Erdogan's Economic Vision

At the meeting, Erdogan responded to many questions on a wide range of subjects, from economy to domestic politics, foreign affairs and his free time. His answers to questions, particularly on economic issues, showed how Erdogan is in full control over the issues and the details.

In yesterday's Zaman newspaper, you will find Erdogan's comments in detail. As it is the subject of this column, I will try to analyze his views on the economy and his evaluations of some of the topics that will be mentioned here.

Above everything else, the performance of Turkish economy in the last two years and the records broken are worthy of praise. To be involved in certain risks and not taking the massive developments into account, is not compatible with objectivity, scientific approach or justice.

The prime minister drew attention to the records broken in growth, decline in inflation and the decline observed in the debt stock when compared with the national income, and said that the point reached should not be ignored. Erdogan gave explicit answers to criticisms like: "The economy is growing but this does not reflect on employment." Erdogan said since they came to power, they have created jobs for 1.2 million people but because of the new population being added to the labor force, it thus appear as if there is no rapid decline in unemployment. Noting that no increase in the employment rate has been observed in the textile sector, with huge labor force, because of the developments in technology, Erdogan said thanks to investments in different sectors they will make a huge leap forward. The growth expected in agriculture and tourism is also one of the hopes for creating employment opportunities.

Talking about the success achieved, Erdogan said the era of making money from high interest rates is over as well as the era of nonoperating revenue for the industrialist, that had reached 80 percent, and now the industrialist has returned to his job and has started to make investments. Erdogan drew attention to the fact that investments worth YTL 65 billion were made in the banking sector last year.

Noting that the banking sector has made profits of around $4 billion and that half of this amount belongs to state banks, Erdogan said: "State banks are now in search of customers to grant loans. We have arrived at that point today." The banking sector granting loans to customers other than the state is something Turkey had missed for a long time. Consequently, the loans granted to the reel sector mean investments and employment.

Making striking statements about relations with the International Monetary Fund (IMF), Erdogan said that they have reduced debts owed this institution from $28 billion to $20 billion. With the stand-by [agreement] expected to be signed in the near future, an additional $10 billion will be borrowed and the debt that will then amount to $30 billion, will be reduced to $10 billion within a period of three years.

Saying that they have done what is good for Turkey in relations with the IMF, Erdogan made this criticism: "Those who yell and scream at the IMF do not know the IMF's importance in the world." As a partner of the IMF, Erdogan noted that it is impossible to ignore this body: "If you are not accredited by the IMF it means you cannot maintain reliability in the international markets," the prime minister indicated, adding that the IMF loans have the lowest interest rates. Underlining that if this money had been borrowed from other sources, the repayment rate would have been much higher, Erdogan said that people should know this fact.

Erdogan closely follows the economic developments as he does with every other subject. Developments in the markets are conveyed to him immediately.

While our meeting was going on, one of the reports brought to him was the budget results in the first three months of 2005. The fall in the budget deficit was beyond expectation. Erdogan shared the data with us with great satisfaction.

On the other hand, Erdogan is not fully satisfied with what has been done so far. What he is hoping for is a Turkey that is at peace with its neighbors and the world, that is doing more in domestic and foreign trade and that has a place in the world's division one league. For this reason, breaking a 38-year-old record does not seem to have satisfied Erdogan. His aim is to increase the income per capita to $10,000 in the shortest time possible.

By emphasizing that they will not make any concessions, particularly on the economic program and financial discipline, the prime minister was delivering the message that they will not allow this positive atmosphere to be sabotaged by provocative actions.