Political, Social and Economic Challenges in the 1990s
Çiğdem Balım
E.J. Brill
With the Cold War behind us, Turkey has emrged as a major economic entity and an important partner for discussions of advancement and progress for the region. Turkey: Political, Social and Economic Challanges in the 1990s explores minutely in 14 chapters the interaction between domestic structural variables and the changes in the external environment to predict future developments for Turkey. The authors are well-known specialists in their fields and policymakers, whilst the data are as up-to-date as possible in this world of regularly changing figures.
Brill’s Social, Economic and Political Studies of the Middle East series is designed to present the results of scholarly research into social, cultural, economic and political conditions in the Middle East today. It covers the past only insofar as it provides an introduction to the twentieth century. The series includes monographs, collaborative volumes and reference works by social scientists from all disciplines.
Çiğdem Balım (Ph. D., University of Washington) teaches in the Department of Middle Eastern Studies at Manchester University. She specializes in Turkish Studies and coordinates the Research Group on Central Asia and the Caucasus.
Contents
Acknowledgments / vii Introduction / ix
Chapter 1: New Patterns of Turkish Foreign Policy Behaviour Kemal Kirişçi / 1
Chapter 2: Regional Security and National Identity: The Role of Turkey in Former Soviet Central Asia Gareth Winrow / 22
Chapter 3: The Turkish Grand National Assembly: A Brief Inquiry into the Politics of Representation in Turkey Ersin Kalaycioglu / 42
Chapter 4: The Turkish Party System and the Future of Turkish Democracy Ustün Ergüder / 61
Chapter 5: Parties and the Electorate: A Comparative Analysis of Voter Profiles of Turkish Political Parties Yılmaz Esmer / 74
Chapter 6: Islam and the Secular State in Turkey Binnaz Toprak / 90
Chapter 7 Recent Trends in Turkey’s Population Cem Behar / 97
Chapter 8 The Political Economy of Export-Oriented Industrialization in Turkey Ziya Öniş / 107
Chapter 9 Fiscal Policy in Turkey: Public Debt and the Changing Structure of Taxation and Government Expenditure, 1980-1993 Cevat Karatag / 130
Chapter 10 Pricing and Distribution in an Economy with an Important Public Sector Suleyman Ozmucur / 167
Chapter 11 Inflation Tax in a Post-Liberalization Environment: Evidence from Turkey, 1980-1990 Cevdet Akgay / 210
Chapter 12 The Development and Nature of Small and Medium-Scale Manufacturing Enterprises in Turkey Mehmet Kaytaz / 230
Chapter 13 Support for Turkish Agriculture relative to Developing and OECD Countries Haluk Kasnakoglu / 246
Chapter 14 Social Order of the Accounting Profession in Turkey: The State, The Market, and The Community Istemi Demirag / 256
Bibliography / 277
Index / 294
ACKNOWLEDGEMENTS
The Editors would like to thank Bogazigi University, the British Academy, the British Council, Foreign and Commonwealth Office, the Turkish Ministry of Culture, the Tuikish Ministry of Foreign Affairs, the University of Manchester and Yapı ve Kredi Bankası for their support of the Conference “Change in Modern Turkey: Politics, Society, Economy” (May 5-6, 1993) which made this volume possible. The University of Manchester Small Grants Fund financed the initial typing of the manuscript.
A special debt is owed to E.F. Harding who volunteered many days helping to prepare the camera-ready copy of the book, especially the equations and the diagrams. Finally, we wish to warmly thank Peri Bearman and Gert Jager of BRILL for their ready help, constant patience, and supportive attitude.
Introduction
This book appears at a time of increasing interest in Turkey. A key factor in this growing interest is the dramatic transformation of the region that Turkey finds itself in during the post Cold War era. Particularly important are the emergence of the Black Sea region as a potentially major economic entity and the emergence of the Central Asian Republics with close cultural and linguistic ties to Turkey.
The external environment can influence the domestic arena of a country by augmenting the domestic capacity to undertake economic reforms and to consolidate democratic regimes. In Turkey, the external context of the post Cold War era has influenced the domestic sphere in such a way that the traditional “left-right divide” on economic issues has progressively dissolved and the principal political parties have converged on broadly similar, if not identical, platforms involving the desirability of a market-oriented economy. As a result, the era of coalition politics in the early 1990s is in strong contrast to the extremely unstable phase of coalition politics during the late 1970s. Furthermore, Turkey’s desire to present herself as a “model” for Central Asia and the Middle East has generated additional impetus within Turkey for improvement in economic performance and also for democratic consolidation.
External changes have created new challenges as well as opportunities for Turkey during the post Cold War era. The ability to take full advantage of these novel opportunities, however, is constrained by Turkey’s domestic structure. A central problem, in this context, concerns severe macro-economic instability, manifested in terms of chronic budget deficits and inflation although Turkey has recorded the highest rates of economic growth within the OECD Group in the 1980s and its growth rate over the course of the past three decades has been among the highest in the developing world, if we exclude the East Asian superperformers. In this volume, particular emphasis has been laid by several contributors on the economic constraints posed by the historic patterns of income distribution within Turkey, by clientalistic nature of much, though not all, of Turkey’s parliamentary politics, and by the uncertainties of Turkey’s official secularism.
The present compilation aims to explore the interactions between the changing external environment and domestic structural variables. The chapters originated as papers at a joint conference of the Universities of Bogazigi and Manchester in May 1993. Although they have been thoroughly revised and expanded for publication, the editors saw little point in attempting to “bring them up to date”.
The chapters present a view of Turkey and its prospects both domestic and international, at a specific point in time, namely the spring of 1993. The chapters attempt, while being topical, to probe beneath the surface of current events, and to identify longer term trends and structural constraints, which may effect Turkey’s developmental prospects and its capacity to play a wider international role.
The first two chapters of the book concentrate on Turkish foreign policy. Kemal Kirişçi, in “New Patterns of Turkish Foreign Policy Behaviour”, discusses the importance of Turkey in today’s post Cold War international environment. There have recently been those, particularly in the media and among opposition politicians, who have argued that Turkey is failing to respond adequately to crises and challenges in its immediate neighbourhood. Some contend that Turkish policy is essentially passive in the face of developments in the Balkans, in the Caucasus and along Turkey’s southern and eastern borders. Kirişçi argues to the contrary, stating that Turkish policy makers, aware of Turkey’s continued geo-strategic value, have embarked on a more active foreign policy since the end of the Cold War. For instance, Turkey played a role in the decision to implement sanctions against Iraq following the invasion of Kuwait and in the later launching of Operation Provide Comfort, the involvement of Ankara was “critical and decisive”. The Turkish government has also pressed various international organizations and institutions to take a firmer line in the crisis in the Balkans. With these and other examples, Kirşçi discusses Turkey’s increased interest in conflict management, and in the pursuit of stability in the Caucasus, the Balkans, Central Asia and the Middle East.
Gareth Winrow, in “Regional Security and National Identity: The role of Turkey in Former Soviet Central Asia”, focuses on recent developments in Turkish policy toward one particular region. Winrow discusses how initial Turkish enthusiasm for developing relations with the newly independent Turkic Republics has been dampened considerably since the “failure” of the Ankara Summit in October 1992. Ankara must take into account continued Russian influence in Central Asia, particularly in the economic, political and security spheres. Common ethnicity and religion, and developing cultural, political links mean that Turkey still has an important role to play in the region although the relevance of the so-called “Turkish model” has been exaggerated. Contrary to the view which argues that Russian influence in the region will be at the expense of other interested parties such as Turkey, Winrow suggests that there is a large scope for cooperation between Ankara and Moscow in Central Asia.
Moving on to domestic politics, Ersin Kalaycioglu, in “The Turkish Grand National Assembly: A Brief Inquiry into the Politics of Representation in Turkey”, examines how the legislative branch of government still plays an important role in the Turkish political system. This is in spite of the impression that since the 1920s, the powers of the executive vis-à-vis the legislative branch of government appear to have been enhanced. Kalaycioğlu analyses how the Turkish Grand National Assembly has been able to adapt to changes in the Turkish political system by means of changing styles of clientalism. Party discipline in the Assembly began to erode as a new clique started to emerge, which cut across the lines of liberal, conservative, and ultra-right-wing party groups in the Parliament. Consequently, the political relevance of the legislative branch started to gain importance in Turkey, not, however, as a factor supporting reformist tendencies in the ruling coalition government, but as an ardent source of constitutional conservatism.
Turkish politics is constantly concerned with the question of the ability of its political institutions to develop a viable democratic regime. Ustün Ergüder, in “The Turkish Party System and the Future of Turkish Democracy”, addresses the question and ponders whether the political institutions of the post-1980 democratic regime of Turkey are capable of dealing with the critical problems and issues of Turkey which range from political terror to income distribution. The endemic fragmentation and volatility of the Turkish party system had contributed to the breakdown of the previous attempts at instituting democracy in Turkey. Ergüder assesses the role that the Turkish party system plays in coping with the challenges of the socio-economic and demographic environment of the Turkish political system. He concludes that the liberal revolution of the 1980s has led to a broader consensus between political parties and social forces and that a solid cultural ground has emerged to establish the democratic form of government. Yet, the shape and substance of the new democratic regime is to be determined by how the problems of human resource management (education, health and employment), division of political power (decentralization), and extraction and distribution of resources, (privatization, taxation), will be dealt with by the governments of Turkey.
The values, attitudes and behaviour of the supporters of major political parties in Turkey are seen from a political culture perspective by Yilmaz Esmer in “Values, Attitudes and Political Parties”. The question that Esmer attempts to answer is: “regardless of their by-laws, programmes, election platforms and regardless of their leaders’ declared or undeclared positions, what are the differences and similarities between the grassroots supporters of Turkish political parties with respect to commonly accepted components of political culture?” Drawing upon a “checklist” proposed by Samuel Bames, the subgroups are compared in such areas as tolerance, gender equality, interpersonal trust, confidence in institutions, state intervention in economic affairs, violence and war, basic freedoms and socialization of youth. The study utilizes data obtained from a number of surveys of which the author was either principal or co-investigator. The chapter concludes that supporters of Turkish political parties display meaningful and predictable patterns of political culture despite overlaps and grey areas.
Turkey is the only country in the Middle East and North Africa which has completely secularized its legal system, but has a predominantly Islamic population. As a result, the relation between state and religion in Turkey has been difficult to interpret for the outsider especially after the growth of Islamic movements in the world following the 1980s. Binnaz Toprak, in “Islam and the Secular State in Turkey”, analyzes how it is possible to keep state and religion as separate entities. Firstly, the history of “secularism” in Turkey is an important factor. Secondly, the state, although authoritarian in the first instance, has succeeded in privatising Islam for the citizens. Proof comes from the election results which show consistently that there is little electoral support for radical politics in Turkey. Thirdly, the large urban middle class in Turkey, with its uncompromising attitude to religion, is important. Fourthly, the fact that the high rate of social and geographical mobility has not resulted in squatter sites and desperate populations is analyzed as a positive element for the continuation of a secular state. The chapter also discusses and interprets the “fundamentalist movements” in Turkey and sheds light on the politics of Islamic fundamentalism which Toprak links with “the accommodation of demands for power-sharing by lower status groups”.
Issues related to Turkish population and its growth are of concern both domestically and internationally. Cem Behar's chapter “Recent Trends in the Turkish Population” attempts to deal with die evolution of the growth and the latest population data extracted from the 1990 census and the 1989 population survey are analyzed. Behar comments on the “recent fertility decline” and the “demographic transition process”. He states that Turkey has undergone a discernible transformation to become a country of small and middle sized urban centres. Eastern and Southeastern Anatolia are the two regions where urbanisation has proceeded at a slower pace. The chapter demonstrates that age stmcture also shows regional variation. As for mortality rates they are in general on a downward trend. Life expectancy has increased both for males and females even though there is significant regional variation with the Eastern provinces lagging behind. Behar establishes that the single most important predictor of “infant mortality rates” is the level of education of the mother. During the “demographic transition” process in Turkey, it appears that mortality is falling because of improving general sanitary conditions and fertility is on the decline because couples have learned how to control their fertility. What is striking about demographic development in Turkey is that during the past few decades there has been a rapid decline in fertility although regional differences are quite substantial with Eastern and Southeastern regions lagging behind. The chapter concludes that the main demographic indicators of Turkey will most probably persist in their downward trend in the coming decades. Meanwhile, if the present trends in internal migration continue, by the year 2000 seventy per cent of the Turkish population will be living in urban areas.
Issues related to the major challenges of the Turkish economy in the 1990s are discussed in Chapters eight to fourteen. Post 1980 Turkish experience under an export-oriented industrialization strategy (EOI) is examined from a broader comparative perspective by Ziya Oniş in “The Political Economy of Export-oriented Industrialization in Turkey”. A central question posed in the chapter is whether Turkey can replicate the outstanding performances of the East Asian newly-industrialized countries (NICs) such as South Korea and Taiwan. It is argued that potential NICs like Turkey may benefit from a close examination of the East Asian NICs but a near NIC like Turkey is unlikely to achieve the same degree of success given domestic and external constraints which the first generation of NICs did not confront during their initial take-off phase. Secondly, Oniş argues that neo-liberal reforms, when combined with a number of favourable external conditions, tend to be quite effective in terms of generating a shift of the existing production from domestic market to exports. Yet, such reforms are less effective in terms of generating a private investments boom, particularly in manufacturing, which would enable the initial rapid pace of export expansion to be sustainable over time. Particular attention is drawn to the macroeconomic environment and manufactured exports. In this context, it is suggested that macro-stability is not simply a technical matter of sound macro-economic management but depends on a high degree of consensus among key groups in society. Finally the chapter identifies the “overextended state” as a key constraint on file continued success of the EOI strategy in Turkey and suggests some key principles for reform which would render state intervention in the economy more effective.
Cevat Karataş focuses on the public debt and deficiencies of the present tax system and discusses the major shift in government expenditure during the last decade in Turkey. In “Fiscal Policy in Turkey: Public Debt and Changing Structure of Tax System and Government Expenditure, 1980-1993”, he elaborates on the public debt and the mode of financing public deficits and concentrates on the growth of tax and non-tax revenues in Turkey. The tax system in Turkey is inefficient and unable to meet government expenditure. It needs to be extended in order to reach the currently untapped bulk of economic activity in Turkey. Karataş also argues that there is a great scope for increasing the effectiveness of corporate tax through fiscal inspection and by reducing the present multitude of exemptions from the corporate tax base. Moreover, property and land taxes are insignificant in the Turkish context because of asset under-valuation and widespread tax evasion. The chapter also stresses the importance of the government expenditure side which deserves special attention if continual fiscal crisis is to be averted. His analysis continues by predicting that pressure would mount for further expansion in social welfare expenditures as Turkey enters into a more advanced stage of economic and social development. Finally, rampant inflation, which has put at risk both employment and living standards in Turkey, ought to be controlled more effectively by better management of both monetary and fiscal policy.
The share of wages in manufacturing and income distribution and the relationship between prices and income distribution are scrutinized by Suleyman Ozmucur in “Pricing and Distribution in an Economy with an important Public Sector”. Taking the 1950-90 period as a base, he demonstrates that in Turkey where the public sector is overwhelmingly dominant, the government can become the structural source of inflationary pressures via the wage bargaining process and administered prices. Following an introduction where a theoretical model of income distribution is presented, the chapter argues that in high-inflation countries raw material prices increase very rapidly and the share of inputs in the total values of output also increases. Thus with mark-up pricing in highly concentrated industries, the increases in raw material prices are easily shifted to the customers. Finally, the public banks happen to control a large portion of the sector and hence the level of credits and the rate of interest.
Following a severe “balance of payments problem” in the 1970s, Turkey has undergone a structural reform and stabilization programme that came into effect in January 1980. Considered to be a success by most, the most disturbing aspect of the adjustment programme was the persistent high inflation which was in the 35 to 50 per cent per annum range in the 1980-85 period and in the vicinity of 70 per cent in the second half of the decade. Cevdet Akgay, in “Inflation Tax in a Post-Liberalization Environment: Evidence from Turkey, 1980-1990”, discusses high inflation in Turkey and investigates the inflation-tax mechanism and the government’s approach to its real revenue from the creation of money in the post 1980 period. The analysis comprises three basic problems in the theory of inflationary finance: firstly the maximization of inflation tax revenue, secondly inflationary effects of real GNP growth rate changes and thirdly a positive theory of government with respect to the optional collection of seigniorage.
Mehmet Kaytaz, in “Development and Nature of Small and Medium Scale Manufacturing Enterprises in Turkey”, dwells on the state and the problems of manufacturing in Turkey mentioned in the preceding chapter by Oniş. Kaytaz deals with the role, development and nature of the small and medium size enterprises (SMEs) in Turkey. He states that the size distribution of manufacturing establishments in Turkey has changed towards larger sized establishments and the proportional share of small establishments has declined. With the changing size distribution, the share of smaller establishments in employment and output have decreased significantly. The chapter finds this to be more noticeable in the case of very small establishments. The chapter also discusses the government policy towards the SMEs. It is noted that industrialization policies in the foreign trade and high protection, investment incentives comprising interest rate manipulation and credit controls, and public sector investments discriminated against SMEs. The chapter also refers to SMEs and entrepreneurs and it notes that the educational level of the entrepreneurs is relatively high and their attitudes towards technological change, innovation and the development of new products are in general very positive. The role of the SMEs as export industries is important and many entrepreneurs see competitive pricing and quality improvement as the main measure to increase competitiveness. A large proportion of the very small establishments have low levels of productivity and do not show a great potential for growth. However, an economy where unemployment and the growth rate of population are high, they provide employment and income at no opportunity cost. The chapter concludes that unless firms face some form of competition, the encouragement policies of SMEs would not be successful.
Agriculture is an important sector of the Turkish economy and hence the issue of subsidies is always very topical. Haluk Kasnakoglu, in “Support in Turkish Agriculture Relative to other Developing and OECD Countries”, reviews the trends in agricultural support in Turkey relative to other developing and OECD countries. Support in agriculture is measured by using the concepts of Direct, Indirect and Total Nominal Protection Rates and Producer and Consumer Subsidy Equivalents. The Nominal Protection Rates show that during the 1960-1983 period, agricultural interventions had a negative effect on agricultural prices in Turkey. Indirect interventions in Turkey over the period registered the highest negative effect on agricultural prices among the 18 countries studied. The PSE and CSE measures showed that, during the 1979-1990 period, the subsidies to agricultural producers in Turkey were on the average the second lowest among OECD countries. The trends in subsidies to producers and tax upon consumers followed very closely the political events in Turkey, increasing during periods of elections and decreasing or remaining the same during periods of low political activity.
Maybe for the first time, in a book about Turkey, the subject of “accounting” is given space because by drawing its examples from Turkey, the final chapter illustrates how accounting and finance are integral to the development of capitalism and that each helps in understanding the other, fstemi Demirağ, in “Social Order of the Accounting Profession in Turkey: The State, The Market, and The Community”, focuses on the social and organizational shaping of accounting practice by Turkish-state specific forces of regulation that have a degree of national specificity. A historical perspective is taken in which the transformation of the Turkish economy from inwardlooking state control to an outward-looking open economy is examined within the context of politico-economic factors. The implications of this development of the Turkish society on accounting and its regulation are analyzed.
The present volume does not aim to raise all of the relevant issues related to Turkey’s foreign and domestic policies. However, within the confines of a necessarily limited compilation, the editors are confident that a sufficient basis has been furnished for those scholars and interested readers who wish to extend their understanding of contemporary Turkey and its problems and opportunities. Even with the dramatic pace of developments in Turkey and indeed in the international environment, many of the issues raised here will most probably remain as points of interest and debate in the foreseeable future.
Chapter One New Patterns of Turkish Foreign Policy
Kemal Kirişçi
Introduction
The end of the Cold War has brought about major changes in international politics. One consequence of these changes has been that the geographical area covered by the ex-Eastem Bloc is going through profound transformations, accompanied by an unprecedented degree of instability. As a result, Turkey finds itself at the very heart of one of the world’s most volatile regions. This situation has profoundly affected Turkey’s place in international politics as well as Turkish foreign policy behaviour. One clear manifestation of this is evident in the changed importance attributed to Turkey in the most recent years. There was a brief period at the end of the Cold War during which it seemed to many that Turkey’s strategic significance had diminished.1 Hence, the cosy niche that the Cold War environment had created for Turkey became replaced with one of uncertainty in respect to Turkish security. During this period it seemed to many Turkish decision-makers that Turkey was being left out in the ‘cold’ to fend for itself. However, the Iraqi invasion of Kuwait and the disintegration of the Soviet Union brought about a redefinition of Turkey’s role in international politics. A Western consensus seems to have emerged over Turkey’s vital role in the search and eventual establishment of a stable order.1 2 This recognition is probably best demonstrated by the growing number of diplomats and statesmen paying visits to Turkey. Ankara, for these leaders, has become a Mecca for a wide range of diplomatic activity.
The new perception of Turkey’s role has also translated itself in greater Turkish diplomatic activity. Suleyman Demirel, who had a reputation in the 1960s and 1970s for having never travelled abroad, during his recent Premiership attended numerous international meetings and paid official visits to a large number of countries, including the
1 For an analysis of the impact of this period on Turkish foreign policy, see Sezer 1992. 2 This enhanced importance was, for example, noted by The Economist, 14-20 December 1991.
Turkey: Political, Social and Economic Challenges in the 1990s
E.J. Brill
Turkey: Political, Social and Economic Challenges in the 1990s Edited By Çiğdem Balım Ersin Kalaycioğlu Cevat Karataş Gareth Winrow Feroz Yasamee
Social, Economic and Political Studies of the Middle East Etudes Sociales, Economiques et Politiques du Moyen Orient Editor: C.A.O. van Nieuwenhuijze
Editoral Advisory Board Samir Khalaf (Princeton University), M. Fathalla al-Khatib (Cairo University), Afaf Lutfi al-Sayyid Marsot (University of California at Los Angeles), Șerif Mardin (The American University, Washington DC), Udo Steinbach (Deutsches Orient Institut, Hamburg), Rodney Wilson (University of Durham)
Volume LIII
E.J. Brill Leiden & New York & Koln
The paper in this book meets the guidelines for permanence and durability of the Committee on Production Guidelines for Book Longevity of the Council on Library Resources.
Library of Congress Cataloging-in-Publieation Data Turkey—political, social and economic challenges in the 1990s/ edited by Cigdem Balim ... |et al.]. p. cm. — (Social, economic, and political studies ol the Middle East; v. 53) Includes bibliographical references and index. ISBN 9004102833 (alk. paper) 1. Turkey—Politics and government—1980- 2. Turkey Social conditions— 1980- 3. Turkey—Economic conditions— 1980- 4. Turkey-Foreign relations—1980- I. Balim, Cigdem. II. Series. JQ. 1809. AA15T883 / 1995 958.103’8—dc20 / 95-12128 CIP
Die Deutsche Bibliothek - CIP-Einheitsaufnahme Turkey: political, social and economic challenges in the 1990s / ed. by Cigdem Balim ... - Leiden ; New York; Koln : Brill, 1995 (Social, economic, and political studies of the Middle East; Vol. 53) ISBN 90-04-10283-3 NE: Balim, Cigdem [Hrsg.]; GT
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