The Turkish Handbook of Economics…

By Tuma Çelik Syriac Member of Turkish Parliament

I did not write the handbook on economics, but I did study economics for six years. Before that, I studied accounting for one year and worked in trade for several years. In other words, I learned economics in practice, in the Bazar, the marketplace, and factory, and studied economic theory at university. That is why I want to say a word or two about the recent events regarding our interest and exchange rate policies, among other things.

Some countries consciously follow a “high exchange rate” policy and try to make their own country’s currencies appreciate against foreign currencies. These countries are generally countries that focus on growth and prosperity through an export-oriented strategy. These countries produce products and raw materials cheaply at home, and, thanks to the “high exchange rate”, they sell these products and raw materials abroad for valuable foreign exchange. The domestic economy of the country grows while the producers become more prosperous.

However, it is not always possible to achieve the desired economic results with above exchange rate policy. This is certainly not possible for countries that base most of their exports on imports. The reason is that the import products needed in order to produce the products for export, will have to be purchased at unfavorable high exchange rates. Therefore, the products to be produced and sold will cost almost the same as the products produced in competitor countries. This comes at the expense of domestic competitiveness and profit margin. Therefore, a “high exchange rate” policy in these countries is not effective.

As Turkey is a semi-agricultural underdeveloped industrial country, most of its export products are non-agricultural and import-based. Because of this dependency, a large part of the products we sell abroad depend on the prices of the imports needed to produce them. Turkey cannot export without importing. Moreover, because Turkey is a semi-agricultural country, it imports much of its raw-food needs from abroad.

On top of all this, Turkey has to import much of its energy needs in oil, natural gas, and electricity from abroad. This leaves Turkey only with revenues from its tourism sector. It can use these revenues without spending money abroad. In the tourism sector, however, there is a lot of competition and the profit margins in the sector are very low. Turkey is ranked as the “cheapest tourism country” in terms of competitive power.

Am I the only one who knows all this? Of course not. Every day, dozens of economists, who are not under the control of the Turkish government, speak out about this. And that is not all they do. They also provide solutions on how Turkey can get out of this vicious cycle and economic paradox. Those in power, however, who do claim to have written the “handbook of economics” have different agendas, considerations, and calculations. They act according to other “truths” than the generally accepted truths. Therefore, like everyone else with a “classic” economic background, I have a hard time understanding the current economic trajectory in Turkey.

In conclusion let me say this on the above matter; some things are mathematically clear-cut as “2 times 2 is 4”. They are not open to interpretation. And that is no different in this case. Economic truths are fact-based and do not change according to the beholder. Eventually the manipulation will end, and we will all have to face reality. I hope that day will not be too late…

While we are on the subject of economics, let us take a closer look at the shadowy world of road-bridge-tunnel, city hospital and airport construction in our country. Let me say this upfront; I do not, of course, consider it wrong to build and develop our transportation infrastructure, which is a sign of the wealth of a country and is indispensable for development. Likewise, it is not wrong to develop our health system, a requirement of the social welfare state, and to ensure that it is accessible to everyone. Therefore, it is not wrong to build a hospital in every province, regardless of its name.

In short, I do not think these things are wrong, but I do think the way and the conditions under which they are done in our country are wrong. There are serious doubts and sharp criticism on the execution of government duties and public work, in almost every economic sector, that the interests of a particular clique are considered above the interests of the country as a whole and all its citizens.

Yes, as with many other things, the used economic model of build-operate-transfer, where the government initiates a public transportation service and then transfers its operations to the private sector, is a matter of policy choice and in my opinion not necessarily a bad choice. Because governments simply do not always have the necessary resources at hand to do what they want to do. The ability to obtain these necessary resources may not always be available or economically feasible. In such cases and based on this build-operate-transfer model, governments execute public work they see fit by spreading the resources they need over time. There is nothing wrong with this. What is wrong with it in our country, however, is the form and use of the chosen build-operate-transfer model, and the wrong behavior that has produced.

Under normal democratic circumstances, and regardless of the political color of the incumbent government, a government should be equidistant from everyone in the country and provide equal opportunity to all from the moment it begins to rule the state. In this context, the government should provide equal opportunities for everyone who wants to work with the build-operate-transfer model. Unfortunately, this is not how things are done in Turkey.

In Turkey under the current government, the build-operate-transfer economic model functions as a full-scale “state siphoning” model. The government conducts most of its economic public duties not on the basis of tendering but by invitation, and only to a certain circle, the “gang of five”. And if this were not enough, the government also eliminates the “risk” of project failure – one of the most natural rules in the world of commerce – for the operators by giving them a guarantee on profits during the term of the operating lease. The amount of transferable profit is completely at the mercy of the government. Unfortunately, the government is not very fair about this.

Another critical point is the state-guarantee on the number of passengers given to the lease operators. According to information obtained, the number of state-guaranteed passenger numbers on highways and airports is very high. Operators will be compensated by the state for passenger shortfalls. This phenomenon is especially visible at airports. According to many experts, the number of the recently built airports that can reach the government-guaranteed number of ” passenger” will not exceed 3 or 4. But thanks to the state guarantee, the state covers the resulting operating deficits. This comes out of our pockets whether we use that airport or not.

So, these are the things we criticize. We are very concerned that the build-operate-transfer economic model is being used by the current rulers as a tool to “rob” the country. Otherwise, of course, we are not against the construction of airports in our country. Neither against the opening of health facilities accessible to everyone nor against the construction of a roads, bridges, and tunnels.

Tuma Çelik is an Independent Member of Turkish Parliament for Mardin. You can follow him @tuma_celik

This op-ed was originally published in Turkish by Gazete Sabro on November 19, 2021. The original can be found here

The views expressed in this op-ed are solely those of the author and do not necessarily represent those of SyriacPress.