Turkey has temporarily shored up its crashing financial market with decisive central bank action. But the country is still waiting for Prime Minister Bulent Ecevit and his government to draw up a long-term strategy to stabilize its fragile economy.
Prague, 27 February 2001 (RFE/RL) -- For the moment, at least, Turkey has curbed the collapse of its financial markets by ordering the central bank to step in yesterday (Monday). But the country is still waiting for its political leadership to elaborate a long-term strategy to save its ailing economy.
The current crisis -- the second in three months -- broke out last week after a bitter row between Prime Minister Bulent Ecevit and President Ahmet Necdet Sezer over issues of power-sharing and corruption.
The dispute immediately raised fears about political instability in the country and unleashed panic in the markets. It also forced the government to abandon a key International Monetary Fund-backed reform program and float the national currency.
After the central bank was ordered to inject an estimated $800 million into the economy, the Turkish lira started showing signs of recovery. Yesterday, the national currency traded 950,000 to the dollar, down 27 percent from pre-crisis levels, but up from the 36 percent depreciation after last Wednesday's (Feb 21) floatation.
But analysts say the measures decided by Ecevit's three-party coalition government are only provisional and do not preclude further problems.
The government has said it must draft a new economic program and revise upwards inflation targets. But so far it has been vague about new measures.
Meeting on Saturday (Feb 24), Ecevit and his coalition partners failed to meet increasing popular as well as political demands for a government reshuffle. Instead, they blamed Turkey's "bureaucrats" for the new crisis.
Central Bank Governor Gazi Ercel resigned over the weekend, followed yesterday by Treasury Undersecretary Selcuk Demiralp. Both men were generally considered the architects of Turkey's economic reforms. Their deputies will manage operations at the central bank and treasury, pending a government decision on permanent replacements.
Some analysts see these changes as cosmetic and unlikely to stem the crisis.
Ilnur Cevik, the editor-in-chief of the English-language "Turkish Daily News," wrote today: "It is funny that the top bureaucrats who were in charge of running the economy have been made to pay the bill for the current crisis while the ministers who were their superiors and who [bear] the real political responsibility remain in office as if nothing has happened."
Voices in the opposition -- and even in the Motherland Party, the government's junior coalition partner -- have called upon Evecit to resign. Reportedly, the influential Association of Turkish Industrialists and Businessmen also favors a government reshuffle. But Ecevit, wary of upsetting his three-party coalition, has so far refused to sack ministers. Today, he told reporters he saw "no need for a government reshuffle."
Semih Idiz is a columnist for the "Star" daily newspaper. He told RFE/RL that Turkey's present government is facing an unprecedented confidence crisis.
"The clamoring for [the government's] resignation is increasing all the time, and I think that the fact that the government did not go for some kind of reshuffling -- even if it was only to create the appearance that it was going to do something -- has angered people more. The business community in Istanbul is very, very angry about this. The public finds it a bit -- how should I say? -- insolent that the government should not be trying to take any of the blame whatsoever for what happened and tries to continue as if it was business as usual."
Other analysts believe that the resignation of a few top civil servants is a step in the right direction, even if it is not enough. Orhan Morgil is an adviser to Turkey's Union of Chambers of Commerce and Industry. He tells RFE/RL that a broad government reshuffle would have unpredictable consequences.
"In order to have credible economic management, some ministers should resign. But the resignation of the whole government would create a political crisis and this is not appropriate, according to me. In Turkey now, we have such a situation that we cannot afford a political crisis, because it will take a long time to build a new government, to organize new elections. All this would create problems in Turkey. This is not what the majority of people demand. The majority of people demand a change in the bureaucracy and a change of some ministers."
Commenting on yesterday's meeting of the influential National Security Council, or MGK, Turkish newspapers suggested today that the tension between Ecevit and Sezer was easing. The "Hurriyet" daily quoted one (unnamed) participant in the meeting as saying: "This has been a meeting of very high standard. The president and the prime minister have been very respectful to each other. The tension has lowered."
Ecevit emerged from yesterday's MGK meeting with a smile on his face. He described as "fruitful" his first face-to-face meeting with Sezer since last week's row.
The prime minister's comments contrasted sharply with last week's aborted session, during which Sezer reportedly threw a copy of the constitution at Ecevit's head. Evecit stormed out of the Cankaya presidential mansion, where the meeting was held, saying the head of state has insulted him and set off a "serious crisis."
A former chief justice of Turkey's Constitutional Court, Sezer was picked by Ecevit to run for president nine months ago. But relations between the two have soured over the past six months, with the president using freely his constitutional prerogative to veto government decisions.
Their apparent reconciliation yesterday was obviously aimed at restoring confidence in the markets. But columnist Idiz believes Ecevit's soothing words come too late.
"The damage has been done and, as far as the public is concerned, whether [Ecevit and Sezer] are reconciling now makes no difference one way or another -- apart from perhaps being assured that there might not be [a] new crisis on the rise for now. But once the damage is being done, this reconciliation at the moment appears a little irrelevant."
Public anger has mounted since the government decided, in effect, to devalue the lira.
Turkey's NTV private television channel reported yesterday that 500 businesses had closed in the Mediterranean port of Mersin and 25 others in the impoverished southeastern city of Gaziantep. NTV also said 8,000 workers were let off in Kayseri, in central Turkey.
Assured by top economic officials that a devaluation was unlikely, many Turks were caught unaware by the plunge in their purchasing power over the past few days. The minimum monthly wage in now worth $105, down $45 since December.
Turkey's Tekel monopoly announced yesterday that prices on tobacco and alcohol will rise by almost 4 percent and more than 11 percent, respectively. The company said the adjustment had become imperative after a price hike on raw materials, transport tariffs, and exchange rates. Price hikes on bread, tea, sugar, or transport are also expected.
Economic adviser Morgil thinks that the new exchange rate will benefit Turkey's exporters by making the country's exports more competitive on world markets. He says that the overall economic situation should eventually stabilize, but warns that the Turkish people should not expect any immediate improvement.
"The population will be affected negatively. At least, in the beginning, for three, four, or five months. Later on, I expect that the economy will pick up. Then, probably, the government can make some adjustments for wages and salaries. But at least for five months people will be negatively affected."
Economists say the population's average income has decreased by an estimated 30 to 40 percent since the beginning of the crisis. So far, columnist Idiz notes, nobody has taken to the streets. But he says that trade unions could stage demonstrations soon, adding that there is a "great potential for instability."