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Mexico, South East
Asia, Russia, Brazil.... now Turkey. Tomorrow it will be Argentina. All victims
of IMF battering. The symptoms were common, the disease the same, the cure the
same IMF structural adjustments. The only difference with Turkey is, a super-cop
cum super-minister has been appointed to forcefully administer the bitter
medicine. This gangster will have extra-constitutional powers answerable to
nobody save his bosses in Washington. He has been given sweeping powers over all
economic and financial matters of the country. He is to take charge of the
treasury, planning, and privatisation. He will oversee budget spending, the
central bank and the regulation of the banking industry and capital markets. He
can overrule all ministers.
Who then is this
monster who has thrown aside even a pretense at democracy and ‘elected’
government. He is Turkish by origin but has his home in Washington. His name is
Kemal Dervis. Prior to taking over as Turkey’s super-minister, he was
vice-president of the World Bank. The IMF had been aggressively demanding his
appointment ever since the current crisis exploded on February 19. Even the
puppet government in Turkey found this an imposition and at first resisted. He
was instead meekly offered the post of Governor of the Turkish Central Bank as a
compromise. This was arrogantly refused by Dervis and the IMF, who demanded all
powers or nothing. Finally, the servile Prime Minister acquised.
The crisis in Turkey
is a mirror-image of what happened in East Asia and elsewhere. First the FII
pumped in huge funds and pushed up the stock exchange to dizzying heights. The
stock market boomed from 5000 in mid 1999 to 20,000 in early 2000. But this was
artificial and speculative; the real economy was in shambles. Throughout the
1990s inflation had been at 100%, and even the current rate was 30%. The crisis
magnified by end 2000. During just two weeks in December interest rates shot up
1,700%. A number of banks crashed and hundreds more were on the brink of
collapse. Amidst another episode of capital flight the IMF came with its
standard bail-out of $10 billion as a three-year loan.
And with it came the
‘reforms’ package. They demanded immediate boosting of foreign currency reserves
through privatisation. The government faithfully pushed through measures to sell
off one-third of its stake in Turkish Telekom and 50% in Turkish Airlines.
Yet the crisis only
deepened. Together with the economic crisis a political crisis erupted in mid
February resulting from an open spat between the Prime Minister and President
over the issue of an anti-corruption drive in the banking sector.
The FIIs saw their
chance and launched their concerted attack. Overnight they pulled out their cash
(on which the entire Turkish economy was dependent having been an IMF faithful
for decades). Within hours the stock exchange fell a huge 15%. There was a run
on the Turkish Lira by speculators. The Central Bank pumped in $4.5 billion
(1/6th of its cash reserves) into the currency market to defend the Lira. But
the FIIs continued their hammering of the economy — within two days they
withdrew another $3 billion. To discourage speculation the Central Bank raised
interest rates by a phenomenal 6,100%. But, just as what happened in East Asia,
Brazil and elsewhere, the funds with these countries were no match for the FIIs.
The government could no longer maintain exchange rate controls and as the
Turkish Lira free-floated, it lost 35% of its value.
With this
devaluation, it was trading at one million Lira to a US dollar. Almost
overnight, millions of Turks and Kurds found their wages and savings devalued by
nearly one-third. Protests broke out throughout Turkey. They wanted a
cancellation of the "IMF Programme" and a sacking of the ministers responsible
for the crisis. Bank employees in Istanbul held separate protests against the
IMF. Dozens were arrested.
Turkey is one of the
best samples of an IMF-guided economy. For several decades now, it has been
under its continuous supervision, with no fewer than 17 IMF programmes
introduced in the country. It has faithfully followed its instructions and
orders : offering major incentives to foreign capital; offering up major state
assets for privatisation; setting up a currency peg, along Argentine lines which
linked the Turkish Lira to the dollar; and imposing high interest rates as part
of a deflationary package. It therefore proves, without any doubt, that the IMF
formula is nothing but a measure to destroy local economies and push them deeper
into the tentacles of the imperialist octopus.
Each bout of
liberalisation will offer only a temporary reprieve, and expose the economy even
more to future crises. And when these crises occur, they will only be contained
by further liberalisation and further concessions made to the insatiable foreign
capital. It is a repetitive vortex which, with each cycle, pulls these economies
deeper and deeper into the control of the imperialists.
Not surprisingly, no
sooner had Dervis taken over, that he flew to Washington to negotiate an even
larger IMF loan of $35 billion !!
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