Global Economics

The Turmoil Behind the Turkish Economic Miracle


The Turmoil Behind the Turkish Economic Miracle

Photograph by Daniel Etter/Redux

The din of banging pots and pans reverberated late into the night across Istanbul’s narrow alleys at the start of June. Young professionals and older housewives alike stood on their balconies, clanging their kitchenware, in support of the tens of thousands of protesters across the country who took to the streets against Turkey’s government. It started as a small environmentalist sit-in over plans to bulldoze a sliver of a park in Istanbul’s Taksim Square to make way for a shopping mall. A violent police crackdown on May 31 escalated the episode to an outpouring of grievances against the state. Thousands in Taksim called for the resignation of Prime Minister Recep Tayyip Erdoğan and chanted against what they see as his increasingly authoritarian style.

Erdoğan has presided over a decade of exceptional economic growth backed by record support from voters. The combination has made him more brazen in his use of power, and many Turks bristle at his attitude—that ballot box victories give him license to act like an autocrat. They say he ignores critics of such policies as his recent restrictions on liquor sales and possible constitutional changes enlarging the powers of the president. “At the heart of it really is a completely majoritarian understanding of democracy in which the prime minister sees himself in a position of complete power because he has 50 percent of the vote. But he completely disregards the other 50 percent,” says Kerem Oktem, a research fellow at Oxford, who is currently in Istanbul.

“This is a protest organized by extremist elements”—Turkish Prime Minister Recep Tayyip ErdoğanPhotograph by STR/AFP/Getty Images“This is a protest organized by extremist elements”—Turkish Prime Minister Recep Tayyip Erdoğan

The turmoil is a new twist for Turkey, which was lauded as an economic powerhouse and democratic exemplar for the rest of the Muslim world during the Arab Spring. The country’s glowing reputation rests largely on the shoulders of Erdoğan, whose Islamist Justice and Development Party (AKP) came to power in 2002 on a promise to deliver growth and stability. On his watch the economy took off, the budget deficit and inflation were tamed, and all loans from the International Monetary Fund were paid off. Per capita income, more than $10,000 today, nearly tripled, and Turkey is now the fastest-growing economy in Europe. “Thank God for this government—they’ve increased people’s purchasing power,” said Ankara cab driver Edip Cansev, as he watched police clash with protesters.

Erdoğan has been criticized for governing by personal edict, as when his comments on access to alcohol were quickly followed by new restrictions on the sale and marketing of alcoholic beverages. In 2012 the prime minister slammed cesarean section surgery and equated abortion with murder. Within a month AKP lawmakers were drafting legislation to limit C-sections and abortions.

To some extent, Erdoğan may be a victim of his own success, targeted by protesters too young to remember the time before him when Turkey was poorer and less stable, says James Ker-Lindsay, a specialist in southeastern Europe at the London School of Economics. Despite the general prosperity, some of the protesters say the economy is not as strong as it appears. Fatma Hatice Kerkecin, an unemployed interior decorator, says Turks are “indebted up to their necks.”

Erdoğan’s government has increased the amount of time allotted to religion lessons in the curriculum, a move some secular students resent. “I’m here because Erdoğan wants to raise a pious generation,” says Ozkan Korkmaz, a 19-year-old high school student standing in Taksim, who shows the wound on his back where a police gas canister hit him in the protests. “They’re imposing a nonscientific education on us.”

If the government is feeling the impact, it hasn’t shown it. “There’s been a steady drumbeat of projects and actions, especially dealing with Istanbul, that have made the secular middle class of Turkish society upset,” says Hugh Pope, the Turkey analyst for the International Crisis Group in Istanbul. An urban renewal project near Taksim will tear down a historic neighborhood to make room for luxury apartments and a shopping mall. Construction of a third international airport, projected to be the largest in Europe with a price tag of $29 billion, was approved on May 3. On May 29, Erdoğan broke ground on a third bridge over the Bosphorus connecting the European and Asian sides of the city. Despite opposition from environmental groups, the bridge project will cut a superhighway through a forest near Istanbul. The bridge has been named the Yavuz Sultan Selim Bridge, after an Ottoman sultan whose 16th century reign is known for expanding the Ottoman Empire and massacring the Alevis, a religious minority whom the Turkish Sunnis did not consider true Muslims. The bridge’s dedication has prompted controversy over Erdoğan’s perceived disregard for people who do not belong to his conservative, pious Sunni voting base.

When public opposition to these projects arises, Erdoğan reminds Turks that the AKP won the elections. Mainstream media has hardly criticized the regime; as protesters fled from tear gas and rubber bullets in Istanbul, Turkish television channels aired cooking shows. Since 2012, says the Committee to Protect Journalists, Turkey has been at the top of the list of countries with the most jailed journalists.

Erdoğan still has a bedrock of support in the country, especially among rural voters who joined the urban middle class thanks to his policies. The opposition that has taken to the streets consists partly of the historic supporters of the legacy of Turkey’s founding father, Mustafa Kemal Atatürk, a secularist who favored westernization.

Yet many of the people clanging pots on balconies and chanting in Taksim are the young, hip, and middle class who profited from the roaring economy but still object to policies that could damage the environment and curb their freedoms. “The middle classes have benefited [from Erdoğan's policies], but they feel that they’re not being consulted about really major things that are going to change the way the city looks and feels,” says Pope, citing the airport, the bridge, and a plan to build an island surrounded by canals on Istanbul’s European side. “These things add up.”

International investors felt the impact of the protests, too. On June 3 they drove Turkey’s benchmark stock index down 10.5 percent—the most in more than a decade. The index recovered some of its losses the next day.

According to his party’s bylaws, Erdoğan can’t serve a fourth term as prime minister. He is widely seen as a candidate for the presidency in the 2014 elections. He is also on a campaign to change the constitution to strengthen the executive office, which until now has been largely ceremonial. Drafts of ruling party legislation would allow the executive to dissolve the parliament, issue decrees with force of law, call elections, and unilaterally decide whether to mobilize the army.

One way to calm the situation, Oxford’s Oktem suggests, would be a hint of compromise. Deputy Prime Minister Bülent Arinç has apologized for the violence of the police response, but Erdoğan, who went to Morocco on a state visit, has shown an exaggerated lack of concern. “If there’s a credible response from the government, then the protests will certainly slow down and end,” Oktem says. “But if there’s an incitement … then I think we might soon talk about the end of the Turkish success story.”

The bottom line: Although the Turkish economy has grown strongly over the past decade, the secular middle class resents the regime.

Topol is a Bloomberg Businessweek contributor. Follow her on Twitter @satopol.
Harvey is a reporter for Bloomberg News in Istanbul.
Hacaoglu is a reporter for Bloomberg News in Ankara.

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