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HomeInterviewsEconomist Harun Odabaşı: AKP Government Has Completely Lost Control

Economist Harun Odabaşı: AKP Government Has Completely Lost Control

Harun Odabaşı is a journalist who worked as an economics editor for media institutions such as Zaman Newspaper, Cihan News Agency (CHA), and Aksiyon Magazine, which were closed down in 2016 through state coercion and police despotism as part of plans to silence free and independent media. He has closely followed and has a good understanding of recent Turkish history and economic trends. Like thousands of intellectuals, thinkers, and professionals in our country, Mr. Odabaşı is one of the journalists who had to leave Turkey and settle abroad due to the recent violations of law and human rights. He is an active presence on social media and offers observations, solutions, and ways out regarding Turkey’s political, economic, social, and regional problems. He is a journalist well-known and followed by the public.

I thank you, Mr. Odabaşı, for agreeing to do this interview with Politurco. I would like to ask you questions about the Turkish economy, recent elections, the newly appointed cabinet, and the discussions surrounding them, as well as the impact of the refugee crisis in Turkey on the deteriorating economy, in terms of economics and the future.

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Harun Odabasi

Inflation and Exchange Rate Fluctuations

Firstly, if I ask for your general thoughts on the Turkish economy, which constantly makes headlines worldwide due to exchange rates and inflation, what would you like to say briefly?

Turkey ranks fifth in the world with its high inflation rate, even though official statistics are manipulated. There is a consensus among trusted economists that the actual inflation rate is twice the announced figures. Considering the increases in the minimum wage and retiree pensions made by the government, they are practically implementing a two-fold increase compared to the official inflation rate. However, even above-expectation increases do not improve the purchasing power of citizens; on the contrary, they decrease it. This alone is sufficient evidence not to trust official figures. Manipulations are also observed in growth and central bank data. Therefore, there is a high margin of error in making predictions based on official figures. As for exchange rate policy, there is a major crisis. The government has completely lost control. The Central Bank has run out of foreign currency reserves, so it cannot implement stabilizing policies. Even state institutions, let alone the private sector, now meet their foreign currency needs from the markets instead of the central bank.

The Deterioration in the Economy and When It Started

In your opinion, how did we reach this point from the Turkish economy, which was considered an example worldwide between 2007 and 2013?

Actually, the dates you mentioned indicate the period when things started to deteriorate. I believe the best performance of the AKP government was between 2002 and 2007. The economic model established with the IMF during the previous government also had a significant contribution. In 2001, Turkey experienced a major economic crisis. Prof. Dr. Kemal Derviş was appointed to lead the economy, and a strict austerity policy was implemented. They tried to prevent corruption by introducing international standards to the Procurement Law. When the AKP came to power, they remained faithful to the plan, and the economy was managed almost automatically for a few years. Inflation reached single-digit figures, exchange rates stabilized, and Turkey experienced an unprecedented rise compared to the past. However, after 2007, the AKP implemented its hidden agenda. The Procurement Law was modified hundreds of times, and the distribution of tenders to cronies gained momentum. Realistic policies were replaced by populist policies. I prefer to describe the period between 2007 and 2013 as a period of stagnation, 2013 to 2018 as a period of decline, and the period after 2018 as a period of collapse.

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Despite Everything, Erdogan Emerges as the Winner

Despite all the economic difficulties, as you know, a critical election took place and Recep Tayyip Erdogan was elected as the 13th President. Was this a surprising outcome in your opinion?

Yes, it was surprising to me. I still can’t believe it! With skyrocketing inflation, soaring exchange rates, an uncontrollable current account deficit, depleted Central Bank reserves, and on top of that, a major earthquake disaster poorly managed by the government, I, like many of my colleagues, did not foresee Recep Tayyip Erdogan surpassing 50 percent. However, this unfortunate surprise necessitates separate considerations of election tactics, black propaganda, and the poor performance of the opposition. The Turkish people did not trust the opposition. Although Kemal Kilicdaroglu gave the impression of being a decent politician, he failed to convince the Sunni Muslim-Turkish majority.

In your opinion, where does the opposition consistently go wrong? Despite the magnitude of the ongoing economic crisis, why do they continue to lose elections against Erdogan?

The mistakes of the opposition are endless. However, their biggest mistake is not using the language of power and failing to develop a freedom-oriented discourse in line with international standards. Especially in the case of the Gulen Movement, where they approved of atrocities verging on genocide, and in the Kurdish issue, they could not go beyond the boundaries set by the government. They acted cowardly. The AKP government took full advantage of the opposition’s cowardice with its massive media power. Although the citizens were aware of the difficulties, they believed that the solution would still come from the AKP.

At this point, I would like to ask you the following: There is a serious economic crisis in the country, and a few months ago, a major earthquake disaster occurred that further exacerbated the situation. However, the public perceives the problem as stemming from external factors rather than the government’s policies. How do you interpret this situation?

Süleyman Demirel had a wonderful saying: “No government can bring down the pot by lowering the ceiling.” Indeed, this saying is endorsed by many politicians, sociologists, and economists. In this recent election, we witnessed new developments that contributed to the science of sociology. It seems that if the right propaganda is carried out, even an economic crisis is not enough to remove the ruling party from power!

One of the most important factors that allowed the AKP to maintain this grotesque governance was the collapse of the middle class, which we refer to as the “middle beam.” Two thousand years ago, the great philosopher Aristotle stipulated the presence of a strong middle class as a prerequisite for democracy to function properly. He pointed out that in a society consisting predominantly of the poor, the majority’s choice may not be accurate. I believe this observation still holds true today.

New Cabinet and the Economy

The appointment of Mehmet Şimşek as the Minister of Finance in President Erdogan’s new cabinet has been positively received by many circles, but doubts about the government still persist. How do you interpret the economy under Şimşek’s leadership?

Mehmet Şimşek is one of the best choices Erdogan could have made. He has experience and is well-known both domestically and internationally. His recent interest rate hike indicated the end of the “nas economy” and a signal of a return to Orthodox policies. However, this is not enough, of course. In order for international capital to come in, the rule of law needs to be restored. No matter how correct the steps Mehmet Şimşek wants to take, there is a government that is focused on the elections and deeply involved in wrongdoing. The markets have given credit to Şimşek, but how long this will last will be shown by time and the implemented economic policies.

The Impact of Legal Violations on the Economy

It has been observed that Turkey has dropped to 117th place out of 139 countries in the index of the rule of law. Many people argue that due to the failure to uphold the rule of law and the emergence of a culture of privilege, economic problems have deepened in the country. What are your thoughts on this?

This was an inevitable outcome. As far as we know, the right to property has been considered sacred since the Hammurabi Code. However, the government demonized a mass of people, numbering in the hundreds of thousands, just to save itself. And not only that, they seized the companies built with the sweat of thousands of people who were devoted to the Gulen Movement. Memduh Boydak, who was also the vice president of TUSIAD, Turkey’s largest business association, and his brothers have been in prison for years. They appointed trustees to their billion-dollar companies without leaving a single pin behind. I can cite many more examples like this. Therefore, foreign capital also sees what is happening. They naturally have doubts about coming to a country where arbitrary decisions are made at someone’s whim.

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Boydak Family

Recently, there has been an increase in revelations of corruption made by circles close to the government. The corruption operations on December 17/25, 2013, and the subsequent increase in corruption believed to have occurred caused damage to the economy. In your opinion, how extensive is this damage and is a “clean economy” possible in Turkey?

The topic you mentioned is very important. The Gulen Movement, especially, played a significant role in the international expansion of small and medium-sized companies. TUSKON was an umbrella organization and was determined to bring the world to Turkey. Billions of dollars in export volumes were achieved. If this could have been continued, it would have made a significant contribution to Turkey’s exports and the fight against unemployment. I believe that the traditional economic giants in Turkey were uncomfortable with the rise of Anatolian capital. Perhaps for this reason, they remained silent while their goods were confiscated under the pretext of FETO. The December 17-25 Corruption Operation was Turkey’s hope for a way out. However, the police and judicial officials who conducted that operation were subjected to such persecution by the state that now the corruption allegations that have come to light cannot even be investigated.

Some analysts argue that the good economy between 2007 and 2013 was made possible by the dismissed individuals through statutory decrees (KHK) following the so-called coup attempt on July 15, and the negative economic trajectory accelerated after their removal from their positions. There are even those who say that the current economic situation will not improve until these individuals return to their positions. What are your thoughts on these issues?

Yes, during the period when the Gulen Movement was influential, Turkey had dropped significantly in corruption and bribery indexes. Human rights organizations began retracting allegations of torture and ill-treatment. Turkey had rid itself of the mafia, and all known and unknown members of the mafia were imprisoned. The era of holding accountable through legal means had begun, ending the era of military coups that occurred every decade. After July 15, numerous individuals were separated from the state through baseless statutory decrees, and all the aforementioned negative traits returned.

The Refugee Crisis and Its Impact on the Economy

According to some data, there are said to be 13 million refugees in the country, and there are those who analyze the economy based on this. Although we cannot be entirely certain about the numbers, how do you generally evaluate this situation?

The refugee issue is a very challenging one. The most developed countries in the world are grappling with this problem and have yet to find a solution. Turkey has been the country that has accepted the highest number of refugees in the past decade, without any prior preparation. Insufficient attention has been given to integration processes. The influx of refugees has not only affected the economy but also disrupted the cultural fabric. Therefore, there is great anger among the people towards refugees. Even political parties that have no policies other than promising to send refugees back to their countries can gain significant support from the public. Firstly, I must say that I understand and empathize with the anger of the people. However, the refugee problem cannot be solved with anger. Rational policies are needed. These people have been in Turkey for over a decade. Their children have reached university age. They have become part of society. It is not possible to send them back at this point. Some may choose to leave, but those who wish to stay should be treated according to the rights recognized by international law. In other words, what I mean is that our anger should not dehumanize us.

Recommendations

As an economist, if you were asked for your recommendations to the current government for the normalization of Turkey and the improvement of its economy, what would you advise?

Rather than providing a response to your question with current arguments, I would like to offer a more fundamental answer. The observations made a hundred years ago by Bediüzzaman, one of the important thinkers of our time, still hold true. Ignorance, poverty, and discord are our greatest problems. An ignorant and poor population is the biggest enemy of democracy. Unfortunately, these segments have no concern for values. They are indifferent to human rights and justice. They are susceptible to manipulation, enticed by food packages, coal, retirement bonuses, and low prices. This is the biggest obstacle in today’s Turkey. The fact that corruption and lawlessness go unnoticed is related to the quality of our society.

Regarding discord, Turkey has been divided into three main axes for decades: Kurdish-Turkish, secular-anti-secular, and Alevi-Sunni polarizations, which have not eased but rather intensified. Instead of universal values, the society is guided by primitive emotions. Each group prioritizes its own interests. Intellectuals fail to fulfill their responsibilities. There is a lack of a holistic perspective. Even the current politicians, instead of thinking universally, are busy adding fuel to the fire.

As for the urgent problems of the real economy; the AKPgovernment has played with the settings of the economy to such an extent that it seems very difficult to turn the deepening crisis into a positive outcome through simple and conventional methods. It is like a multi-variable equation or multiple organ failure. No one possesses a magical formula. In my opinion, even if the will to solve the problem is present, the process of recovery and economic growth will not occur quickly. If you close the current account deficit, how will you reduce inflation? If you lower inflation, how will you bring stability to the price of foreign currency? They attempted to increase the demand for foreign currency through the exchange-protected deposit system. However, the exchange rate increased so much that its cost to the Treasury is becoming unbearable day by day.

The imposition of the notion that “interest rates cause inflation” by Erdogan, who claims to be an economist, has cost several central bank presidents. It led to the loss of control over foreign currency and inflation.

To overcome the crisis, we must first acknowledge that we are in a crisis. We need to move away from the rhetoric of flying and running and prioritize measures that can reduce market tension, even if it means sitting at the table with the IMF if necessary. If the actors of the real economy regain trust in the government, price stability may come. In other words, there is a major fire at home, and first, the fire needs to be extinguished before the building can be repaired and renovated. Investment and incentive packages will only deepen the crisis if the financial problems are not resolved.

Mr. Harun, I thank you for this interview and for sharing your thoughts with us.

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ENGIN YIGIT
ENGIN YIGIT
Engin Yigit is a Politurco columnist, activist, and author. Follow him at @enginyigtt.
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