However, there were no apologies for the sideways glance the Turkish government seems to throw whenever the subject of an IMF stand-by agreement is broached. Finance Minister Ali Babacan repeated the position over the weekend that the Treasury was capable of steering its own course and would only do a deal that was in line with its own mid-term program.Although the government still says it would like to sign on to an IMF program, it insists on doing so on its terms. The conventional wisdom, increasingly, is that it will only play ball with the IMF if it takes fright that the markets are about to lose confidence. This approach has support in the country at large.
Part of the issue is one of perception. The 2009 crisis doesn't look like the 2001 crisis -- the one that Turkey brought upon itself and which it managed to cast off under IMF tutelage through a major restructuring of public finance. Understandably the government will do anything not to invoke those desperate times. The current crisis is not of its own devising; people are reminded, and the Turkish banking community is in a strong position relative to even its Central European peers. Unlike 2001, it is the shortage of global credit and the collapse of its export markets that is the problem. More to the point there has been no sudden devaluation or overnight interest rates soaring into five figures. In fact interest rates are creeping down. What we see instead is a slow wasting. The economy will shrink this year by a greater figure (6.0-6.5 percent) than the 5.7 percent of 2001, and registered unemployment is over 16 percent of the work force. Yet while households suffer, the overall perception is that Turkey is muddling through.
Turkey emerged from its 2001 crisis by casting what were in those days referred to as the twin anchors. The first was the prospect of EU membership, and the incentive this held for a series of political reforms. The second was an IMF program. With its sense of discipline and new-found stability, Turkey began to attract foreign investment, and, despite the restrictions on public spending, the economy grew. Turkey continues with its European Union application, though no one these days would describe this process in less than ambivalent terms. Ambivalence also describes Turkey's relation with the IMF -- it hesitates to do the deal even though it knows this would bring the cost of borrowing down. It rationalizes that it is a good investment to demonstrate that it can make it through these turbulent times on its own.
Of course, the World Bank and the IMF have not convened in İstanbul to pressure the government into signing on the dotted line. “We are not looking for customers,” Mr. Strauss-Kahn said, underlining that it would be inappropriate to discuss such an arrangement in a week of its annual meeting. That this meeting just happens to be in İstanbul does reinforce Turkish claims to be self-reliant and the importance of İstanbul as a fast-emerging commercial node -- just as previous annual meetings in Singapore, Dubai and Prague underlined other global shifts. Try as it might, İstanbul could never get the Olympic Committee to take its bid seriously, but it has managed to woo the World Bank to come to stage its own form of games. And if anyone should be throwing shoes at anyone, it should be at the city's hotelkeepers, some of whom have taken advantage of their captive audience of international financiers by charging three times the going rate.
The question is where the fulcrum lies. Is Turkish society better off without the cuts in public spending the IMF might demand or is it, as that high unemployment rate suggests, that employers have been shedding labor in anticipation that times ahead will remain hard. Would Turkey be tightening its belt quite so much now if a stand-by arrangement were in place? The view in the overpriced hotel corridors is that it is not so much that Turkey might pay a cost if it does not do an IMF deal but that it is already paying the price.
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