Economic instability and ethnic unrest in Turkey

economic instability and ethnic & religious unrest in Turkey

Despite its glorious past and the individual strengths of the different peoples who have been brought together in the modern nation of Turkey, the country is currently faced with a number of problems. Among the most important and daunting challenges currently facing the country are growing ethnic strife, religious discord that - in the wake of the events of last September seem all the more terrible - and substantial economic structural weaknesses. This paper focuses on the last of these three problems - while recognizing that economic instability and ethnic and religious unrest are of course in fact intimately related to each other. In particular, this paper examines recent economic conditions in Turkey, how the particular nature of these economic conditions has brought about a number of measures that attempt to reform the country's economic structure. The statistical description and evaluation of the country given in this paper should allow the reader to understand the background against which current and recent economic reforms have been deemed necessary and have been implemented.

Brief Historical and Political Background

Before beginning to look specifically at the nature of the country's current economic problems, it will be useful to provide the briefest sketch of its current cultural and political structures. Ironically, many of Turkey's current political and even cultural problems - which feed into and in many cases worsen its economic problems - a are actually the result of genuine constitutional reforms made two generations ago.

While we in the West like to think that constitutional reform that results in a more genuinely representational government must be a good thing, in fact in the case of Turkey such reform had unintended but still deeply troubling consequences. The constitutional reforms that went into effect in 1961 produced a system of electoral policy and governance that made it difficult (and in actual practice nearly impossible) for any one political party to gain the majority needed to enact effective legislation. With little real possibility of the government's being able to take decisive action on the many important issues facing the country, people have often resorted to direct, violent "reform" in the streets (Ibrahim, 2001, p. 38). This continuous political civil unrest has made it increasingly difficult for the country to maintain a stable economic program and has made it unattractive to foreign investment. The inability of the government to create a stable economic situation has led in turn to more civil unrest, which has in turn led to a poorer showing by the country's economy, leading to more unrest - in an infinitely downward moving spiral (www.latimes.com).

We can see that the country's political and social problems worsened dramatically in the late 1970s (even as its economy also continued to weaken and to become more subject to increasingly dangerous fluctuations) as extremists on both the left and the right end of the political spectrum increasingly turned to violence - including political assassinations - as the only way in which they felt that they might get their message across and win followers amongst the people at large. Finally, the level of disorder had become so great that civil governance and law had essentially been abrogated and the military (in this case not without justification) took over the reins of government on September 12, 1980, by the army of the government. The constitution was suspended indefinitely, martial law imposed, all open political activity was banned, the press was severely restricted, and thousands were jailed, some for legitimate reasons, others on the mere suspicion of being dangerous to political stability as the army envisioned it. (Rittenberg, 1998, p. 61).

In the last dozen years, the country's political situation has improved, with the first civilian head of state since 1960 being elected in 1989. However, despite the fact that the central government has grown increasingly stable over the last decade as well as increasingly committed to Western ideas of democracy (which of course belong to all people throughout the world and not to the West alone), the country has continued to suffer economically during both the 1980s and 1990s and now into the 21st century. These economic problems have a number of different and complicated causes, but the most important are the continuing large deficits incurred and sustained by the government, a continuing weak currency, and continuing economic losses that have resulted as an indirect effect of the United Nations trade embargo of Iraq. All of these factors continue to have significant and detrimental effects on the country's current economic condition. These weakness in the economy have left the nation subject to Islamic nationalist movements that many Turks believe to be disruptive, especially in the current post-September 11th geopolitical situation. And while the great majority of Turks are themselves Muslims, many also find recent Islamic militant movements to be foreign to their own interests because these militant groups are in general backed by Arab interests. Turkey is a Muslim nation, but not an Arab one, and the Islamic militants are not as sensitive as many Turks want their nation to be to their country's unique position at the crossroads of the East and the West (Abramowitz, 2001, p. 81).

These political and cultural concerns, along with the natural desire of all Turkish citizens to see their economy on a more reliable and healthier standing, have lead to a number of recent economic reforms, or at least attempts at economic reforms.

Demographics

The country's current demographic situation is not dissimilar to other nations that lie on the border between the First and Third Worlds.

Population Estimates

Turkey, 2002

Population (in millions)

Source

UNSD

Rural

Population by age and gender (in millions)

Male Female Source to 14 Years

15 Years and Older

UNSD

http://apps.nccd.cdc.gov

We can see the country's high birthrate by comparing this population figure to an estimated July 1998 population of 64,566,511. The country's young population accounts in part for its high birthrate, as does the subservient position of women who often have little control over their own fertility. The figures below offer further insight into the nation's demographic state:

Population growth rate: 1.6% (1998 est.)

Birth rate: 21.38 births/1,000 population (1998 est.)

Death rate: 5.35 deaths/1,000 population (1998 est.)

Net migration rate: 0 migrant(s)/1,000 population (1998 est.)

Sex ratio:

at birth: 1.05 male(s)/female under 15 years: 1.03 male(s)/female

15-64 years: 1.03 male(s)/female

65 years and over: 0.85 male(s)/female (1998 est.)

Infant mortality rate: 38.27 deaths/1,000 live births (1998 est.)

Life expectancy at birth:

total population: 72.82 years male: 70.38 years female: 75.39 years (1998 est.)

Total fertility rate: 2.47 children born/woman (1998 est.)

http://www.rt66.com/~korteng/tudemog.htm

Shift from Central Planning to Market Economy

The Turkish economy is in what might be termed semi-precarious health. It could certainly be worse, but also certainly be better. Since its birth as a nation-state into its current shape in 1923 in the wake of World War I, Turkey has operated a mixed economy, in which both state and private enterprise have contributed to economic development. (Indeed, it is arguable that all country's in the world today have a mixed economy; the United States may be a bastion for private enterprise but many workers also benefit from government money, such as the money awarded by the federal government to private companies in the form of defense industry contracts.) Since the end of World War II, the economy has been transformed from a predominantly agricultural one to one in which industry and services are the most productive and rapidly expanding sectors even as agriculture and other rural economic activities continue to play an important role (Howe, 2000, p. 28).

Until the middle of this century, the federal government itself played by far the most important role in the industrialization process that was occurring in the nation. Federal monies provided most of the capital needed, for example, for structural upgrading of the nation's railroads and ports (thus improving its basic transportation infrastructure) as well as for the development of basic first-stage industrial sectors such as mining. This provision of assistance in building the physical infrastructure that businesses and industries would need to expand and compete in world markets was an essential part of the role that the Turkish government took over in the decades after nationhood.

But at least as important as the physical building of roads and railroads by the government was its protection of the nation's emerging industries by high and indeed almost impenetrable tariffs that effectively nearly closed its markets to foreign competitors. This - along with other government policies - had the effect of discouraging foreign investment. The result was, until about 1950, an economy that remained self-contained and but also essentially isolated, with foreign trade playing only a minor role (http://(www.imf.org).

It is of course impossible to know what would have happened to the nation had it continued along this highly centralized and isolationist economic policy; however, we may look to other similarly isolated economies and assume that the nation would have been ill-served indeed and would in fact be in an even worse economic position today than the one that it is in if it had not opened and decentralized its economy in substantive ways after World War II.

These economic reforms came about in large measure because of the political (more than purely economic) relationship that Turkey had with Western nations in the middle decades of the century. The government began to open Turkish markets to outside countries even as it also began to allow for more private sector power in the economy. In large measure as a direct result of the opening of the economy to the West, the country began to receive large amounts of foreign aid. This foreign aid was in turn used to finance improvements in the nation's agricultural sector, bringing Turkish farming methods more into line with those used in the First World. (it should perhaps be noted here that this is not entirely a good thing, for while modern farming methods are more efficient at extracting larger crops in the short run, they also tend to produce greater rates of erosion and soil degradation, tend to deplete the water level, tend to cause pollution through the greatly increased use of pesticides and fertilizers and tend to make crops more subject to attacks by parasites because of monocultural practices.) in both the agricultural as well as the industrial sectors, economic growth accelerated (as measured by such standard indicators as the per capita rate of the growth domestic product and available per capita calories), with the private sector playing an increasing role (viz. Landau, 1997, chapter three).

In the middle decades of the century, it looked as if the country were well on its way to becoming a First World nation through the application of classical economic strategies and theories. Among the most important of these classical economic theories, of course, was the shifting of economic importance away from intervention and central planning by the federal government and an ever-increasing reliance on the mechanisms of the free market. Thus, by the 1980s, the government was acting as if it were a true believer in the virtues of at least an almost unrestrained economy and actively encouraging foreign investment along with the establishment of joint enterprises with foreign companies and foreign government and praising the value of free trade even as at the same time it promoted a substantially reduced role for the state in the economic sector (www.nytimes.com).

However, as both developing and developed nations have all-too-often had occasion to learn, the free market is neither perfect nor merciful. Throughout the 1980s and 1990s inflation remained a serious problem, and Turkey's per capita gross domestic product remained well below those of most Middle Eastern and European countries (www.un.org).Thetransitionfrom Third World to First World country that had seemed to be almost assured began to seem a distant possibility.

Conclusion

Turkey remains far richer culturally than it is economically and there is no obvious solution to its problems on the horizon despite the fact that over the last half century it has in most ways acted in all the ways that a Third World country "should" act to modernize, improve and stabilize its economy.

The two most important reasons that the country remains on economically shaky ground is that the cost of Turkey's annual imports is usually much higher than earnings from exports and its continuing inability to bring inflationary forces into line. If Turkey is to have a bright economic future, it must find some way of reducing this trade imbalance, possibly by increasing its reliance on tourism (already an important source of revenue for the country). Any failure to meet the current challenge of inflation could prove disastrous to a country that has so much to offer the world, but finds itself repeatedly unable to overcome the significant challenges that it faces.