In this article, I would like to touch on three related issues, each with its own significance and solution. First is the new position of emerging economies, especially Turkey, in the global system and the redefinition of its economic and political relations with developed countries, especially the U.S. Second is the repartition of markets and resources. Third is the need for imports apart from energy or import dependency in industry and the concomitant chronic foreign trade and current account deficit problems in an open economy like Turkey.
Today, Turkey-U.S. relations are not only a political issue, but also an economic one which is addressed in the context of the general course of the economy and the daily functioning of money and capital markets. Some argue that the tension in Turkey-U.S. relations is being dragged into a point that goes beyond the Johnson letter and the Cyprus Peace Operation – which will eventually have a negative impact on the economy. First, let me say that the political and economic system established under U.S. leadership in the wake of World War II has ended and what we are experiencing now should not be mistaken for the tension experienced in the 1960s and 1970s.
During and a short while after the Cold War, the strategic partnership was ultimately described and used as a towing line for hegemonic power in the system. Turkey's deep-rooted objections, as in the Cyprus issue, surfaced as temporary tension that subsided when the parties agreed on the general line that U.S. economic sanctions were going as far as an embargo during these tense periods and the International Monetary Fund (IMF) was hanging over the country like the sword of Damocles – which were the main factors in resolving the tension quickly in the U.S.' favor.
Objections to the dominant policy had economic consequences, such as the interruption of foreign aid, restrictions on trade, the suspension of foreign credit, the exchange problem and making foreign goods supply impossible. This picture, of course, was enough to replace the opposing political power with a military coup even before elections were held. Even if there were different systemic functions in various regions of the world, like Latin America, the general systemic functioning and global hierarchy were established in this way.
Earlier this century, first the Soviets got out of this equation and Eurasia, starting from Eastern Europe, embarked on a new quest. And at that time, the new colonial closed economies began to find ways to quickly open up to foreign countries. Apart from the traditional left and right understanding, new political movements and leaders began to appear in these countries. In the old paradigm, independence movements remained short-lived moves that countries tried to maintain either on their own or as the satellite of the Soviets. However, open and dynamic economies, in which markets freely could run, were needed in order to catch up with the quickly developing technology to be partners in the global financial system and find resources to develop.
Now, emerging economies, starting from the Pacific, have begun to acknowledge this fact since the end of the 1980s, ushering in a new era. So, the colonies of the past came to attract global investments, rebuild technology and develop it. Capital exports, starting in the Pacific and spreading to the whole world, began. It did not take too long for China to partner with the U.S. The first dollar monetary system that the U.S. created after World War II also began to destabilize at that time.
In a nutshell, nothing is like it was before, so tension or breakdowns in relations are no longer issues for Turkey. Turkey will act in line with its interests, especially in its own region and everyone, particularly the U.S., has to acknowledge it. We have come to the end of the U.S. thinking that its interests are universal as it polices the world.
This new situation will not adversely affect the overall balance of the economy and its growth trend. On the contrary, with a holistic approach, it will boost welfare in the medium and long term depending on the more equitable partition of markets and resources.
Today, high-speed rail networks, energy transits, the emergence of new energy resources with new technologies and the fair sharing of these resources constitute dynamics that will undoubtedly change the global hierarchy for the good of the oppressed.
Within this framework, we are in the midst of a new partition process in which the oppressed demand a new and fair share. Countries like Turkey implement a floating exchange rate regime and place no restrictions on money and capital markets where inflows and outflows are free, but they do have a foreign deficit. Given the facts above, such countries should bring up a new development and industrialization strategy.
There are two main reasons for Turkey's foreign trade deficit: The import of energy and intermediate goods. As a result of the old paradigm I explained above, the Turkish economy created an import-intensive export and production profile in the use of investment goods and intermediate goods.
We have to break it now. It is necessary to establish a new production and export economy to encourage domestic production and domestic industry supply. This issue is not only about the current account deficit, but also about high value-added global competition dynamic.
This should not remind you of the old import substitution models. This is because Turkey was a closed economy at the time, but we are now talking about a completely open economy. In this respect, the step that Turkey will take to solve the current account deficit problem will not reduce growth, but eliminate the unnecessary import of intermediate goods and ensure the non-energy current account balance without protectionism.
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