hist 302 (spring 2007) part 2

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HIST 302 (Spring 2007) PART 2

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HIST 302 (Spring 2007) PART 2. The Second Turkish Republic 1960-1980  The military takeover / coup / putsch of 27 May 1960 (27 Mayıs Devrimi / Darbesi) a)     “to prevent fratricide” (kardeş katli) - PowerPoint PPT Presentation

TRANSCRIPT

Page 1: HIST 302 (Spring 2007)  PART 2

HIST 302 (Spring 2007)

PART 2

Page 2: HIST 302 (Spring 2007)  PART 2

The Second Turkish Republic 1960-1980

 The military takeover / coup / putsch of 27 May 1960 (27 Mayıs Devrimi / Darbesi)

a)    “to prevent fratricide” (kardeş katli)

b)   “to extricate the parties from the irreconcilable situation into which they had fallen”

 The conspirators:

a number of radical colonels, majors and captains

 

Greeted with explosions of public joy

among student an the intelligentsia

The rest of the country showed no such reaction

Page 3: HIST 302 (Spring 2007)  PART 2

General Cemal Gürsel: as a figurehead,

former commander in-chief of the land forces

 National Unity Committee (NUC) (Millî Birlik Komitesi)

headed by Cemal Gürsel – 38 officers -

Alpaslan Turkeş – the most influential member

Declaration of professors justifying the intervention:

DP acted unconstitutionally

The investigatory commission – Tahkikat Komisyonu

became illegal 

Page 4: HIST 302 (Spring 2007)  PART 2

Young Turks

Tradition of military leadership of modernizatation

ceased to be under the Single-Party regime

Fevzi Çakmak = Millet Partisi

Restructuring of Army in the 50s.

Extensive rearming and retraining of the military (NATO)

The modern army = the most progressive element

The process of modernization created expectations

Under the guise of Atatürkism or Kemalism

Underlying factor encouraging the military to intervene:

A combination of frustration & renewed self-confidence

Page 5: HIST 302 (Spring 2007)  PART 2

Most prestigious elements in society in the 1950’s

Free professions in law, medicine, engineering and the like

Military & civil servants lost ground

Social background &social and economic views of the instigators of the coup

NUC – discontented with DP’s economic and social policies

a) A more balanced economic growth

b) A more equitable distribution of wealth

c) Land reform

for DP social justice was not a main consideration

Page 6: HIST 302 (Spring 2007)  PART 2

Military Rule May 1960 – October 1961

NUC decision (3 August)

to retire 235 out of 260 generals &

some 5000 colonels and majors

 

Democrat Party suspended on 31 August

&

dissolved on 29 September 1960 

Page 7: HIST 302 (Spring 2007)  PART 2

A speedily return to constitutional rule

Onar Commission – Prof. Sıddık Sami Onar

A provisional constitution – 12 June 1960

giving legal basis both to the coup and to NUC

The cabinet of technocrats as an executive organ

To finalize the text of the constitution

The Constituent Assembly (Kurucu Meclis)

convened in January 1961 

Page 8: HIST 302 (Spring 2007)  PART 2

Consisted of two chambers

Bicameral parliament

1. An upper house in the legislature:

the NUC (Milli Birlik Komitesi)

2. A lower house: 272 (Kurucu Meclis)

representatives of

a) the remaining political parties

b) the professional (occupational) groups

c) the provinces

Page 9: HIST 302 (Spring 2007)  PART 2

The New Constitution: (1961)

The Republic is described as

Nationalist [milli], democratic, secular and social

Social and democratic were not in the 1924 Constitution

Populist and revolutionary (1924) are omitted

Legislative and executive power are no longer concentrated in the GNA [Büyük Millet Meclisi]

From an assembly, or convention, system to a parliamentary one

Page 10: HIST 302 (Spring 2007)  PART 2

The National Assembly (Millet Meclisi) counterbalanced

with other institutions

to prevent a power monopoly in politics

using one’s majority to become despotic

Page 11: HIST 302 (Spring 2007)  PART 2

1961 Constitution derived from 3 main sources:

a) The historical legacy of the Constitutions of 1876 & 1924

b) The experience of contemporary democratic states

c) Turkey’s present social needs

Page 12: HIST 302 (Spring 2007)  PART 2

a) Historical legacy

1876 Constitution

Created an elected parliament

Gave place to individual rights (limited)

Gave recognition to the idea of limitation of the Sultan’s powers

in the name of the people

Participation of the ‘people’ in a system dominated by the Sultan

The emergent principle of division of powers

To replace the concentration of all legislative, executive and judicial powers in the hands of the Sultan

Page 13: HIST 302 (Spring 2007)  PART 2

1924 Constitution

A victory for the principle of pupular sovereignty [milli hakimiyet = halk egemenliği ]

at the expence of the separation of powers

Sovereignty firmly invested in the nation

Nation’s soveregn rights exercised on its behalf by the GNA

Only the nation and its representative GNA possessed authority

GNA the source of executive as well as legislative power

Page 14: HIST 302 (Spring 2007)  PART 2

1961 Constitution

Provided greater degree for the separation of powers

An impartial Presidency

A parliamentary form of government

in which a balance between government and parliament

1876 & 1924 “government with parliament”

1961 parliamentary government

Page 15: HIST 302 (Spring 2007)  PART 2

b) Contemporary experience

Illuminated by ideas about representative democratic government

Insistance on patriotism = national (rather than nationalism), on laicism, on the legitimacy of power only through elections

Subjecting political power to the inspection of public opinion & political institutions.

Page 16: HIST 302 (Spring 2007)  PART 2

c) Present needs

i) Strong democratic government to carry through

economic and social development in a planned way

ii) Inclusion of social rightsConstitution is a foundation stone for a democratic welfare state

(refah devleti)

Page 17: HIST 302 (Spring 2007)  PART 2

New Institutions

Two Chambers: National Assembly [Millet Meclisi] & Senate [Senato]

together Türkiye Büyük Millet Meclisi

The National Assembly 450 members

The supremacy of the lower house - the last voice

More representative on account of its system of election by proportional representation

Term of office is 4 years

Deputies need only be 30 years of age and be literate

Page 18: HIST 302 (Spring 2007)  PART 2

A second chamber : Senate (Senato) 150 elected members

Natural memberslife membership for member of the NUC 15 members appointed by the Presidentformer presidents

The term of office of all elected and appointed senators is 6 years

1/3 of elected and appointed members of the Senate retire every 2 years

Senators have to be at least 40 years of age & to have had higher education

Page 19: HIST 302 (Spring 2007)  PART 2

2. An independent Constitutional Court (Anayasa Mahkemesi)

to review the constitutionality of the laws of the GNA

High Council to try the President, the PM, & other ministers &

highest legal personages for offences arising out of their duties

Suits for annulment of laws and standing orders

Suits for the closing down of political parties

Page 20: HIST 302 (Spring 2007)  PART 2

3. Full autonomy for the judiciary, the universities and the mass media

4. The system of proportional representation:

to prevent the division of the country into two hostile camps

to lessen the chance of one party

to make single-party government unlikely

holding an overwhelming majority

Page 21: HIST 302 (Spring 2007)  PART 2

5. A full bill of civil liberties -

To strengthen the basic rights

Social and economic rights and obligations

the right to bargain collectively and to strike

the right to social security and medical care

6. A constitutional role for the military:

the National Security Council (NSC) (Milli Güvenlik Kurulu)

Page 22: HIST 302 (Spring 2007)  PART 2

National Security Council March 1962

advised the government on internal and external security

Members: 

The chief of the general staff [genel kurmay başkanı The service chiefs [kuvvet komutanları] & The ministers concerned [ilgili bakanlar]

A powerful watchdog,

sometimes replacing the cabinet

as the center of real power and decision-making

Page 23: HIST 302 (Spring 2007)  PART 2

The President of the Republic

A tendency to make the President an arbiter

in the political struggle

More distant from the GNA than formerly

The requirement of political neutrality

Yet, the break from Parliament is not complete

Page 24: HIST 302 (Spring 2007)  PART 2

President chosen by the GNA

for seven 7 years (longer term of office)

by a 2/3 majority of the GNA in plenary session [NA + Senate]from among members of the GNA who are at least 40 years old + higher education

should not be responsible to GNA

The president is not eligible for re-election

Page 25: HIST 302 (Spring 2007)  PART 2

The referendum

on the new constitution (9 July 1961)

A severe setback for the forces of 27 May

Accepted with 61.7 against 38.3 per cent of the votes cast

 

The ban on political activity lifted (13 January 1961)

RPP & RPNP reactivated

Page 26: HIST 302 (Spring 2007)  PART 2

New Parties

1) The Justice Party [Adalet Partisi]

headed by Ragıp Gümüşpala; retired general

Primary goal

full rehabilitation of the retired officers and arrested democrats

2) The Workers [Labor] Party of Turkey [Türkiye İşçi Partisi]

headed by Mehmet Ali Aybar, publicist, lawyer, former University academics

3 ) The New Turkey Party [Yeni Türkiye Partisi]

headed by Ekrem Alican

Page 27: HIST 302 (Spring 2007)  PART 2

The parliamentary elections (15 October 1961)

RPP gained % 36.7 : (171 seats) disappointed

JP polled % 34.7 (158 seats)

The New Turkey Party got % 13.9:

A continuation of the Freedom Party

founded by dissident Democrats in 1955

The conservative RPNP polled % 13.4

Page 28: HIST 302 (Spring 2007)  PART 2

Taken together,

the parties which were considered heirs to DP

were still the strongest in the country

The new constitution more liberal than the old one:

It tolerated a wider spectrum of political activity than before,

both to the left and to the right

Page 29: HIST 302 (Spring 2007)  PART 2

 

The trial of the old regime: Yassıada Mahkemeleri

 

31 sentenced to life imprisonment &

418 to lesser terms,

while 15 sentenced to death (11 death sentence commuted) müebbed hapis

Adnan Menderes, Fatin Rüştü Zorlu and Hasan Polatkan hanged

Celal Bayar’s death sentence

commuted

because of his advanced age

Page 30: HIST 302 (Spring 2007)  PART 2

A Period of Transition – the Period of Coalitions

  1961-1965

Heavy pressure on the two party to collaborate in a coalition

to be led by İsmet İnönü

 The First İnönü Coalition

A marriage of convenience, not love

Failure: a) the amnesty for the former DP politicians

b) the project for a planned economy

The JP rejected as insufficient a proposal to reduce the sentences of the Democrats 

Page 31: HIST 302 (Spring 2007)  PART 2

 The Second İnönü Coalition

İnönü formed a new cabinet

A coalition with the two smaller parties

Many frictions

The worst: the proposal for a land tax

Page 32: HIST 302 (Spring 2007)  PART 2

Cemal Gürsel asked the JP leader, Ragıp Gümüşpala

to form a government.

He failed in his attempt

 

The Third İnönü Coalition

A minority coalition of RPP and independents

JP brought it down:

budget is not approved

A Caretaker Cabinet

headed by Suat Hayri Ürgüplü (a former diplomat)

 

Page 33: HIST 302 (Spring 2007)  PART 2

Elections in October 1965

 

JP won a landslide victory

gaining an absolute majority of the votes cast ( % 52.9)

RPP was down to % 28.7.

The other parties gained les than % 7

Workers’ Party of Turkey (WPT) in the parliament: 15 deputies

Page 34: HIST 302 (Spring 2007)  PART 2

National remainder system NRS

Milli Bakiye Sistemi

% of votes = % of seats in parliament

Permitted the Workers’ Party 15 seats in the assemby

Page 35: HIST 302 (Spring 2007)  PART 2

Demirel, prime minister.

 He dominated Turkish politics for the next five years

 

Goods years for Turkey

High economic growth - % 6.9 growth rate & Continual increases in real incomes

 

Demirel’s most important achievementReconciliation of the army & the rule by civilians

The price paid: The armed forces were granted almost complete autonomy

Page 36: HIST 302 (Spring 2007)  PART 2

JP was a coalition of

1.    industrialists

2.    small traders and artisans

3.    peasants and large landowners

4.    religious reactionaries

5.    Western-orientated liberals

 

It had very little ideological coherence

 

Page 37: HIST 302 (Spring 2007)  PART 2

Demirel’s frequent recourse to two tactics

  To preserve the unity of the party and his own position

1.  Emphasis on the Islamic character of the party

He stood for traditional values

Flirted with leaders of Nurcu movement

 

2. Constant anti-communist propaganda campaign &

harassment of leftist movements

Page 38: HIST 302 (Spring 2007)  PART 2

He became unpopular among intellectuals

But his support held up well in the countryside

The elections of 1969

 JP suffered slight losses ( %46.5)

RPP polled only % 27.4

 

JP formed a new cabinet

Slightly more centrist than the old one

 

Page 39: HIST 302 (Spring 2007)  PART 2

Problems within JP – Opposition to Demirel.

He lost the support of the most conservative wing

a) Anatolian landowners

&

b) small traders and artisans

over his proposals for new taxation

to help pay for industrialization

Page 40: HIST 302 (Spring 2007)  PART 2

February 1970

The right wing of the JP voted with the opposition

& forced Demirel to resign

 March 1970

New cabinet - No alternative to Demirel 

Rift (split - dissention) superficially healed

Page 41: HIST 302 (Spring 2007)  PART 2

December 1970

JP decedents

41 deputies and senators left the JP

&founded the Democratic Party (Demokratik Parti)

led by Ferruh Bozbeyli

its name, recalling DP

Page 42: HIST 302 (Spring 2007)  PART 2

Left of Center (Ortanın Solu) 

New definition for RPP

The RPP moved left of center A new manifesto in the 1965 elections

written by two coming men of RPP

Turhan Feyzioğlu and Bülent Ecevit

 

Page 43: HIST 302 (Spring 2007)  PART 2

Emphasis on social justice and social security

without being explicitly socialist

 

To mobilize the votes of

1) workers

2) inhabitants of the shanty towns (slum areas of towns)

Page 44: HIST 302 (Spring 2007)  PART 2

RPP new stance did not profit in 1965 elections

Lacked credibility as a progressive party

The people in the squatter towns basically villagers

who had moved to the big city

taking their village values with them

 

as in the villages, they voted JP

 

Page 45: HIST 302 (Spring 2007)  PART 2

JP propogandists’ tactics:

Left of center is the road to Moscow

Ortanın Solu Moskova’nın Yolu

 

Page 46: HIST 302 (Spring 2007)  PART 2

After the defeat – Acrimonious (bitter) debate – Infighting

Blaming “the left-of-center” tactics

Extraordinary Congress of RPP - 1967

Increase of the central office’s hold over the party

Party dicipline

Page 47: HIST 302 (Spring 2007)  PART 2

A group of 47 representatives and senators

who opposed the left-of-center line

left the party

to found the Güven Partisi (Reliance Party)

led by Turhan Feyzioğlu

Right of center

Ecevit’s main competitor for the position of “Crown prince”

Personal jealousy

Page 48: HIST 302 (Spring 2007)  PART 2

The growth of political radicalism

 

On the left:

A growing student population

&

a growing industrial proletariat

 

On the right:

JP policies served the interests of

the modern industrial bourgeoisie, of big business

 

Page 49: HIST 302 (Spring 2007)  PART 2

However, JP’s electoral base consisted of

a) farmers

&

b) small businessmen

They became the prime targets of both

a) the Islamic party

b) the ultra-nationalist party

Page 50: HIST 302 (Spring 2007)  PART 2

NAP

The NAP led by Alpaslan Türkeş – an ultra-nationalist

(Nationalist Action Party / Milliyetçi Hareket Partisi)

Claimed to be opposed to both monopoly capitalism & communism

 From RPNP to NAP – 1969

Hierarchically organized, militant with ultra-nationalist program – Nine Lights (Dokuz Işık)

Youth Organization – Ülkü Ocakları + Bozkurtlar

Page 51: HIST 302 (Spring 2007)  PART 2

NOP

The NOP ( National Order Party / Milli Nizam Partisi ) 1970

headed by Necmettin Erbakan.

Voice of smaller businessmen 

Used “Islamic” discourse to criticize the monopolies as lackeys of the Christian/Jewish West

They posed a serious threat te Demirel’s power

 

Page 52: HIST 302 (Spring 2007)  PART 2

Political violence in the late 1960s

Bombing attack, robbery and kidnapping

National Remaider System abolished in March 1968

Representatives of WPT played a very important role as opposition

Left, without ouftlet for expressing discontent in the assembly, vented their frustrations in the street

Page 53: HIST 302 (Spring 2007)  PART 2

The violence of the left met and surpassed by violence from the militant right

By early 1971:

Demirel weakened by defections - Became paralyzed

 

He was powerless to curb the violence

on the campuses and in the streets.

 

He could not hope to get

any serious legislation on social or financial reform

passed in the assembly

Page 54: HIST 302 (Spring 2007)  PART 2

The fragmentation of the Right

became the major factor of political instability

By the early 1970s

Situation became explosive

A dangerous mix

Student and working-class militancy

Social and economic changes

Growing political conflict

World situation

Page 55: HIST 302 (Spring 2007)  PART 2

A revolution of rising expectations

Expectation were not met

German economic miracle had syphoned off workers

Population growth

Widespread unemployment

Job market unable to absorb the younger population

Overcrowded schools and universities

Ideal for recruiting militants for the Left and the Right

Youth played a crucial role in creating political instability

Page 56: HIST 302 (Spring 2007)  PART 2

Demirel sided with Turk İş

Wanted to destroy DİSK

A Law : Unless represented at least 1/3

Workers came out in protest on 15-16 June 1970

Paralysed the Istanbul-Marmara region

The Right described the protest as

“a dress rehearsal for revolution”

Page 57: HIST 302 (Spring 2007)  PART 2

Beginning of 1971 – A state of turmoil

Leftist student militants robbed banks

Kidnapped US servicemen

Attacked American targets

Constant strike activity

The Gray Wolves, neo-fascist militants

Attacked professors who were critical of the goverment

Islamists became more aggressive

Openly rejected Atatürk and Kemalism, infuriating the armed forces

Page 58: HIST 302 (Spring 2007)  PART 2

12 March Memorandum (12 Mart Muhtırası)

Handed by the chief of the general staff

It amounted to an ultimatum by the armed forces

 

The memorandum demanded:

A strong and credible government

to end the “anarchy”&

and carry out reforms “in a Kemalist spirit”

 

If demands were not met, the army would “exercise its constitutional duty” and take over power itself

Page 59: HIST 302 (Spring 2007)  PART 2

Demirel resigned

İnönü denounced any military meddling in politics

 

The new government installed by the generals

headed by Nihat Erim, member of the right wing of the RPP

Ecevit, infuriated, resigned as secretary-general

 

A cabinet consisted largely of technocrats

from the outside the political establishment.

 Nihat Erim announced that his government would:

1.    restore law and order

2.    enact a number of long-overdue socio-economic reforms

Page 60: HIST 302 (Spring 2007)  PART 2

Atilla Karaosmanoğlu (World Bank) drew up a reform program:

 1.    Land reform

2.    Land tax

3.    Nationalization of the mineral industry

4. Joint ventures to protect Turkish industry at least % 51 Turkish-owned

Stubborn opposition from vested interests in business and agriculture

But sophisticated industrialists

like Vehbi Koç and Nejat Eczacıbaşı

supported the reform proposals

Page 61: HIST 302 (Spring 2007)  PART 2

Renewed terrorist attacks

NSC proclaimed martial law in 11 provinces

 Renewed every two months for two years

Persons suspected of terrorism rounded up

Witch-hunt - The persecution of the left

Progressive liberal sympathisers arrested

5000 people put to jail

leading intellectuals (writers, journalists, professors),leading members of the Workers Party of Turkey

prominent trade unionists 

Page 62: HIST 302 (Spring 2007)  PART 2

The NOP & WPT closed down in May & July 1971

Erbakan allowed to resume his activities in October 1972

under National Salvation Party (Milli Selamet Partisi)

 

Erim to compromise with the conservatives in the assemby

 Demirel’s old ministers in the cabinet

Page 63: HIST 302 (Spring 2007)  PART 2

11 reformist technocrats resigned

Replaced by politicians from the right 

Erim’s new cabinet

amendments to the constitution

aiming at making it less liberal

support of the parties of the right

Page 64: HIST 302 (Spring 2007)  PART 2

 

44 articles were changed.

Basically:

1. Limits to civil liberties

2. End to the autonomy of the universities and of radio and TV

3. Limit to freedom of the press

4. Curtailment of the powers of the Constitutional Court

5. Increase of the powers of the NSC

giving unsolicited advice to the cabinet - Binding advice

6. Foundation of special State Security Courts (Devlet Güvenlik Mahkemeleri) to try over 3000 people

Abolished in 1976

Page 65: HIST 302 (Spring 2007)  PART 2

The assembly refused

the right to rule by decree (kanun hükmünde kararname)

Nihat Erim resigned (April 1972)

Succeeded by Ferit Melen

one of the leaders of the Reliance Party

Collaborated more closely with JP

Principled stance  of Ecevit

Ecevit ousted İnönü from the RPP chairmanship

succeeded him in Party conference (May 1972).

İnönü resigned from the RPP (November 1972)

Page 66: HIST 302 (Spring 2007)  PART 2

The term of office of Cevdet Sunay (1966-1973) came to an end

 

The army put forward the chief of general staff Faruk Gürler

as his successor

 

Gürler was defeated

Fahri Korutürk, a retired admiral, became the president

 

He appointed the economist Naim Talu

to lead a caretaker government

to take the country to the free elections

Page 67: HIST 302 (Spring 2007)  PART 2

October 1973 Elections:

 produced a surprise result

RPP polled % 33.5 against % 29.5 won by JP

NSP: % 11.9

None of the parties had an absolute majority

 Long-drawn-out negotiations

January 1974 - a new cabinet

Based on the surprising combination of RPP with NSP

 

Page 68: HIST 302 (Spring 2007)  PART 2

 RPP:

Social Democratic Identity

Won its votes in the progressive, industrial belt

Not in its traditional stronghold of backward, east and central Anatolia

Attractive to urban migrants

Social democracy as the ideology of the future

Page 69: HIST 302 (Spring 2007)  PART 2

 NSP :

Opposition to the growth of monopolies &

dependence on foreign capital

Call for heavy industry &

an economy based on Islamic values (interest-free banking)

The New Cabinet

A marriage of convenience: Common basis: the distrust of

a) European and American influence

b) Big business

Page 70: HIST 302 (Spring 2007)  PART 2

Cyprus crisis broke out

Turkish forces in Cyprus

Ecevit became a national hero overnight

Karaoğlan

He wanted to use his popularity

to gain an absolute majority in early elections

Resigned to instigate new elections (September 1974)

 

Page 71: HIST 302 (Spring 2007)  PART 2

 

A major miscalculation

A caretaker cabinet under Professor Sadi Irmak

 Demirel finally formed a coalition:

First Nationalist Front

JP, the NSP, the NAP, RRP and defectors from the DP

Bribing them with cabinet posts – 30 ministers

Page 72: HIST 302 (Spring 2007)  PART 2

Disproportioned influence of NSP & NAP

Colonizations of ministries in an unprecedented way

Thousands of civil servants discharged or demoted

Replaced with party loyalists

Increased violence and economic crisis

The elections of 1977

Ecevit’s popularity - RPP got % 41.4

JP went up to % 36.9

A stalemate

Attempt by Ecevit to form a coalition with the independents

Failure

Page 73: HIST 302 (Spring 2007)  PART 2

Second “Nationalist Front” coalition by Demirel

Influence of the NSP and NAP greater than in the first one

 Short lived. JP deputies defected

 

Ecevit formed a cabinet with defectors now independents

The independents given cabinet posts

It survived until October 1979

 

It could not master the rising tide of violence

Page 74: HIST 302 (Spring 2007)  PART 2

The military grew increasingly disillusioned with

Ecevit’s soft attitude to terrorism and Kurdish separatism

 

October 1979 elections for the senate

Drop in support for the RPP

Defections from RPP

Ecevit lost majority - Resigned

 

Demirel returned to power

Minority government supported by independents

Page 75: HIST 302 (Spring 2007)  PART 2

JP-RPP coalition

proved impossible to realize throughout 1973-80

They were unable to cooperate

 The political system gradually became paralysed

giving small extremist groups disproportionate influence

 

Polarization of the big parties due to ideological factors

 

President Fahri Korutürk’s term ended in 1980

Paralysis -The assembly proved incapable of electing president

after 100 rounds of voting

Page 76: HIST 302 (Spring 2007)  PART 2

Overwhelming problems Turkey faced in the 1970s

 

(1) Political violence (2) Economic crisis.

 

The development policies of the governments :

the substitution of imports through industrialization

 

Direct investment incentives:

subsidies & tax rebates

Page 77: HIST 302 (Spring 2007)  PART 2

Economic crisis

1973 – 1980

 

Page 78: HIST 302 (Spring 2007)  PART 2

The creation of a home-grown industry:

 

1. Extensive import restrictions and high tariffs

 

2. Manipulation of the exchange rates

3. Creation of a buoyant internal market

Page 79: HIST 302 (Spring 2007)  PART 2

1. Extensive import restrictions & high tariffs

to keep out European & American industrial products

 

2. Manipulation of the exchange rate

by keeping the rate of the TL artificially high

Firms, to buy foreign investment goods & raw materials,

allowed to purchase $ or DM comparatively cheaply

3. Creation of a buoyant internal market through Populism:

a) paying high guarantee prices to farmer (above world price)

b) allowing industrial workers high wage rises

Page 80: HIST 302 (Spring 2007)  PART 2

Industries

which would never have been able to compete on world market

made handsome profits on the home front.

 

New industries spread unevenly among regions

 

Vast majority established in the Istanbul area

smaller concentrations around İzmir and Adana

 

Import-substitution strategy

successful for some time

1963 - 1976 the annual rate of growth averaged % 6.9

Page 81: HIST 302 (Spring 2007)  PART 2

Role of the state economic enterprises still important

% 40 of total industrial production

 Inefficiency: Reasons:

1) Political concern

2) Social concern

1. Business decisions in the state state sector, including the pricing of products, remained politically influenced

 

2. Huge overstaffing as a result of patronage system

 

Result: Heavy losses to be covered through the state budget

Page 82: HIST 302 (Spring 2007)  PART 2

New industries heavily dependent on imports(foreign parts & materials for production)

dependency:

on the availability of foreign reserves to pay for them

Economy became extremely vulnerable

Since the 1950s

Increasing dependence on oil as a source of energy

 

The oil crisis of 1973-74

quadrupled price on the international market

Steep rise in import bill

Page 83: HIST 302 (Spring 2007)  PART 2

Second oil price shock in 1979-80

2/3 of foreign currency earnings to meet oil bill

Recession in Europe

Western market for Turkish products declined

 

For a while

Possibility to keep up economic growth

by depleting the Central Bank’s foreign reserves

Page 84: HIST 302 (Spring 2007)  PART 2

Using the transfers of the Turkish workers in Germany

 

Remittances began to decline steeply after 1974:

a) Recession – Unemployment

b) Political unrest – Loss of trust

1. The situation of the workers in Europe deteriorated

2. They lost confidence in the situation in Turkey

 They kept their money in Germany 

Page 85: HIST 302 (Spring 2007)  PART 2

Governments tried to solve problems by:

1.    concluding costly short-term Eurodollars loans

2.    printing money

3.    conserving foreign reserves through import restrictions

 

Scarcety of oil for industry & electricity generating

By 1979 power cuts off up to 5 hours a day

Fuelled inflation

a) Rising price of energy b) Irresponsible financial policies

Page 86: HIST 302 (Spring 2007)  PART 2

Inflation running around % 20 during the early 1970s

 

By 1979 it was at % 90

 

To keep inflation down:

1) price control thought Price-Control Board

 Result = huge black market

 2) Artificially high rate of exchange for the TL

Devaluation always came too late

Page 87: HIST 302 (Spring 2007)  PART 2

Import restrictions imposed to save foreign exchange

a) fuelled the black market

b) gave rise to large-scale smuggling

 

Radical measures

to extricate Turkey from its financial and economic impasses

 

Ecevit negotiated with IMF, World Bank and OECD

for new credits (1978)

Creditors demanded drastic economic reforms

Agreement to release 1.8 billion $ in new credits (July 1979)

Page 88: HIST 302 (Spring 2007)  PART 2

Dependent on a reform program to be implemented  

1. Abolishing import and export controls

2. Cutting subsidies

3. Freeing interest rates

4. Raising prices

5. Cutting government expenditure

Demirel’s government

The task of implementing given to Turgut Özal

the under-secretary (müsteşar)

for economic affairs in charge of planning

Page 89: HIST 302 (Spring 2007)  PART 2

24 January 1980

Reform package launched (called “Chilian solution” )

Credits began to arrive

 Widespread resistance

 

Activities of the trade unions

made it impossible to implement economic package

 

Members of DISK occupied factories - Strikes

 accompanied by clashes with the security forces

Page 90: HIST 302 (Spring 2007)  PART 2

The Third Republic

Political Structure

1980 - 2007

 

Page 91: HIST 302 (Spring 2007)  PART 2

The Third Republic

The coup: 12 September 1980

Armed forces took over political power – To save democracy

The communiqué

State organs had stopped functioning

 

Page 92: HIST 302 (Spring 2007)  PART 2

The the existing political system uprooted

 1.    Parliament dissolved

2.    Cabinet deposed

3.    Immunity (dokunulmazlık) of the deputies lifted

4.    Political leaders arrested

5.    Political parties abolished

6.    Radical trade unions confederations, DİSK and MİSK suspended

7.    Mayors & municipal councils dismissed

A state of emergency (olaganüstü hal) declared

Page 93: HIST 302 (Spring 2007)  PART 2

Concentration of all power in the hands of the military

National Security Council (Milli Güvenlik Konseyi)

headed by General Kenan Evren

declared head of state (devlet başkanı)(14 September 1980) 

Local commenders, under martial law, given wide-ranging powers

Closures of newspapers – Arrests of journalists & editors

Eventual return to democratic system envisaged

 

Page 94: HIST 302 (Spring 2007)  PART 2

 

Enforcement of radical changes

before handing power back to the civilians  

Undoing work of their predecessors,

perpetrators of 27 May

Saw their task:

a) saving democracy from the politicians

b) Purging the political system

A 27-member cabinet under Bülent Ulusu (Retired admiral)

Composed of bureaucrats and retired officers

Page 95: HIST 302 (Spring 2007)  PART 2

A wave of arrests swept the country after the coup

In the first 6 weeks - 11.500 people arrested

By the end of 1980 - the number grew to 30.000

After one year - 122.600 arrests had been made

 

Politically motivated terrorist attacks diminished

but at great human and social cost

 

Trials held before military courts under martial law

Within 2 years - 3600 death sentences pronounced

15 carried out.  Tens of thousands of lesser sentences

Page 96: HIST 302 (Spring 2007)  PART 2

The new constitution prepared by a constitutional committee

headed by Professor OrhanAldıkaçtı (İstanbul University)

 

A constituent assembly (Danışma Meclisi) of 160 members met on 23 October 1981

(120 appointed by the military governors, 40 by the NSC)

Elected 15-member constitutional committee 

The Constitution of 1982

 

A reversal of the 1961 constitution

Page 97: HIST 302 (Spring 2007)  PART 2

 

1. Concentration of power in the hands of the executive

2. Increase of the powers of the president and the NSC

3. Limits to freedom of the press, freedom of trade unions (banning political strikes, solidarity strikes & national strikes)

4. Limits to rights and liberties of the individual

 The usual rights and liberties (freedom of speech, freedom of association, etc)

included in the constitution

Page 98: HIST 302 (Spring 2007)  PART 2

Rights & Liberties could be annulled, suspended or limited

on the following considerations:

1.    the national interest,

2.    public order,

3.    national security,

4.    danger to the republican order and public health.

Constitution subjected to a referendum 7 November 1982

 Voting made compulsory

Anyone who chose not to or neglected to vote:

a) had to pay a fine b) lost the right to vote for five years

Page 99: HIST 302 (Spring 2007)  PART 2

Criticism of

a) the constitution

b) speeches General Evren held in favour of yes vote

banned

The referendum yielded expected result:

a yes vote of % 91.4

 

New Law on Political Parties promulgated (March 1983)

 

Politicians active before September 1980 banned from politics

for 10 years

Page 100: HIST 302 (Spring 2007)  PART 2

New parties could be formed

but their founders needed the approval of the NSC

 

Students, teachers & civil servants barred from party membership

 Parties not allowed

a) to found women’s or youth branches

b) b) to develop links with trade unions

c) to open branches in villages.

15 parties founded,

but 12 not approved by the military

Page 101: HIST 302 (Spring 2007)  PART 2

3 parties allowed to take part in the elections

 1.    The Party of Nationalist Democracy Milliyetçi Demokrasi Partisi Identified with & supported by the generals Led by retired general Turgut Sunalp

2.    The Populist Party Halkçı Partı

led by Necdet Calp

3. The Motherland Party Anavatan Partisiled by Turgut Özal

Turgut Özal - behind the economic reform program served as a minister in charge of the economy under the military regime (Bülent Ulusu government)

Page 102: HIST 302 (Spring 2007)  PART 2

6 November 1983 Elections

MP scored an overwhelming victory - polling over % 45

PP did reasonably well to poll % 30

PND came the third with % 23

 

New electoral system heavily weighted in favor of majority

To limit the disproportionate influence of the small parties

Before 1980 = one of the reasons for the breakdown of system

The % 45 gave the MP an absolute majority

Page 103: HIST 302 (Spring 2007)  PART 2

Under Turgut Özalslow process of further democratization went on

 

Before the municipal elections of March 1984

the parliament voted to allow some of the parties

banned the year before to participate

 

The Municipal elections of March 1984

 

The MP did only marginally less well than five months earlier % 41.5

Page 104: HIST 302 (Spring 2007)  PART 2

The Social Democratic Party 23.5 per cent[Sosyal Demokrat Parti ]led by professor Erdal İnönü

 

The True Path Party polled % 13.5 [Doğru Yol Partisi] Süleyman Demirel’s party, - fronted by other politicians

 

The National Salvation Party, got % 4.5 of the vote[Milli Selamet Partisi]Necmettin Erbakan’s party, - fronted by other politicians

 The Populist Party less than % 9

The Party of Nationalist Democracy only % 7

Page 105: HIST 302 (Spring 2007)  PART 2

Strange political landscape

 

Opposition parties in parliament lost their legitimacy

 

Parties with sizeable portion of the electorate behind them

not represented on a national level

Solutions:  

On the Left:

PP and SDP merged to form Social Democratic Populist Party

[Sosyal Demokrat Halkçı Parti – SPP] November 1985.

Page 106: HIST 302 (Spring 2007)  PART 2

A new challenger for the inheritance of old RPP

The Democratic Left Party DLP Demokratik Sol Partisi - DSP

Led from behind the scenes by Bülent Ecevitfronted by his wife, Rahşan Ecevit - party chairwoman

 The Ecevits

a) depicted SPP as elitist and old fashioned

b) declared the PDL as the only true workers’ party

On the Right

The leadership of PND dissolved the party - May 1986

Representatives joined the MP & PTP

Page 107: HIST 302 (Spring 2007)  PART 2

18 members of SPP deserted to the DLP - December 1986

giving DLP representation in parliament

 

Özal accepted the challenge of the old guard

Referendum on a change in the constitution

to allow the old politicians to take part in politics

Page 108: HIST 302 (Spring 2007)  PART 2

 Referendum - 6 September 1987.

 % 50.24 yes against % 49.76 no

The result of the referendum led Özal to announce

early national elections

Page 109: HIST 302 (Spring 2007)  PART 2

29 November 1987 Elections

 

The MP managed to retain its absolute majority

MP polled % 36.3

SPP % 24.5

PTP came third - % 19.2

Other parties failed to pass the threshold [baraj] (% 10)

 

Page 110: HIST 302 (Spring 2007)  PART 2

March 1989: Municipal elections

The results:

Support for the MP severely eroded

MP suffers major defeat in local elections

Reasons:

Corruption and unpopular economic policies

With both voters and private sector

Page 111: HIST 302 (Spring 2007)  PART 2

SPP came out on top, % 28.2

PTP came second % 25.6

MP managed only third place % 21.9

Page 112: HIST 302 (Spring 2007)  PART 2

Evren’s term came to an end - November 1989

Regardless of the electoral result

Özal stood as presidential candidate

The opposition boycotted the session of the TBMM

in which the new president was elected

Turgut Özal elected 8th president of Turkey

Page 113: HIST 302 (Spring 2007)  PART 2

Yıldırım Akbulut replaced him as PM

He lacks Özal’s authority

&

fortunes of party decline hereafter

Page 114: HIST 302 (Spring 2007)  PART 2

Reasons for the decline of Özal’s popularity

 

High inflation - back to pre-1980 level of around % 80

Erosion of purchasing power

 

2. Nepotism and corruption surrounding the regime

 

Page 115: HIST 302 (Spring 2007)  PART 2

 

Özal’s belief:

Unrestricted capitalism free-for-all

Resulted in a number of business scandals

 Özal family criticized for

a) nepotism

b) corruption in their business activities

Page 116: HIST 302 (Spring 2007)  PART 2

June 1991

Mesut Yılmaz elected leader of MP

Forms new cabinet

He is expected to give party youthful and modern image

20 October 1991 Elections:

 PTP (center-right) won the elections %27

MP % 24

SPP - disappointing result % 20

% 20 included votes for People’s Labour Party (Halkın Emek Partisi)

Their candidates contested the elections on the SPP slate

Page 117: HIST 302 (Spring 2007)  PART 2

Personal animosity between Demirel and Özal prevented coalition

A coalition of PTP and SPP

Süleyman Demirel: Prime Minister

Erdal İnönü: Vice Prime Minister

17 April 1993

President Turgut Özal dies of heart attack at age of 66

Parliament elects Süleyman Demirel as Turkey’s 9th president

Leaving his party without strong leader

Page 118: HIST 302 (Spring 2007)  PART 2

13 June 1993

Tansu Çiller elected leader of TPP

First woman to lead Turkey, heading coalition with the Social Democrats

25 March 1994

The Welfare Party, (the party of political Islam)

Makes a breakthrough in local elections

Its candidates becoming mayors of Istanbul and Ankara

Page 119: HIST 302 (Spring 2007)  PART 2

18 February 1995

Social Democrat parties – RPP and SPD unite under umbrella of RPP

23 July 1995

Parliament passes amendments to 15 articles of constitution, designed to make political life more democratic

20 September

Coalition collapses, leading to early election

24 December 1995

WP (representing political Islam) wins with % 21.38

of votes and 158 seats,

Page 120: HIST 302 (Spring 2007)  PART 2

Insufficient to form government

Political crisis follows

6 March 1996

MP and TPP coalition is formed

Unstable - hostility between two leadersMesut Yılmaz – Tansu Çiller

6 June 1996

Mesut Yılmaz resigns

opening way for Necmettin Erbakan

Page 121: HIST 302 (Spring 2007)  PART 2

29 June 1996

Erbakan and Çiller announce formation of coalition

Both leaders agree to shelve investigations of corruption against each other

28 February 1997

NSC advises Erbakan-led coalition to clamp down / put pressure on Islamist activity, especially the wearing of headscarves in

universities

18 June 1997

Erbakan decides to resign hoping to be replaced by Tansu Çiller as PM and for coalition to continue

Page 122: HIST 302 (Spring 2007)  PART 2

President Demirel appoints Mesut Yılmaz (Motherland Party) to form new coalition

New coalition:Yılmaz + Ecevit

16 January 1998

a) Constitutional court orders dissolution of Welfare Party for violating principle of secularism,

b) Bans Erbakan from party’s leadership for 5 years

17 December 1997

In anticipation

Islamists had already formed Virtue Party (Fazilet Partisi)

Page 123: HIST 302 (Spring 2007)  PART 2

21 April 1998

Continuing offensive against political Islam

Recep Tayyip Erdoğan, Mayor of Istanbul and member of VP sentenced to 10 months’ imprisonment

for a speech made in 1997, exploiting Islam & inciting religious heatred

26 November 1998

PM Mesut Yılmaz resigns amid charges of mafia connections

11 January 1999

DLP leader Ecevit forms new cabinet to lead the country to an early general election

Page 124: HIST 302 (Spring 2007)  PART 2

18 April 1999

General election won by Ecevit and NAP (extreme right)center-right parties collapse

3 May 1999

Ecevit is reappointed PM

Coalition with NAP and MP

5 May 2000

Ahmet Necdet Sezer, president of Constitutional Court, replaces Demirel as president

Page 125: HIST 302 (Spring 2007)  PART 2

21 June 2001

Constitutional Court dissolves VP,describing it a center of Islamic fundamentalism

21 July 2001

Political Islamists form Felicity Party (Saadet Partisi)as successor to VP

14 August 2001

Moderates from VP, led by Recep Tayyip Erdoğan, found Justice and Development Party (Adalet ve Kalkınma Partisi)

claiming to be secular ‘Muslim democrats’, not successors to former VP

Page 126: HIST 302 (Spring 2007)  PART 2

3

November 2002

Early general election

brings AK Party to power with % 34.3 of ballot and 363 seats

RPP with % 19.4 & 178 seats becomes the opposition

with no other parties managing to clear the % 10 electoral barrier

Page 127: HIST 302 (Spring 2007)  PART 2

Economic Structure

1980 – 2005

Page 128: HIST 302 (Spring 2007)  PART 2

1980-1991

The efforts to restructure the economy

24 January 1980 :“The “stabilization program”

 

Turgut Özal

the architect of the IMF-inspired economic reform package

of the last Demirel cabinet

The Program become effective after  12 September 1980: Military takeover

The suppression of

the trade unions and the political left by the military

Page 129: HIST 302 (Spring 2007)  PART 2

Renewal of confidence for Turkey

International business world and financial community represented by

the IMF, the World Bank and the OECD,

 

Flow of credits, denied to pre-1980 governments, resumed.

 

National debt

grew from 13.5 billion $ to 40 billion $ in 1989.

But the repayment posed no real problems

Page 130: HIST 302 (Spring 2007)  PART 2

The aims of the program. Threefold

 

1.    To improve the balance of payments

2.    To combat inflation

3.    To create an export-orientated free market economy

Page 131: HIST 302 (Spring 2007)  PART 2

The means employed to attain these goals:

 1.    Drastic (and ongoing) devaluation of the TL to make Turkish exports competitive in foreign markets

 

2.    Rise in the interest rates: From – to + interest ratesto reduce over consumption and thus inflation.

 

3.    Wage-freeze of workersto increase competitiveness and lower inflation

 

4.    Price-rises - the abolition or reduction of state subsidies to reduce budget deficit

Page 132: HIST 302 (Spring 2007)  PART 2

Exports encouraged through a set of specific measures:

 

1.    Subsidies for exporters – tax examption etc. (vergi iadesi)

2.    Simplification of the notoriously complicated bureaucratic export procedures

3.    Abolition of the customs duties on imported inputs for export-orientated industries

 

Page 133: HIST 302 (Spring 2007)  PART 2

A drop in real purchasing power

of between %40 - 60

for most wage-earners in the years 1979-89

Caused by: 

a)   price rises

b)   a freeze on wages

c) high interest rates (purchases on credit reduced)

 

The main winners of the decade:

Large-scale economic units

the existing and emerging big holdings

Page 134: HIST 302 (Spring 2007)  PART 2

Types of family holdings in the 80s

1. generation: RPP generation

Koç & Eczacıbaşı group

had roots which went back to the 1920s.  

2. generation: DP-AP generation

Sabancı group

begun their rise in the 1950s

3. generation: ANAP generation

Anka and STFA - Building firms (early 1980s)

profited from building boom in Arab oil-producing countries used the opportunity to branch out into other sectors

Page 135: HIST 302 (Spring 2007)  PART 2

Nearly all these firms

a) family-owned

b) structured as holding companies

with their own banks, insurance, trading and production companies.

 

The early stage of accumulation & import substitution

Imports and joint ventures with foreign firms

Main business: production of goods under license

Holdings, in times

became export-orientatedwithout halting their earlier activities

Page 136: HIST 302 (Spring 2007)  PART 2

The government tried to keep down prices for industrial goods

by encouraging competition on the home market

through the abolition of import restrictions

 

Luxury items could be freely imported

subject to a special tax

Revenue used for the housing program (toplu konut)

Page 137: HIST 302 (Spring 2007)  PART 2

Foreign investors encouraged:

1.    No longer faced discriminatory measures

 

2.    Repatriation of invested capital and the export of profits made possible

 

3.    Investors given preferential treatment regarding import duties

 

4.    Free trade zones instituted in different places (around the ports of İzmir and Mersin and near Adana)

Firms sep up factories & re-exported their products

Page 138: HIST 302 (Spring 2007)  PART 2

Government promoted

investment in infrastructure & utilities

 

1.    Telecommunications & road networks modernized

 

 

2.    Construction of natural gas pipelines from the Soviet Union

Significant impact on air pollution

replacing the inferior coal & lignite

Page 139: HIST 302 (Spring 2007)  PART 2

New constructions took place on

“build-operate-transfer” basis (yap-işlet-devr et)

 

1. Foreign investor builded a facility (a power plant, airport)

&

2. Operated it until its costs recovered & profit margin achieved

 

3. Handed over facilities to government for further operation

 

Used in energy & tourism sector

Page 140: HIST 302 (Spring 2007)  PART 2

The building up of a tourism industry

energetically pursued

By the late 1980s - Turkey

captured a sizeable part of Mediterranean holiday market

became a popular destination for package tours

 

The Gulf crisis - 1990-91

hit the tourism industry hard

It recovered quickly in 1992

following the civil war in the former Yugoslavia 

Page 141: HIST 302 (Spring 2007)  PART 2

South-Est Anatolia Project Gigantic

(GAP – Güneydoğu Anadolu Projesi)

energetically pursued project

 

The plan envisaged

the building of a whole complex of dams on Fırat and Dicle including hydro electrical plants and irrigational works

 

a) to produce energy for industry

b) to irrigate 1.6 million hectares in the plain of Harran doubling the area under cultivation

Page 142: HIST 302 (Spring 2007)  PART 2

The main part of the project

The enormous Atatürk dam on Fırat opened in 1992

 

The project and the dam built

without financial assistance from international agencies

  For political reasons

to avoid having to reach agreement with downstream countries about sharing the water

Syria and Iraq

Page 143: HIST 302 (Spring 2007)  PART 2

The stabilization program achieved many of its aims:

 

1.    Exports grew by an average % 22 yearly during the years 1980-87

 

2. The nature of Turkish exports changed over the decade

 

In 1979

% 60 of exports had consisted of agricultural products

In 1988

this was down to % 20

Page 144: HIST 302 (Spring 2007)  PART 2

Over the same period

the % of industrial products in total exports

grew to over 72

 

Among the industrial goods

textiles were of special importance

contributing over a 1/4 of the total value of the exports

 

3. Export destinations changed

Page 145: HIST 302 (Spring 2007)  PART 2

The early 1980s coincided with the 2. boom in world oil prices

The Turkish exporters, supported by the Government

managed to profit from

the new wealth in the Arab oil-producing countries

 A period

Turkish exports to the Middle East & North Africa

exceeded those to EC

with Iran the single biggest market

 B period

The older pattern re-established itself

E C once again main Turkish export market

Page 146: HIST 302 (Spring 2007)  PART 2

Imports went up and exceeded exports

The balance of payments gap closed

by remissions from workers in Europe

 

Political stability & attractive interest rates above the rate of inflation

encouraged workers to put their money in Turkish banks

 

High interest rates & wage freeze

combined to lower inflation - % 30 - 40 in the ½ of 80s

Page 147: HIST 302 (Spring 2007)  PART 2

Inflation rose once again

it reached its pre-1980 level in 1988

Reason:

The continuing high budgetary deficit

Causes:

1.   Failure to curb the growth of civil service

2.    Inefficient taxationProfits of the industrial holdings left untouched

3.   Huge state industrial sector KİTs

Inefficient and largely loss-making

Page 148: HIST 302 (Spring 2007)  PART 2

The privatization program progressed very slowly

 

Reason: State industries - old-fashioned & overstaffed

The private investors not interested in them

 

The abolition of a number of government monopolies:

private airline companies & television stations

 

 1989: The turning-point – Spiriling inflation

Page 149: HIST 302 (Spring 2007)  PART 2

 

1.    A serious drought (dry weather) Agricultural producers (and exporters) hit hard

 

2.    Increase in interest rates Cutbacks in government investment

 

 3.    A high exchange rate for the TL The TL’s gradual devaluation dropped behind inflation By 1990 it was overvalued by some 40 per cent

 

The economic policies of the 1980s greatly increased the differences between rich and poor

Page 150: HIST 302 (Spring 2007)  PART 2

 

1.    A new class of often very wealthy entrepreneurs arose Fortunes made in import, export & construction

 

2.    The purchasing power - the majority of the population drastically reduced & real poverty in many homes

 

3.    A steep rise in the number of unemployed (İşsizlik)

 

Labor unrest increased - 1990-91 January 1991 – 1.5 million employees held a general strike

Page 151: HIST 302 (Spring 2007)  PART 2

The slowdown in the world economy at the end of the 1980s

The projected growth of the 6. Five-Year Plan (1990-94) proved unattainable

 

Turkey more sensitive to global economic trends because of

its export-orientated economy

Turkey entered a period of low growth

combined with high inflation and growing unemployment

Page 152: HIST 302 (Spring 2007)  PART 2

1994

Nature of crises

Balance of payments crises

Originating mainly from the capital account

Caused partly by domestic imbalance

Origins:

Fiscal imbalances; Relaxation of austerity measures

steady appreciation of the real exchange rate;

export stagnation, import boom, outflow of short-term capital

Page 153: HIST 302 (Spring 2007)  PART 2

External Dimension

Significant over-dependence on fragile short-term capital inflows

following premature capital account liberalization in August 1989

International actors in the post-crisis context:

IMF : the primary actor

EU: involved through the Customs Union

Page 154: HIST 302 (Spring 2007)  PART 2

Political consequences

Democratic regime remained intact

An implicit link:

The negative effect of 1994 crisis

The rise of political Islam

Indirect or “postmodern” military intervention February 1997 (28 Şubat)

Page 155: HIST 302 (Spring 2007)  PART 2

2000 / 2001 Crises

Nature of crises

Balance of payments crisis caused by

Successive speculative attacks and massive outflows of capital

leading to

a) the collapse of growth b) heavy unemployment

Both internal and external imbalances are important

Page 156: HIST 302 (Spring 2007)  PART 2

Origins

Disequilibrium in the banking sector

Private banks in 2000 & public banks in 2001

Strong link:

Disequilibria in the banking sector and fiscal imbalances

Page 157: HIST 302 (Spring 2007)  PART 2

External dimension

Highly volatile external environment

Characterized by recurrent crisis in emerging markets&

reversible capital flowsespecially after Asian crisis of 1997

Export performance negatively affected by

the Russian crisis&

weak global demand

Rendered the economy highly vulnerable to a crisis

Page 158: HIST 302 (Spring 2007)  PART 2

International actors in the post-crisis context

IMF is the critical actor both in the pre-and post-crisis era

The role of the EU decisive for the first time

IMF and EU anchors are increasingly interrelated

World Bank involved as a secondary actor

Page 159: HIST 302 (Spring 2007)  PART 2

What went wrong between 1980 & 2001 ?

There was considerable liberalization in foreign economy policy

Difficulty: undertaking long-term structural reformssuch as

a) privatization &b) achieving the retreat of the state on the domestic front

Özal’s liberalization agenda – accompanied by the expansion & concentration of the state’s economic power

Public sector still dominated in the economy

The creation of the out-of-budget funds (public housing & public transportation) under direct control of PM

Page 160: HIST 302 (Spring 2007)  PART 2

The behavior of economic groups (reliance on import substitution policies)

A new export elite prosperedbecause of

export subsidies & export promotion schemes

Side payments to various interest groups - Populism

a) Subsidies for the agricultural elite &

b) Industrial incentives for various industrial groups, lowering of import tariffs on certain goods

Crucial for building large electoral coalitions

Page 161: HIST 302 (Spring 2007)  PART 2

Democratic pressures & electoral concerns

increased the need

for more side payments &

extension of state patronage

Although economic policies changed

a) the institutional settingb) the nature of bureaucracy &

c) the personalized, higly politicized distribution of state patronage

remained intact

Page 162: HIST 302 (Spring 2007)  PART 2

Payments dstributed to the constituencies

Examples of side payments by existing governments:

TPP (Çiller) farmersabove-the-world-market base prices

RPP - urban workers - wage increases

TPP – WP coalition – support for the new Anatolian business community & small-to-medium-sized enterprises

ANAP coalition – rising base prices for tea

Populist policies resulting from;

Increased political fragmentation in the parliamentThe need for coalition governments and frequent elections

Page 163: HIST 302 (Spring 2007)  PART 2

The problem with privitization:

The paradox: Liberal agenda coexisting with a state based on patronage

Some success in the 1980sLess than %10 of the privatization program’s goals in the 1990s

Turkey ranked among the worst three privatizing countries.1987-1997 total revenue from P did not exceed $ 3 billion

Unresolved problems:

Endemic fiscal deficits with inadequate tax revenues & rising external / internal debt

Page 164: HIST 302 (Spring 2007)  PART 2

Significant policy contraints introduced by globalization

Transformation of political economy from

A protected and closed regime

to

An export-oriented liberal one

Turkey’s economic performance in the 1990s disappointing

compared to that of the 1980s

& changes in other emerging markets

Page 165: HIST 302 (Spring 2007)  PART 2

To attract a significant amount of Foreign Direct Investments (FDI) and portfolio investments

To become significant players in regional and global trade

Turkey became a liberal economy

But not enough to push for public-sector reform & end patronage-based politics

The necessity of setting up institutional framework to resolve the distributional conflicts

resulting from openness and liberalization

Page 166: HIST 302 (Spring 2007)  PART 2

Reasons for Turkey’s stagnant economic performance

Extreme forms of popular spending & spiraling public deficits

Rapid technological change

The pace of financial integration

The liberalization strategies adopted in 1980s

As a response to globalization pressures

insufficient to reap the benefits of a highly interdependent global economy

Page 167: HIST 302 (Spring 2007)  PART 2

Crucial issues:

Turkey’s ability to implement institutional & public-sector reforms

Turkey’s foreign economic policy:

Turkey applied a liberalization strategey in its external ties

This is not enough / at times counterproductive

Solution: Ongoing coordination of domestic industrial strategies, technology

policies, & incentive mechanismswith those of foreign economic venues

To combine proactive foreign economic strategies with domestic institutional reforms and development goals

Page 168: HIST 302 (Spring 2007)  PART 2

Political consequences

A decisive turning point

The democratic regime proved to be highly resilient (recuperating quickly)

in the face of the crisis

Collapse of the democratic regimes following 1958/59 & 1978/60 crises

1960 Restoration of democracy over a relatively short period of time

1980 Longer military rule

Restoration of full or unrestricted party competitionover a longer period

Page 169: HIST 302 (Spring 2007)  PART 2

The impact of the changed international environment &

The presence of a powerful EU anchor

Page 170: HIST 302 (Spring 2007)  PART 2

Turkey finds itself at a crossroads

After having experienced the most serious crisisin its recent history between 2000-2001, the economy has recovered and reveals

one of the highest growth levels amongst the OECD countries.

Page 171: HIST 302 (Spring 2007)  PART 2

The adoption of a new institutional framework in terms of monetary and budgetary policies as well as product, labor and capital markets, including infrastructure sectors and agricultural subsidies,

a path has opened up that will enable the country to free itself of three traps linked to

a lack of confidence, government weakness &extreme informality in committing itself long term to the road to greater growth

Page 172: HIST 302 (Spring 2007)  PART 2

This new framework of measures must be set entirely in motion and

completed for it realize its full potential.