How the bubble of Western ‘irrational exuberance’ about Turkey was deflated

An event entitled “The End of Democracy? The 'New Turkey' and a Region in Flux,” took place in on Sept. 24, as a part of the Labour Party’s 2018 conference in Liverpool.

Following the full speech which was delivered by Ayşe Zarakol, the distinguished academic from Cambridge University.

Liverpool Labour Party Conference Talk (Sep 24 Monday)

The organisers have asked me to put recent developments in Turkey in a wider historical so I will aim to do precisely that. My usual tendency is to speak in centuries, but today I will spare you and focus on the last two decades and mostly on Turkey’s relationship with the West. In the brief time I have, I want to try to answer the question of how much of the domestic developments of Turkey in the last 18 years of AKP governance were actually driven by international dynamics.

The way this question is usually answered really varies with where you are when you ask it. If you ask the question while you are in Turkey, you will get one answer. According to President Erdoğan and his supporters, everything that they consider to be positive in the last 18 years is an accomplishment of Erdoğan and Turkey: the massive infrastructure projects such as the tunnel under the Bosporus or the third bridge over it; the new roads; shopping malls all over the country; in sum, all of the seeming economic growth the country has experienced in the last decade. These are all supposed to be a consequence of Erdoğan’s grand vision, carefully executed. Anything that Erdoğan considers a negative, by contrast, is an insidious ploy by foreign powers and traitors who work for foreign powers: the Gezi protests in 2013, the Gülenist betrayal of Erdoğan; the coup attempt in 2016, the current economic wobble the country is experiencing (which Erdoğan refuses to label a crisis) - these are the works of foreigners who are envious of Turkey’s rise and desire to put a stop to it. This is the official narrative inside Turkey.

And if you ask the question outside of Turkey, in the West, then the unexamined assumption is that Turkey’s derailment off the path of democracy is perhaps tragic, but its own doing. It has nothing to do with global dynamics - what has happened only goes to show that Turkey is one of these places, like Russia, that is not really cut out for democracy to begin with. I now want to complicate for you both of these narratives simultaneously - both the nationalist Turkish one that blames the West for all Turkey’s stumbles and the Western one that dismisses Turkey’s failings as self-contained and domestic.

What I am going to argue instead is that Erdoğan and the AKP have ridden what was until now a very fortuitous wave of international factors, and Turkey’s upward and downward political trajectory in the 21st century cannot be understood except by paying careful attention to these global dynamics. Far from being hurt by foreign meddling, Erdoğan’s regime has been very much helped along by international factors, especially until 2013. I don’t mean this in conspiratorial sense, however. I mean something rather akin to a wilful blindness instead. You might be familiar with the term ‘irrational exuberance’, referring to market behaviour, used to explain overvaluation behind the economic bubbles such as the dot-com bubble of the 1990s or the housing bubble of the mid-noughts in the U.S.. What I am thus suggesting is that Erdoğan, his party, the AKP and by extension Turkey as a country, was at the receiving end of such a moment of ‘irrational exuberance’ in the global system, in other words, an overvaluation by international political and economic actors in especially the first decade of the 21st century. Without this ‘irrational exuberance’, Erdoğan could not have consolidated the current power he has.

This international ‘irrational exuberance’ about Turkey’s prospects had several components. The economic component is the most obvious in some ways but the damage it has wrought is only now becoming undeniably apparent in Turkey.

Like all current economic stories, it is a complicated one but for time saving purposes let us summarise it by saying that much of Turkey’s vaunted economic success under AKP rule was accomplished on the back of cheap global credit looking for a high-yields place to go after the global financial crisis of 2007-8. As Adam Tooze also notes in his recent book “Crashed”, by 2015, governments and businesses outside America had piled up $9.8 trillions of debts denominated in dollars, and $3.3 trillion of this debt was owed by emerging markets.

Between 2008-2013 especially Turkey was chief among a group of so-called ‘rising power’ countries that benefited from this availability. Thanks partly to the magic of PR and marketing, in this period Turkey had branded itself successfully as a second-tier, but certainly up and coming, BRIC country. In this low-interest international environment Turkish banks (state and private) liberally borrowed money; there seemed to be no limits to how much you could borrow. In the meantime, the AKP government announced bid-after-bid of giant public-private hybrid infrastructure projects, the private part of which were almost always awarded to businessmen with AKP ties, and whose bids were also underwritten by state bank loans resting on the same cheap international credit.

These infrastructure projects served dual purposes. On the one hand, they allowed Erdoğan to create his own ‘oligarchs’, so to speak, whose economic fortunes were entirely tied to their support for the AKP. This new cadre of businessmen eliminated or provided a counterbalance to old money. On the other hand, the infrastructure projects, while ongoing, generated their own secondary economy, for example by employing many in the construction sector. The housing projects helped increase home ownership and transportation projects in major cities helped to improve the commute of recent migrants from rural areas who often live in peripheral areas of the city.

Shopping malls helped fill the leisure hours of this new lower middle class. All in all these developments, generally created the impression of an erstwhile developing country just on the verge of take off. In the meantime, actual manufacturing holdings of the state were privatised and/or stripped for real estate value, and domestic agriculture was increasingly overtaken by imports. In other words, not all but much of the economic growth of Turkey was an illusion built on cheap credit unsustainable in the long run. These days, the Turkish economy is coming face to face with the reality that it was built on a house of cards.

The second component of the international ‘irrational exuberance’ about Turkey was political. After 2008, around the same time Turkey started benefiting from an inflow of cheap credit that bolstered its economy, the Obama administration was looking for a way to disentangle U.S. foreign policy from the Middle East, while correcting for some of what they saw as the missteps of the Bush years. In the next years, the image of Turkey’s booming economy and Obama’ desire to find a middleman to delegate its administration’s interests in the region converged on the narrative of the so-called “Turkish model”. It is difficult to remember now, given all that has transpired in the intervening years, but especially after the inception of the Arab spring in late 2010, the idea that Turkey was a model for the region was very heavily pushed not just by Turkey, but also by the U.S..

I can personally attest to this because I attended a lot of policy meetings with Americans on the’ ‘Arab spring’, and the unpleasant task of pointing out that Turks did not really know or understand their supposed neighbourhood any better than Americans would always fall to me. I spent the 2012-2 academic year in Washington DC on a policy fellowship and now it almost amuses me to remember how positive the image of Turkey that was being bandied about back then: a rising power, an economic miracle, a country that had finally reconciled democracy and Islam and capitalism etc.. Not much attention was paid to critics who suggested Turkey still had not sorted out its own domestic problems, especially in human rights and its treatment of its own Kurdish population, and therefore were sceptical that it could sort out the rest of the Middle East.

This rosy picture of Turkey was being pushed by think-tanks with connections to the Turkish government who had an obvious interest in maintaining such an image, but it resonated with American policymakers because it was a story they liked hearing. At least part of what has transpired in the Syrian civil war can be traced back to the errors of judgment committed in that time period.

To sum up, then, between 2008 and 2013, Turkey’s economic situation and global political stature was artificially inflated by a confluence of factors directly resulting from the political and economic crises the U.S. and Europe had found themselves in, due to the mistakes of the early noughts. This was a period everyone in the West was focused on problems here and wanted to believe in the feel good narrative of rising non-Western powers who would help alleviate the problems of international markets and share the burdens of global governance and management of problem regions like the Middle East.

At a critical juncture for them domestically, the AKP and Erdoğan very much benefitted from this desire in the West to have a “feel good” story about Turkey. Meanwhile, the idea that Turkey was returning to historical roots as a major regional power was very marketable domestically because for historical reasons, international stature matters very much to Turks. Excessive Western support for Erdoğan in the period prior to 2013 also made it very difficult for domestic critics to launch a serious opposition to him because these critics were themselves accustomed to using the West as a referent.

After the 2013 Gezi protests, the narrative of a “Turkish model” for the Middle East quickly expired, as it became more apparent by each year that Turkey was not the country the Obama administration had imagined it to be. Ironically, the Gezi protests happened to coincide with the same moment Bernanke at the American Fed decided to put the brakes on cheap credit. The Turkish currency took a double hit, though not as badly as the one this past summer, and Erdoğan quickly switched to a new script of blaming the interest lobby and an envious West for all of Turkey’s troubles, a refrain that he has kept up since.

This is another narrative that has a lot of adherents in Turkey because it is a familiar one: all school children are taught about how the Ottoman Empire was secretly undermined by colonial European powers intent on carving up its territories. Especially coming up after a period of seeming economic prosperity and meteoric international rise, the surreptitious sabotage narrative made sense to people on the street because it jived with their learned anxieties about the international order.

Thus in the summer of 2013 the bubble of Western ‘irrational exuberance’ about Turkey was punctured, if not entirely deflated. Since then the bubble has been letting off steam at an ever-growing pace, though Erdoğan has played a decent hand of the cards he had left, including the refugee deal he struck with Merkel, which bolstered his regime at a critical time of vulnerability. And he has also benefited from an increasingly chaotic international environment where leaders like him are becoming the norm rather than the exception, even in the traditional core of the international system. We have finally reached a point where very little juice is left either in the Turkish economy or foreign policy. Turkey is country that is running on fumes in all senses. How long it can keep going is anyone’s guess, given the fact that Erdoğan has successfully dismantled almost all sources of domestic opposition to his rule.

I am nearly out of time, so let me reiterate that my purpose in drawing attention to the international drivers of Turkey’s political trajectory was not in order to let Turkey off the hook. As in Tolstoy’s maxim about unhappy families, there are a lot of problems that are specific to Turkey that make it an unhappy country in its own unique way, problems that my fellow panelists have drawn and will draw attention to. But we also have to place Turkey in a broader global context of the crisis within the West and the hype of rising powers and the attendant distortions caused by that hype. In that sense, what has happened in Turkey is not unique at all and yet another tragic consequence of the grave political mistakes and the economic crises of the first decade of the 21st century. At a certain level of abstraction, one could even trace the tragedy of Turkish democracy to the same causal chain of events that drove Brexit here in Britain, for instance.

If there is one big conclusion to be drawn from all of this, it is that it no longer makes sense - if it ever did - to think of the West and the rest as separate, independent entities with their own separate fates and futures. What happens in Washington, London, Paris etc. has unforeseen consequences for Ankara, Rio, Delhi and vice versa.

Thank you.