Last Week S&P downgraded Turkey’s credit rating, again. There is actually a serious problem here. Rating agencies abroad have a totally different view on the economic model that Turkish government insists on implementing.
Recently, the Minister of Finance and Treasury in Turkey made a statement. After a careful reading of the mixed expressions in the statement, I gave the following answer to those who wondered what he could possibly mean.
“Mr. Minister does not accept neoliberal practices that have nothing to do with the real essence of liberalism. He is trying to explain that their government have taken a different path, considering the fact that neoliberal instruments do not work anymore. However, it would be hasty to call this new path heterodox. Perhaps we might call it unorthodox. He is saying that new approaches will produce a more accurate solution than the neoliberal prescriptions since the cause-and-effect relationships in the economy seem to be quite confusing right now.”
Although I did my very best to interpret his speech into a sane and more comprehensible speech, the reactions of the public clearly show that Mr. Minister’s statement has not been received well at all. We cannot deny the fact that Turkey is now five notches down from the level of investment grade that it reached in 2013. The country even went down to the credit rating levels of 1994-1998, which have been called “nightmare years” in Turkey.
Thus, we have the same credit rating as Kenya, Togo, Mongolia, Egypt, Costa Rica, and Uganda. This situation, which might seem a bit unfair at first glance, can be interpreted as follows: Our country became more reliable when it built a beautiful ship, but when we tried to take the ship on land, our reputation was damaged. We know that Mehmed the Conqueror had his ships cross by land, but when those ships landed in the sea, they were in good condition. In other words, Mehmed II had accepted that the ships were designed to float in the sea and acted accordingly. Today’s Turkey, on the other hand, is trying to stick to the thesis that “ships can also travel by land”, using the giant storm we are going through as an excuse.
Let us take the example further. We are pointing to those in trouble in the open sea, and say to the people inside the ship trying to move on land, “Look how they are suffering! But you are comfortable right where you are”. But the ship does not move forward. The people inside the ship are doing what they have to do, but this does not mean dynamism. The people in the ship continue to consume whatever is in the galley while the cooks, stewards, machinists, other attendants, and passengers continue to survive one way or another. We seem to be free from the perils of the turbulent sea, but the ship is not advancing. Only ships that struggle with the stormy sea continue to travel. We, on the other hand, are trying to go to their destination by land.
05
I can make this example even more diverse. I can talk about the striking use of foreign currency reserves, emission power, new rules that are published every morning in the official gazette, the problems in justice, freedoms and education, the political environment, our relations with other countries, the energy we depend on and of course the immigrant-refugee situation. Unfortunately, when looked from the outside, Turkey seems like a country where there is a huge gap between the global and national realities and the prescriptions we apply to address them.
This month, I will travel both in Turkey and abroad. While the majority in Turkey asks, “What will happen to our economy?”, foreigners ask “What will happen to Turkey?”. Sometimes I wonder which question is saner. We firmly believe in the myth that “Nothing will happen to Turkey as it was founded on the essentials principles of a Republic. The economy will improve over time”. However, the economy in Turkey has never been good for long periods of time, and today, foreigners have difficulty in seeing us apply and adhere to the basic principles of our Republic.
In conclusion, we must accept that the laws of the universe did not change but the order of the world did. If we accept the rules of aerodynamics when building our fighter jets, but do not accept the basic principles of economics when designing an economic model, it is quite natural for outsiders to find this situation a bit risky.
