Even the ongoing tension between Iran and Saudi Arabia has failed to prevent the decline in oil prices. Russia's war-based strategy in the Middle East, particularly in Syria, has also flopped. The U.S. knows that public support for Russian President Vladimir Putin, which was more than 80 percent last year, will be disrupted by a heavy economic crisis, and it outlines its strategy based on this possibility for now. With the removal of the 40-year-old oil export ban in December, the U.S. now stands out as an energy giant that will determine oil prices from now onward. Furthermore, it was a significant coincidence that the U.S.'s expectation for a rise in oil inventories and North Korea's detonation of a hydrogen bomb occurred in the same few hours. This being the case, as the dollar has gained value around the globe, oil prices have declined. This means that countries in the Middle East, which strive to make their systems sustainable through high oil prices, will not have a future in the medium term. Moreover, Saudi Arabia's budget deficit has reached $100 billion, while Russia is in a worse state and it will grow even worse, even more quickly. It is estimated that the Russian economy will continue to shrink in 2015 and the upcoming years. The Russian economy might shrink by more than 2 percent in 2015 and this shrinkage is likely to continue in 2016 as well. Such a situation will not only make Putin's rule questionable inside of the country, but it will also jeopardize his regional strategy, particularly the Eurasian union project. As a result, the oligarchic capital, on which Putin relies, has two choices to make in the near future: To renounce either Putin or his strategies. In both cases, however, Russia will continue to pose problems in the region in the near future as an ailing country that disrupts stability. In short, as in the previous century, the Middle East and the Caucasus will play a key role in the formation of the 21st century and every country that bases its economy on energy exports in these regions will have to revise and change their regimes. So, it appears that things will not settle down in the Middle East and the Caucasus in the short and medium term. The same argument applies to developing countries in the eastern and southern parts of the world, which should open their systems up for discussion, starting with the economy. For instance, the problem with Latin American countries is not that their economy relies on a single natural resource like that of Russia. Rather, they fail to escape neoliberal economic policies and develop unique growth models. Even assertive leftist governments in Brazil failed to do this. I think South Korea is a striking example in this regard among developing countries with the practices it has applied since the end of the 1990s.
Nowadays, Turkey has initiated a discussion through the idea to switch to a presidential system and a new constitution. I would like to take this occasion to address the disinformation that is aimed at President Recep Tayyip Erdoğan, which argues that he is trying to highlight a closed, statist and sometimes populist economic approach. This disinformation is not voiced by certain circles from inside the country alone, as it was much earlier masterminded by global financial circles that have recently been found to have non-market criminal records. The stance of these circles on developing countries is not a secret, as they have a rip-off mechanism that is an updated instance of the orthodox International Monetary Fund (IMF) programs of the 1970s and 1980s. During these years, developing countries did not implement a floating exchange rate plan and many of them built their monetary policies, which were outlined by colonial institutions like currency boards, on the idea of transferring funds to the outside, becoming indebted to the outside and paying these debts. The logic of this mechanism was based on the idea that internal and external prices must absolutely be balanced in these countries where growth was based on imports and high inflation, as they did not produce intermediate industrial goods. However, this kind of logic hit the wall after a while; the IMF urged these countries to unveil high devaluations to make export goods very cheap and ensured a debt payment cycle through intense austerity measures.
Now, many countries, including Turkey, implement a floating exchange rate regime that encapsulates inflation targeting and implicit exchange rate targeting. The only tool for the stability of exchange rates is interest rates, which can maintain debt and imports as long as it is above the world average. As it can be understood from the fact that the Central Bank of the Republic of Turkey (CRBT) has achieved the inflation target just once over the past 10 years, it is not possible to keep inflation low. Indeed, this is a rent and rip-off economy in the real sense, starting from monetary policies and, as opposed to what is claimed, it does not highlight an outward-oriented economy, but a closed one where the market does not function in financial and real fields, as a monopoly rent mechanism prevails there. This understanding is an enemy of foreign direct investments, which generate long-term employment and income.
As an alternative to this understanding, the investment environment should be improved further in Turkey and long-term trust should be built for investors. The state should protect Small and Medium Sized Enterprises (SMEs) by creating economic externality, activate the market regulation through anti-monopolistic adjustments and spearhead research and development (R&D) investments. It needs efficient fiscal policies to achieve all this.
Turkey aims to achieve full EU membership, which highlights a completely outward-oriented economy where market entries and exits are absolutely free. The efficiency of independent regulatory and supervisory institutions is important in such an economy. These institutions unearth anti-monopolistic non-market acts and build market regulation based on this framework. Here, the objective is to ensure public welfare and a constantly improving income distribution that eliminates poverty. So, countries like Turkey will abandon impoverishing and outdated economic policies that are based on a Ponzi-style understanding. This can be a brief definition of the Erdoğan economy, if it really exists as claimed. Indeed, this path is a step toward a remedy and welfare in all developing countries.