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“This issue is economic!”
In the elections carried out last weekend, votes for the ruling party decreased by around 20 percent. You can say "The crisis did not originate in Turkey. It was transmitted from abroad to Turkey. We have no fault with this respect" as much as you want. But it does not matter. The global crisis is now the economic crisis of Turkey. Shut down businesses, workers that lost their jobs, reduced production level are all an evidence for this. The only thing the results of the elections carried out last Sunday and in particular distribution of votes for Provincial Council show is that the global crisis has currently become the economic crisis of Turkey. Of course, this will be evident only to those that are able to acknowledge. Why the ruling party lost around 20 percent of the votes will certainly be discussed starting from Sunday evening. There exists an evident loss of votes. And there are various rumors on the reasons of this vote loss. For those who are aware of what is actually going on, there is nothing to discuss: "The issue is apparently economic". Acknowledging this as soon as possible has various benefits. Because, both the problem and the damage have just began.
Because of the 2009 elections, Turkey has wasted almost a year and a half considering the economy. Turkish economy is left without a compass and a captain on stormy oceans. Now, it is time to take a step to remedy the mistakes. Since the last elections were local elections and cannot change the administration, the important conclusion to be reached via the election results is about what should be done. Here, the first question to appear in one's mind is: What must be done? First thing to be done is to ease the pain the crisis poses and buy time for enterprises and employees. Second, since the government cannot be expected to relieve each pain the crisis poses, it important that the government presents an exit strategy to enterprises and consumers. Third point, if we also consider that the budget will further deteriorate due to the crisis, is how the government will ensure the credibility of the measures to be taken.
At the first stage, the target of the measures to be implemented in the short term to ease the pain is to limit contraction and loss in employment. Things that must have been accomplished in the short term are not comprehensively completed, unlike some comments in the opposite direction. The impression that the crisis has not been managed well in the short term must be overcome as soon as possible. A comprehensive measure package must be introduced. Potential components of this package can be found in the related study of TEPAV and has been elaborated on the column in this daily, last week. This is the first point.
However, it is obvious that the government cannot secure everyone via measures that will be taken in the short term. The thing that must be done is to provide the corporate sector and consumers with an exit strategy. And this is what is missing. There is a significant lack in this respect both in Turkey and in the rest of the world. By means of a framework that will enlighten not only today but also tomorrow, decision making processes of the private sector and the public sector can be harmonized. It is not possible to coordinate the actions of those that will make investment and consumption decisions unless such harmonization is ensured. If you have noticed, the medium term perspective mentioned here does not imply that a long term strategy will be developed. Information on the march of the public budget and macro indicators in the upcoming years is sufficient. There is no need to convey which technologies will be used. Public sector just has to provide the private sector with a framework showing how the public sector will behave in couple of years ahead. Under this framework, Medium Term Program will be a highly important coordination document. On the basis of this program, the private sector will coordinate itself. And this is the second point.
Third point is related with credibility. The administration, which kept on saying "the crisis will not hit Turkey" and conveyed "false" information to the corporate sector, now has to convince the corporate sector for a medium term framework. This is not an easy task. At this point, to ensure the credibility of the commitments the government is to make, there is need for a Fiscal Accountability Law, and a State Aids Law, which we also promised to enact in the scope of EU negotiations. The IMF is also important in ensuring that the additional expenditures to be made in the short term will not further disturb credibility. It is apparent that there is no way out unless external funding is received and these funds are transferred to the private sector in the short term. Turkey needs the funds to be received from the IMF. The economic program to be developed will not be credible in the absence of funds from the IMF.
Then, can the Turkish government design and implement this economic policy? Does it have such organizational capacity? This is the first million-dollar-prize question of the day.
Will the government which is to tackle the crisis in the rest of 2009 and in 2010 and go to elections in 2011 be willing to design and implement such an economic policy framework? This is the second million-dollar-prize question of the day.
The task is hard to accomplish. But the conclusion is apparent: "The issue is economic!"
Life is hard anyway; but harder for those missing this reality.
This commentary was published in Referans daily on 31.03.2009