In 1989, the Turkish lira became liberally convertible into foreign currency. In 1990, the index shot through the roof. In 1992, when emerging markets were enjoying a heyday, the İMKB fell through the floor. As the decade progressed, the Turkish economy became larger and better integrated with the world at large. Its people became prosperous, their expectations rose and the economy became less and less able to buck the trend. Turkish politicians became increasingly dependent on the external financial community to finance their bad habits, and governments fuelled chronic inflation by borrowing at unsustainably high rates of interests from its own citizens. It was a system that was destined to fall apart, and in 2001 it did just that.The currency collapsed, interests rates soared and growth slumped. However, a remedy was at hand. A bit of prudence, a bit of fiscal discipline, a commitment to get on with a program reform that would bring Turkey into line with its European trading partners, and the Turkish economy moved decisively back onto the road to recovery, spurred by a renewal of investor confidence. It would be a mistake to paint too rosy a picture. There are still numerous instances where this government is unwilling to engage with structural reform. Even so, there is a general consensus that the main difficulties which the Turkish economy now faces are not necessarily of the country's own devising but the fallout of the US-led recession.
Yet, arguably, the problem was never about the dynamics within the Turkish economy. The difficulty Turkey faced throughout the infamously “wasted” 1990s was the result of a malaise deep within the state itself. It is worth remembering the great impact which the agreement in 2004 to sit down to negotiation with the European Union was not the sigh of relief that Ankara would finally implement the acquis on mining waste or forbid the sale of pirated DVDs, but that it would commit itself over the long term to engaging with institutional reform. Indeed, it was only after showing itself committed to such reform that negotiations actually began.
Whether through European disinterest in Turkey or whether through Ankara's own reluctance, no one can have complete confidence that institutional reform in Turkey is on track and inevitable. However, at the same time, we are witnessing a new and at times uncomfortable phenomenon. Many of those institutions are falling apart from lack of repair.
At the moment it is the justice system which is under the microscope. There are now those languishing in prison awaiting the completion of an endlessly complicated court case on charges of plotting to overthrow the state. If the Ergenekon trial accomplishes anything, it will be to demonstrate how painfully slowly the wheels of justice turn. Many of those on trial are now complaining of the very thing of which they, when they were in positions of responsibility, took advantage: of using the courts as naked instruments of social control rather than as a means of dispensing justice. As well-connected suspects find medical reasons to avoid incarceration and cancer patients die behind bars, we have become aware that the prisons are filled with people who have paid back long ago any debt they owed to society. We have also become painfully aware that judges and prosecutors can be appointed to sabotage justice, not just to implement it, as the arguments go on behind closed doors over which court officials should be assigned to which case.
The courts are not the only institution or institutional relationship that is making news. The relationship of the armed forces to the elected government is a problem that preceded those three decades of inflation. The education system is coming under scrutiny for producing exam results and not learning. And the government is still trying to find out what the Kurdish question is, let alone provide the answer. Just as Turkey could no longer insulate its economy from outside pressures, Turkey's credibility will increasingly depend on its ability to define and resolve its own domestic problems. It cannot duck the winds of change.
