Not so long ago, Turkey was a Third World country. A leader of genius, Kemal Ataturk, set the country on a path toward modernization. In the past 20 years especially, Turkey had again become a power to be reckoned with. The economy is now larger than Sweden’s, which was three times the size of Turkey’s just two decades ago. Turkey has few raw materials, but its foreign trade, if current trends continue, will soon overtake Russia’s. The great disaster for Turkey in this earthquake is that it has struck just as the country was about to take the final step into the First World.
Turkey started to boom in the ’80s. The expansion began with textiles–Turkey is Europe’s largest supplier–and then spread. All such booms are regional, and in Turkey it has primarily affected the west and south. Izmir, the great and historic port on the Aegean, and Kocaeli province, around Istanbul, are as prosperous as Catalonia. Mecidiyekoy, in Istanbul, is the biggest electronics center west of Seoul. In eastern Turkey a huge irrigation project provides water to a part of the world that has lacked it since before Alexander the Great. This has lifted dusty, two-bit towns, such as Gaziantep, onto the world’s economic map, as local entrepreneurs discover the European market. Some corners of the country, however, are still backward. The partly Kurdish areas of the southeast and the Black Sea coast have shared only partially in the western-and-southern boom.
Turkey had been trying hard to spread progress throughout the country. The new government, installed just two months before the earthquake struck, has a serious program for reform, privatization and foreign investment. It faced formidable obstacles, though. Half of the economy is still under state control, and the government indirectly controls agriculture. Some of this works well; some of it works badly. The Constitution, which was designed to keep out foreigners, makes privatization difficult. Under the old-fashioned welfare system, men can receive a pension after 25 years of work; women, after 20. With people living longer and longer, the system runs a huge deficit. Turkey has many family businesses and self-employed people; tax collection is very difficult, as all Mediterranean countries have found. So successive governments have printed money. But that fuels inflation.
Turkish inflation is like no other. Typically, inflation takes off, Latin American style, or is stopped with a short, sharp shock. The Turkish central bank, though, is run by excellent technicians, who from time to time get help from the IMF–and inflation has run at a controlled annual rate of 80 percent. Every six months, state salaries and pensions are adjusted against a dollar index, and the dollar (or the Deutsche mark) can be bought and sold at will. Turkey’s successful bankers and entrepreneurs are, in effect, on a dollar standard. As in all inflation, those who have get more, and those who do not have get less.
Most Turks get less, a cause of chronic political instability. The migrant masses have of course protested with their votes; so have middle-class families. The Islamic party, Welfare, successfully exploited this unhappiness and won the 1995 elections. But the government it formed was fatally divided (the popular portrayal of Turkish Islam as a ferocious bogeyman is false). In the last elections, Nationalists took many of the votes that had gone to Welfare in 1995 by attracting the support of small businesses and playing on the resentment Turks felt about being rejected for membership in the European Union. A Thatcherite party joined with the Nationalists in a coalition, as did a left-wing party alarmed by the rise of political Islam. Its leader, Bulent Ecevit, is a respected figure–he translated T. S. Eliot and had a rather dashing early career in England.
The Ecevit government has just about enough of a majority to force through change. The first priority: reduce inflation. The government must also establish a balanced investment-and-saving program; this will mean tackling the welfare system. Finally, Ecevit and his coalition partners have to attract foreign investment.
Until this earthquake, Turkey had been proceeding toward the most dramatic political and economic changes since Ataturk’s reforms. It was about to take the decisive step into the First World–a limited state sector, a hard currency, world-class firms, healthy domestic savings. The earthquake has been a disaster for that program. But Turkey has survived disasters before, and it will certainly do so again.
