Backroom economic decision-making and withering of politics?: The case of Turkey’s low-grade democracy

1. Backroom economic decision-making and withering of politics?: The case of Turkey’s low-grade democracy • Mine Eder, Bogazici University • Oct 24-26 2008 Yale-WB political economy workshop Washington DC

2. OUTLINE • An overview of lingering structural problems in Turkey’s political economy • Persistent problems of governance Turkey, problems with accountability,rule of law, transparency and corruption • Why does economic liberalization per se fail to solve the problem of governance? • The case of “neoliberal populism” in Turkey: liberalization with lingering patronage politics • AKP reproducing most of the populist legacies in Turkish politics • Why should we be concerned about populism and its variants? • Links between “neoliberal populism” and quality of democracy

3. Methods • Overview of macroeconomic performance of Turkey since the start of the country’s economic liberalization with particular focus on post-financial crisis (2000/2001) period • Focusing on major economic decisions of AKP government • a) privatization decisions • b) public procurement processes • c) relations with the IMF • d) agricultural reforms • e) social security reforms • Assessing these decisions in terms of prior deliberation, public debate • Screening major newspapers in Turkey and compiling evidence on a) cases of failed accountability, lack of transparency (public procurement cases), circumvention of intermediary institutions, associations b) corruption scandals, examples of clientelistic networks c) political and social tensions, instability, legal/constitutional disputes d) attempts to control and intolerance towards critical media e) public speeches, rhetoric of anti-elitism

4. AKP’S POST-CRISIS (2000/2001) ECONOMIC PERFORMANCE: GLASS HALF EMPTY? Prons: economic growth, lower inflation, booming small-to medium enterprises, booming exports, ability to attract FDI and foreign capital inflows Cons: “borrowed growth”, increasingly unsustainable debt accumulation, (rising current account and trade deficits), failure to address fundamental problems in Turkey’s political economy • Unemployment, particularly youth unemployment • Very low female participation in the labor force • Increasing social insecurity, persistently strong informal economy but weakening of “informal welfare networks” (with commodification of agricultural labor, end of informal housing, and family) • Growing rural unemployment and poverty • Persistence of inequality and income distribution • Limited access to higher education and poor education standards • 84th in Human Development Index • 2nd worst income distribution in the world (after Mexico)

5. Key macroeconomic indicators Source: TR Central bank www.tcmb.gov.tr and Under secretariat of Treasury www.treasury.gov.tr

6. Central government consolidated budget debt stock (billion $) Source: Undersecretariat of Treasury. www.treasury.gov.tr

7. Comparative indicators on Turkey’s external debt (2005) ( %) Calculated from www. treasury.gov.tr

8. Composition of Foreign Debt (Millions $) Source: Erinç Yeldan ( 2007) Patterns of adjustment under the age of finance. http://www.networkideas.org/feathm/jul2007/PPT/Erinc_Yeldan.ppt#289,1,Patterns of Adjustment under the Age of Finance: The Case of Turkey as a Peripheral agent of New-Imperialism

9. Turkey: Labor Productivity and Real Wages, 2000-2006

10. Source: www.treasury.gov.tr

11. Labor Force Status By Non-Institutional Civilian Population, Years and Sex (Thousand Person, 15+ Age)

12. Employment by Status of Workplace, (Female, Thousand Person, 15+ Age)

13. Economic Activity By Years And Sex ( Female Population, Thousand Person, 15+ Age) Source: TUIK

14. Employment Status Of Persons Who Are Not Registered To Any Social Security Institution Due To Main Job By Years and Sex (Thousand Person, 15+ Age) Source: TUIK

15. The poverty rates of individuals according to poverty line methods, TURKEY Source: TUIK

16. Poverty rates according to economic activity of the household members, TURKEY Source: TUIK 1. calculated as shares of specified groups in the total population

17. Income distribution by quintiles ordered by income (Turkey) Source: TUIK

19. Human development report 2007/2008

20. Turkey’s lingering governance problems • Persistent problems of clientelism, privatization as a new platform of patronage politics (rise of new Islamist capitalists?) • Excessive centralization of economic decision-making, absence of any serious deliberation/consultation or public debate (e.g. Social security reform, wage bargaining, relations with NGOs and business associations) • Lack of transparency, continuing politicization and encadrément • Insufficient separation of powers and accountability • Absence of independent media, growing intolerance of criticism from media • Persistent social/political tensions and polarization between the Islamists and the secularists • Heightened Kurdish conflict • “Cemaat” organizations, philanthropic organizations and similar “informal groups” slowly replacing social functions of the state

21. How can we explain political success of AKP with lingering political economy and governance problems in Turkey? • Disappearance of political economy issues from the public debate, “The IMF-consensus” • Electoral success does not translate into good governance • Convenience of usual patronage politics rather than politics of deliberation • Failure of “secular” opposition who has also long failed to address these two dimensions in Turkey • Economic voting?: continuing obsession with identity politics • Post-9/11 factors: Turkey as the model of “Moderate Islam” • IMF and EU as insufficient external anchors of “stability” • Limits of Islamist mobilization? • Neoliberal populism?: significant increase in social transfers and philanthropic state with no structural reform on issues such as agriculture and poverty

22. What is neoliberal populism? • Carrying out basic economic liberalization agenda, financial liberalization, trade liberalization, coupled with fiscal discipline, (which rules out major redistributive policies conventionally associated with populism) • But maintaining the core strategies of populism, charismatic leadership, “direct appeal to the people,” (anti-elitism), circumventing institutions, parliamentary and other organized, institutionalized channels of communications, continued use of patronage and clientelistic networks

23. Towards a breed of “neoliberal populism”? Persistent core of populism • A language of “the people” • Distaste for institutions • Centralization of decision-making Relatively new elements in the neoliberal era - Micro-populism instead of macro-populism - Philanthropy rather than a social state (grateful masses versus rights-based citizenship) -Technocratization and “withering” of politics

24. Populism with prospects of both “accompanying” and “haunting” democracy Pragmatic aspects of democracy, politics of suspicion, rule of law Redemptive democracy, politics of faith Relationship between democracy and populism

25. Turkey specific conclusions • AKP paradoxically consolidating democracy in minimalist terms through neoliberal opening into the world economy, responding international pressures for democratization, (the US but particularly the EU), taking an anti-militarist stance, reduced risk of a military-coup • But clearly lowering the “quality of democracy” in terms of accessibility, accountability, responsiveness of government • AKP appears to be permanently stuck in between redemptive and pragmatic aspects of democracy • Problematic reduction of democracy debate into shades of secularism • Complete withering away of political economy issues from public debate

26. Broader questions and conclusions • Why are institutional and regulatory reforms and even legal reforms often not enough to ensure good governance? • Neoliberal populism running the risk of disintegrating into the “underside” or “dark side” of democracy • The need to understand that blind-folded economic liberalization may help expand patronage rather than curb it. • The need to differentiate between politics as deliberation and politics as patronage. • How obsession with “identity politics” (Islam, Kurdish politics in the case of Turkey) help de-politicize economic issues • Questions on the (f)utility of “external” anchors for democratization and good governance