Global Economics

Turkey's Numbers Game


Heading into the July 22 general election, Turkey's 73 million (or is it 64 million?) people are awash in figures

School may be closed for summer, but everybody in Turkey is doing math.

Political analysts are busy calculating the possible distribution of seats in Parliament after the general election on July 22. They must factor in how many parties win the 10% of the national vote needed to enter Parliament, as well as how many independent candidates prevail in their districts.

Prime Minister Recep Tayyip Erdogan has caught the numbers bug. He told supporters at a rally over the weekend that he estimates his ruling Justice & Development Party (AKP) will capture 298 to 315 seats. With a total of 550 seats, a simple majority of 276 votes is needed to pass ordinary legislation. But some actions, such as amending the constitution or electing a president in the third round of voting, require a two-thirds majority, or 367 votes.

The latter number is why Turkey is holding elections in the first place. Last spring, Erdogan put forth his Foreign Minister, Abdullah Gül, as his choice to become the country's next president. But Turkey's secular political Establishment balked at the prospect of a president whose wife wears a head scarf—widely seen in Turkey as a symbol of political Islam. Millions of Turks took to the streets in Istanbul, Ankara, and other cities in support of secularism (see BusinessWeek.com, 4/30/07, "Turkish Turmoil Slams Markets").

Parliament twice voted Gül through to the next stage before Turkey's Constitutional Court ruled in May that the AKP did not have the necessary two-thirds majority to elect him president on the third round. That prompted Erdogan to call early elections and to propose a referendum for next fall on whether the president should be elected directly by the citizenry.

Dismal Statistics

Heading into this Sunday's general election, the opposition Republican People's Party also is tossing around a lot of figures. The party is running full-page ads with numbers in large print under the heading "Tayyip's Scorecard": 71 soldiers "martyred" by Kurdish separatist terrorists in the last six months; national debt nearly doubled since 2002, to $407 billion; the highest real interest rates in the world at 19.5%; some 2.6 million unemployed, vs. 1.5 million five years ago; Europe's most expensive diesel fuel; and electricity rates 10 times the European Union average.

Despite the dismal stats, recent polls show the AKP increasing its share of the popular vote to around 40% from the 34% it won in the 2002 elections, which should allow it to secure enough seats to form a single-party government. That may be thanks to the Erdogan government's liberal economic policies during the past five years, which have brought growth averaging 7.4% annually and have succeeded in bringing inflation down to single digits for the first time since the early 1970s.

Critics note that Turkey's budget deficit has climbed under Erdogan, in part because of populist (and vote-getting) measures such as a plan announced last week to boost by 30% the price paid to farmers for hazelnuts. That's more than three times the rate of inflation. In fact, the rising cost of living has become a campaign liability for Erdogan. The Prime Minister likes to talk economics with the masses using concepts they can understand, often explaining prices in terms of simits, the sesame seed bread rings that Turks consume in huge quantities.

But labor union Türk-Is is using the same device to highlight the problem of inflation: Four years ago, when the AKP assumed responsibility for the economy, the average civil servant's monthly salary would buy 2,100 simits. Now, it buys just 1,400—a drop of one-third.

Then there's Turkey's census problem

Last week, daily newspaper Vatan ran a banner headline proclaiming "Nine Million Turks Missing." Turns out, just weeks before the Turkish census bureau was set to complete a nationwide head count, it had managed to locate just 63.75 million people in the country, vs. a projected 72.8 million. The potential impact on the election is unclear at this point, but apparently municipalities have long overestimated their populations to get a larger share of government funds. A downward population readjustment could eventually affect allocation of Parliamentary seats.

While all the numbers are a bit of a blur, even the most innumerate Turks have gained some facility with figures after years of hyper-inflation and a revaluation of the lira in 2006 that chopped six zeros from the currency. Now, Turks switch fluidly from discussing prices in the new denomination—say, 1 lira and 20 kurush (cents)—to talking about them in the old way (1.2 million lira). The mental math keeps people on their toes.

What's the arithmetic for the election? A Deutsche Bank (DB) report this month said a win by the AKP would be a "market-friendly" outcome, affirming the government's policies and effectively rendering this spring's nationalist protests "background noise." The stock market seems to assume an Erdogan victory: Up 35% since the start of the year, the Istanbul bourse set a high of 52,087 on July 13. Turks are hoping for more such good numbers.

Kuser writes for BusinessWeek.com from Istanbul.

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