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All eyez on Turkey
In December 1995, the American rapper 2Pac (Tupac Amari Shakur) was on MTV, talking about his new album. “It's called All Eyez on Me. That's how I feel it is. I got the police watching me, the Feds... everybody's looking to see what I'mma do now so All Eyez on Me.” That’s what it feels like in Turkey these days.
Everybody is desperately looking beyond the municipal elections, trying to understand how Turkey will do in the election-free 4.5 years ahead. Some are waiting for a new economic reform program. This is because the New Economy Program (NEP) formerly known as the Medium Term Program (MTP), which was announced in mid 2018, merely serves as a disaster-aversion plan. It is not a real strategy.
Turkey’s economy grew 7.4 percent in 2017. The NEP estimated that the figure would drop down to 3.8 percent in 2018. The final figure released last week was 2.6 percent growth in 2018. There have now been two consecutive quarters of negative growth, so all eyes are now on bank balance sheets, which will give us an idea of the depth of Turkey’s recession.
Some observers are solely interested in Turkey’s S-400 missile purchase from Russia. Turkey’s NATO allies seem to be clueless on how to handle the situation. But Turkey is not alone in this kind of move. India has also recently rejected a similar US demand. Yet the mood of US Senate regarding Turkey has been explained to Turkey at the highest level by Senator Graham’s visit just a few months ago.
Then there is the European Parliament decision accepting a Turkey report recommending the accession process to be formally suspended. Note that the decision has been taken after a severe debate on suspension versus termination. The accession process has been effectively suspended, if you ask me. The politicization of the customs union debate is proof of the pudding. The modernization of the customs union is good for both Turkey and the EU. For Turkey, liberalization of the services sector is of utmost importance for the technological renovation of the country’s industry. Turkey needs more investment bringing in new technology. The EU in turn, needs a more liberal service sector in Turkey. The issue is that the structural reform agenda of Turkey is now captive to a political debate. All eyes are on Turkey’s human rights record. Turkey is working on a justice reform bill, which shows that it is aware of the danger, but it’s unclear whether that will be enough.
Start listening 2Pac’s song.
“So much trouble in the world, nigga
Can't nobody feel your pain
The world's changing every day, times moving faaast
I'm lost in the land with no plan…”
We need a plan, a credible one, and we need it fast. If you ask me, it would have five pillars: First, there is the financial and macroeconomic stability component. Macro stability is the reason why Turkey focused so much investment in construction in the last ten years. It was just the best way to get your money back in a few years. The second pillar is the rule of law. Just have a look at a comparison of governance indicators between Turkey, MENA countries and the EU. Turkey needs to make a decision about adhering to EU standards. If it won’t, I see many in Europe who would be happy about an early TREXIT. The third pillar is a structural reform agenda with the servisification needs of Turkish industry to be taken into account. The fourth pillar is administrative reform, nothing other than making the presidential system start working as an administrative apparatus. Currently, it obviously is not. The fifth pillar is the public relations or foreign policy component. Turkey needs a story to tell to our partners.
So yes, all eyez are on Turkey.