Turkey’s objectives in the presidential era

  • 28 Haziran 2018 Perşembe

The historic step taken by Turkey on June 24 undoubtedly points to a qualitative change. However, as far as I can follow, assessments made in many areas, including the economy, remarks by opposition parties’ spokesmen and even comments by market analysts about the future of the economy are based on the assumption that the old system continues.

For instance, it is inexplicable that who will be the economy ministers is being so intensely debated, for ministries in the new period are the cover, not the book. As the famous adage says, “do not judge a book by its cover,” for what makes the cover precious is the book. Here, the book is the democratic choice of the nation, that is to say, the democratic executive authority the president has received from the nation.

In this sense, what is political in the new system is not ministries but the structures to be shaped by the direction of the president’s will. In the old system, ministers were elected MPs, and received their bureaucratic power directly from the electorate. Now this is not the case. Ministries act directly in line with the political objectives of the political will (the presidency), so they are bound to the presidency in terms of goals; however, they have “independence” in the development of instruments in their own execution areas in accordance with this objective. So, in the new system, ministers are the appointed bureaucrats.

In this case, as seen in this example, I think that the figures in the new administration structure to be determined in the upcoming days might be a matter of magazine curiosity rather than of politics.

Here, we need to focus on where the presidential system aims to take Turkey on the basic issues in the next five years and what its political and economic objectives are – which is very clear especially for Recep Tayyip Erdoğan, the first elected president.

It is essential that Turkey goes beyond being a regional power and achieves the potential of being a global power – which requires the fulfillment of 2023 vision goals in terms of the economy. As we have always iterated, the 2023 vision goals are qualitative, not quantitative. Now, our immediate goal is to capture the current great wave of change overturning the world and move ahead of developed countries in basic development areas.

To this end, what will be done in the economy is evident, and as we have long underlined, Turkey does not have an ambiguity in its economic policies. The strategies of our economy-related institutions towards this goal are also clear. However, depending on the developing conditions and economic developments in our region and in the world, new policies may also come into play. In this regard, boards and other structures within the presidency are being structured to form medium and long-term policy sets.

The system established after World War II can no longer meet the dynamics of the world economy. There is an urgent need for new money, finance and commercial systems. Today, trade wars that seem to foreshadow a deeper crisis than the 2008 crisis are not the result of the grudge of the U.S. president, but the most concrete narrative telling us that the old system is over now.

The U.S. dollar-based trade and circulation system is ending. Besides, the developed countries can no longer use the technology rent, which is one of the main sources of their development. The main focus of the new industrial revolution is the horizontal expansion of technology, while the basis of profitability is not the vertical growth, but horizontal and sharing-oriented growth dynamics.

This basic change, changes not only the scales and dynamics of production, but also the basis of finance, starting with monetary systems. Digital commerce integrations and monetary systems, based on popular network technologies, are subverting the structures that have grown with traditional scale economies.

This will be the point where the new crisis is based. In this sense, not only in Turkey, but also all over the world, those who have established inflexible production and service structures through old scales will have difficulty soon.

The developed countries of the world, particularly those in Europe, no longer have the capacity to overcome these challenges on a micro level (companies and households) and a macro level (unemployment, public and general indebtedness, growth sustainability). Due to the aging population, demand components are weak and not pro-advanced technology.

Most importantly, these countries have lost their privilege of technology rent. However, even prior to the presidential system, Turkey had long made infrastructure investments of this new era on both micro and macro bases. It has now stepped into the presidential system, which will maintain these investments with greater efficiency and productivity. Turkey’s dynamic population structure is also demanding advanced and common technology. In this sense, Turkey will not face the challenges that developed countries will experience in the near future. So, the crisis will pass at a tangent to Turkey, just as it did in 2009.

Indeed, the new presidential system, which is fully outward-oriented, competitive and dynamic, will attract foreign investments on all levels and will quickly form political and economic environment – we have already begun forming it. For instance, the Credit Guarantee Fund (CGF) and the Credit Insurance System, the most important ones of the steps taken last year and this year, are finance and trade revolutions which have regulated our entire finance and trade system from scratch. Our Banking Regulation and Supervision Agency (BDDK) will soon issue the regulations on how rating agencies that will measure our small and medium size enterprises (SME). When this is coupled with the Credit Insurance System, it will be easier for our enterprises to access loans and our banks will more accurately place their resources. What are even these developments, other than a revolution?

In this sense, the road map is clear; investments will not stop, and the wheels of the economy will continue to turn by essentially handling structural problems such as inflation and the current account deficit in an inclusive growth perspective.

In this framework, I predict that the growth we achieved in the first quarter of 2018 will continue in the second quarter around 5 to 6 percent. For our financial system and companies, there is not a level of indebtedness that cannot be converted or a considerable open position. Also, those in such a condition are under control. I do not even need to mention it for the public sector anyway…