality.
On the one hand, the AKP is enacting laws to silence social media, and on the other, it seeks to prepare amendments that will further impair the political opposition in future elections via changes to the election districts and thresholds. The opposition, which is already ineffective, is busy flogging a dead horse.
Some wax hopeful that the end of capitalism in Turkey and the world has come, that the bad days will be left behind following the ongoing crisis because more liberal, egalitarian and progressive political parties will rise. However, history suggests the opposite and if we still hold such expectations for the post-crisis period, I must say we are the most to blame.
Because if you scratch the veneer off of the political parties in Turkey that seem more liberal, libertarian, and egalitarian, you will see that almost all of them were among the leading actors in the formation of the current crisis, and they are trying to market a dream of a new world without any self-criticism.
In Turkey, the government does not take radical measures to resolve the country’s problems, but the opposition does not put forward compelling suggestions for solutions either.
As long as we refuse to see that opposition within the system is itself a mini-hegemony, we will continue in empty expectation to watch how demands for bread and freedom are grinded down. Even worse will be to witness a significant portion of socialist parties and movements scattered to a point where they are incapable of engaging in politics, trying to survive by sitting on the tail of intra-system opposition parties, such as the main opposition Republican People's Party.
When the early election discussions flare up, it does not take a prophet to see that what is actually flaring up is a struggle for power, and that the government as well as in-system opposition actors will resort to every trick in the book to maintain their hegemonies, big and small.
One example of this has been the opposition lining up behind the government immediately to legitimise it, and not do much else, when it came to the matter of the re-conversion of the Hagia Sophia to a mosque last week.