Turkey’s response to the Moody’s decision

Credit ratings agency Moody’s has downgraded Turkey’s sovereign credit rating to non-investment grade.

What does that mean? This is an issue for economists and I am not an economist.

So why am I writing about this subject? I do so because I find the statement after the decision by Mehmet Şimşek, the deputy prime minister responsible for the economy, very important.

“The best answer we can give to rating agencies is to speed up structural reforms and maintain fiscal discipline. We should not stop! We’ll go on with the reforms,” Şimşek wrote on Twitter after the Moody’s downgrade.

He has not engaged in polemics over the Moody’s decision and instead prefers to give messages of reform to both domestic and foreign public opinion.

What’s on the agenda?

But despite Şimşek’s words, the issue of economic reform is the weakest one on the public’s agenda.

To what degree are we hearing about reforms from politicians shaping public opinion these days?

Of course, the July 15 failed coup was not just any ordinary coup attempt. We certainly need to continue to talk in depth and properly analyze this calamity. 

But it would be a huge mistake to forget or postpone Turkey’s important long-term problems like the economy, the law and institutional governance. 

Obviously the state’s relevant institutions are dealing with the economy, but this is not an automatic button. You need the motivation of society for economic improvement. No reform can achieve the expected outcome without investors and without the confidence and enthusiasm of workers.

Just like former Deputy Prime Minister Ali Babacan, Şimşek is an economist whose expertise is trusted both inside and outside Turkey. We need to take his words seriously. This is what he said nine months ago: “Turkey will have three anchors in the coming period: Fiscal discipline will continue; we will revive the EU accession process; and we will succeed in structural reforms.”

To what degree are these currently on our agenda? What is the current state of affairs on these three anchors?

I don’t know whether Şimşek would today reiterate his words on reviving Ankara’s European Union accession process. What’s more, if everyone says the most important problem of the economy is the need for foreign financing, what are our anchors in terms of addressing that problem?

The coup and the economy

One of the reasons why Western circles have particular difficulty in understanding the coup and the Fethullaist Terrorist Organization’s (FETÖ) illegal structuring within the state is that these things are unimaginable in a normal country.

But one day, I hope without further delay, the government will end the state of emergency, concluding that we are back to normal conditions.

Then the problems in the economy, foreign policy and the judiciary will once again become more visible and return to the top of the agenda.

Unfortunately, our structural problems might have gotten more complicated due to practices during the state of emergency that have shaken confidence in economic rationality, in the rational and legal functioning of institutions, and in the independence of the judiciary.

We should not forget the concept of reform even in our most frustrated times. There is no way of being a strong country unless we catch up with developed countries’ standards in education, the judiciary, technology, the economy and freedoms.