APPENDIX A: TURKEY AT A GLANCE
A1. The country
Official name Türkiye Cumhuriyeti (Republic of Turkey) Head of state President Ahmet Sezer
Area 814,578 km²
Capital Ankara
Population 72.3 million (2005)
Religion Muslim (99%), Other (1%) Language Turkish
Currency 1 YTL (Yeni Türk Lirası) = 100 Kuruş
Table A1. Fact sheet
1Table A1 gives some general facts about the Republic of Turkey. Turkey’s identity stems from its central location at the crossroads of cultures and civilizations. The upper northwest part of the country, named Thrace, is situated at the European continent and beyond the Bosporus lies the mainland of Anatolia, the Asian part of Turkey. The Black Sea, determining the country’s borders on the North, separates Turkey from Russia and Ukraine. More towards the east, Turkey adjoins Central-Asian states that have searched for closer relations with their Turkish kinsfolk after the collapse of the Soviet Union. The south-east borders to the strict Islamic nations Iran, Iraq and Syria. Turkey itself also obviously belongs to the Islamic world. It maintains numerous intensive trade relations with Arabic nations and is a respected member of the Islamic Conference. The warm southern part of Turkey is a lively tourist center because of the Mediterranean Sea coastline, and the Aegean Sea parts western Turkey from Greece. As a result, the Turkish society consists of numerous minorities, of which the Kurds are probably the best known.
These diversities return in the country’s landscapes, its nature, climate and culture and resulted in severe regional disparities in terms of economic generation and wealth. A map of Turkey and its seven regions is presented in figure A1.
The regions are the Marmara Region (with Istanbul as its capital), the Black Sea Region, the Mediterranean Region, the Aegean Region, Central Anatolia, East Anatolia and Southeast Anatolia. Major cities are metropolis Istanbul (with a population of 11 million), Ankara (4 million), Izmir (3.5 million), Konya (2.2 million), Bursa (2.1 million) and Adana (1.8 million). These regions in turn are subdivided into 81 provinces.
A2. Brief history
The melting pot that Turkey is in our time finds its origin in the past. Anatolia has experienced rises and falls of sophisticated civilizations and has almost always been populated. The earliest signs of human life were found near Diyarbakır and were
1
Source: www.turkishembassy.org.
estimated to date from 7500 B.C. Excavations further proved the existence of the world’s first ever town, Çatalhöyük (near Konya) around 6800 B.C. The Assyrian kingdom flourished in the third millennium B.C. One of the most famous Assyrian bastions was the city of Troy, located nearby the narrows of the Dardanelles, and described accurately in Homer’s Iliad.
Figure A1. Turkey and its regions
After overthrowing the Assyrian realm, the Hittites ruled Anatolia for centuries. The downfall of their kingdom was triggered by harsh pirate invasions and the Assyrians and Phrygians, a population rooted in the Balkan, took advantage of the following status quo by annexing huge parts of the former Hittite land. In the final millennium before Christ these groups shared the reign over Anatolia together with the Lydians.
In the 5
thcentury B.C. the mighty Persian Empire had absorbed Anatolia to a large extent. It was Alexander the Great who conquered their entire empire and beyond.
However, Alexander’s dominion did not last long and Roman emperors gradually enlarged their power in Anatolia. Centuries of relative peace passed by in Asia Minor until Christianity emerged and the churches refused to worship the Roman gods. A major turning point was the conversion of Emperor Constantine to Christianity in the fourth century. He gave the order to build the city of Constantinople (the present Istanbul), which in no time became the capital of the Christian prosperity. As the Byzantine Empire augmented their territory towards the west, one could say, the end of the Roman might was approaching.
Nonetheless, their power eroded and ultimately broke down under pressure of the Arabs and Seljuk Turks that emerged in Anatolia in the 11
thcentury. The Byzantines attempted to reinstall their reign several times, but the Seljuks appeared to be too strong. A Mongolian army achieved to defeat them in 1243 and stayed in force for a century approximately, after which oriental tribes known as Ottomans triumphed. The Ottoman Empire has been one of the greatest realms in history.
After decades of steady expansion, the turning point was the Ottoman conquest of
Constantinople, the last Byzantine remainder. Ongoing wars shifted the borders to the
Balkan, the Middle-East (beyond the holy cities of Mecca and Medina) and Northern Africa. The Ottomans were reputed for their potent army, the excessive riches and religious tolerance. Their Empire reigned supremely in the 16
thcentury. Afterwards it remained a respected power, although their circumference shrank slowly but surely.
Especially various conflicts with the Russians that were chasing an ice-free port in the Black Sea area harmed the sultanate. These wars of attrition induced a decline in the power of the Ottomans. When the First World War broke out in 1914, they formed a front with Germany and the dual monarchy Austria-Hungary. The heavy losses suffered in the war left the Turks with no other option but to surrender.
In 1923 the Treaty of Lausanne that ensured the independence, integrity and sovereignty of the state, but also heavily reduced its territory, was signed in cooperation with western powers. The Republic of Turkey was proclaimed by the inspiring leader Mustafa Kemal, better known as Atatürk (‘Father of the Turks’). His ideas and values are still very valuable and useful in the present society and politics. Atatürk developed modern building blocks of the Turkish nation, based upon strong patriotism and a secular European emphasis. The main changes that this ‘Kemalism’ brought about were
2:
• Secularity
• A transfer of responsibility over education from the Islam to the government
• Discouraging females to wear veils in public and prohibiting the use of the traditional fez for men
• Adopting civil and penal codes that originated from European (especially French, Italian and Swiss) law models
• Replacing the Islamic calendar with the Gregorian
• Using a Latin alphabet for writing Turkish instead of the Arabic script
• Creating a system of family names
In the wake of World War II, in which Turkey remained neutral, they became a founding member of the United Nations in 1945 and the Council of Europe in 1949. To stop the growing threats to security the country joined the NATO in 1952.
Until 1945 the Turkish political system was characterized by a single leading party. In 1950 the Democrats of Adnan Menderes won the first free elections. A military coup and execution of the prime and other ministers ten years later purged the democratic build-up.
During the decades thereafter, the country was afflicted by economic troubles (see the subsequent section) and political instability. Hence, many Turks migrated to Western Europe in the hope of getting into the western act of wealth. The army that had been the guardian of the secular state in this period intervened again in the year 1980 and a military junta ruled Turkey until 1983, the year in which the democracy was restored under new president Turgut Özal.
Özal suddenly died in 1993 and his contribution to the country’s economy and political system was considered huge. Successor Süleyman Demirel aimed to build on the stable foundation and to retain the peace, but he only managed to achieve the latter at the expense of the former. Corruption levels rose, and the democratic and economic development left much to be desired. Around the turn of the century, Turkey suffered a couple of tough economic downfalls. After recovering from these crises, Turkey’s primary objective is to gain accession to the European Union.
2
Source: Miller & Demirel, 1988.
A3. Economy
Using a Soviet-model of production plans, focus on heavy industry and large state enterprises, Atatürk has also been a key person in rebuilding the country’s economy after the collapse of the Ottoman Empire (Sunier, 1998). In these decades Turkey’s economic growth has been one of the highest among OECD countries. These policies were in force until the economic growth declined again in the late 1970s, as a result of the oil crises and the inflationary rise.
Özcan and Çokgezen (2003: 2) identify three causes that undermined the market trust and institution building, leading to persistent failures and abuse in the 70s and 80s: Turkish politics were populist-oriented and far from stable; the single-leader tutelage in party politics that provoked sloppy oversight practices; and the social norms that allowed investors to accept flimsy assurances and fuzzy legality as part of their gambling habit.
The governments were primarily concerned with budget deficits and current accounts, at the expense of long-term industrialization and development. In these decades a serious exodus, especially to Germany, of low-educated Turkish workers took place. Substantial parts of the generally higher salaries in their destination were remitted to their relatives in Turkey that mostly lived in the poorer parts of the country. This trend fitted excellently in the then governing party’s ideal of equality in the ostensible ‘people’s sector’, and in their aspiration of cutting the deficits. The regional disparities remained severe nevertheless. To illustrate, average per capita income in the poorest part of the country, East Anatolia, is less than 30% of the Turkish average (Lejour et al., 2004) of $ 4,982
3. After a while, the Turkish economy became heavily dependent upon these remittances.
The widespread lack of trust in the state and investment experience ultimately induced the fall of the government.
In the 80s an Islamic party that attempted to deregulate the market was in charge. The informal money market has always been large in Turkey and led on the downside to the remarkable growth of the shadow economy. An economic climate that took the justness of the people and law for granted appeared not to work either. According to Özcan and Çokgezen (2003: 5), it is an indication that “a pattern of abuse of investors occurred in an environment where abusers have not been punished and where honesty and dishonesty have been blurred in the eyes of the public”. The government aimed at expelling this development when they established the Istanbul Stock Exchange in 1985.
Consequently, after yet another political transfer of power, Turkey transformed into a market economy with an international exposure (Lejour et al. 2004). The economy opened up for foreign trade and years of steady growth followed, but the reverse side of the medal was a rising inflation rate caused by an increasing public sector deficit.
The development of the Turkish economy from 1988 until 2004 is shown in figures A2 and A3 by means of unemployment rates and real GDP growth
4. The economic downfall in 1992 was directly triggered by the Gulf War. High inflation and a devaluation of the national currency led to difficult conditions for the year 1994. The most severe setback to the economy however was suffered in 1999, a joint result of the Russian crisis, major earthquakes, continuing high interest rates and increasing domestic taxes (IGEME, 2005).
3
Source: www.wikipedia.org.
4
Source: www.imfstatistics.org.
Figure A2. Unemployment rate Turkey 1988 – 2004
Real GDP Growth Turkey 1988 - 2004
-15 -10 -5 0 5 10 15
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Growth
Series1
Figure A3. Real GDP growth Turkey 1988 – 2004
Unemployment rate Turkey 1988 - 2004
0.000 2.000 4.000 6.000 8.000 10.000 12.000
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year
Percentage
The country could not stop these financial crises because of a dysfunctional public finance and a huge deficit of governmental spending. The fixed exchange rates could not be held anymore, and their release led to a harsh devaluation of the Lira. The immediate causes of the crises in November 2000 and February 2001 were lack of reforms in the banking sector and risky inflation policies. By the end of 2000, the interest rate was over 1000 per cent (MKB Nederland, 2005).
Under Economic Affairs minister Kemal Derviş the economy was being rebuilt. An FDI Law, intending to encourage investment freedom, was introduced in 2003, as well as the establishment of 21 Free Trade Zones. The national currency Lira was revalued in the hope of counteracting the inflation. From January 1, 2005 1 million Turkish Lira was worth 1 YTL (Yeni Türk Lirası), or 100 Yeni Kuruş.
Over the last couple of years however, the Turkish economy shows clear signs of structural improvement. A 9.9% growth rate was achieved in 2004, a result that is ascribed to the reform progress, particularly in the financial policies. Turkey currently is making up its arrears towards the EU in rapid pace and its burden of deficits and high inflation are also fading away. Currently a second 3-year IMF program supports the economy in retaining the outstanding prospect and reducing the risk of a new economic crisis. After finishing this program, it is hoped that Turkey does not need any additional financial support. The main issues nowadays are the unemployment of 10.2% and the increased current account deficit, which jeopardizes the currency stability and the public finance. The dense regulation of the labor market has been the key cause of the high unemployment, whereas the shortage of the current account is a leftover of the wobbly past. Table A2 presents the key economic facts of the country as of the year 2004.
A4. State and political structure
The Republic of Turkey is a presidential constitution that consists of 81 regions, each having its own governor. The Parliament (Meclis) in Ankara is the only legislative power in the highly centralized government according to the constitution. The president is chosen by the Parliament for a mandate of 7 years, whereas the 550 members of the Parliament are active for 5 years. The president in turn chooses the Prime Minister, which is generally the leader of the largest governmental party and the council of ministers is selected by the Prime Minister
5. The executive power is exercised by the president and the council of ministers, and finally independent courts apply the judicial power. In 2000 the present reform-minded president Ahmet Sezer was elected.
The huge army is rather powerful and able to work autonomously, not being ordered by the Ministry of Defense. However, this is about to be eroded under pressure of the European Union (see the subsequent section).
The (post-) Cold War period demanded for more international security and collaboration.
Turkey is therefore an active member of major international organizations such as the United Nations, the Council of Europe, the Organization for Security and Cooperation in Europe (OSCE), the Organization for Economic Cooperation and Development (OECD), the North Atlantic Treaty Organization (NATO) and the Black Sea Economic
5
Source: MKB Nederland, 2005.
Cooperation Organization, which was spearheaded by Turkey itself. Moreover, the country occupies a unique place in the Organization of the Islamic Conference (OIC) and the Economic Cooperation Organization (ECO)
6.
GDP € 551.9 billion
Per capita GDP € 7,687,- Economic growth 8.9%
Inflation 9.9%
Labor force per sector Agriculture, fishing and forestry (39.4%), industry (22.4%), trade, services and government (37.9%)
Unemployment 10.2% of the labor force
Export € 66 billion
- most important products Clothing and textile, transportation goods, machinery, iron, steel and metals, vegetables and fruit
- most important partners Germany, United Kingdom, United States, Italy, France
Import € 102.6 billion
- most important products Machinery, transportation goods, minerals, metals, chemicals
- most important partners Germany, Russia, Italy, France, United States, China, United Kingdom
Public debt 57.8% of GDP
Debt-service ratio 43.4%
Foreign debt € 112 billion Balance of payments
current account
€ 5.147 billion deficit
Table A2. Economic facts
76
Source: IGEME, 2005.
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