Washington Report on Middle East Affairs, April 2002, pages 56-57

Talking Turkey

Ankara Moves on Domestic Reform and to Buttress Its Image as Regional Peacemaker

By Jon Gorvett

While not quite yet the cruellest month, February nonetheless can be exceedingly chilly, and this year proved no exception, as Turkey observed the first anniversary of its long-running financial crisis.

One year after a banking run prompted a shock devaluation in the Turkish lira, melting down an already-going-critical financial sector, a report from the Ankara-based Middle East Technical University (METU) on the state of the nation made for depressing reading. Of a population of around 70 million, some 1.5 million people lost their jobs in the aftermath of February 2001’s crash, while inflation rocketed. One sorrowful result of this has been a rise in suicide rates. In the central Anatolian province of Nigde, the rate was up 50 percent. Elsewhere, crime statistics—in particular for theft—also have risen to previously unheard-of levels, though still way below those in the prosperous West.

Commenting on the report, Professor Ahmet Insel said that the crisis had been “the breaking point of the past two decades in Turkey,” a time after which nothing would be quite the same again. And, as legislation to open up the economy and reform the constitution in line with European Union norms moves rapidly through parliament, this seems to be a prediction speedily coming true.

Perhaps not quite so fast as all that, however. In January parliament approved two key pieces of legislation that the IMF—which is backing, and largely scripting, Ankara’s post-February 2001 economic program—has insisted on if the country is to get fresh loans. The first is a new banking law which provides for the recapitalization of the banking sector, last February’s main culprit, due to its drought-like liquidity crisis. Under this law, large quantities of money will be used to rehydrate the system, and hopefully draw new investors into the market through sell-offs of state banks, and the sector’s walking wounded, to foreign parties.

Secondly, a tobacco law was passed. This allows foreign businesses more unrestricted access to the Turkish market, while also ending the previous practice whereby the state bought up the tobacco crop at a higher-than-market price and then processed it at even higher costs, before storing it in large warehouses and watching it rot—as nobody was buying it. However, the law also means that thousands—possibly even hundreds of thousands—of Turkish tobacco growers will find themselves without work. In an agricultural sector in which most other commodities are organized in a similar, state-sponsored fashion, what happens to tobacco is also a test case for what may happen to literally millions of farmers; some 45 percent of Turkey’s population still lives off the land.

Passing both laws, therefore, had not been easy and was hailed as an achievement by both the government and the IMF. A month later, however, a court action by the opposition True Path Party (DYP) threatened to put a wrench in the works. The Constitutional Court ruled that both laws required its approval before they could be put into practice and ordered that proceedings therefore begin. Meanwhile, the laws remain in limbo.

Similarly, the government also is trying to pass a package of reforms to bring the country’s constitution into line with EU regulations, preparatory to an EU membership bid that has been languishing in the Brussels filing cabinets for some 40 years now. The three-party coalition government proposed a number of changes to the draconian laws governing political crimes, and to the death penalty, which no EU state permits.

Removing capital punishment these days is a tough one, though. Although it never has been a major issue in Turkey, right now there is one person in particular on death row who makes the issue a hot one, and that is Abdullah Ocalan. Three years ago a Turkish court convicted Ocalan, the leader of the Kurdish Workers’ Party (PKK), of being responsible for the deaths of over 30,000 people in the guerrilla war in the southeast between his fighters and the Turkish army. The idea of him dodging the gallows is particularly galling to the second largest party in the coalition government, Devlet Bahceli’s right-wing National Action Party (MHP). The MHP now has refused to back abolition, meaning that a parliamentary vote on the issue will require opposition backing in order to pass, a scenario that almost always involves a great deal of horse trading.

Bahceli denies that he is anti-EU, as do most Turkish political leaders—except for those on the far left, who made an unexpected entry into the EU issue in February. Then, the leftist Workers Party (IP) published hundreds of e-mails hacked from the private communications of Karen Fogg, the European Commission chief in Ankara. The IP accused the EC head of “spying on Turkey,” and the affair caused some scandal between Brussels and Ankara. This was particularly embarrassing at a time when Turkey was also putting itself forward as a regional—if not global—peacemaker between West and East, hosting the joint EU-Organization of the Islamic Conference platform in Istanbul.

A Peace on Both Your Houses

The conference was something of a triumph nonetheless for Turkish Foreign Minister Ismail Cem, who had stitched together the meeting in the aftermath of Sept. 11 as a way of making the point that Turkey can indeed claim to have a place in both “camps” of East and West. The point was somewhat lost, though, as the principal actor in the post-Sept. 11 world—the United States—was entirely absent from the conference. Indeed, while EU foreign ministers rubbed shoulders in Istanbul with their counterparts from both Iraq and Iran, President George W. Bush was busy describing both as two parts of his “axis of evil.”

What Iraqi Foreign Minister Naji Sabri and Ismail Cem were discussing over canapés at the conference, however, was the prospect of the two being compelled to fight a war against each other sometime soon. Before the opening of the conference, statements from U.S. officials that they were considering a military operation against Iraq to topple Sadam Hussain had sent the Istanbul Stock Exchange into a nosedive, prompting economy chief Kemal Dervis to “reassure” the Turkish-American business council in mid-February that a war had been “factored in” to the IMF’s latest loan, and so there was no cause for alarm.

Deputy Prime Minister Mesut Yilmaz, however, saw things rather differently, telling journalists that it was “certain” that an attack against Iraq would damage Turkey’s economy. “However,” he added, “the scale of the effects is open to speculation,” he added.

Meanwhile, Central Bank Governor Sureyya Serdengecti also tried to limit the damage, but did acknowledge that tourism and foreign trade would be hit by any attack against Turkey’s southern neighbor.

Ankara is particularly sensitive to the issue of toppling Saddam, as it fears that this would lead to northern Iraq—which is already de facto out of Baghdad’s control—breaking off to form an independent Kurdish state. Such a development might give great encouragement to Turkey’s own Kurdish population, which might then demand secession.

Consequently, Prime Minister Bulent Ecevit spent much of February warning Saddam to let in U.N. weapons inspectors and/or comply with U.S. demands as Turkey might find it very difficult to keep out of any conflict to the south. Saddam, however, appears to have rejected Ecevit’s overtures. Washington then acted to calm nerves by saying in late February it had no plans for an immediate attack, bringing a halt, however temporary, to regional jitters.

A war with Iraq is the last thing most people in Turkey either want or need right now. It is difficult, moreover, to see how an operation could be mounted without Ankara’s support. With their country now the IMF’s greatest-ever debtor nation, however, many Turks are hoping that the government’s resolve may not be weakened in the months ahead by a tightening financial noose.

Jon Gorvett is a free-lance journalist based in Istanbul.