Turkey’s political class must rise to challenge after currency crisis

Date: 01/08/01

The Turkish economy is perched on a knife-edge, and with it the prospect for any early progress towards European Union membership. The proximate cause of the present difficulties was the collapse of the Turkish currency in the spring, following repeated speculative attacks and the floating of the lira on 22 February.

Behind this breakdown, however, was a consistent delay in adhering to the terms of the rescue packages agreed by the International Monetary Fund (IMF) in December 1999, and again one year later. A third package, bringing the total aid promised to €17.92 million, was reluctantly agreed in May, with a scarcely concealed warning that this was Turkey's last chance to put its house in order.

Under this agreement, loans of €1.71 million by the IMF, and a further 11.94 million by the World Bank, were due to be released in early July, but the payments were temporarily suspended because of further foot-dragging by the Turkish authorities.

They had failed to take action against five insolvent banks and had not honoured promises to appoint private-sector professionals to the board of Turk Telekom, a public monopoly.

The suspension had a good effect - action was immediately taken over the disputed points, and this triggered the resignation of Communications Minister Enis Oksuz, who had been one of the main obstructers of the reform programme put in place by Economics Minister Kemal Dervis.

The finance chief was previously a highly respected official of the World Bank, and his appointment had been seen as a guarantee that the terms imposed by the IMF would be carried out to the letter.

Dervis receives strong moral backing from President Ahmet Necdet Sezer; his problems lie with the politicians in Bulent Ecevit's government. This is an unwieldy coalition between his Democratic Left Party (DSP), the extreme right National Action Party (MHL) and the centre-right Motherland Party. The internecine divisions within the coalition are exacerbated by the increasing frailty of the 76-year-old premier, who is clearly no longer the force he once was.

The awkward squad within the government is largely concentrated in the MHL, to which Oksuz belongs. Despite its divisions, the coalition has now lasted for two years, and may well stagger on until the next elections, which are not due until April 2004.

There is no plausible alternative combination within the present parliament, and Ecevit is unlikely to risk calling an earlier election due to the relative unpopularity of his own party.

It is not only the economic reform programme which is being jeopardised by the MHL.

Together with the military, it is acting as a brake on the actions which Turkey needs to take to satisfy EU demands ahead of setting a date for opening of membership negotiations.

A recent example was the repudiation of the compromise reached at Budapest in May by Foreign Minister Ismail Cem on the question of the use of NATO assets by the Union's rapid reaction force. This was deeply embarrassing to Cem, and hardly increased EU confidence in Turkey's trustworthiness as a negotiating partner.

This was followed in June by the decision of Turkey's Constitutional Court, seemingly influenced by the military, to ban the Islamist Virtue Party, in a re-run of the 1997 banning of its predecessor, the Welfare Party.

Virtue was the largest opposition party, with 102 members in the 550-strong parliament. Only two of these have been unseated, but the ban may have a destabilising effect in the parliament, with at least some of the ex-Virtue MPs seeking to join the MHL, enabling it to overtake Ecevit's DSP and become the dominant party.

Nearly everyone who meets the top Turkish officials dealing with European affairs, including Volkan Vural, recently profiled in European Voice (21 June), is struck by their high quality and the strength of their conviction that Turkey can and must make the necessary changes to ensure Union membership.

The big question is whether Turkey's political class can match the determination of the official elite. In fact, the parliament's recent record of passing the necessary modernising and liberalising set of measures is by no means bad.

What is needed now is decisive action by the government to ensure this legislation is actually implemented, to stamp down on human rights abuses, subordinate the military to the civil authority, exert influence to achieve an acceptable settlement to the Cyprus problem and give whole-hearted backing to Dervis's economic reforms.

It is a tall order, but unless it is met, Turkey will face a bleak future, and the European Union, which would have much to gain from the adhesion of this youthful, energetic and strategically important nation, will also suffer from an unnecessarily lost opportunity.

Writer says Turkey will face a bleak future outside the EU unless its leaders carry out the social and economic reforms it badly needs.