A list of 60 learned economists has written to the Financial Times warning of the dangers of moving too briskly to get the nation’s huge deficit under control. “The first priority must be to restore robust growth,” they write. Consolidation must happen, but not while the economic recession still rages. Their warning comes in response to an equally forceful letter sent to the Sunday Times by another group of economists that said now was the time to start tackling the deficit. Left unattended, Britain’s credit rating would deteriorate, it would have to pay more to borrow and find itself in the vicious circle of indebtedness which Turkey experienced only too well during the 1990s.Turkey, too, is in the throes of furious schism. It is nothing to do with how the economy is being managed since, though it might seem stranger than fiction, the economy is in reasonable shape. Yes, unemployment is perilously high, and last year the economy shrank -- this is a world recession, after all. However, Turkey can see the way back to sustainable growth. Public spending is not out of control. The ratio of debt to gross domestic product (GDP) is some 47 percent, both well within the Maastricht criteria and well beyond the perimeter of that “ring of fire” identified by PIMCO analyst Bill Gross of countries where that figure approaches or exceeds 90 percent. Turkish inflation is down, interest rates are historically low and growth is forecast at 4 percent.
So how is the country tearing itself apart? It all has to do with a public prosecutor of Erzincan, a city which I suspect even many readers of this column would hesitate before locating on the map (hint: it’s between Sivas and Erzurum). He has been put into one of his own jails by another public prosecutor who has in turn been suspended from his duties by a body that oversees judicial appointments. They have done so because the prosecutor appears to be protecting a general who has declared war on his own state. (For a fuller explanation I refer you to the columns of this newspaper over the last few days.) The first prosecutor says he’s being persecuted for trying to prosecute a religious sect, and members of the political opposition fully agree. However, the government has decided it has to do something about that judicial body which is persecuting the prosecutor’s persecutor. This might mean rewriting the Constitution, which in turn, could mean a referendum, which might in turn mean an early election. And an early election could operate like weed killer on all those bright economic grass shoots, especially if the country returns to a period of querulous coalition government.
The Turkish president, Abdullah Gül, cut to the quick of the matter when he said none of this wasteful feud need have happened had Turkey adopted the judicial standards of the European Union it is intending (on paper, anyway) to join. He urged the government to adopt the EU judicial acquis and for “all political parties to cooperate to make this reform a reality.” And he said this with a straight face.
The Turkish market will, if things go well, be an agent of European recovery. It seems a terrible waste at a time when the Turkey is in a relatively strong economic position not to try to press this advantage home. It is an even greater waste that Turkey would gamble the prosperity of its citizens by not getting its institutions in order. Nations now inside the European Union must be asking themselves why anyone would bother to apply to a body floundering in a sea of economic woes. The answer in Turkey’s case is the same answer that it has always been, that Europe provides Ankara with an anchor and a proven handbook on how to resolve its own institutional conflicts.
