IMF saga continues to shake Turkish politics

The front pages of many of yesterday’s newspapers and around more than a dozen columnists have preferred to jump in the middle of a political discussion between the ruling and opposition parties over the IMF’s surveillance visit to Turkey last week. 

They claimed that two senior figures from the opposition parties held an unannounced meeting with the visiting IMF team at a hotel in the Turkish capital. One of these figures is Faik Öztrak, spokesman of the Republican People’s Party (CHP) and a former undersecretary of the Treasury, and the other is Durmuş Yılmaz, from the Good Party, who served as the governor of the Central Bank before entering politics. 

Although unannounced, a few journalists have already been at the hotel and took photos of Öztrak and Yılmaz after the meeting. These pictures were published on the front page of an ultra-nationalist newspaper on Sunday, and later were reprinted by others just a day later. Stories accompanying these pictures harshly criticized the opposition for holding a secret meeting with the IMF, and one of them even suggested these two men were crafting a plan for staging an economic coup in Turkey with the support of the IMF.

The media campaign against the opposition was later enforced by ruling party officials. Ömer Çelik, deputy leader of the ruling Justice and Development Party (AKP), who was in New York as part of President Recep Tayyip Erdoğan’s delegation, slammed both Öztrak and Yılmaz for the meeting. The opposition has long been arguing that the government will be obliged to knock on the doors of the IMF, Çelik said, adding, “And then, they secretly meet the IMF officials. This is a double-standard.”

A statement by the Treasury Ministry also slammed the IMF for not informing the government about its representatives’ plans to hold meetings with the opposition figures. An indirect reply was given by the IMF Resident Representative Office in Turkey, which has informed that “a routine IMF surveillance mission led by Mr. Donal McGettigan visited Turkey during September 12–23, 2019, for the annual Article IV consultation.

“In line with usual practice, the mission met with the Turkish authorities, in addition to representatives from the private sector, political parties, academia and think tanks, to hear a range of views about economic developments and prospects.” The statement seems to hint that meeting the opposition, along with the government, was the usual course of action. 

Those who are familiar with Turkish politics surely know what the IMF means for Turkey and how it resonates in the eyes of public opinion and therefore politicians. Reminiscent of the collapse of the Ottoman Empire whose budget was strictly controlled by foreign money lenders, which had restricted the independence of its rulers; today’s many international financial institutions, creditors, credit rating agencies as well as the IMF and the World Bank are still regarded from this historical and ideological perspective in contemporary Turkey. IMF and others are seen, therefore, as institutions restricting the political and economic sovereignty of the nation.   

Having said that, due to poor management of the resources and deteriorated economic conditions, the same Turkish politicians had to resort to IMF measures through stand-by agreements since the early 1960s. It’s disputable to what extent these agreements helped the Turkish economy over decades, but almost all economists agree on the fact that the latest stand-by deal with the IMF in the 2000s has long constituted the ground for the rise of the economy for more than a decade.  

The AKP has religiously implemented the measures advised by the IMF and put things on the right track in the first half of their 17-year rule. The income per capita was increased to $10,000 from $3,500, inflation reduced to single-digit figures with around 5 percent annual growth rate in the same period. That helped the AKP to increase its votes and influence across the country. 

However, today’s economic conditions in Turkey are much different from a decade ago. A report issued after the IMF team’s visit suggests that Turkey remains susceptible to external and domestic risks and requires structural reforms for strong and sustainable growth. It also calls on the government to announce a new economic program in the coming weeks, diagnosing the challenges facing the economy and outlining a comprehensive set of policies to address them. This is because of worsened economic conditions that any encounter with the IMF or any calls on the government to sit down on the table with these creditors do create a lot of noise.

Turkey already has a long history with the IMF and has vast knowledge of its functions. The IMF has never alone been a savior of the Turkish economy and never will be so. It’s a tool. The governments may like to use it or not. But given the rise of populism in the Turkish political environment, it seems the IMF will continue to be used as a tool for domestic consumption as well.