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May 29, 2011, Sunday

Turkish elections and Washington (1)

During my short stay in Turkey last week the number-one question I received from the Turkish media was always the same: What is Washington's view of the Turkish elections.

On the surface, this is a simple question. Yet, I have the bad habit of answering simple questions by asking more difficult questions. Which Washington are we talking about? Are we talking about the Obama administration? The White House? The US Congress? The American media? The State Department ? The Defense Department ? The Israel lobby? Indeed, Washington is not a monolith. There are several Washingtons. For instance, the way Congress looks at Turkey often differs from the executive power. And even within the same administration the views of the State Department often differ from the Pentagon.

Moreover, Turkey is a notoriously complex country. The intricacies of Turkish politics make it a very difficult subject to follow for Americans. During my few days in Turkey I realized that Turks themselves have a very hard time understanding what is going on in their own country. Take the sex-tape scandals, for instance: No one seems to agree what purpose they are serving. When Turks are unable to make sense of their country, no one should blame Americans for not having a clue about Turkish politics. Therefore, I think it is safer to talk about an American effort to understand Turkey rather than a single American view of Turkey. In short, American analysts, officials, journalists are trying to figure out what is going on in Turkey instead of expressing clear-cut opinions.

Despite all these caveats, I will venture some generalizations and simplifications about the emerging conventional wisdom on Turkey in Washington. There seems to be an overall agreement in Washington that the Justice and Development Party (AKP) is invincible. The reason is simple: The Turkish economy is doing really well. It is the cardinal rule of all elections that people primarily care about their economic well-being. It is much easier for incumbent parties to win elections when the growth rate is high, unemployment is low and living standards are improving. This basic human reaction was immortalized by the Clinton campaign in 1991 with the very witty “It's the economy, stupid” slogan. Following this rule, it is no surprise that the governing party in Turkey has a huge advantage in the upcoming elections.

Turkey managed to weather the 2008 global financial crisis much better than the West. In 2007, when Prime Minister Recep Tayyip Erdoğan argued that Turkey would not be severely impacted by the global financial crisis no one in the academic and policy community took him seriously. Yet, what was perceived as wishful thinking on the part of the Turkish government became a reality. Compared to the rest of Europe, and most certainly its Western neighbor Greece, the Turkish economy looks like a great success story. No other country in Turkey's neighborhood is growing at 9 percent. Not surprisingly, when the economy does well, most of the credit goes to the governing party.

To be sure there are some problems with this conventional wisdom about the Turkish economy and the popularity of the AKP. Two important issues come to mind. The Turkish economy weathered the global financial with limited damage in great part thanks to structural reforms in the banking and financial sector implemented in 2001, shortly after the worst financial crisis in the history of the Turkish Republic. So an important part of the credit for the way Turkey weathered the global crisis goes to then Finance Minister Kemal Derviş. Yet, no one can deny that the AKP has done a good job in navigating the economy through stormy waters over the last few years. The second problem with the Turkish economic miracle narrative is Turkey's growing current account deficit. Most economists agree that Turkey is rapidly reaching a very dangerous level of trade deficit to gross domestic products (GDP) ratio. The only way to sustain this deficit is through massive private capital flows, which are notoriously volatile. In short, the macroeconomic fundamentals of Turkey are not as rock-solid as they appear.

The second conventional wisdom about Turkey in Washington is about the absence of an effective political opposition to the governing party. This is perceived as a major weakness for Turkish democracy. I will expand on this point next week.

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