Turkey's Crisis

by Peter Tsagaris

International Socialist Review, June / July 2001


The Turkish government got another break from its fiscal agony at the end of April: a second $10 billion loan from the International Monetary Fund (IMF) designed to save the economy, which is widely believed to be bankrupt. At the same time, the Party of the Democratic Left (PDL)-the main party of the ruling government coalition- appears to be coming out of its national convention unscathed and in one piece. Turkey's prime minister Bulent Ecevit was reelected party president by an overwhelming majority. Finally, even the demonstrations in the streets seemed to quiet down after May Day.

Nevertheless, nothing on the horizon suggests that the cycle of economic and political crisis that began last November-when the IMF made its first $10 billion loan in an attempt to "stabilize" Turkey's economy-has run its course. Also, nothing suggests that the working class of Turkey won't return to the streets.

The stabilization

The economic crisis, which reached its peak in February 2001, has its origins in a three-year stabilizing, anti-inflationary program. Imposed by the IMF and other international creditors, it was the typical solution-privatization and austerity. For the first six months of last year, the medicine seemed to be working well. Inflation dropped drastically, and an ambitious target was set for further reductions to single-digit inflation by 2002. Then things started to go wrong. Tight monetary policy-an essential part of lowering inflation-turned dozens of small private banks (until then called the "little miracles" of the economy) into the first victims of the crisis because the central bank gave them no aid as they ran out of cash.

The resulting bankruptcies, along with the austerity of the whole previous period, enraged workers and masses of the poor, as it became obvious that their sacrifices would not lead to better days. By December 2000, the largest strike since 1980 took place. More than one million people chanted slogans against the government and the IMF.

By February, the situation had reached a crisis point. A small argument between Ecevit and the president of the country was enough to lead to panic. On a single day in February, the stock market fell by 14 percent. Nevertheless, central bank director Gazi Ertsel insisted on February 20-the day after the stock market plunge-on strict adherence to the IMF's bitter pill. "All of us have worked hard for this program," Ertsel declared. "We are not going to abandon it because of the liquidity crisis of a few days."

Two days later, Ecevit's government did abandon the program, allowing the Turkish lira to "move freely"-that is, allowing it to collapse. The government called in Kemal Dervis, a former vice president of the IMF, to play the role of savior of the economy. Dervis assumed the responsibilities of a "super minister of finance.

But so far his policies have been ineffective. By the end of April, Turkey's foreign debt was estimated at $110 billion. From February 16 to April 13, the lira lost 44 percent of its value, while the foreign exchange reserves of the central bank were reduced by $9.2 billion, to a total of $18.6 billion. In one month's time, wholesale prices jumped by 14.4 percent. The goal of single-digit inflation is now a pipe dream, with consumer goods and wholesale prices running at real inflation rates of 52 percent and 57 percent, respectively! As a result, everyday transactions are being conducted in dollars because people do not trust the lira's stability.

In his new revised program, Dervis announced a 9 percent cut in public spending. In the meantime, economists are predicting that the economy will shrink by 3 percent in 2001-a sharp fall from last year's 6.1 percent increase. The plan to sell off Turkish Airlines-the flagship of all privatization schemes-is in a quagmire. The other big plan, the privatization of Turk Telecom, faces objections from both the generals and members of parliament from the ultraright Party of Nationalist Action (PNA), a partner in the governing coalition.

But the U.S. is still pushing to take advantage of Turkey's crisis by using it to pry open Turkish markets. According to the New York Times, in mid-May, President Bush wrote Ecevit a letter and "expressed confidence that Turkey would meet [IMF] requirements and laid down some benchmarks, including privatizing telecommunications and restructuring the banking industry. Some Turks saw a warning between the lines. 'The letter asks Turkey to transform itself to be part of the global system and also conveys that if it does not, Turkey has no one to blame but itself for becoming a third-rate or fourth-rate nation,' said Cem Duna, an investment consultant and former diplomat."

Meanwhile, the poor and workers are suffering the most under the IMF's austerity plan. Unemployment has spread like wildfire. At least 500,000 have lost their jobs since the beginning of the crisis as thousands of small businesses have shut down or carried out massive layoffs. The unemployment rate is now more than 20 percent. And those that still have jobs are not much better off. While inflation skyrockets, a good monthly salary tops out at $300 in the cities, and things are even worse in the countryside. Stunning interest rates-as high as 180 percent-have made it impossible to pay off household debt and are simultaneously strangling small businesses. It was these circumstances that produced mass protests in April, shaking up Turkey's major cities. Hundreds of thousands of protesters took to the streets, following a call from organized labor and professional associations.

The first to clash with police were small merchants and craftsmen. More than 70,000 demonstrated in the Turkish capital of Ankara. The police greeted protesters with tear gas, water cannons, and even live ammunition. But demonstrators answered back in kind. Two hundred were injured-137 of them police-while a number of government buildings were besieged by the protesters. On the same day, 40,000 people protested in Ismir and 20,000 in Iconio. On Saturday, April 14, all four trade union confederations called a national day of action. This time the protests were prohibited in Ankara, and the spotlight shifted to Istanbul. Tens of thousands of workers took to the streets holding banners with slogans such as "No to the IMF," "We want job security," and "Save workers from bankrupt banks." Similar demonstrations took place in 55 other counties. The film ran again on May Day, with protests in 44 counties. Forty thousand demonstrated in Istanbul while demonstrators clashed with police in Diyarbakir, a Kurdish-populated area in southeastern Turkey.

Hunger strikes

There are about 12,000 political prisoners in Turkey today. The vast majority of them are members of Turkish left parties and the underground Kurdistan Workers Party (PKK). The leader of the PKK, Abdullah Ocalan, is among those prisoners. Ocalan was arrested in February 1999 by Turkish security forces in Kenya with the active collaboration of the Greek embassy in Kenya and the American CIA.

In September, the Turkish government decided to step up the repression of prisoners by transferring them to individual isolation cells from big halls where they lived in common quarters and could better take care of each other. This would make it easier for prison authorities to torture and eventually "disappear" the imprisoned fighters.

To protest these plans, prisoners started hunger strikes on September 20, 2000. On October 22, 282 strikers took it a step further and embarked on a death fast. Worried that the protest was threatening their control, Turkish authorities sent special forces to 20 prisons on December 19. In the aftermath of their mission-with the ironic name of "Back to Life"-30 people were dead, hundreds more injured (many later died in hospitals), and six missing. But the mass protests in the streets have focused international attention on the crisis and caused the government's plans to backfire. Together, the labor unions and the professional associations have asked the government to negotiate with the hunger strikers, as did European Union (EU) members of parliament that visited Turkey.

The government was forced to agree to improve prison conditions so that prisoners have a place to meet and receive visitors. But the hunger strike continues to take its toll. As the ISR went to press, 20 more strikers had died and 80 more were in critical condition. Another 800 continue the hunger strike, ingesting nothing more than a solution of water and salt.


While Dervis has managed to secure the new IMF loan of $10 billion, Turkey's ruling class no longer has a clear plan. Just a few months ago, all mainstream analysts, the media, and the majority of politicians were strong IMF supporters. Now, that picture has changed radically. Renowned economists and ex-government officials charge that "with erroneous diagnosis and therapies, the IMF has caused a reduction of 20 percent in gross domestic product since last September," according to the British Financial Times. "The short-term solution is not to do what the IMF says, but what we know [is right]," wrote Irtzan Koumtsou, a former top manager at the central bank, in Hurriet, a large Turkish daily.

Others, such as the president of the Federation of Chambers of Commerce, see the way out as agreeing to what is asked for from the streets: the government's resignation. Indeed, the popularity of the PDL has fallen to 3 percent. After its national convention, two members of parliament resigned in protest at a lack of party democracy as well as at the cover-up of some financial scandals. Eight more are threatening to follow them. Despite this, the ruling class does not seem to have a political alternative to the current arrangement.

The second part of the governing coalition, the center-right party Mother Country, is viewed as a den of corruption, as many of its leaders are involved in the kinds of scandals that flourish during economic crisis. The most extreme case is that of the minister of energy, who resigned after being accused of making money on natural gas imports from Russia.

The fascists of the Nationalist Action Party (MHP) are in the governing coalition and therefore are seen as partly responsible for the crisis, so it is difficult for them to make gains. During the demonstrations in Ankara, protesters stoned the cars and offices of the MHP.

The largest opposition party, the Islamist Party of Grace, is not faring any better. During the days of protest in Istanbul, the party's leader, Retzai Koutan, was booed at the city bazaar. Nonetheless, the possibility that Islamist parties may benefit from the crisis is of particular concern to the United States government. ''Officials in Washington fear that if the coalition is turned out of office, power would fall to Turkish nationalist or Islamic fundamentalist parties that would oppose U.S. policies in Iraq, Iran, the Balkans, and Cyprus," according to the Washington Post.

In opinion polls, 65 percent of participants say they would prefer to vote for a party "that does not exist yet." For these reasons, there is a widespread impression that the new savior of the nation will be dressed in uniform. The danger of a military coup certainly exists, particularly when one considers Turkish history. Previous coups occurred in 1960, 1971, and 1980, dealing serious setbacks to the labor movement-from which it is still recovering. Today, politicians still consult the military on almost every move they make. But even the generals have no proposal about how to put the economy back on its feet. Military force simply can't impose any more poverty on people- the situation has already gone too far.

On the other hand, a military coup would set back the hopes of the ruling class for participation in the EU, a hope shared by many in the military. That's why their reaction to the crisis was a political one. The head of Turkey's joint chiefs of staff announced a reduction in military spending by $ 19.5 billion in a move designed to show responsibility to the ruling class and the international creditors of the country, while attempting to appease demonstrators.

The left

Unfortunately, the parties of the left (besides the PDL) are very small and unable to fill the vast political vacuum that has been created. But the necessity for workers to organize a united fight against the austerity measures has found other ways to express itself. An umbrella organization, the Labor Platform, has been created by 15 labor union associations that represent more than one million unionized workers.

One of its main demands is to freeze debts to the banks. This is a crucial demand in this period because it poses a challenge to the legitimacy of capitalist priorities and, at the same time, would lessen significantly the burden of the crisis on the backs of the poor. Participants in the Labor Platform are all large trade union confederations. The leader of the largest of them, Biral Meral of the conservative Turkiye Isci Sendikalari Konfederasyonu (Turk-IS), publicly flirts with the idea of turning the Platform into a united labor party.

Those of us on the left in Greece should play more of a role than that of mere indifferent observers. A successful struggle against the public welfare system "reforms" of Prime Minister Costas Simitis' government would have a very positive influence on the developments in Turkey, as it would inspire the Turkish working class in their own struggles. By strengthening the protests for cuts in military spending, we give protesters in Turkey a strong argument to ask for the same. It is also our duty to demand the closing down of the new isolation cells and to demand freedom for all political prisoners. But to show the sincerity of our solidarity-and to distance ourselves from the hypocritical humanitarianism of Greek national chauvinists- we must also demand from our government political asylum for all of the Turks and Kurds who manage to escape the hell of Turkish prisons.


Petros Tsagaris is a member of DEA (International Workers' Left) and the editorial committee of the Ergatiki Aristera (Workers Left), the newspaper of DEA.

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