Economic recovery incompatible with democracy deterioration

Joost Lagendijk

What to expect after the stunning Justice and Development Party (AKP) win on Sunday?

Because in the past President Recep Tayyip Erdoğan has never shown any magnanimity after an electoral victory, many Turks who did not vote for the ruling party are afraid that we will see more repression, intimidation and violence. They fear the remaining critical media will be put under growing pressure or will simply be confiscated, as happened to the newspapers and TV channels belonging to the İpek Media Group just before the election. Because restarting the fight with the Kurdistan Workers' Party (PKK) paid off electorally, the new AKP government might be tempted to continue with the violent confrontations in the Southeast and eventually in bigger cities. Right after the election, a new wave of arrests indicated that the fight with the Gülen movement is not over yet. In other words, Turkey should prepare for further polarization and increased tensions.

It is hard to argue against this nightmare scenario in which Turkey will rapidly move from being an illiberal democracy into a full-blown autocracy. In Turkey's history, being conciliatory was never a winning ticket, so why would it be now? While in power, Erdoğan never showed any inclination to soften his confrontational policies, especially not after they proved to be successful over and over again. So, looking at other, more positive options almost appears as a naive effort to deny the inevitable deterioration that is coming.

Still, that is what I will do. According to me, there is one good reason to think that more repression and violence is not necessarily in the cards: The need to repair the economy. The Turkish economy still faces many structural problems such as high unemployment and inflation, corruption, decreasing exports and foreign investments and a vulnerable currency. Policies to tackle these problems have been postponed since the electoral cycle started at the beginning of this year. That was only putting off the evil hour. The number-one priority of the new government will be to get the economy back on track and return to growth figures that will allow Turkey to get out of the middle-income trap in which it has been bogged down since 2011.

Every economic analyst in Turkey and abroad, maybe with the exception of Erdoğan's advisers Yiğit Bulut and Cemil Ertem, will tell you that this economic recovery will only happen if the level of political instability and societal tension goes down. Yes, markets were celebrating on Monday and the lira enjoyed its best days in years. But, as Bloomberg Business, one of the leading economic trendsetters, observed, the euphoria may not last too long. Reuters quoted an analyst from a global risk consultancy as saying: "Political turmoil has caused Turkey to lose the confidence of foreign capital and foreign investment. … Unless the new government finds a way to address the social tensions dividing the country, that confidence is unlikely to come back.”

These remarks echo the conclusions of an extremely interesting paper on the ups and downs of Turkish economic growth by the acclaimed Daron Acemoğlu and Murat Ucer that was recently published by the National Bureau of Economic Research in Cambridge, US. The authors link the economic successes of the years 2000-2007 with the deepening in Turkish democracy and the talks with the European Union. After 2007, that virtuous circle was broken: "As Turkey-EU relations collapsed and internal political dynamics removed the checks against the domination of the governing party, in power since 2002, these political dynamics went into reverse and paved the way for the institutional slide that is largely responsible for the lower-paced and lower-quality growth Turkey has been experiencing since about 2007.”

The message from all these economic experts is loud and clear: If the new Turkish government wants the economy to improve, it first needs to tackle the instability created by obstructions to the rule of law and the witch hunts of companies that are seen as unfriendly to the AKP. Closing down or putting under government control newspapers like Hürriyet or Zaman, both well-connected internationally, will create enormous image damage for Turkey and will fatally undermine any efforts to boost economic growth. Ongoing violent clashes with the PKK all over the country will have the same effect.

It is up to the new government's economic team to convince a reluctant president, not used to any limits on his vindictive behavior, that a deteriorating democracy is simply not compatible with a resurgent economy.

Published on Today's Zaman, 3 November 2015, Tuesday