Political stability versus economic stability.
A sizable number of our citizens believe or assume that political stability is a pre-requisite for economic stability. So, the Justice and Development Party (AK Party), quite logically is trying to convince some of the electors who did not vote it on June 7 that Turkey again needs a single-party government -- itself, of course -- to fix current economic problems, like low growth, increasing inflation and unemployment. I am not so sure of this logic. I am afraid that dangerous confusions exist in the background of this perception. To overcome these confusions as much as possible, we first have to try to roughly define what we mean when using the terms political and economic stability.
Political stability in its popular version, particularly in Turkey, means a single-party government based on a majority of the deputies in Parliament. This stable majority allows the single-party government eliminate whatever laws it deems unnecessary and to stay in power during the legal term (four or five years) between two general elections. On the other hand, the coalition governments constituted by political parties often having quite divergent programs and policies and are considered a source of political instability since these divergences may cause paralysis when the country is confronted with difficult problems. When confronted with major macroeconomic imbalances, this paralysis might involve economic instability. The historical experience of Turkey since 1950, the starting date of political plurality in the country, largely confirms the popular approach defined above. Major homemade economic crises, for example in the 1970s and 1990s (including the 2001 crisis), occurred under coalition governments. Nevertheless, Turkey also experienced some periods of economic instability under single-party governments. This was particularly the case between 1957 and 1959 when the Democrat Party (DP) was in power. As these bad times are far in the past, they have been forgotten by the newer generations. On the other hand, the political instability identified with coalition governments is not necessarily a cause of economic instability. European history is full of examples of coalition governments that successfully overcame important economic problems. I remember, some years ago Belgium could not even form a government for more than a year, but I did not hear anyone talking about economic instability in this country.
The misinterpretation of the relationship between political instability and economic instability is often deceptive, as the mismanagement of the economy by the government in place on one side and the weaknesses of economic institutions on the other side are not considered appropriately. I argue that in spite of important institutional reforms implemented in the aftermath of 2001 crisis, like policy independence of the central bank or independent public bodies supervising the financial sector, Turkish economic institutions are still not solid enough or free of political intervention to call it an open market economy. And we must also note that the independence of these institutions has come under threat in recent years. I should also note that the risk of economic mismanagement came to the Turkish agenda recently. Adverse consequences of President Recep Tayyip Erdoy-an's harsh intervention in monetary policy -- ordering the central bank to make a sizable decrease in its policy interest rate and arguing, moreover, that disinflation would follow this decrease -- have been avoided in extremis, thanks to the courageous resistance of now former deputy Prime Minister Ali Babacan, who was in charge of economic affairs in AK Party governments. During this week's AK Party congress, Babacan and his bureaucrats were replaced by a new economic team close to Mr. Erdoy-an.
If the AK Party succeeds in securing a majority in Parliament during the election on Nov. 1, I am almost sure that the new economic team will take control of the conduct of the Turkish economy, denounce Babacan's approach as neo-liberal and defend an obscure "national economy." The risk of mismanagement is there. This is the reason I think that a single-party government is not able to guarantee the economic stability in our country.
SEYFETTyN GE[pounds sterling]RSEL (Cihan/Today's Zaman) CyHAN
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|Publication:||Cihan News Agency (CNA)|
|Date:||Sep 19, 2015|
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