Threats and opportunities

“We are caught in the web of a global crisis which has nothing to do with the local economy,” they say. At least they are kind enough to admit that there is a worldwide financial crisis.

“How can we overcome this crisis, with the least damage?” they kindly murmur. And most important of all, these words are voiced in front of foreign officials. “We also think of this crisis as an opportunity,” our government officials challenge.

These words really soothe our concerns.  Sometimes certain crises can be turned into opportunities. My dear friend Osman Arolat always reminds us that in Chinese the word “crises” means both threat and opportunity. We can always turn this crisis into an opportunity but nobody wants to deal with important structural problems.

As if there was nothing to do, we created an argument with the International Monetary Fund, or IMF, about squeezing throats. The issue is not the IMF or the European Union anchor. The important issue is for Turkey to regulate her mid-term economic program. The national budget, which was submitted to the Grand National Assembly floor, is contradicting the program we have. On the other hand, the road the government is following is making every prediction about the upcoming budget impossible.

Next March there will be local elections. The government is at an impasse about taking economic measures and preparing for local elections. But something has to be done. A new package has to be submitted to Parliament. This week only the bill called “The Mevlana legislation,” will be discussed in Parliament. According to the bill, Turkish citizens will bring back money earned in foreign countries without paying any income tax. They are only required to pay a tax of 2 percent for money they have gained.

Most probably the bill will be passed by Parliament next Thursday but it is not clear that it will be a guarantee for money to come from abroad. Because that sum is not as much as we expect in this situation. It is not enough to bring back money and not question its sources. If banks decide at the end of the day to recall all credits they have paid, what will happen?

It is certain that money will be afraid and escape. It is said this measure was taken to soothe the concerns of bank account holders. But in reality by taking this action, banks want to keep themselves happy. Because the source is abroad and paying it back becomes more expensive every day.

We are entering a phase in which both the value of imports and exports are dropping. The gap between foreign financial instruments will increase. The need for local and foreign financing will rise. As there are no new investments there is no economizing. It is clear that we are constantly in need of foreign financial funds. We have to keep a good relationship with foreign money markets. But as those markets are very much involved in solving their own problems, it might be a hard time to attract their attention to Turkey.

Last year only two bills could be passed through Parliament for the restructuring of the Turkish economy. One was the social security bill and the other the bill to develop research and development. This year the government has to take the opportunity of this crisis and focus its attention on fundamental bills.

We have to reorganize the infrastructure of capital, money, the workforce and other markets. Most importantly we have to re-establish economic legislation and redefine the place of public institutions. Saying “the Central Bank is autonomous” is not enough. And things do not work if you threaten the Governor of the Central Bank with being fired whenever he does or says things you do not like. Today economic institutions lack proper infrastructure and legislation. On one hand you can restructure the markets and on the other hand, infrastructure will not be right. This is unimaginable.

As we are on our way to admitting our reality let us also begin to solve our fundamental economic problems, meaning, let us complete our economic infrastructure regulations.