After Margaret Thatcher became prime minister in 1979, many said that she would do a “U-turn” away from the economic liberalization reforms she had promised. The iron lady would disappoint them. “To those waiting with bated breath for that favorite media catchphrase, the ‘U-turn’, I have only one thing to say” she said, “You turn if you want to. The lady’s not for turning!”
Yet very shortly afterwards, starting in 1981, the lady started to turn. She left her version of ideology behind and accepted the facts. Why? She knew that prime advice in politics, I presume: don’t fight facts.
But fighting facts becomes all the harder when they are visible to the naked eye of the voter especially under COVID-19 conditions. When several people you know have lost their jobs, when perhaps you have lost yours, when people can’t find the money to buy groceries or pay rent, something will give sooner or later. You are bound to revise your political opinions at some point, say things and do things you never thought you would, and no amount of nationalistic language can change that.
Last weekend, we started to see a great shift in Ankara, suggesting that the government understood this. It started with the appointment of a new central bank governor and a new economy minister, both old school technocrats very well known in policy circles. Then the president met with the CEOs of foreign-owned companies in Turkey for the first time after a long interval, singing all the right tunes, if I may say so. Markets reacted favorably, and the lira appreciated more than 10 percent in a single week. Yet there has not been much of a change in Turkey’s CDS ranking. Turkey still has the highest risk premium at 403, indicating that a mere rate hike (which is expected) would not be enough for the country to return to its old business-friendly place.
What everyone wants to know is: is this truly the end of Mickey Mouse economics in Ankara? It is not an easy question to answer. I tend to think that COVID-19 has narrowed Ankara’s margins for further experimentation, and re-awakened a taste for economic reality. There has been some striking data to illustrate this point, too.
Have a look at October’s polls. When Metropoll asked people about the country’s economic course, 78 percent said that it was going badly. Note that this group was made up of 58 percent and 69.4 percent AKP and MHP voters respectively.
When this 78 percent asked what was wrong with the economy, 60.2 percent blamed “wrong economic policies,” 45.9 percent said it was the presidential system and 45 percent said it was a perceived incompetence of the government’s economic management team. Only 22.7 percentage of survey participants put the blame on nefarious foreign plots! That is not enough to win a presidential election, and indicates that the government’s line has not been working.
I see the survey results as a solid basis for a seasoned politician to decide not to fight the facts. Now is the time to sober up and focus on the fundamentals for the Turkish economy.
Still, the question remains: Is the change in Ankara real and here to stay, or just window dressing? Are we back to sound economic policy or just buying time?
I tend to think that a cosmetic change would have been smoother. The sheer amount of drama surrounding the shift indicates a deeper change in the way the government approaches the economy. The proof of the pudding, of course, is in the eating.