Constitutional Court annulling reform package would ruin economy

Past examples such as a closure case against the ruling Justice and Development Party (AK Party) and a memorandum from the military issued on April 27, 2007 threatening the government to be “careful” about the country's secularism show that political instability causes billions of dollars of damage to the economy. Turkey is now dreading a new political shock, with the business world, civil society organizations and ordinary citizens fearing that the ruling might scare foreign investors and leave the Treasury in the mire of high interest rates. The business world has been stressing that good standings granted to Turkey by international rating organizations that were earned with great effort should not be jeopardized. At the time of the closure case against the ruling party in 2008, the Treasury paid an extra TL 2.5 billion in interest only, while the total loss of İstanbul Stock Exchange (İMKB) companies topped $80 billion. During the seven months of the trial, outgoing foreign capital reached $997 million, while 20 international companies decided to suspend investments worth $3 billion. Economists estimate the cost of the trial to the Treasury at TL 20 billion.

This is why in addition to the general public, markets, the business world and investors have fixated their eyes on the Constitutional Court, anxiously waiting for the ruling on the package that is likely to be delivered today. Erman Ilıcak, an executive board member of the Turkish Industrialists and Businessmen’s Association (TÜSİAD), says the atmosphere of ambiguity should be done with as soon as possible, stressing that it particularly influences foreign investors negatively. “We should get rid of such problems and go about or business,” Ilıcak says.

The head of the Turkish Union of Chambers and Commodity Exchanges (TOBB), Rıfat Hisarcıklıoğlu, states that the referendum process on the package should go smoothly or the country’s stability could be harmed. Hisarcıklıoğlu said, “This [smooth process] will be a positive influence for stability and growth in 2010.”

The head of the Turkish Confederation of Businessmen and Industrialists (TUSKON), Rızanur Meral, warned that not only foreign investors but even domestic investors would be hesitant in an environment where the executive is rendered ineffective to such a great extent. He recalled earlier Constitutional Court rulings that have had their toll on the economy such as the court overturning a constitutional change that would have allowed the wearing of headscarves in universities, which had been passed in Parliament with 411 votes out of a total of 550, and another ruling that had canceled a parliamentary vote in 2007 that had elected AK Party candidate Abdullah Gül as president. He said, “It is hard to say that the judiciary is trustworthy after a series of decisions such as the headscarf and the 367 [presidential vote]. However, if the court cancels the referendum, it would irrevocably destroy confidence in the judiciary.”

Political stability is a mark for the economy’s surge to continue, Turkish Exporters Assembly (TİM) head Mehmet Büyükekşi told Today’s Zaman, saying a possible annulment ruling from the Constitutional Court could slow down or even reverse the improvement in the economy. He said such a ruling would inevitably hurt the economy. “We need constitutional change to bring Turkey to a better level. We, as the business world, are against an annulment. Also, foreign investors will have question marks about their Turkish investments.”

If the court cancels the referendum slated for Sept. 12, this would destroy Turkey’s vision and dreams for the future, according to Independent Industrialists and Businessmen’s Association (MÜSİAD) President Ömer Cihat Vardan. He said an annulment ruling would certainly have a huge toll on the economy. “It will particularly cause foreign investors to review their Turkish investments. It could cause trouble for both domestic and foreign investors that are active in sensitive regions. We are expecting the Constitutional Court to keep these possibilities in mind when reviewing the package. Anything to the contrary would deal a blow to the dreams of Turkey, which is hoping to become one of the world’s greatest economies by 2023.”

Former MÜSİAD Chairman Ömer Bolat stated that an annulment would certainly cause political ambiguity. “This would be unfair to the 73 million living in Turkey. Court members should think about this first. They should simply review the package on procedural grounds without going into the essence of the package. A possible annulment would most certainly negatively affect foreign investors”

İstanbul Chamber of Commerce (İTO) Deputy Chairman Dursun Topçu said ambiguity and decisions that are hard to forecast seriously affect the business world. “For this reasons we as the representatives of the business world would like the Constitutional Court to take the package to the people in a referendum. The people should have the last say on this.”