On the 19th of February a serious altercation between the Prime Minister Bulent Ecevit and the President Ahmet Necdet Sezer signaled the start of the Turkish financial crisis. Within hours several billion dollars left the country. The central bank attempted to stop the outflow by offering exorbitant interest rates, but to no avail. The currency was allowed to float, thus plunging the country into a financial crisis which rapidly led to an economic and social crisis.
Embezzlement, corruption and scandals
Of course the dispute between the Prime Minister and the President was merely the detonator of a crisis which had been threatening for months. Ahmet Necdet Sezer, the President of the High Court who was elected State President in May 2000 was supposed to fight against the embezzlement, corruption and other dubious practices which had plagued the Ankara regime, in order to try to salvage its image. But the end of 2000 and the start of 2001 saw new scandals erupting on an unprecedented scale, in a country where scandals are commonplace. The equivalent of billions of pounds were found to have been embezzled from the state by ex-ministers, people close to central government and high ranking civil servants.
On the 8th of January the daily newspaper Milliyet reported that two businessmen had defrauded the state by obtaining subsidies for fictitious exports for an amount totalling $1.7 billion (£1.2billion). The list of those implicated included ex- minister and businessman Cavit aglar - a protégé of the former president Demirel, Murat Demirel - the former president's cousin, another businessman, Hayyam Garipoglu and several more.
On January 14th, the press announced that five of the highest ranking officials of TEAS (the electricity board) including another former government minister, had been indicted for corruption. Amongst other charges they were accused of having embezzled the equivalent of $800m (£0.6 bn) to commission the construction of one electricity generating plant.
Eight banks then declared themselves insolvent: Interbank, owned by Cavit aglar, Egebank owned by Murat Demirel, Sumerbank whose vaults had been filled with state finances before being privatised (supposedly because it was mismanaged by the state), and which now belongs to Hayyam Garipoglu (who was also named in the aforementioned scandal), as well as Bank Ekspres and Yurtbank. In fact the owners of these banks, aided and abetted by corrupt businessmen and high-ranking state officials, emptied the coffers of their own banks in order to declare themselves insolvent!
On behalf of the state, the Finance Minister intervened in order to act as guarantor - under the pretext of preventing "a serious economic crisis". £6bn were reimbursed, though according to some, the amount was £7bn. In other words, these swindlers, closely linked to the state, stole the savings of hundreds of thousands of people and were then reimbursed by the state with taxpayers' money!
There are other examples of the very evident links between the state, corrupt businessmen and the mafia. In May 2000, when a car crash killed "businessman" Melik Giray, a mafia godfather who had a contract to supply several prisons, one of the passengers happened to be the Attorney General of the DGM (the State Special Court). This high ranking law court dignitary survived the accident with just a few broken bones, but the discovery of his suspicious friendship with this "Godfather" meant that the state was obliged to sack him.
This was a reminder of the Susurluk affair, in November 1996, when as a result of another car accident, similar links between certain politicians, far right-wing assassins, mafiosi and police chiefs were revealed - although, at the time, the subsequent enquiry led to dead-end.
Withdrawal of capital and devaluation
It was in this context of bankruptcy, corruption, state discredit and blurred boundaries between business men and the mafia that the new President accused the Prime Minister of having hindered an investigation by the presidential office into the dealings of these failed and corrupt bankers and of having done nothing whatsoever against the general atmosphere of corruption. The accusation, which was undoubtedly well-founded, was enough to trigger financial panic, which rapidly led to the devaluation of the Turkish lira. Between 19 February and April 2001 it had already been lost 50% of its value, with catastrophic consequences for the population.
In fact, aside from the specificities of the domestic situation in Turkey this financial crisis mimicked almost exactly the financial crises which had struck countries of South East Asia, Latin America and Russia in preceding years with, in each case, the population paying the price for the speculative ups and downs of the international financial market.
On the advice of the IMF, an anti-inflation plan which aimed at achieving fixed parity between the dollar and the Turkish lira had been adopted at the end of 1999. According to the government, this was to put an end to the chronic inflation (running at an annual rate of 100%), which had been affecting the country for several years. Indeed, over a 10-year period, the value of the Turkish lira had fallen to less than 1/200th of its original value leading to the issuing of ten million lira banknotes, which today are each worth around £6. To achieve its aims, of course, the government relied on austerity measures which it imposed on the working class, starting with public sector workers who, despite their repeated demonstrations, were awarded a paltry 25% pay rise, when annual inflation was still nearly 100%.
But as we have already seen, these austerity measures and the demand that sacrifices were needed did not impress corrupt businessmen and bankers, who remained unconcerned by such appeals to "good citizenship". Neither the mounting state budget deficit nor the foreign debt which was already $114bn (70% of GDP) showed any sign of letting up. The international financial markets, which the Turkish Central Bank had always relied on for loans to pay off its debts, even at astronomical interest rates, this time ignored all appeals for help. Given the general lack of confidence in the ability of the authorities to maintain the parity of the Turkish currency with the dollar, capital began to leave the country. After a first financial shock in November 2000 the crisis of 19 February 2001 transformed this flight into panic and after having spent the reserves of the Central Bank, the government was ultimately forced to abandon the defence of its currency and let it float.
The ransomed population
Of course the corrupt bankers, the international capitalists and the rich mafiosi managed to convert their assets into dollars or euros just in time. But it is now the Turkish population who have to pay the price for this gigantic swindle. The exchange rate of the Turkish lira, previously 676,000 liras per dollar had dropped to 1,160,000 liras per dollar by 5th May, losing 42% of its value.
In just a few weeks the prices of imported products went sky- high. The price of a bottle of gas, used by most families for cooking, increased from 5 million liras in February to 12 million at the beginning of May. Other prices followed: from public transport to agricultural products and inflation which had barely begun to slow, has shot up once more.
In the meantime the banking crisis led to a rapid escalation of the economic crisis. The middle classes, the petit-bourgeoisie and in particular traders who had previously taken out loans in dollars were suddenly faced with repayments which had increased by 50 or 100%. Banks facing bankruptcy refused to give out more loans. Commerce shrunk and thousands of small companies closed down, laying off their workers, often without even paying them the wages owed to them. This was particularly the case in the textile industry, one of Turkey's traditional export sectors on which millions of people depend for their livelihoods. Hundreds of thousands have been sacked throughout the country.
At the beginning of March, a few days after the start of the crisis, Ecevit's government had to accept the nomination of a "super minister" of the Economy, Kemal Dervio, a former vice-president of the World Bank, whose nomination was recommended by the IMF as a condition for granting Turkey a new $12bn loan. According to the majority of financial experts Turkey needs almost $40bn just to make up the losses of the state banking system. But before handing over such an amount the IMF is undoubtedly waiting to see how Kemal Dervio will force through his "recovery plan". This means imposing vicious austerity measures on the poverty-stricken population, as it is out of the question that Dervio, be he a "super minister" on not, would lay a finger on the capital of the crooks and mafiosi of all kinds, who have accomplices at every level of the state apparatus and who have, of course, sheltered all their earnings in foreign banks.
The discredited government.
Prime minister Bulent Ecevit, member the "social democratic" party DSP - a party which indulges in a lot of nationalist demagogy - did at one time claim to be a champion of honesty and integrity. But the coalition government along with the right-wing liberal party, the ANAP, and the far right nationalist MHP have been involved in so many scandals that they are now totally discredited. From this point of view the economic crisis is but one of many crises, such as the earthquake in August 1999, during which the population was able to measure the true extent of the incompetence of the state apparatus and the government. Their bragging when they captured the Kurdish PKK leader Abdullah Ocalan and their assertion that they had put an end to the Kurdish guerilla war which he had led, carried no weight. Nationalist slogans and patriotic chauvinism are not enough to make the population forget the harsh reality of everyday life.
It is this worn-out government which today has no choice other than to let Kemal Dervio carry out his "mission" and wait for the IMF subsidies. As for the army, which continues to intervene directly in government through the MGK - the National Security Council whose members include representatives of the Chief of Staff, the Prime Minister and the President - it also prefers to stay in the background for the time being, reserving the option of a coup d'etat, like the one of September 1980, as a last resort. But how long can this situation last, given the depth of the crisis into which the country is sliding?
To date the only real reaction has come from the petty-bourgeoisie and in particular the market traders and small shopkeepers, who denounced the government and called for it to step down. Trade union organisations half-heartedly tried to organise a few demonstrations. But it is obvious that these highly bureaucratic organisations, which have always been ready to collaborate with the bosses and government are incapable of proposing a fighting program which would enable the working class and the poor to challenge this incredible extortion for which they are being made to pay the price. The Islamic party which was sidelined by the government and banned several years ago - and which resurfaced as the "Virtue Party" (Fazilet Partisi) - seems to have the highest profile in campaigning against the thieves and fraudsters who are robbing the population - and this campaign could benefit them in political terms.
While all of this has been going on, the far-left prisoners in the country's jails have been continuing with their hunger strikes in protest against their conditions of detention. After the 30 deaths on the 19th of December, when prisons were stormed by the army, every week more hunger strikers have died, but this has been viewed with total indifference abroad. European leaders have shown not the slightest sign of displeasure towards the Turkish regime; nor have they even tried to give them the usual lessons in "democracy" which they do not spare when it comes to others. But it is also largely the case that in Turkey itself, the hunger strikers' cause appears to be far away from the preoccupations of the population at a time when it is so severely affected by the crisis.
As for the regime, which is incapable of bringing the crooked bankers and the mafiosi to book, leaving defenceless hunger strikers to die is one convenient to make a show of strength and determination. It can use this as a threat against the whole population and to demonstrate that the State will stop at nothing to impose its policies.
This corrupt state and the discredited government perhaps believe that they are more powerful than they actually are. The Turkish working class is strong and able to fight. It has shown over the past years that it is capable of acting against this unscrupulous police state. The IMF diktats and Kemal Dervio's recovery plans could come up against strong resistance. We can only hope that the workers in Turkey will rapidly equip themselves with the means to fight in order to impose their right to a decent livelihood, against the demands of the international speculators, the greed of the bourgeoisie and corrupt bankers and against the cynical and despotic regime which protects them.
6 May 2001