Turkey is NOT a "a big, functioning, democratic Muslim state that could be an example to the rest of the Middle East". Turkey is a hysterical country that appears to be secular when viewed from abroad, but where the government forces the mainstream Sunni Islam down the throats of a large Alevite Shia minority and where its multiple religious and ethnic minorities suffer harrassment and restrictions. Turkey may look democratic, but many parties are still illegal and the decisions of the democratically elected government are subject to approval by the all powerful military. You write that "Turkey has the biggest and arguably one of the toughest armies in Europe". Big it definitely is. But Turkey's army has never proven its might in a real war; it has rather proven its might by illegally occupying the defenseless mini-state of Cyprus as well as against its own citizens, namely the Kurds, who were ethnically cleansed from their homelands to major Turkish cities in an effort to force them into the Turkish mainstream. Diyarbakir, a city in the SE, used to have a population of 400,000 in 1990, which swelled up to 1.5 millions in 1997, after the Turkish Military that you so praise conducted the ethnic cleansing of Turkey's own Kurds! That's 275% more people in just 7 years!
By praising Turkey one does not serve the truth and frustrates millions of belabored underdogs within Turkey. It is also a great offense to other successful Muslim democracies who unlike Turkey are genuine democracies, tolerant of various ethnic and religious groups and who do not aggress their neighbors, such as Indonesia.
Turkey on the Edge
Ankara needs help now, but rejects it.
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Turkey, in the hot grip of the summer solstice, faces a hazy future. For a change, Turkey is suffering from an economic and financial crisis not of its own making. Its fiscal discipline and good behavior of recent years are going unrewarded as its economy contracts, its currency weakens, and its stock market gets ignored amid a historic emerging-market boom.
It's a sad state of affairs for this country of 71 million people, with the 17th-largest economy in the world and immense potential. Unlike those in the European Union, Turkey's population and workforce are growing, and its people, banks, and public sector are not heavily in debt. Its banks are downright healthy compared with those in Europe, the United Kingdom, and the United States.
Turkey matters be-cause it is a big, functioning, democratic Muslim state that could be an example to the rest of the Middle East, and could emerge as an anchor to the southern flank of the EU. Turkey has the biggest and arguably one of the toughest armies in Europe. From Gallipoli to Korea and Vietnam, the legend has grown: "Don't mess with the Turks."
However, at this moment Turkey is ailing. The economy collapsed last fall with those in the rest of Europe, and although there are a few tentative "green shoots," plenty of problems lurk. The premier investment bank, EFG, forecasts that real GDP will decline 4.5 percent this year and will rise only a feeble 3.5 percent next year. Unemployment is 14 percent, and is about 20 percent among the younger age groups. Inflation, despite the weak economy, remains in the range of 6 to 7 percent, and real interest rates are too high for a convalescing economy.
Rising oil prices are hurting big time. The federal budget is a shambles, investment money is flowing out, and the currency is anemic. The private sector's short-term debt has soared, and the fear is that the foreign exchange required to service and pay back that debt will push down the value of the Turkish currency, and set off a vicious circle as the debt grows ever more difficult to pay down.
Local sources estimate that Turkey needs at least $20 billion to service its foreign debt. Thus the recent visit of top World Bank and IMF officials was watched with great anticipation. Pre-sumably a loan (of maybe $15 billion to $20 billion) was offered, terms were discussed, but nothing has happened so far.
Why? Because the price of the IMF money is a stiff dose of austerity. Since the government faces an election in the next 12 months, it is very reluctant to endure IMF medications that might anger voters and lead to a defeat for the ruling party. In essence, the government is gambling that the economic recovery will be strong enough to solve Turkey's problems and make an IMF loan unnecessary.
This is not a wise gamble. Signing a deal with the IMF is crucial insurance. If the IMF provides Turkey with the money to bridge its financing gap over the next two years, the adjustment in the economy will be relatively painless. However, if there is no IMF loan, the lira will fall, the economy will weaken again, and there will be another, perhaps more severe round of wealth destruction.
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