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Shrouds and Power, or what does the corruption scandal mean for Turkey? (part 2)

A note from the editors of LeftEast: This is the second of a number of articles on Turkey we will be publishing over the next two weeks. With this series, we wish to introduce our readers to the dynamics of the Turkish society beyond the Gezi protests. We will do that through the discussion of topics without which contemporary Turkish politics cannot be understood: the longue duree history of AKP’s neoliberal rule, the ethnic composition of the Turkish working class, and the Kurdish question. Our aim is also to expand our traditional geographical coverage to other peripheral capitalist zones.

AK-onomics: neoliberalism and the phantom of equality

The Turkish ruling party’s main tool for deflecting criticism of its legal and police policies has always been the economy.  In assessing the claims of an AKP “economic miracle” since 2002, we must separate real accomplishments from their semblances, which may be just as important.  The first decade of the new century saw Turkey fostering a banking system with better safeguards than those in many western countries.  Turkey’s banks saw almost no repercussions from the global banking crisis in 2008.  As economist Refet Gürkaynak has explained, the subsequent dramatic lowering of interest rates by the US Federal Reserve led to an interest rate imbalance between Turkey and the West, and in turn a substantial capital flow to Turkey.  A sound banking system and relatively high interest rates have deepened the potential for surplus value already presented by a low-wage economy undergoing a sustained wave of privatizations.

Buoyed by short-term loans from westerners taking advantage of the interest rate gap, the Turkish private sector has further built up a middle class consumer culture and credit economy, at the dual cost of deep endebtedness to foreign capital and liberalization measures that make the lives of the working class increasingly precarious.  Meanwhile, the strategy of servicing short-term debt with the help of foreign direct investment amounts to a two-fold dependence on foreign capital.

From the perspective of these capital owners, the Turkish economic statistics have looked good since 2002, when the country began to climb out of the economic crisis that in the same year brought the AKP to power.  Yet as economists as various as liberal Dani Rodrik and radical Erinç Yeldan have pointed out, these statistics are frequently misleading.

Take for instance the oft-quoted claim that Turkish exports “tripled” during the first decade of AKP rule.  These statistics are invariably cited in current dollar terms; taking into account the decline in the value of the dollar since 2002, Turan Subaşat has measured Turkey’s “real exports” as increasing by about 50% (or 5.3% annually) in those years, demonstrating a growth rate surpassing neither Turkey’s own performance in the previous two decades, nor that of other emerging economies in the same years.  Measured in “constant prices,” in fact, Turkey was one of very few economies in the developing world whose export growth rate slowed down between 2002 and 2011.  What is more, Turkish exports are predominantly import-dependent; that is, they require imported machinery and other capital goods used in the assembly of exports.  An index of this import-dependency is Turkey’s growing trade deficit, which shows imports increasing much more quickly than exports, in a development that has only accelerated in recent months.[1]

The lengths to which the government now goes to continue the narrative of rapid export expansion are visible in the bizarre story of Turkey’s “gold exports” to Iran, which since 2012 have been known to be a form of payment for imported Iranian oil and natural gas.  Relying on a quirk in what counts as a “commodity” in non-marxist terms—gold, but not currency—in government sources this trade has counted toward “exports,” significantly inflating official growth figures.

Yeldan and other economists agree that the real motor of economic growth in recent years has been not production, but speculation. According to Refet Gürkaynak, since 2008 Turkey’s growth has been almost entirely in the real estate and construction sectors, fueled in large part by the public works projects of which Erdoğan is so proud.  These programs, while almost certainly corrupt, have admittedly affected the lives of many people.

Even so, it is questionable whether the average Turk has much benefited from a growing economy defined by privatizations, the weakening of labor unions, a record high number of fatalities from work accidents and the removal of worker’s compensation funds.  In Turkey about half of wage-laborers earn the minimum wage, currently just under 400 USD / month.  An interesting debate ensued when Erdoğan announced in parliament that the minimum wage had risen on his watch far above the rise in the price of certain staple foodstuffs.  Labor union representatives responded that when one takes into account housing and transportation—two areas where AKP claims the most progress—the buying power of a worker earning the minimum wage has remained stable or even declined somewhat since 2003.

Whatever the objective state of things, it is possible that the persistent narratives of an “economic miracle” have in themselves contributed to Erdoğan’s popularity among voters already attracted to his cultural conservatism and populist style.  The intense personal loyalty many express for their Prime Minister may also stem from new

policies that loudly proclaim an allegiance to the common man, over against traditionally privileged groups.  To take one example: in the secular republican era, public servants enjoyed certain privileges, including access to full professors at public hospitals.  Erdoğan’s government has cancelled this privilege, declaring that anyone has the right to see a full professor for medical consultation.  Not only do professors now have much less time for research—medical research being an area in which Turkey has held its own on the world stage—but waiting lists to see them are now so long that access is, once again, effectively determined by connections and favoritism.  Many doctors have also left the public health system entirely. The condition of the ordinary wage earner may not have improved, but at least the state has sent the signal that “the secular elite” is no longer in charge.  The effects of such fantasmatic egalitarianism are not to be overlooked.

From a leftist perspective, it goes without saying that political movements that channel the aspirations of impoverished classes without significantly improving their plight are often the most dangerous movements of all.  This is not the first time that such a movement has inspired protestations of loyalty-unto-death.

Under western eyes

So how have the dual inspection crises of the last month affected Turkey’s standing with the “international community,” and in particular with its western spokesmen?

While sending the message that judicial review is an unacceptable breach of its authority, the government’s resistance to inspection also highlights multiple fronts on which the decade-long alliance between western liberal-capitalist hegemony and the AKP may be splintering.  Not only did the corruption scandal uncover an illicit deal enabling Iranian businessmen to circumvent the US-led trade embargo, but the shipment of mysterious cargo to Syria also heated up allegations of state assistance to Al-Qaeda-based rebel groups in that country.

While the Prime Minister’s son, who got away with flouting a prosecutor’s summons, was seen meeting a former Al Qaeda financier, the police in Van investigated a prominent NGO for connections to the terrorist organization.  This same NGO, the IHH Humanitarian Relief Foundation, not only organized the Mavi Marmara expedition—Erdoğan’s one major confrontation with Israel—but has also been instrumental in the AKP government’s line of communication with the Syrian rebels.  Soon after the investigation began, all officers involved in it were relieved of duty.

Probably even more important to the West than these security concerns are the economic ones.  By failing to guarantee the kind of stability investors require, Erdoğan now risks falling afoul of the liberal capitalist consensus that has consistently strengthened his hand.  Financial analysts worry about Erdoğan’s increasingly populist (and implicitly Islamic) talk about the injustice of interest rates, concerned that if this talk leads to action he will saw off the branch he has been sitting on all this time.  Last week’s Central Bank decision to increase interest-rates left Erdoğan scrambling to express disagreement and surprise—shared, presumably, not only by Islamists but also by consumers who by now are as endebted as is the economy as a whole.

Pleasing foreign investors has hitherto been the prime objective of AKP’s economic policy, so much so that warnings of the Turkish economy’s dependence on foreign direct investment—a factor in the “fragility” of a national economy—can be found even in The Economist.  It would seem that those who accepted the dictates of the global market as the condition for their party’s survival had not fully taken account of the cyclical nature of capitalism, for which giving those investors too much of a good thing might not actually be a good idea in the long run.

In any case, converting the country’s temporary investment boom into structures that can survive this phase of the business cycle has not been an AKP objective.  When one factors in declining educational standards and new laws that effectively discourage women’s entry to the labor force, continuing growth looks more unlikely, leading to a distressing prospect for both capital and labor.

What is to be done?

While AKP proclaims a version of “democracy” willing to dispense with constitutional republicanism, the intermittently left-wing Republican People’s Party (CHP) has now chosen to present itself as the defender of normative liberal democracy.  Its leader, Kemal Kılıçdaroğlu, has made a case for his party in the Wall Street Journal and gotten new support from the New York Times and prominent EU “Socialist” Hannes Swoboda, who in 2010 loudly badgered him to support Erdoğan’s referendum but recently seems to have had a change of heart.  CHP now wants to convince the West and its allies in Turkey that it presents a more reliable partner than the unpredictable Erdoğan.

Seeking to narrow the distance between itself and Erdoğan’s base, CHP has nominated right-of-center candidates in some of this spring’s municipal elections.  Even this strategy seems unsuccessful with the voters.  In Ankara a former member of the Nationalist Movement Party (MHP) is running for mayor under the CHP banner and trailing AKP incumbent Melih Gökçek, a man known for his proposal to kill women seeking abortions and his apparent belief, broadcast on social media, that the Gezi protestors were building a nuclear bomb.  A coalition of four (genuinely) socialist parties has nominated Kaya Güvenç, currently polling under two percent.  Things do not look good.

On the whole, the Turkish Left still has not recovered from: 1) the blow to the head delivered by the 1980 coup, 2) seeing its organizational base erode through privatization and the weakening of labor unions, and 3) the internal split into pro-Kurdish and ulusalcı (left-nationalist) camps, with one side practically deifying Abdullah Öcalan and the other holding up the nation-state as a bulwark against global capitalism, taking in stride the Republic’s historically unapologetic stance toward its treatment of the Kurds and toward the Ottoman massacres of Armenians.  As for Öcalan himself, he is now singing the same tune as the government on the corruption scandal, talking about a “coup” aiming to derail negotiations between the government and the PKK—and allegedly bragging that he “saved” Erdoğan during the Gezi crisis by not calling for participation by his own supporters.  Possibly Öcalan really would like to save Erdoğan from the traditionally Islamic-nationalist Gülen movement, whose support for the “peace process” has been tepid at best.  Yet whatever such statements might mean for the strategic positioning of the Kurdish movement, they are not likely to foster unity on the Left.

We would like to see AKP’s fall come from a groundswell of popular support for workers and the rule of law, rather than geopolitical tensions, conflict among right-wingers, or an economic downturn.  But the really bad news is that right now only the last of these scenarios looks likely.  If Erdoğan has to step aside to restore investor confidence, will not the same politics continue under another guise?  The successful defense of Gezi Park may have breathed new life into the opposition, but so far it has not proved sufficient to save the country.

[1] See Turan Subaşat, (2013), “The Political Economy of Turkey’s Economic Miracle,” World Economics Association (WEA) Conferences, No. 4 2013, Neoliberalism in Turkey: A Balance Sheet of Three Decades, 28th October to 16th December, 2013.