Tuesday, 2 September 2003

Turkey Knocking on Europe's Door

So Turkey is knocking again at Europe’s door, though this time it is not about to break it down with a battering ram. As things stand today, the odds look in favour of the door being opened to it, though negotiations are bound to be arduous and a protracted transition period may be imposed on the free movement of people.

Admitting Turkey is no routine matter, the less so the more the Union moves from single market to political federation and perhaps super-state. Five per cent of Turkey’s territory is in Europe, 95 per cent in Asia. Nearly a hundred per cent of its population of 67 million is Muslim and 15 million of those are Kurds who refuse to believe that they are “just mountain Turks”, and who still dream of self-determination. On present trends, by 2020 the country’s population should grow to 90 million, 15 per cent of the Union’s projected 600 million. In numbers, it would be by far the biggest member, leaving Germany with its present 82 million and projected 78 million well behind. At the same time, Turkey with an average income of about $3,000 per head, would be twice as poor as the poorest members. Turkish traditions are in harmony with the direction the EU is taking toward a strong role for the state in the economy and the imposition of a “social conscience”. In all other respects, however, the fit between the club and the candidate is not obvious, to put it with due restraint.

Making their way into Europe has been the main and constant objective of their history ever since the Ottoman tribe started nibbling at the Greek colonies of Byzance along the coast of Asia Minor in the 13th century. A century later the tribe had the beginnings of an empire. In 1352 the sultan took Constantinople that was to become Istanbul, and went on to subjugate Serbia, Bosnia, Bulgaria and Wallachia (the bulk of the area that in 1878 was constituted as Rumania). Except for the slave trade that moved people south to the Turkish slave markets (along with a counter-current of Turkish migration northwards from Anatolia), Turkish rule over the Balkans was not harsh by the standards of the age. Unlike the Spanish persecution of Muslims and Jews and the religious wars in France and Germany, the Turks were tolerant of other religions, treating the Greek orthodox church quite well, regarding Protestants as allies against the Habsburgs, though there was always mutual hostility with the Roman Catholics.

After the defeat of France by Charles V in 1525, France and Turkey concluded an alliance that was to last nearly two hundred years and greatly hindered the coalition of the Habsburgs and the Papacy to halt the Turkish advance into Hungary, then one of the major European powers. Suleyman the Magnificent annexed most of it in and after 1541. There were a few more westward pushes till late into the 17th century, including another great siege of Vienna, but the steam was by then going out of the Ottoman drive.

Like the British Empire that was acquired in a fit of absence of mind, the Turks also picked up without really trying, an empire in the south and east, Baghdad, Mecca, Damascus, Cairo and the whole North African coast of the Mediterranean falling like ripe plums into the sultan’s lap, though his sovereignty was not enough to give him effective control. It is hard to avoid the impression that the non-European parts of the empire were but a side-show.

The decline of European Turkey was as steep as its rise. Hungary and the Balkan countries were liberated, or liberated themselves between the 17th and 19th centuries. After World War I, only Constantinople and a bridgehead around it were left of the European possessions.

Apart from the exhaustion caused by two much conquest in too many wars, the causes of the Turkish decline were socio-economic and they are still at work under the surface today. As a result of its system of land tenure, there was never a Turkish landed nobility and aristocracy. Unlike most European states that moved through feudalism to unitary kingdom, the Ottomans simply missed the feudal stage and moved directly to a highly centralised absolute monarchy on the model of her Persian neighbours. The high officials were the sultan’s slaves, often Greeks on the civil and Albanians on the military side. Between them and the lowly reaya who paid the taxes, there was nobody with an independent power base on the land or in trade who did not closely depend on the central government’s grace and favour. Society was, and in a way still is, classless, for the meritocracy of officials and state-sponsored businessmen does not generate a class structure that is entrenched in civil society and stands on its own legs economically.

Endemic corruption is in no small measure a consequence of the servile meritocracy. Economists sometimes contend that it makes no difference whether officialdom is decently paid or underpaid and makes it up by taking bribes. For this to be true, the bribes must not affect the allocation of resources, and for that to be anywhere near the truth, the bribe-taking itself must be a competitive process, the business that can make the best use of a state permit or most efficiently fill a state order paying the highest bribe and getting the permit or the order. There are complex reasons, going way beyond the scope of this article, why this benign result fails to be produced. For one, theft trumps competition. If a state bank’s directors siphon off the depositors’ money to their associates and blandly mark its trace as a “non-performing loan” in the books, the return on the directors’ “investment” is infinity and no legitimate borrower could outbid and out-bribe that, no matter how productive the project he seeks to finance. It is along such lines that the misallocation of resources and the poor performance of the Turkish economy much of the time between the 18th century and today, can find an explanation.

By the early 20th century, Turkey went by the name of “the Sick Man of Europe”. It is a sad irony that some Turks, indignant at the tendency to classify Turkey as an Asian country that ought not to try and elbow its way into the European Union, cite this unflattering sobriquet to prove that even when it was down and out, Turkey passed for being European. After dethroning the last sultan in 1922, Kemal Pasha and his successor Ismet Inonu ruled a benevolent quasi-dictatorship with a strong lay, westernising and modernizing tendency, a drive that has had a good deal of success, considering the morass from where they started. Inevitably, however, a deep rift in society opened between lay and western on one side, Islamic and oriental on the other. The dread of the lay and westernizer minority of being sucked into Islamic backwardness by the majority is the reason why Turkey has lately come close to gate-crashing in its insistent demand to be admitted to the European club.

Democratic mechanics tend to produce Islamic governments. The army, as the guardian of Kemal’s lay tradition, tends to remove such governments. It has done so four times since World War II, the last time in 1997. Until last November, Turkey was governed, if that is the right word, by weak and teetering lay coalitions presiding over runaway expenditure, ballooning public debt, galloping inflation and a paroxysm of corruption. Nominal interest rates ranged from 40 to 150 per cent p.a. and the price index in the last three years rose by 54.9, 54.4 and 45.3 per cent. In 2001, the dams burst, the Turkish lira was allowed to float downward, and the national product fell by 7.4 per cent,—a crisis of Argentine dimensions.

The new, moderately Islamic government of the “AK” (“clean”—a play on initials) party has a stabilisation programme sternly supervised by the IMF that has had a measure of success. Inflation has slowed to about 30 per cent, the depreciation of the lira in inflation-adjusted terms to about 10 per cent, GDP in 2002 has risen by 3.7 per cent and might manage to keep up this rate this year and next. Unemployment at over 8 per cent is average by European Union standards. However, tales of official incompetence and corruption are flying as thick as ever. The task of pulling through is heroic, mainly because of the dire state of the public finances. The public debt is either short-term, floating rate or dollar-linked, so that inflation does not lighten it. Its service is so onerous that in order to keep the debt constant, the state is supposed to generate a budget surplus before debt interest of 6.5 per cent of GDP, and it is far from evident that a non-dictatorship in Turkey can politically long survive such fiscal rectitude. The army and the electorate must be satisfied, and in addition too many eager hands are trying to fill too many empty pockets for the accounts to balance.

The biblical camel would find it hard to pass through the eye of the needle, but it is not much easier for a democracy to reform a statist, politically controlled economy along liberal, competitive lines. Truly, the Turkish case seems to be one of scarce means in vain pursuit of self-contradictory ends. Note that the EU, while no doubt wishing to see the Turkish economy in better shape, has set two imperative conditions for their membership: democracy and the abolition of the death penalty. As of last year, Turkey has done both, more or less. The rest, far less important for political correctness, is in the lap of the gods.

Anthony de Jasay

Anthony de Jasay is an Anglo-Hungarian economist living in France. He is the author, a.o., of The State (Oxford, 1985), Social Contract, Free Ride (Oxford 1989) and Against Politics (London,1997). His latest book, Justice and Its Surroundings, was published by Liberty Fund in the summer of 2002.

This article first appeared on http://www.econlib.org