Turkish main opposition to ‘bring back rule of law and give Central Bank independence’

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Welfare improvement in Turkey has coincided with huge, unsustainable indebtedness, says Selin Sayek Böke (L), the deputy leader of the main opposition Republican People’s Party (CHP). HÜRRİYET Photo

The ruling party’s economic model has come to its end and there is a need for a new program to stop the “slow death” that Turkey is now facing, according to the main opposition Republican People’s Party (CHP) Deputy Chair Sayek Böke.

“We need reforms in five major areas, but first and foremost we must bring back the rule of law,” said Böke, who was recently appointed as the CHP’s deputy chairperson responsible for the economy.

How do you evaluate the Justice and Development Party’s (AKP) performance, successes and failures?

The AKP’s ruling period has not been a monolithic period. The first part of their rule was dominated by success stories. Their first and foremost success was that they inherited a reform package, and they continued to execute it. For the first time for quite some years, the authorities implemented a policy set. Within that reform package, there were successful items, like fiscal imbalances being corrected and the Central Bank becoming independent. These were not written by the authorities themselves but inherited. The failure points are actually a mirror image of this; the minute they had to come up with their own policies, they decided not to do so. Since 2007, there has been no clear checklist where we can say that this is what is being promised and this is what has been done. This brings with it a transparency and accountability problem.

Some analysts would argue that the AKP’s consecutive successes at the ballot box are due to its economic policies; it has succeeded in improving the lives of millions.

We have to differentiate between two things. Yes, we are living better lives; this is true for a large group of people. But a majority of this was possible because of global conditions. The credit for global conditions goes to the ruling party. This is natural. This welfare improvement worked up to 2007; afterwards, there was a period that was very shaky and vague. There was no clear road map. The Turkish economy started slowing down. I call it a slow death. Since 2013, the dramatic shift has been “we don’t really have to do anything.” People started feeling that welfare loss. Yes, we are in better shape in terms of the amenities we can reach, but the sustainability of them has become a question mark. Policies were implemented shortsightedly; there was no clear, long-term plan; since 2013, there has been no future plan that they have bound themselves to. As to the welfare of the individual, this is going to show up in their future welfare. The growth rate dropping from 7 to 3.5 percent for six consecutive years suggests nothing other than the fact that the future is going to be difficult.

But the slow death is yet not trickling down to the public.

The slow death is difficult to feel. You have a blood clot there; it has not yet triggered a heart attack but eventually it could [turn] into heart attack. An early intervention would have avoided that happening. I see the Turkish economy as being in such a situation. Growth of 3.5 percent is very low for Turkey, which still has huge inequality in income, and across [regions]. The fact that the very dense areas in the economy are separated from the rest is creating a lot of tension. A 3.5 percent growth rate does not [permit] the resolution of these tensions. People might not feel it yet, but they are increasingly indebted. Welfare improvement has coincided with a huge indebtedness which is not sustainable. That sense of welfare has now been replaced by a sense of risk.

How about the government’s recent reform package?

It does not go beyond a wish list. Certain problem areas are well-identified. But we still don’t have a checklist. It does not have a clear guideline.

What will be the main tenants of the CHP’s economic model? Can we talk about a new program?

Yes, and this is what Turkey needs. There are 25 structural changes that are reported in the [AKP’s] reform package. We don’t need 25 areas; we need five major reforms that would feed the rest. The current economic model has come to its end. This was a very uni-dimensional macro-economic framework; the idea was that “we will grow and we will ignore the cost of that growth.” So the new model that has to replace this one has to have growth as a component, not as the major dimension. A multi-dimensional framework has to put the individual at the center, with the well-being of the individual at the center. Growth should serve that individual’s welfare.

This can only be possible if every individual feels they are included in the process. So, the second component has to be social inclusion. Some would argue that the AKP’s ruling period included social inclusion, but I’d argue that it was insufficient, and in terms of quality it was very poor. We [the CHP] don’t care about just including the individual in the system; we care about including them with equal opportunities and equal outcomes. This has to be across all segments of the population and all geographic regions.

We need a new mentality, and one could simplify it into suggesting a richer Turkey through the inclusion of the people.

But as you said, many would argue Turkey has become richer and millions were taken out of poverty.

The so-called success came at the cost of lives. For instance, recently we have been experiencing more and more deaths in mines. Growth comes at the cost of peoples’ lives and environment. How is this possible? There is much written in the laws in Turkey, but when it comes to implementation, when it comes to ensuring that the laws are not altered, there has been a cultural change, especially over the last couple of years. Growth patterns are important, but you can’t do this by killing people. You should not change laws purely by your own will; the process of the decision-making process has to change. Inclusion? Women are not included in the economic system. One cannot talk of societal growth.

What is your plan to deliver growth with social inclusion?

First and foremost, we need to bring back the rule of law. The only way we are going to have income generated is if you have work. In order to have job creation, you need to have investment, and to regenerate investment, private firms have to see the future. For them to see the future and have confidence in the system, there should be trust in the law.

Second, we need to discuss education. Almost anything I’ll talk about in terms of the economy will touch upon education. We need to create an education system that allows for an easy transition across jobs. We are in a period of another industrial revolution; there is the digital revolution. People need new skills. We need to provide them with these skills; a new education system that prepares the youth for the future. [For instance, there could be] a technology and innovation policy accompanied by large infrastructure investment strategies that are not just created for large metropolitan areas; fiber optic infrastructure is going to be relevant across all regions. Decentralization in regional policies will be another reform area in itself. In addition, we are a very globally connected country, and we should remain so, but we have to read the world better and start building these global connections to insure that we find access to Asia. [We should be] a Turkey facing the EU in terms of the reform agenda, but generating economic strength through access to the Asian market.

These are long-term strategies, but the ordinary person has short-term concerns. Some argue that part of the voters might not be happy with the ruling party, but they can’t risk opting for an alternative due to their shaky economic situation.

I’ll agree with the concern of the individual. Such indebtedness naturally creates concerns. But we have short-term plans too. When we talk about structural change, we have to, as the public authorities, ensure the individual that they will be supported in their job transition in the short run.

For those who are indebted, how do you resolve the problem? One, you generate income so you can pay back the debt. The earlier the slow death ends and these reforms start, the faster that repayment will actually happen. For new income generation, we need a new economic model that can start very quickly. For example, our Central Bank has lost its independence. Why should I care as an individual? I should care because that means higher interest rates and that means higher inflation, which means for the individual that their indebtedness will get higher and higher. So the minute we come to power, we will say the Central Bank is really independent; that will immediately have an influence on the individual.

Second, we are a social democratic party; any social policy is an integral part of our policy. Those who are in need will find us; we’ll be there to ensure that any need for a social safety net will be provided by public authorities. We will not allow any individual to slip through the cracks and be punished for the system that was imposed on them.

Some argue that those who are getting social assistance keep voting for the AKP, fearing that this aid will be cut if another party were to rule the country.

Social assistance will always be a necessity, as there will always be vulnerable groups. It is in our Constitution - we are a welfare state; this is a given. But we also want to create an environment where there is no need for social assistance.

The new economic model will ensure that there is a big brother back there to protect the individual, but the individual will not have to go back and ask for any assistance. This can’t happen overnight but the new mentality of production will naturally bring less need for social assistance.

Is the CHP anti-foreign investment?

This is completely wrong. Of course, dependence on foreign capital creates vulnerabilities; exogenously, the world has become a more difficult place; even if you do everything right in house, just that cut of funding can create vulnerabilities. However, a country like Turkey, which is still developing and needs to grow fast, needs funds, and creating these funds domestically takes time. We did a very poor job in the previous years in creating domestic funds. The change will be to ensure that domestic savings are made, but that does not mean we wish to exclude foreign savings. We can’t [operate based on] a model without foreign savings.

However, a good management of foreign capital is necessary; not all of them are the same. Foreign direct investment brings with it employment creation and technology. So if we accept foreign capital, the next step is how do we attract and convince the foreign capital that is more beneficial to the country. We are not, and we cannot be, against foreign capital. Foreign capital will come if there is rule of law. Currently, the situation is that we don’t have any rule of law; according to the political will, economic tools can be used as punishment.

But many feel the CHP has a problem of delivery.

I think our municipalities are a great example of us delivering. Many of the things we are talking about at the macro level are policies that our municipalities are already doing. Maybe we have to do a better job at explaining it. The world has changed over the past 12 years, so has the ruling the party and so has the CHP. We have a clear road map to success; we know what we are doing. We have the recipe. I agree we need to do a better job to take the message to the streets.

What would the CHP do differently than the past?

The process of policymaking up to elections is more participatory. We are listening more, the way we approach the issues is already different we have a clear road map that reads the situation. If one argues that the CHP hasn’t changed, then we would be coming up with the same policy prescriptions that we had in 2011. But what we are saying is that we read the past and the future well.
We feel and know the need to touch the people. We are not speaking economics in just macro indicators. We are speaking of people, and that in itself is a reflection of our mentality. We are identifying economic problems through people and trying to solve the problems of people. That will be reflected more and more by our visits on the ground, knocking on doors and explaining ourselves.

From your previous remarks, we can deduce that you attribute a lot of importance to the EU.

Very much so. In itself, the EU is a great partner already. A continuation of that relationship and ensuring that both parties mutually benefit necessitates a strong and detailed relationship continuing.

What are the very first things that you’ll do the moment you come to power?

I look forward to that day. We will announce in January what we will do in our first 30 days, 50 days, etc. In the short term, giving the Central Bank independence is quick and easy to do. Changing certain laws that ensure legal structures are not used as punishment tools, like taxation policy, is something we would do very quickly. Together with this, the creation of an independent revenue service is something we’ll do very quickly. But we will also be there for the long run.