For a professional economist, the global crisis is a heaven-sent opportunity to observe what is normally unobservable. Crises are good laboratories. Nowadays, I am thinking of the dynamics of policy response in the case of a "global economic crisis" versus an "economic crisis in one country." The policy response to an economic crisis is almost always a political one. The question is this: Is an economic crisis an opportunity to start dealing with the long-neglected structural problems of a country? Or Does the latter eventually require a political crisis? Which one do you think is easier? "Crisis in one country" case or a "global economic crisis case"? Looking at the Turkish experience, I tend to favor the first one. Look at Italy, for example. Berlusconi vs. Tremonti is more understandable as part of this dichotomy. Or the theatrics of Obama-GOP horse trading on the debt-ceiling argument. I think even under intense crisis conditions, it's the politics, stupid. All the theatrics is just because of that. Let me start the discussion.

Did you follow the tension between Italian prime minister and his finance minister a few days ago? Let me start from there. It was before the Italian parliament's decision to enact a 48 billion-euro package to deal with the increasing tension coming from the markets. Italy has done nothing to face its structural deficiencies since the beginning of crisis. Prime Minister Silvio Berlusconi had other things to do up until now. The markets became acutely aware of those structural deficiencies only recently, and market participants are starting to see the same problems differently when they become tense. This time it is Italy. Wait for Spain also.

The expenditure reduction package was designed by the Italian government. It is important to calm down the tension. However, two days ago, before the package was passed, Berlusconi told an Italian journalist that "You know he [Finance Minister Giulio Tremonti] thinks he's a genius and that everyone else is stupid. I put up with him because I've known him for a long time and one has to accept the way he is. But he's the only one who is not a team player." This was right after the finance minister himself was caught calling a ministerial colleague a "cretino," or idiot. Then the damage was done. As it was before the parliament's decision, the flight from Italian debt led to a sharp increase in yield. As such, it has a short-term cost. The Tremonti-Berlusconi row may have long-term consequences. But it is still there. Why?

I think the difference lies in the fact that this is a global crisis, not a crisis in one country. Consider Turkey in 2001. The fire was only in our house then. Responsibility lay completely with the government in Ankara. Credit lines among Turkish banks were cut off. Every day one or two banks were taken under the custody of the Deposit Insurance Fund Administration. This was just one year after the incompetence of the emergency management units of the government became highly visible when a major earthquake hit the most populated northwestern regions of Turkey. Then the economic crisis led to a political crisis. In the 2002 elections, all the parties of the previous coalition government were punished severely by voters, giving Recep Tayyip Erdogan the chance to lead the country. That also theoretically enabled a period of major structural transformation (though what happened in practice is the subject of another discussion).

In the case of Italy, however, the situation is different. The Italian crisis is unfolding in the midst a global crisis. The political elite of Italy think that they have the right to say "Hey, we didn't do it." I can hear Berlusconi saying: "It is the damned Americans and this wise guy Tremonti who got excited. They are the cause of your pain."

Why have the Europeans not been that quick in finding a solution? Politically there is room to maneuver. Like the case of Berlusconi. This is a global crisis, not a crisis in one country.

However, I find the theatrics in Washington D.C. highly surprising nowadays. Wasn't it all because of the Republicans? Why is there no refrain of "it's the politics, stupid" in Washington?

This commentary was published on 16.07.2011 in Hürriyet Daily News.