It has been a decade since Turkey ended the process of standby agreements with the International Monetary Fund (IMF) under the leadership of President Recep Tayyip Erdoğan, who was serving as prime minister at the time. Now in 2018, Turkey is now on the brink of a major transformation and a determinative power in its region. On the other hand, it has reached the potential of a technology capable of producing its own weapons and even high-tech defense software.
No matter what happens, Turkey is one of the fastest-growing countries today with its continuously upwardly revised economic growth which goes beyond forecasts. Currently, some suggest reducing Turkey's growth, clamoring that the economy is getting heated. However, this idea has no foundation, given that the IMF-free past decade has completely refuted such arguments. Remember that Turkey made all kinds of concessions to borrow $10 billion from the IMF following the 2001 crisis. And when the loan of $10 billion was approved as a result of negotiations and efforts that lasted several weeks, the government and main stream media were in seventh heaven. Back then, Kemal Derviş was appointed economy minister as a condition of this loan. Interest rates remained at 193.7 percent in the first treasury tender held after Derviş took office. This being the case, the pro-IMF and pro-Feb. 28 coup media wrote headlines like: "Derviş has successfully passed the first exam." Imagine that IMF programs made the country happy that the treasury borrowed at 200 percent. This was true not only for Turkey, but also for all South American countries in the same period.
Turkey joined the IMF in 1947, which pointed to the fund's domination over the country.
Let me tell you an old IMF story from years ago. IMF loans for Turkey and the standby agreements that followed these loans started after 1960. In fact, the IMF wanted to initiate the agreement process during the Democrat Party (DP) period. Prior to the parliamentary elections of 1954, the IMF suggested high devaluation and all-too-familiar stability measures to the Adnan Menderes's DP government. However, Menderes rejected IMF delegation, saying that they did not know anything. Having rejected IMF's suggestions, Menderes won the 1954 elections as well. Then he told his close circle of companions: "Did I not tell you that these men know nothing. If what they said had taken place, we would not have won the election." However, the IMF turned up like a bad penny.
After 1954, the IMF kept a tight rein on the Turkish government. As Turkey rejected the IMF, its sources of borrowing were made difficult, giving rise to a foreign currency shortage. During those years, the IMF insistently brought up two all-too-familiar proposals of high devaluations and contractionary economic measures. In 1958, a package in the direction of IMF proposals was partially accepted. In fact, this package would be the beginning of the end of DP rule. In short, the first step of the military coup of May 27, 1960 was this narrowed IMF program. Of course, main IMF programs and standby agreements started with the coup and lasted until 2008. At the same time, this period was a time of military coups and impoverishment in Turkey and transferring national funds to the outside.
Throughout this process, Turkey borrowed $46.617 billion in IMF loans. Apart from the economic losses we sustained due to IMF programs during the military coup of May 27, 1960, the military memorandum of March 12, 1971 and the military coup of Sept. 12, 1980, even the postmodern coup of Feb. 28, 1997, alone cost hundreds of billions of dollars for the Turkish economy.
Moreover, the economic multiplier of crises that emerged as the result of bad economic programs is so great that it is impossible to measure them. Using a mathematical measurement of bankrupt businesses, rising debts and interest rates, and falling national income, we may reach some figures like those above, but they are often misleading. The best gauge in this instance is sociological development. We may explain it with the phrase "the lost generation," as IMF programs and coup processes led to the loss of several generations in Turkey.
So, what is the origin of the economic jargon that has been shaped in the now-bankrupt IMF and which has been presented like an absolute economic doctrine to some confused people in developing countries like Turkey? Actually, this jargon depends on the dollar-based Bretton Woods monetary system, which has now turned to counterfeiting. The White Plan, adopted in Bretton Woods, linked the global monetary system to the U.S. dollar. And it stipulated that if countries' balance of payments ran in deficit, it would be first ensured with tight monetary and fiscal policies and then, if countries practiced a fixed exchange rate regime, they would be ensured with high devaluation as a result of IMF approval. IMF jargon defined it as a "continuous state of imbalance" and delivered the economy to this understanding under loans with severe conditions.
This understanding argues that the deficits of balances of payments will improve with price changes. That is, the balance of external prices and internal prices can be achieved only with devaluations to be made at regular intervals in developing countries. If there is a floating exchange rate regime, this is a problem that can be resolved with orthodox policies equipped with high interest rates.
Now, you may ask me why I am saying all of this; the IMF has not been in Turkey for a decade.
Let me explain. Just 10 years ago, in 2008, some shortsighted people suggested that Erdoğan sign the 20th standby agreement to borrow $35 billion from the IMF, as there was a problem with the balance of payments, warning that the economy would decline further. However, Erdoğan rejected the suggestion and avoided a new standby agreement. On the contrary, he paved the way for a great investment move. And now you see Turkey's current situation.
Back then, some capital structures advised tightening Turkey's belt and to use the $35 billion IMF loan to pay off the debts of several monopolies. Now, the same structures and their aides are clamoring to suggest the same thing today: "The Turkish economy is getting heated. Let's hit the brake, hike interest rates, stop investments and let banks use their resources to service the debts of several monopolies. Let's stop the Credit Guarantee Fund (CGF) and let resources flow to monopolies and to the outside." Bear in mind who is suggesting this trap for the Turkish economy today. You will see how their laundry will soon be aired in public, just like the military coup plotters of the past and the Gülenist Terror Group (FETÖ). We already know them from Augusto Pinochet's Chile, and Argentina and Brazil, as the economic hitmen.
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