Don’t gloat at Europe, says Turkey-based Greek academic

Barçın Yinanç Hürriyet Daily News

Although the crisis experienced by Turkey in 2001 differs from the current Greek crisis, it is the structural reforms introduced by Turkey that Greek policy makers are advised to take, says Greek academic Dimitris Tsarouhas (R). DAILY NEWS photos, Emrah GÜREL

Turks should not gloat at Europe’s economic woes, according to a Greek academic based in Turkey.

There is a degree of Schadenfreude among some Turks, said Dimitris Tsarouhas, who teaches at Bilkent University in Ankara. “Europe is on a downturn and Turkey is on an upturn. But things can change really fast.”

The Turkish economy is doing well but it is impossible for it to remain unaffected by the eurozone crisis, he told the Hürriyet Daily News in a recent interview.

How is the Greek crisis perceived in Turkey?

People in Turkey don’t tend to emphasize the Greek crisis. Greece for the Turkish public is not as important a country as Turkey is for Greece, for instance. [The view in Turkey is] that there is a crisis in Europe and that the European Union is facing a crisis. There is a degree of Schadenfreude. “You Europeans, you got pretty much what you deserved. You have not worked as hard as we do.”

But is this said about Europeans or about Greeks?

I don’t think the Turkish public makes a major distinction between the two. With Greece, actually there is a high degree of sympathy. They say, “We know how you guys feel; we’ve been through these crises.”

They don’t see it as a Greek thing. And actually, it’s not just a Greek thing. By now it has gained a European dimension. It is right to say Europeans are in trouble. The question is [whether Turkish people should be characterized as having Schadenfreude or not]. I don’t think it should.

Yes, Europe is on a downturn and Turkey is on an upturn. But these things change can change really fast. So it is not in the interests of the Turks to propagate on the European crisis. The argument is being made by state representatives and ministers that what is happening in Europe will affect the Turkish economy. It will inevitably affect the Turkish economy. I think Turkey is doing well. But this is a world where connections are getting deeper, especially between Turkey and the EU and especially on the economic front.

Now, one thing is very clear: the safest market for Turkish products and the safest root of investment coming from outside is Europe. The highest amount of FDI [Foreign Direct Investment] flow is from EU member states. The largest share of trade between Turkey and the outside world is taking place with the EU. For both practical and political reasons, Turks should not gloat about what’s happening in Europe. I don’t want to suggest this is happening too much or that Turkey has turned its back on the EU; it did not. In fact, the crisis has highlighted yet again that Turkey [presents] a major opportunity for Europe rather than a threat.

Why is Greece not cutting its defense expenditures in view of its improved relations with Turkey?

At the beginning of the crisis two years ago, the debate on the need to lower military spending in line with rapprochement with Turkey was high on the agenda and the [George] Papandreou government approached it favorably. But the debate shifted, I am afraid. As the crisis grew deeper, people turned more inward and fears have risen. They have become more conservative. The idea of reducing military spending as part of the dialogue with Turkey, which was attractive two years ago, is no longer attractive. People are focused on the national sovereignty debate; especially when the Turkish economy is posting a high growth rate, that makes it even worse. People start saying, “As we are losing our economic sovereignty, our neighbor Turkey is [growing] stronger.” Therefore, the more extreme wings of the debate say, “Turkey could seek to exploit the opportunity [presented by] Greece’s weakness for its own purposes.” So, there are these alleged scenarios being built up on how Turkey can take advantage of Greece’s current problems.

How is Turkey’s economic success perceived in Greece? Is there a sense of “We were in a much better situation, now even Turkey has passed ahead of us”?

There is this sense of “Turkey has now passed us, whereas a few years ago we were the ones Turkey was looking at us in terms of welfare, prosperity.” But what is interesting is that when we talk about the so-called Turkish miracle – the way I describe it is as a European BRIC … many Greeks, quiet astonishingly, ascribe a large part of it to the political leadership of Turkey. They believe that leadership in the form and shape of the current prime minister has not only portrayed the country as independent and dynamic, but has also combined this with very sound economic management skills; the supporters of this view say that this is what this country needs. And the more nationalist wing, those opposing Turkey or [who are] even jealous of Turkey’s rise, even they seem to be applauding [Turkish Prime Minister] Recep Tayyip Erdoğan, congratulating his style of leadership.

How do you explain Turkey’s success?

I believe it started before the current government. I don’t believe the Turkish upswing begins in 2002, although it has certainly continued [since then]. You [had] a major crisis in 2001 and it is very different than the current crisis in Greece and then you [had] a very effective regulatory regime being put in place. You [had] political determination even under a coalition to sort out the economy in the long run, you [had] a comparative advantage of a young population, an economy adjusting to international modes starting from the 1980s; and all this led to a situation whereby – from a certain point onwards – the country [started] reaping the benefits.

Is there a difference in the democracy deficit between the two countries? Turks accepted the bitter pill, never hitting the streets, while the Greeks are always protesting.

I believe every country has its own political culture and its own historic heritage. Turkey has an institutional heritage from political, economic and societal dimension. That’s the legacy Turkey still has. The legacy of that period is very much felt in Turkish political economy. For example: in the area of industrial relations and social partnership, we observe very weak trade unions; in the private and even more so in the public sector, they are basically disempowered, although measures have been taken recently to address some of these issues. In Greece we don’t have this. This example illustrates my point: In Greece, trade unions are not representing society anymore; I believe they have become a small interest group. But, it is also true that there is a very strong culture, political heritage from the 1974 transition to democracy that stresses the right of people to strike, to protest governmental policies they find unjust.

But this leads us to this odd question: looking at where the two countries’ economies stand, are we to conclude that it is better to have a weaker democratic culture?

Turkey has been, until recently, a developing economy. In developing economies you don’t have strong trade union rights, you don’t have a sizable middle class. You have a large population working hard to survive and a small population enjoying a wealthy life. From now on things will not be the same for Turkey. Turkey will not, for instance, be a cheap labor site. Turkey is moving toward the wealthy league of states. This will create a bigger middle class than today. That will have consequences on what we’ve been talking about before. I don’t think there is anything genetic or cultural about Turks not voicing themselves.

But some argue that the religious dimension, belief in faith and conservative values, such as family solidarity, plays a role in how Turks approach the economic crisis.

I don’t believe any nation, not just Turkey, will tolerate conditions of massive inequality in their societies for too long. In Turkey, you have the rise of a middle class, creating a set of new expectations. But, of course, there is an element of a cultural dimension if we use the Turkish example: in more traditional societies, where you don’t have an elaborate, comprehensive, state-sponsored social protection regime, then you have substitutes and the substitute in Turkey is fundamentally the family. Family plays a major, stabilizing role in Turkish society and economy.

Although you claim the nature of the crisis is different – and noting that the two do have their difference – are there no lessons to be taken from the Turkish experience?

Turkey has been good at introducing structural reforms, making its economic growth rate sustainable in the long run. Turkey has created a regulatory regime in the economy; it has reformed parts of its social protection system, such as the pension system or healthcare system.
It is the structural reform parts of the Turkish story that the Greek policy-makers are advised to take.

People are drawing parallels between Kemal Derviş, who was appointed as Turkey’s economy minister during the 2001 crisis, and new Greek Prime Minister Lucas Papademos, as they are both bureaucrats.

I don’t agree with the analogy. Since [neither] are strangers to the world of politics, they are not people taken from the academic amphitheater or from banks and imposed on politics.
But there is a major difference between the two. Derviş was invited by the then-prime minister and was given very wide room to maneuver in how he would design a healthy recovery from the crisis and was backed by the three parties in Parliament. He was not asked to play the chief role of heading the government. In Greece, the situation is different. We had a prime minister who decided or was forced to leave, there was an agreement between him and the leader of opposition and the far-right party to invite a fourth person to head a national unity government with a specific mandate and to [stage general elections] at the first available opportunity. Papademos is heading a political government. That makes his job more difficult.

It took years for Turkish banks to open a branch in Greece and, even afterwards, there are complaints that they can’t expand. The general view in Turkey is that there will be resistance from Greece in the event that the Turkey offers its assistance or buys some Greek assets.

It’s not all about politics. The Greek bureaucracy is legendarily slow, much slower than the Turkish bureaucracy, which has been reformed to a certain degree. There will always be some resistance. When the National Bank of Greece bought Finansbank, some said the deal was not in the interest of Greece [but] we now know this was a sound move from an economic point of view. There will always be people with a negative response. For mainstream opinion, what matters is the kind of cooperation; if there is state-sponsored cooperation, there won’t be a reaction. Things could be different if the Turkish private sector wanted to make certain acquisitions that may be potentially more problematic – not just because it is Turkish. At a time when you feel vulnerable, you don’t differentiate between Turkey, Germany or France.