Crisis management: Erdoğan style

Since mid-August hundreds of thousands of Turkish workers lost their jobs; dozens of prominent factories of the country closed their doors; a sharp decrease in Turkish exports was recorded and Turkey’s credit rating was drastically degraded by international rating agencies, but up until very recently, Erdoğan was losing his temper, his eyes were growing bigger and he was starting to yell at and blame as "crisis mongers" whoever used the word "crisis" or talked about "the need to take some urgent economic measures."

Business people and industrialists demanding the government engage in a new standby deal with the IMF were being accused by the prime minister over the past many months of demanding state guarantee for their debts but he would not let "the IMF choke the Turkish economy É" Later, however, the prime minister, at least, agreed of the need of making a new deal with the IMF and met with the IMF executives in Washington. The deal is still in the making and how much credit the IMF will extend to Turkey is still unclear.

In the meantime the crisis was deepening and spreading across the country, the already incredible and unprecedented high current accounts deficit was skyrocketing and the country sinking in stagnation. Then, the crisis which was to past Turkey tangentially, learned from the prime minister over the last week that the crisis had not only reached Turkey, but had indeed reached a peak point and had started to subside but the "impacts of it will be felt for a long periodÉ"

Some may say, of course, that what we have been living through is one way of crisis management because had the government conceded that there was indeed a crisis in the country, because of the panic wave such an acknowledgment would have created in the society, the crisis would have grown even bigger É Some others, however, would say the Erdoğan government has tried to apply some sort of an ostrich approach, buried its head in sand and hoped that since it did not see the crisis, the crisis would past the country tangentially.

Situation worsens
The prime minister and his economic tsars are of course very busy with crisis denial or in efforts to downgrade impacts of the "tangentially" passing crisis on Turkish economy, but they should spare some time and watch TV bulletin demonstrations of workers, journalists sacked from work across the country.

For the past one month, on the other hand, the government has been talking about a set of measures it intends to take to diminish the impacts of the "tangentially" passing crisis that reached a peak point" and is now "subsiding down" but impacts of it will be "felt for a long period ahead." The package, however, could neither be completed, nor does the government intend to announce it anytime soon. But, as if it wanted to add some salt and pepper to the last supper of the divine Turkish administration, the international rating agency Moody’s served a very strong warning to Ankara that the Turkish economy would enter recession in 2009 if it does not cut a new agreement with the IMF.

"Without an IMF program, Turkey will end up going into recession in 2009. The issue is one of confidence," said Moody’s Turkey analyst, Kristin Lindow in a presentation to a conference in Istanbul. But the government is having "the later the better" opinion as regards a deal with the IMF because an IMF deal will choke its free coal, foodstuffs and such election gifts. Further worst, while the government is expecting to receive some $20 to 40 billion of credit from the IMF (the actual figure is slated to be around $19 billion), it is estimated that by the March local polls, some $25 billion of free coal and foodstuffs will be distributed to the poor to woo their votes. Still, the government remains deaf and blind to calls of the industry to reduce value added tax and the special consumption tax, to boost consumption as a measure against impacts of the crisis.

This is crisis management - Erdoğan style.