Turkey’s trial with globalization (1)

Turkey’s process of globalization started at the beginning of the 1980s, and this coincided with that of the neo-liberal reforms paradigm, which dominated the agenda almost everywhere around the globe. Some countries were quite well prepared for such openness, liberalization and deregulation measures in trade, finance and the public sector. Some countries, like Turkey, were quite unprepared during their import-substituting industrialization process, which ended with a dramatic failure by the early 1980s. So Turkey turned to the International Monetary Fund (IMF) to get massive financial aid in order to eliminate its balance of payment bottlenecks.

According to the IMF’s standard stabilization measures, Turkey liberalized its trading system quite rapidly at the beginning of the 1980s. By the late 1980s, however, Turkey liberalized its financial accounts. Unlike the 1980s, when Turkey experienced a decade of a stable economic and political environment, the 1990s witnessed serious and successive economic, political as well as social crises.

From an anti-globalization perspective, a neo-liberal globalization paradigm and its major actors, such as the IMF and the World Bank, were responsible for all those failures not only in Turkey but also in other periphery countries. In my view, these criticisms are based on obvious empirical facts and not unfair at all. However, they capture a part of the facts and are incapable of explaining what really happened.

Naturally, globalization is a process bringing both opportunities as well as some risks. Neither the risks nor the benefits stemming from this process are equally distributed among countries. The cultivation of benefits while minimizing side effects is closely related to many factors. Among those factors, the capacity of the state, the preparedness of the economic sectors and the mental awareness of the whole society for such integration are the most critical.

In the case of Turkey, weaknesses pertaining to all these fields are quite apparent. However, the most important weakness has been the loss of state autonomy and, therefore, erosion in the capacity of the state. In fact, the state apparatus was strategically captured by a coalition composed of civilian and military bureaucrats, elite bourgeoisies and political officials. This coalition was initially created by deliberate state policies itself for obvious ideological reasons.

The state ideology that triggered crises was shaped and legitimized by the Cold War environment of the post-World War II era. However, this extraordinary architecture was apparently inconsistent with the new domestic and global environment. Despite that, the system was under the rigid control of a centralized, strong bureaucratic group. Turkey’s bureaucratic oligarchy was historically isolated from a merit-based competition and judicial accountability as well as social transparency. Moreover, they were and still are subject to a lifetime employment career path. As this system of exclusive privileges resulted in entrenched interest-seeking coalitions, Turkey’s gerontocracy preferred resisting any major attempts at reform.

After the deep crisis of 2001, the system lost its capacity to survive or reproduce itself mainly due to financial bottlenecks and widespread protest from citizens. Since then, Turkey has been implementing several reform measures to achieve an open society, thereby entering a new era of openness in economics as well as politics. In this opening, in addition to the crisis that erupted in 2001, Turkey’s full EU membership agenda, domestic pressures and demands on behalf of change were critical elements.

With the passage of time, however, the psychology in the society has become quite mixed and ambiguous. In other words, a significant segment of society is increasingly getting alienated to the recent globalization experience and to an integrated economy.

On the one hand, the significant contribution of the positive global environment in the revival of the economy from the ashes of the 2001 crisis is obvious. First of all, Turkey’s gross domestic product (GDP) has almost tripled, from almost $200 billion in 2002 to $650 billion in 2008. Per capita GDP jumped from around $3,000 to over $9,000 in 2008. Continued reform also helped in reforming an underachieving public procurement and fiscal system and overall financial system, in eliminating chronic inflation of 70 percent for more than 20 years, in fueling an export surge from $30 billion around 2002 to over $130 billion in 2008.

After all these remarkable achievements, for the first time Turkey has been declared an open and working market economy by the EU since 2004. As a matter of fact, the so-called openness index for Turkey is comparably higher than any other major emerging market economy.

However, the picture is quite bleak on the other side of the coin. There are many signs that an initial drive for change, reform and globalization in society is rapidly fading away. Persisting, widespread and high unemployment, distorted income distribution indicators, a worsening situation of small businesses under global competition, an ever-rising current account deficit and accumulating private sector debt are the major concerns that cause this diminishing passion for change and reform.