Lehman Brothers sank one year ago, and since then, three-quarters of families surveyed in five major Turkish cities are worse off. That figure goes up to 90 percent among those who were not doing so well to begin with. A third of this poorest sector have fallen behind in their utility bills, and nearly 10 percent have had their electricity cut off (“at least temporarily”). Families are having to economize on such basic items as the food they put on the table.
One argument often heard in Turkey is that the country weathered its own self-inflicted economic crisis in 2001 and emerged with its financial institutions trimmer, better-regulated and far more able to cope with the turbulence this time. Undoubtedly, had Turkey not excised its not so much toxic debt as toxic banks then, it would be in far worse shape now. However, this argument has been repeated so often that one sometimes gets the sense that the crisis in Turkey is a mirage, even though the decline in gross domestic product (GDP) growth this year will rival the 5.7 percent decline in 2001. While it is true that the financial system is relatively robust when compared to other peer institutions in the rest of Europe, individual households are not so confident. According to the succinctly titled “Economic Crisis Affecting the Welfare of Families in Turkey,” the informal networks of support on which the least advantaged most depend have themselves become attenuated because of the crisis.
It is children who suffer the most, according to Reza Hosseini, resident representative of UNICEF Turkey, and the damage done is irremediably transferred to the next generation. Even before the crisis, child poverty in Turkey was intense (27 percent according to UN indices). While the conditions of most Turks improved during the post-2001 years of growth, the situation of children in particularly rural areas has deteriorated.
One need only look at the conditional cash transfers (CCT) which the government makes to encourage families to keep their children in full-time schooling. A sum of less than $20 a month can make all the difference, even in a country where per capita GDP approached $10,000.
Social assistance should be “child sensitive,” and it should not be young people who carry the burden of the economic downturn, Mr. Hosseini says. The question is why the large sums which the government pays out in social transfers are not hitting the target. The report makes it clear that needy families do not look to the state for help but to their own immediate circle.
In Turkey, the key economic question -- at least as presented in the press -- is whether the government should sign on to another IMF agreement or whether it is the IMF who should sign on to the medium-term economic program of the Turkish Treasury's own devising. The government does not want to commit itself to the wholesale economies in public expenditure associated with an IMF program yet, at the same time, does not want to signal that it will itself engage in free-spending “qualitative easing.” However, the real debate in Turkey should be about how the government can get the most bang for its bucks and mitigate the effects of the crisis in the most effective way.
This report holds the vital clue. Direct spending on poverty reduction not only addresses the heart of the problem but also pumps funds to that section of the population which is most likely to put the money right back into circulation. Turkey should be discussing how to get the unemployed back to work, which sectors should be nurtured when the recovery comes, but also how to devise a system of direct child assistance so that young people grow up with a chance.
