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Economic & Political Weekly EPW August 3, 2013 vol xlviii no 31 13

Is Turkey Thriving?

T Sabri nc

Turkeys ruling party, the Justice

and Development Party orAKP,has built its fortunes by followingan aggressive neo-liberalprogramme which has boostedthe finance, real estate andtourism sectors. With theeconomy weakening, theAKPfears erosion of its support base;this explains why the party can

brook no criticism of itseconomic policies.

On 27 May 2013, Jeffrey Sachs of

Columbia University published acommentary titled Why Turkey

Is Thriving inProject Syndicate. He argued,Long-term growth stems from prudentmonetary and fiscal policies, the politicalwill to regulate banks, and a combinationof bold public and private investments ininfrastructure, skills, and cutting-edgetechnologies (Sachs 2013). I was temptedto use the title Turkey Is Not Thrivingfor this article, but Deliveli (2013a) of

HrriyetDaily News has used that titlealready in his response to Sachs a fewdays later. I have nothing significant toadd to Delivelis arguments. There is nodoubt that Turkey is not thriving. Whichcountry is thriving these days?

Structural Weaknesses

Coincidentally, 27 May 2013 was also theday the Gezi Park protest, that triggeredthe ongoing uprising in Turkey, started.In 2006, another Columbia University

professor, Frederic Mishkin, co-authoredthe reportFinancial Stability in Icelandpraising the financial soundness ofIceland about two and a half yearsbefore the Icelandic financial systemcollapsed. It is difficult to say whetherit was Mishkin or Sachs who wasunluckier with the timing, because theeconomic miracle of the governingneo-liberal Justice and DevelopmentParty (Adalet ve Kalkinma Partisi,AKP)in Turkey has not collapsed yet.

A related debate took place betweenDani Rodrik of Princeton University andthe finance minister of Turkey, Mehmetimek on Twitter. Emre Deliveli joinedthe debate fromHrriyet Daily News on21 June, two days after the heatedexchange between Rodrik and imek.Deliveli summarised the exchange asfollows: It started when Rodrik tweeteda correction from The Economist: Inlast weeks briefing, we said that

Turkeys GDP per person had tripled inthe past 10 years. This was true only innominal terms. In real terms, GDP per

person has risen by just 43%. Sorry,imek countered, arguing that thecorrect way to measure GDP was innominal dollars (Deliveli 2013b).Delivelishumorous article Macroeconomics 101for Finance Ministers is not only a goodread humour has been the deadliest

weapon of the protestors against theAKP since 31 May but also contains ascreenshot of the entire exchangebetween Rodrik and imek.

To make matters worse, another salvocame from another heavyweight econo-mist, Daron Acemolu of MassachussetsInstitute of Technology. Acemolu told asmall group of journalists on 22 June be-fore a speech at stanbul Bilgi University(Kmrcler 2013),

The Turkish economy is at greater risk rightnow, but this is not about the countrywideprotests. The Feds latest decision to end theliquidity party had been expected for a longtime, and is not surprising. The expectedmove has affected many emerging and de-

veloping economies negatively for morethan three weeks. The Turkish economy,however, has been affected most due to itsstructural weaknesses, particularly its highcurrent account deficit.

But, of course, Acemolu is an Arme-nian citizen of Turkey and his hostility

towards the economic miracle of theAKP is only to be expected.

Given Prime Minister Recep TayyipErdoans now world-renowned searchfor conspirators including an interest-ratelobby who planned the ongoing proteststo bring down Turkey way ahead of time,I would not be surprised if Rodrik, Deliveliand Acemolu had already been promotedby some AKP officials to the ranks ofconspirators jealous of the economicmiracle of theAKP (Kayakiran 2013). It

is possible that even I may find a placein the long list of conspirators after thisarticle. There is another possibility.Ankara Mayor Melih Gkek, an electedofficial of theAKP, may tweet a link tothis article and accuse me of being anagent of India. I am writing in Mumbai,and both India and Turkey had beenamong high-growth emerging markets.Would it not be nice for India to bringdown one of her strongest rivals?

When Selin Girit, a Turkish reporterfrom BBCs Turkish service, tweeted aproposal from one of the ongoing park

For Abdullah, Ali, Ethem, Medeni and Mehmet.

T Sabri Oncu (sabri.oncu@gamil.com) is acitizen of Turkey currently based in Mumbai.

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forums in stanbul, Gkek started ahashtag war accusing Girit of being aforeign agent. In a series of tweets,Gkek claimed the following:

Led by England, they are trying to collapse oureconomy via agents hired, both nationally andinternationally. They are dreaming for Turkey

to be the Sick Man of Europe once again. Hereis concrete proof (Watson and Tuysuz (2013).

A large number of threateningmessages were sent to Girit after Gkeknamed and attacked her. Of course, Giritis not the only one who has been namedby electedAKP officials and has receivedlife threats. There have been many more.

The original tweet of Girit was this:

A proposal from the forum at Yourtu Park:Lets not be the standing man, but the manthat stops. Lets stop the economy. Dont

consume for six month[s] (HDN 2013).

It is the economy, stupid, as BillClinton coined in the 1992 presidentialcampaign. The question is, why is theeconomy so important to theAKP, despitethat theAKP secured about 50% of thevotes in the last election in 2011. Does not50% of the population of Turkey comprisedevout Muslims who would support theIslamistAKP under any conditions?

An answer comes from another foreign

agent, David Goldman (aka Spengler)ofAsia Times. I leave it to Gkek todecide whether Goldman is a paid agent ofBotswana, Madagascar or Belize. WhetherGoldman is a foreign agent or not, hewrote this in his 3 June article, TheEconomics of Turkish Spring

Only a small minority of theAKP base, more-over, favours its Islamist agenda. Only 12%of Turks want Sharia to be the law of theland, according to an April 2013 Pew Insti-tute survey, compared to 84% of Muslims inSouth Asia, 77% in Southeast Asia, and 74%in the Middle East and North Africa.That is why Erdoans mandate rested oneconomic performance. His Sunni funda-mentalist agenda does not appeal to theTurkish majority. But he drew votes fromsecular Turks on the putative strength of hiseconomic management (Goldman 2012).

Who knows what theseAsia Times andPew Institute are and with what inter-galactic intelligence agencies they areassociated? Maybe they are associated withsome, maybe they are not, but Goldman

has been arguing at the Middle EastForum since early 2012 that there hasbeen anAKP fuelled credit bubble in Turkey

(Goldman 2012). He is clearly a conspi-rator, even if he is not a foreign agent.

Vulnerability to Capital Outflows

It does not end there. As if with the inten-tion of adding fuel to fire, Goldman Sachsand the Washington-based Institute of

International Finance made public state-ments on the vulnerability of Turkeyto capital outflows on 21 June and 26June, respectively. On 21 June GoldmanSachs said,

Brazils real, Chiles peso and Turkeys liramay fall significantly to curtail wideningcurrent account deficits. The lira, South Africanrand and Indias rupee would need to depre-ciate about 30 percent on a trade-weightedbasis, while the real and peso need to fallabout 20% (Xie 2013).

And, on 26 June the Institute of Inter-national Finance said,

Turkey, Romania, Poland and Morocco areamong the countries most vulnerable to slow-ing investment in developing nations becauseof their dependence on foreign financing(Cao 2013).

Is this not concrete proof of an interest-rate lobby consisting of national andforeign financial institutions that wanthigher interest rates in Turkey?

Although the rest of the world learnt

of the term interest-rate lobby only afterthe onset of the 27 May 2013 uprising, thisterm is not new either in Turkey or in WallStreet. For example, about a year and ahalf ago on 11 January 2012 in AnkaraErdoan said, The interest-rate lobby isworking on the attack right now (Bryantand Bentley 2012).The term has been incirculation in Turkey for many years ifnot for decades and its origins may betraced back to 1985. In 1985, the centralbank financing of the government halted

in Turkey. The Turkish Treasury startedauctioning government bonds only to thebanks and other financial institutions athigh interest rates regularly and the thenCentral Bank of Turkey Deputy GovernorRd Saracolu established the inter-bank money market in 1986 (zgr 2008).

Indeed, there is an Indian counterpartof the term interest-rate lobby. It is theIndian term lazy bankers. The godfatherof the Indian term lazy bankers is no

other than a former Reserve Bank of India(RBI) deputy governor, Rakesh Mohan.He criticised the banks in India for being

lazy bankers a clique consisting ofbankers who buy government bondsbeyond reserve requirements I presume in 2002 at the annual bank economistsconference in Bangalore (Bandopadhyay2008). Coincidentally, the origins of theterm lazy bankers may be traced back

to the end of the central bank financing ofthe government also in India. The Indiangovernment started to sell all its bonds tobanks and other financial institutions athigh interest rates in 1994 and, in 1995,RBI direct purchases of the governmentbonds was banned. Yet, there was nothingwrong with what those lazy bankerswere doing. They were not lazy. Is it notmost rational to lend to that entity with thelowest risk, yet with very high return?

When Erdoan uses the term interest-rate lobby he means nothing but financecapital a term whose history goes backto Marx, if not earlier. Either Erdoanand/or his speech-writers have not readHilferdings Finance Capital written in1910 or they do not want to use the termfor ideological reasons. Maybe, financecapital is too difficult a term to communi-cate to the public? Or, maybe, becauseinterest is a sin in Islam the term interest-rate lobby is better suited to the sup-

porters of the IslamistAKP? What Erdoanpossibly does not know or say, however,is that finance capital does not careabout this or that country.

Neo-liberal Regime

Finance capital in general, and banks inparticular, rose to prominence in Turkeyafter the ongoing neo-liberal regime wasinstalled by the International MonetaryFund (IMF) which on 24 January 1980approved an economic stabilisation

programme in exchange for loans whena balance-of-payments crisis hit Turkeyin 1979. And, the implementation of theprogramme was guaranteed by theTurkish military with the coup dtatof12 September 1980. Indeed, not only theprominence of the banks, but the AKPitself is an offspring of that neo-liberalprogramme whose seeds were sown on24 January 1980 and watered on 12 Sep-tember 1980, although both the banks and

AKPs roots go back to much earlier times.Since the implementation of the 24 Jan-uary 1980 neo-liberal programme required

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an obedient workforce to ensure cheaplabour, the military junta adamantlysupported by the Industrialists and Busi-nessmen Association of Turkey (Trkiye-Sanayici ve AdamlarDernei, TSAD)or the stanbul bourgeoisie crushed theleft brutally and suppressed the labour

unions. Another tool of the junta amongmany others was to encourage religionagainst radical ideas and the left. Courseson religion were made mandatorythroughout grade school and religioushigh schools proliferated.1 And, shortlyafter the end of the junta in 1983, one ofthe largest Islamic congregations, theFettullah Glen Congregation started toorganise in the police force and eventu-ally captured almost all of it.2 It is thisbrainwashed police force associated withthe Glen Congregation that has beenattacking protestors around the countryin the name of God since May 31.

The objectives of the 24 January 1980stabilisation programme were a reduc-tion of state involvement in production; anincreased reliance on the markets, a switchfrom an inward looking economy to anexport-oriented one, and the attractionof foreign investment direct, I presume.After the declaration of the programme

Turkey signed three standby agreementswith the IMF and five structural adjust-ment loan agreements with the WorldBank between 1980 and 1984. While thesolutions offered by the IMF programmeswere short term and consisted of suchrecommendations as devaluing the cur-rency to increase exports and restrictingmoney supply to control inflation, thelong-term solutions of the World Bankstructural-adjustment programmes aimedat transforming an inwardly-oriented

economy to an outwardly-oriented one.These World Bank structural adjustmentsincluded trade and financial liberalisa-tion, export promotion, privatisation ofpublic enterprises and fiscal restructur-ing, that is, austerity.

This is how it all started and the mainoutcome was the rise to prominence ofthe finance, real estate and insurancesectors in Turkey, as well as of tourism.And, the game of rent collection had

begun. The AKP has been nothing butthe last agent of this ongoing neo-liberaltransformation in Turkey.

In a recent interview with Brasil deFato (Viana 2013), Joo Pedro Stdile,national coordinator of the Movement ofLandless Rural Workers, analysed theeconomic roots of the ongoing Brazilianuprising as follows.

There have been many opinions as to why

these protests occurred. I agree with theanalysis of Professor Erminia Maricato, whois one of our best specialists in urban issuesand has worked in the Ministry of Cities un-der Olivio Dutra. She defends the thesis thatthere is an urban crisis in Brazils cities, a re-sult of the current stage of financial capital-ism. Due to an enormous amount of housingspeculation, rent and land prices have in-creased 150% in the last three years. With-out any government control, financial capi-tal has promoted the sales of cars in order tosend profits overseas and transformed ourtraffic into chaos. And in the last 10 years

there has been no investment in public trans-port. The housing program My home, mylife has driven the poor out to the peripheryof the cities, where there is no infrastructure.

All this has generated a structural crisiswhere for people, large cities have become aliving hell where they lose three or fourhours a day in transit which they could in-stead be using to spend with their family,studying or participating in cultural activi-ties. Added to this is the poor quality of pub-lic services, especially health and education,from the primary and secondary level,

where children leave without being able to

write. And university education has becomea business, where 70% of university studentsdiplomas are sold on credit (Fuentes 2013).

And, in a recent interview at Open-Democracy, Samir Amin, an Egyptianeconomist, described his views of theeconomic reasons behind the second revo-lution in Egypt, unfortunately capturedby the military once again, as follows.

Millions of people signed their names aftergiving deep political consideration to whatthey were doing: something totally ignored

by the international mainstream media.They represent the majority of all the elec-toral constituencies, but they do not haveany voice. The Muslim Brothers wield politi-cal power and like to think they can control100% of the votes. Thus, they ensured mem-bers of the movement in every public sector.Islamists have only ultraliberal answers togive to the crisis: they have replaced thecapitalists bourgeois clique that wereMubaraks friends with reactionary busi-nessmen. Moreover, their goal is quite sim-ply to sell off public goods.It is theft to attach derisory prices to goods

that are worth billions of dollars. These arenot the usual privatisations that reactionaryregimes indulge in, selling off goods at their

economic value. This is pure fraud, more thana privatisation (Amin and Acconcia 2013).

Put Stdile and Amin together, and youare more or less describing the thrivingTurkey of Sachs. If you see any resem-blance between your country and thesethree countries, namely, Turkey, Brazil

and Egypt, you can be certain that theelites of your country are trembling.

Notes

1 Ahmet Sik, ImaminOrdusu (The Army of theImam), 2011, unpublished manuscript float ingover the Internet because it was banned bythe AKP.

2 http://fgulen.com/en/

References

Amin, S and Acconcia, G (2013): A Year of Demo-cratic Farce, Open Democracy, 4 July, viewed on

23 July 2013: http://www.opendemocracy.net/samir-amin-giuseppe-acconcia/year-of-demo-cratic-farce#.UdV389zoAJ4.facebook

Bandopadhyay, T (2008): Back to the Easy Old Daysof Lazy Banking,LiveMint, 4 February, viewedon 23 July 2013: http://www.livemint.com/Companies/uCzQuROgwo4cJdHqI7FyuO/Back-to-the-easy-old-days-of-lazy-banking.html

Bryant, S and M Bentley (2012): Erdogan Will FightInterest-Rate Lobby in Turkey, Says Rates ShouldFall,Bloomberg, 11 January, viewed on 23 July2013: http://www.bloomberg.com/news/2012-01-11/erdogan-will-fight-interest-rate-lobby-in-turkey-says-rates-should-fall.html

Cao, B (2013): Turkey to Romania Seen at Risk asEmerging-Market Inflows Slump, Bloomberg,26 June, viewed on 23 July 2013: http://www.bloomberg.com/news/2013-06-26/turkey-to-romania-seen-at-risk-as-emerging-market-in-flows-slump.html

Deliveli, E (2013a): Why Turkey Is NOT Thriving,Hurriyet Daily News, 31 May, viewed on 23 July2013: http://www.hurriyetdailynews.com/why-turkey-is-not-thriving.aspx?pageID=449&nID=47915&NewsCatID=430

(2013b): Macroeconomics 101 for Finance Minis-ters,Hurriyet Daily News, 21 June, viewed on 23July 2013: http://www.hurriyetdailynews.com/macroeconomics-101-for-finance-ministers. aspx?pageID=449&nID=49178&NewsCatID=430

Fuentes, F (2013): Brazil: Joo Pedro Stdile of theMST: We Are in the Midst of an IdeologicalBattle,Links, 24 June, v iewed on 23 July 2013:http://links.org.au/node/3411

Kayakiran, F (2013): Erdogan Casts Bankers as Villainof Turkish Protests,Bloomberg, 19 June, viewedon 23 July 2013: http://www.bloomberg.com/news/2013-06-19/erdogan-casts-bankers-as-

villain-of-turk-protest-boosting-yields.htmlKmrcler, G (2013): Turkish Economy at High

Risk, But Not Due to Gezi Protests, MIT EconomistSays,Hurriyet Daily News, 24 June, viewed on23 July 2013: http://www.hurriyetdailynews.com/turkish-economy-at-high-risk-but-not-due-to-gezi-protests-mit-economist-says.aspx?pageID=238&nID=49336&NewsCatID=344

Goldman (2012): Ankaras Economic MiracleCollapses Changes in Turkey, The Middle EastQuarterly, 19(1): 25-30, viewed on 23 July 2013:http://www.meforum.org/3134/turkey-eco-nomic-miracle

(2013): The economics of the Turkish Spring ,Asia Times, 3 June, viewed on 23 July 2013:http://www.atimes.com/atimes/Middle_East/MID-02-030613.html

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The Global Relevance of IndiasPharmaceutical Patent Laws

Rory Horner

The recent decision in the

Novartis Glivec case continues along-established tradition of Indiacontesting a Northern agendaon patent laws. This key globalrole, arising from the exceptionalcombination of a vibrant domesticpharmaceutical industry withcivil society awareness of thepublic health implications ofpatents, has been accentuatedby recent developments and hascontinued relevance for theglobal South.

Denied on the grounds of not havingmet the standard of efficacyrequired by Section 3(d) of the

2005 Patent Act, the 1 April 2013 SupremeCourt dismissal of the Novartis appealagainst the earlier rejection of its patentapplication for Glivec, an anti-cancermedication, has attracted global attention(e g, Biswas 2013; Chatterjee 2013; The

New York Times 2013). In a recent com-mentary in this journal, Sudip Chaudhuri(2013) has outlined some of the broaderimplications of the decision, including the

linking of the question of patenting withnet benefits to society and considerationof the specific conditions of a country.

Here, I argue that the recent pharma-ceutical patent law decision continues along-established tradition of India playinga key global role in contesting a Northernagenda on patent laws. This influenceextends well beyond the Indian pharma-ceutical industrys monetary value or im-mediate geographic location, and arisesfrom the combination of a vibrant domestic

industry with civil society awareness ofthe public health implications of patents.

Leading Patent Law Reform

India has for long been a pioneer in thedeveloping world in attempting to adaptpharmaceutical patent law to take accountof domestic health needs and to be in linewith its level of development. At the timeof Independence in 1947, the colonialPatent Act 1911 was still in place providing

for patents on both products and processes(technique of manufacture) in pharma-ceuticals. Post-Independence government

inquiries, such as the Patents EnquiryCommittee 1950 and the PharmaceuticalEnquiry Committee 1954, recommendedthat patent law should be set to take ac-count of the national interest and the levelof development. Government enquirieswere also distinguished by a particularreluctance to grant extensive patents onpharmaceuticals.

The Patent Act 1970, based on therecommendations of the 1959 AyyangarReport, was a crucial initiative to facilitatea domestically-owned pharmaceuticalindustry as an alternative to the very ex-pensive imported pharmaceuticals. Com-ing into force in 1972, this Act wasdesigned to offer process patents for onlyfive years, and no product patents, onpharmaceuticals. As has been welldocumented (e g, Chaudhuri 2005), thechange in patent law played a key role

in the development of the Indian phar-maceutical industry.

These developments also had a muchwider global influence. By reforming itspatent law and showing that a substantialpharmaceutical industry could emergewithout product patents, India acted as apolicy model and became a leading coun-try in placing pharmaceutical patents onthe agenda for the New InternationalEconomic Order (Patel 1983). Proposingthat, where appropriate, each developing

country should establish its own pharma-ceutical industry, the 1976 Colombo con-ference of non-aligned countries recom-mended that, for pharmaceutical patents,states should either shorten the durationof or exclude product patents. The Indiangovernment pushed for a revision of the1883 Paris Convention on intellectualproperty (IP), but following demands bydeveloping countries for exclusive com-pulsory licensing of patents, negotiations

on this proposal broke down in 1981.The approach to IP set by the Indiangovernment, namely that patent law needs

Rory Horner (rhorner@clarku.edu) is at theGraduate School of Geography, Clark University,United States.

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zgr, D ala (2008): Economic Decision Mak-ing in Turkey: Financialization and the Ex-perts, unpublished PhD thesis, John HopkinsUniversity.

Sachs, J D (2013): Why Turkey Is Thr iving,ProjectSyndicate, 27 May, viewed on 23 July 2013:http://www.project-syndicate.org/commen-tary/inside-the-turkish-economic-miracle-by-

jeffrey-d--sachsViana, N (2013): O significado e as perspectivas

das mobilizaes de rua, Brasil de Fato, 25June, viewed on 23 July 2013: http://www.brasildefato.com.br/node/13339

Watson, I and Tuysuz, G (2013): Ankara Mayors

BBC Spy Claims Spark Hashtag war, CNN,25 June, v iewed on 23 July 2013: http://edition.cnn.com/2013/06/24/world/europe/turkey-gokcek-hashtag/?hpt=hp_t3

Xie, Y (2013): Goldman Says Real, Lira, Rand MustWeaken to Close Trade Deficit, Bloomberg,21 June, viewed on 23 July 2013: http://www.bloomberg.com/news/2013-06-21/goldman-says-real-lira-rand-must-weaken-to-close-trade-deficit.html