Yet few were surprised when Deputy Prime Minister Ali Babacan met a receptive audience at the UN General Assembly on Thursday in New York after he took the microphone to share his ideas on what the European Union, which Turkey aspires to join, should do to find some relief at a time often referred to as the most troubling of all for the bloc economically. “Fiscal consolidation is urgently needed in many European countries, and structural reforms are of utmost importance to increase competition [on the continent]. So every country here should take the necessary steps, and we would love to see a stronger solidarity in the eurozone as all that happens,” he told the audience -- representatives from countries in and outside the EU. He spoke at the opening of a two-day high-level meeting on the state of the world economy that is convened at a time European leaders have started to openly discuss Greece's exit from the single currency area eurozone.
Had Turkey not shown a widely-lauded economic performance in the past decade during most of which Babacan was at the wheel of national economy management, those words would have been mere nonsense. But given how the country has put its financial house in order and moved from bust to boom by achieving a robust 5.4 percent economic growth rate per annum on average from 2001 through 2011, the deputy prime minister has much credibility indeed when he lectures world leaders on economy.
The meeting was called by UN General Assembly President Nasser Abdulaziz al-Naser and Secretary General Ban Ki-moon. Other speakers at the opening included Jose Manuel Barroso, president of the European Commission, the EU's executive arm. He gave assurances to the audience that the EU will do whatever is necessary to overcome the current financial crisis it dived deep into, delivering what he called a “message of confidence” that the EU is on the right track. "We are doing a root-and-branch reform of our budgetary and economic policies," he said. "And, beyond the so-called sound and fury, we are making good progress in laying firm foundations for strong economic recovery and sustainable growth," he added, speaking in parallel to what Babacan recommended for the continent. “In Europe," he said, “It is quite clear that for growth to come back to more important levels and to restore confidence, we need fiscal consolidation, structural reform and targeted investment.”
Also addressing the assembly the same day, Nobel economics laureate Joseph Stiglitz was, however, not as optimistic. He said, "The best that can be said for Europe and the United States is that they look forward to a long malaise, slow growth or stagnation." For him, the magnitude of the European financial crisis renders the austerity programs a number of countries in the region are now implementing totally ineffective, if not counterproductive. "Austerity has not worked and will not work," he said.
Overspending for years from state coffers has brought the eurozone to the verge of dissolution today with three of its members -- Greece, Ireland and Portugal -- already forced out of international bond markets and only able to service their bills thanks to hundreds of billions of dollars the union -- which teamed up with the International Monetary Fund (IMF) to increase its firepower -- started disbursing for their use. The fear is now that the bloc's much larger members Spain and Italy are next to share the same fate with the first three EU nations. And if that happens, all observers agree, there will be fundamental consequences for the single currency area. At its best, it will turn into a smaller club with fewer members whose economies are competitive enough if it can escape crumbling upon itself.
Indeed, the Turkish economy has walked a long way from the early 2000s onwards, arriving to its present shape that could have only been a scenario for the most optimistic of academic discussions because as recently as 2001 it had a total public debt pile overriding its gross domestic product (GDP) that stood way below $200 billion and consumer inflation of over 70 percent. Last year, on the other hand, the proportion of the country's public debt to its nearly $800 billion GDP dropped to some 40 percent -- compared to an EU average of around 80 percent -- and consumer inflation was recorded at 10 percent.
These economic achievements also came at a time when most of the developed world saw its economies grow too little to recover from what is now referred to as a global economic crisis more serious than the Great Depression of the early 1930s. Comparisons of the Turkish economy and those in the rest of Europe, in particular, are frequently made, and all come to a widely acknowledged reality: Turkey did a great job in the past decade.
All this has helped current government officials grow ever more confident of themselves and their policies. Participants in this year's World Economic Forum meetings in the Swiss resort town of Davos sensed it when they met Turkish policymakers.
“You are having a privileged position by the ringside seat of the eurozone, and I know you have views on that. Obviously, you also had a financial crisis in the last decade, and Turkey has coped with it quite remarkably. So you have lessons to teach us as well,” Martin Wolf, chief economics commentator at the Financial Times said to Babacan on a Davos panel he chaired on Jan.28, for example. And at that particular panel Babacan was sitting next to world economic leaders such as IMF chief Christine Lagarde and former World Bank President Robert Zoellick as well as UK Finance Minister George Osborne, Japanese Economy Minister Motohisa Furukawa, Canadian Central Bank Governor Mark Carney and Hong Kong's chief executive Donald Tsang.