Responding to the New Economic Plan: The intellectual poverty of the Turkish businesspeople
Economic crises are not pre-destined. They are, instead, primarily the result of government ineptitude.
Symptoms of economic crisis such as high inflation, double digit unemployment and currency falls are the results of unsuccessful economic policy. But economic crises are not purely government failures. For example, in explaining Turkey’s current economic crisis, Turkish market actors should share a good deal of the blame.
Turkey has spent billions on construction projects rather than in sectors that would drive production and ensure long-term stability. But helped by cheap euro and dollar loans, Turkish companies instead spent billions on construction.
The current crisis shows that market actors in Turkey have problems understanding domestic and international political and economic trends. The ongoing crisis demonstrates their poor ability to anticipate risk and develop strategies.
For example, most Turkish businesspeople did not anticipate how the government’s foreign policy would damage their business. Or, most have no clear idea about the correlation between authoritarianism and economic slowdown.
Having failed to anticipate such developments, major Turkish companies, including several banks, have no policy but to ask for a government rescue.
Ironically, many experts warned the government and markets that Turkey’s foreign policy and domestic politics would damage the economy.
Turkish businesspeople are probably not in the habit of reading such political analyses or are satisfied with viewing the economic environment through government plans and strategies.
The response of business circles to the government’s New Economic Plan (NEP) announced last week shows their state of mind.
A quick analysis of the NEP reveals that the only positive aspect of the plan is its comparatively realistic stance on macro-economic targets. But the NEP says nothing about the methods to pursue these goals. In other words, the document has no content deserving the name of an economic plan.
So why did Turkish businesspeople applaud it?
The answer is clear. The NEP strongly insinuates the government may come up with a bailout for banks. Turkish big business applauded the NEP because the government signalled support for banks that failed so badly they have trouble finding new credit for refinancing.
But let us remember some facts. The government has made serious mistakes since 2010 in fields such as the Kurdish issue, democratisation and foreign policy.
Turkish businesspeople have either supported such mistakes or preferred to survive in their bubble as if such political decisions would never touch their business. Worse, some leading Turkish companies have lobbied for the government in exchange for state-generated funds and projects. Now they have no strategy other than asking for the government’s help.
But why do the representatives of Anatolian companies, known for their Islamic worldviews, also applaud the NEP?
We can understand the enthusiasm of Istanbul big business for the NEP since it holds out the prospect of rescue for their banks, but companies declare bankruptcy across Anatolia almost on a daily basis. The NEP does not offer any concrete plan for them.
So, why are Anatolian businesspeople are so happy? The answer is about ideology, reflecting again this time the intellectual poverty of the so-called Anatolian tigers. The thinking of Anatolian companies is that the ruling Justice and Development Party (AKP) “is our party and we should always support it”.
But, ironically, the AKP does not prioritise the problems of Anatolian companies, as it believes it can always secure the votes of conservative Anatolian populace.
Squeezed between a canny pragmatism and ideological loyalism, Turkish businesspeople are now more like technocratic-minded actors who can only survive under the shadow of the government.