Dec.
2
2015

The Solution for the Immigrant Crisis

The majority of Turkey expects a clear indication from the EU whether their country can join to the community. Our interviewee, Sinan Ülgen, chairman of the Istambul-based EDAM (Centre for Economics and Foreign Policy Studies) and visiting scholar and researcher at the Carnegie Endowment says: Turkey can play a key role in finding a solution for the immigrant crisis; it could effectively contribute to decreasing the political and economic burdens of Europe if Europe gave not only money in return, but promised that the country would be integrated into the Union too. Such a promise would increase the influence of the Turkish ‘Western-minded’ political-economic parties in the upcoming elections in early November. According to the interviewee, the Turkish liberal and free-market oriented economic-financial policy is not under serious threat.
Despite the current capital flight and currency depreciation, the three percent economic growth, that used to be five percent, is sustainable in Turkey.

Péter Zentai: Is Turkey’s economic crisis caused by the arrival of millions of refugees and immigrants who are planning to settle down in the European Union?
Sinan Ülgen: The first refugees in Turkey appeared four years ago – right after the outbreak of the civil war in the neighbouring Syria. Their numbers have grown from zero to 2-2.5 million. Even though, the Turkish budget spent 8 billion euros so far to provide refuge and supplies, we cannot say that this 8-billion-financial-burden caused the decline of our national economy; we did not run out of money because of the refugees.
To answer your question: it is not very wise to make a connection between the refugee crisis and the current Turkish economic situation because Turkey has been able to manage the refugee issue – we have been able to protect the lives of now millions of people.

If the refugee issue did not play a primarily role in the decline of the economic conditions, then what is the reason of the capital flight, why is the Turkish lira getting weaker, and why do Turkish companies and banks lose from their exchange price? Why has the Turkish economic growth decreased so significantly?
It dropped from 5 to 3 percent.  It is relatively a serious fall, but that 3 percent in itself proves that there is no danger of recession to talk about. This growth rate of GDP is still far above the EU average.
Of course, I do not want to downgrade the foreshadowing signs in our economy; however, they are primarily connected to changes in global economic-financial situation: investors are preparing for the end of the world of zero interest rates. They withdraw capital from emerging markets, especially from Turkey, while many years of the ‘growth story’ of the Turkish economy was thanks to the stable capital import, and the steady expansion of foreign investments. The balance of payments has not been positive earlier either, but now, due to the capital flight it shows severe deficit. This is what caused the decline of Turkish lira. Meanwhile, in the European Union, Turkey’s main export market, consumption has not increased and neither has the demand for import goods, since there is no substantial economic growth in Europe.
However, the other side of the coin is that the Turkish budget is working fine, the country’s fiscal situation is stable, the foundations of Turkish banks are strong and surrounded by clear and firm regulations. In a broader sense, this is a fundamentally liberal economy, always open to improvements, where internal consumption has not ceased; moreover, Turkey – in contrary to the countries of the European Union – is not aging: a significant proportion of its population is young adults, and it is steadily growing. All of these are the key to prevent the rate of economic growth to fall beneath 3 percent.

Unless President of the Republic, Erdogan does not start nationalize and overwrite the liberal economic policy…
It is highly unlikely to happen. In this country, nobody questions that the economic achievements of the last two decades were the results of liberalization. (During his first presidency, Erdogan encouraged foreign investors and the fast liberalization of the economy – Ed.) Every political player wants to see the economy growing, and they see it clearly that it is possible only by opening the Turkish economy. In Turkey, the economic-financial policy is laid down indirectly by the parliament, while the government acts directly. We must remember, Mr Erdogan is the President of the Republic and not the head of state, and Turkey does not use a presidential system…

Who knows for how long…
Elections are going to be held at the beginning of next month. There is a good chance that a coalition government will be formed, with members supporting free market and liberal economic policy. The formation of such a government would slow down or stop the flight of capital from Turkey on its own.
However, we must remind ourselves: the supporters of Mr Erdogan are not against the continuation of open economic policy either.

How do the refugee issue and the final agreement between Turkey and the European Union affect the outcome of the elections?
First of all, the inflow of refugees has not exhausted Turkey, and it still does not affect the society severely. This issue was not included in political strategy of the governing party, the opposition, or the President of the Republic either. Fundamentally, Turkey has always been open and welcoming towards them. The county has been able to manage at least two millions of refugees so far. This is exceptional because it seems that in some of the EU countries, the internal political balance would be disturbed if they had to host only a few hundreds of refugees.

Why has thousands of Syrians started leaving Turkey for countries of the European Union?
Primarily because Turkey’s resources meet only the basic needs of refugees; so to say, they are just enough for life saving only. We have not yet established the infrastructure required for their integration into the Turkish labour market and education system; we do not have the resources for that. This is where the connection between the EU’s expected role for Turkey and the outcome of the elections comes into the picture.

If the EU gave more money to Turkey, would it take care of the refugees with a more versatile approach?
The solution for this issue is not a matter of money only. The EU together with Turkey and other key elements have to implement a plan which promotes the restoration of peace in Syria. The situation must be stabilized by joined efforts; as a result, the inflow of refugees would stop and the majority of those who found refuge here would return home.
Now, it is inevitable that the EU played a bigger role in improving the Turkish refugee situation – and it has to provide further financial support.
The majority of the Turkish society supports the EU. This majority would be mobilized in the upcoming elections if the Brussels gave a clear indication that the EU would not leave Turkey on its own. Not only in the refugee crisis, but with regard to future strategic perspectives offered to Turkey.

So, do the majority of the Turkish population and the political-economic elite expect the EU to say: Turkey will be integrated in the close future? One of European’s main problems with the refugees is that they belong to a foreign culture. How could Europe agree to the admission of Turkey, a country with almost eighty millions of Muslims?
Anyway, but Europe has to give an answer soon – along the guidance of its most fundamental existential interests – to this crucial problem. The stakes are whether it gives up its fundamental values or not. One of the fundamental spirits of the European Union is to be ready to integrate European countries with internal system based on political and economic freedom, and according to this adapts to numerous requirements. If Turkey was refused based solely on that the majority of our population is Muslim, the EU would reveal that it is nothing but a ‘Christian club’; every of its basic documents declaring that the expansion of this European community cannot be based on religious and ethnic aspects would mean nothing.

Does the Turkish value system meet the European expectations?
With regards to economic and financial parameters, it certainly does. We are in better position than what some countries were when they were admitted to the EU.
We are a secular country, according to our constitution there is no state-religion. The roles of the state and the religion are separate. Actually, the fact that the majority of the population is Islamic should have no significance.

However, those who do not want you to join the EU can point out the lack of internal democracy.
It would be good if nothing but that were the only problem. The majority of the Turks stand for joining the EU. If our country got a clear message ensuring that the religious affiliation of the Turkish people does not matter in a secular country, and that our admission has no condition other than meeting certain political and economic requirements, then, first of all, it would influence the outcome of the elections significantly; second of all, it would put an end to the autocratic intentions (that is connected to Erdogan) and speed up the internal democratization. A full integration into the European Union is a key interest for the majority of Turkish political, economic and financial participants too…

 

Original date of Hungarian publication: 7 October 2015