Blood in, blood out: you don’t get to just walk away from neoliberalism

 

(To be published in Arabic for Arabi21)

When the AK Party came to office in Turkey under the leadership of Recip Tayyip Erdogan in 2003, they inherited a government obligated to repay over $20 billion in debt to the International Monetary Fund, the World Bank, and other major international lenders.  The loans had been acquired largely by the former government’s economic minister Kemal Dervish (who had previously worked for the World Bank), and Dervish had put together a “National Plan” for restructuring Turkey’s economy to enable the government to service these loans.  Dervish’s plan was a classic neoliberal formula; the standard macroeconomic structural reforms demanded by the IMF of all its debtors.

The plan included large-scale privatization of state-owned enterprises and banks, and opening them up for foreign investors; as well as slashing social spending, stopping agricultural subsidies, freezing public sector wages, and so on. When the AKP came to power, this plan was already underway, and, since the debts were already hanging around Turkey’s neck. Erdogan’s government continued with the neoliberal program.

As a result of these policies, superficial economic data from Turkey went from strength to strength for the last 10 years.  Foreign investors were happy, the IMF was happy, and the AK government was almost universally praised.  The story of the real economy, as is most often the case under IMF structural adjustment reforms, was rather different.  By 2010 real wages in manufacturing were 12% lower than they were in 1998; household debt has increased, purchasing power has decreased, the gap between rich and poor has widened.  The richest 100 families in Turkey own wealth equivalent to the total wealth of the poorest 15% of the population (about 11.25 million people).

Since the Ottoman times, business in Turkey has functioned under a kind of patronage system, with the state operating as a key facilitator, or even as a sponsor for favored groups of elites. Any type of entrepreneurial activity in Turkey has always been based on government relations.  Thus it has been said that in Turkey they do not have political parties per se, but rather they have patronage networks.  The Islamists have, therefore, always been locked out of this game in Turkey, as the anti-religious government exclusively patronized secular nationalist businessmen.  One of the common features of the neoliberal program is that it redistributes wealth and power within a society disproportionately to a small handful of locals who collaborate with the reform process and reap its benefits.  When the AKP took over the government, this altered the direction of patronage and has led to the creation of a new class of Islamist financial elites in Turkey, aided by the already skewed effects of neoliberal reforms.

Throughout the rise of Erdogan and the AKP, the Gulen Movement (Hizmet) played a key role.  In fact, it would not be inaccurate to say that the AKP harvested the political crop planted by the social and educational work of Hizmet in Turkey. Erdogan and Fethullah Gulen were essentially allies in the effort to loosen the grip of religious intolerance and to revive Islamic feeling in the society. As long as this was the case, the AKP had no objection to Hizmet members moving up the ranks in state institutions, replacing hardline anti-religious elements in the army, the police, the judiciary, and in higher education and the media.  Tensions between Erdogan and Gulen began when it started to emerge that Gulen had political ambitions himself, and that placing Hizmet members in key state institutions was actually part of a coordinated plan to seize power and declare his version of an Islamic state in Turkey, with himself as supreme leader.

Both because Erdogan is a democrat and because the sincerity of an Islamic state is questionable when its leader is living in luxurious, self-imposed exile in the United States, the tacit alliance between Hizmet movement and the AKP was broken.

Just prior to the split, in 2013 Erdogan successfully completed full repayment of the IMF loans because of which the government had subordinated its economic policy for a decade; and almost immediately, Erdogan’s attitude towards neoliberalism appeared to change. He rails against the IMF, relentlessly criticizes the Central Bank, advocates a zero percent or a negative interest rate, advocates much more populist economic policies, and wants greater economic sovereignty for Turkey. International business suspects that Erdogan is not the committed neoliberal they thought the was.

Within the AKP, there are at least two factions now; the neoliberals, and the populists.  Erdogan’s neoliberal advisors talk about “restructuring the industrial sector to boost value-added exports”, which is a complicated way of saying “suppress wages”, while the populists talk about trying to increase household savings and grow domestic consumer activity, which is another way of saying “raise wages and improve the quality of life”.  Whenever Erdogan does something politically which is perceived as consolidating his personal power, foreign investors get nervous, and this can only be because they are dubious about whether he will use that power to serve their interests or instead the interests of Turkey.  In fact, you can almost trace when Erdogan started to face criticism in the international media to the moment he released Turkey from IMF bondage and started to express a different economic vision.

All of this is important background to understand what happened on July 15th, the failed coup attempt by Gulenists, and the subsequent crackdown on their members within state institutions.

Fethullah Gulen is being hosted by the United States, living in a compound in Pennsylvania; and the popular perception in Turkey is that he has become an asset to American intelligence.  When the coup attempt was underway, the US embassy in Turkey issued an emergency warning to Americans in the country under the title “Turkish Uprising”; a rather conspicuously premature description of a strictly military attempt to overthrow the government.

It would seem to indicate that US intelligence anticipated that Gulenist  civilians would turn out in support of the puschists, to make the seizure of power appear like a popular uprising. It was reported on CNN during the night of the coup attempt in an interview with former CIA agent Bob Baer, that he had actually discussed the possibility of a coup in Turkey with Turkish military officers just a few months earlier. So, it appears that something of a consensus may have emerged regarding the desire to remove Erdogan from power because of the increasing doubts about his commitment to neoliberalism’; and it was believed  that the sprawling Gulen network would be able to deliver this result.

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