Italy's interim Prime Minister Carlo Cottarelli has been handed the job to form a new government. The country saw an economic crisis turn into a full-fledged political crisis and now it has become Europe's new ticking time bomb.
Turkey knows Cottarelli very well. He was one of the figures who led Turkey to one of the worst economic crises in its history. During the crisis in the late ‘90s and 2001, Cottarelli served as the International Monetary Fund's (IMF) Turkey desk chief.
Judging from his actions at that time can we call Cottarelli a good technocrat? The exact answer to that question would be "No." Cottarelli and his team uncompromisingly argued for the exact policies that dragged Turkey into the crisis. Interestingly enough, Italy is in the middle of a big crisis today and Cottarelli is in charge. The Italian president has assigned the task of forming a new government to a person who violates all kinds of democratic practices.
But what lies at the heart of this decision? The answer to this question is very interesting. Italy's minister of economy is against the euro in the proposed government model. It is very clear that the overvalued Euro serves Germany's purpose, but who can argue that it also serves Italy, Spain or even France? Today, the overvalued euro is one of the biggest causes of the crisis in southern Europe.
Now, if Cottarelli sets up the government, the Italians should be careful and protect their mental health against what Cottarelli would do. This is because when Cottarelli served the IMF in Turkey, he led to the attempted suicide of Turkey's then minister in charge of the economy. Certainly, I am not kidding, that is the truth. Now Cottarelli who will form the new government in Italy had caused the suicide of Hikmet Uluğbay, the minister responsible for the economy, in 1999.
Uluğbay had a meeting with Cottarelli and his team on July 1, 1999. The economy minister attempted to commit suicide attempt on July 6 but miraculously survived.
In a later interview, Uluğbay said: "I was under great stress. Think of a dad who is facing a foreclosure. I was living in this country. What was requested of me and what was said brought me to this point."
There was no end to the IMF and Cottarelli's wishes. In fact, Uluğbay was an honest technocrat. He was not a politician in the real sense. I think that he could not accept the then coalition government's decision to completely give in to IMF's demands, dragging the country into a deep crisis. His suicide attempt was also the result of individual desperation and rebellion. Let us remember this. It has not been too long; the players of this painful history are still alive and still confront us as in the case of Italy.
Guess Italy's current state. The Italians are in such dire straits that they are handing the country over to someone notorious for handing out failed IMF prescriptions and whose mind is still stuck in the previous century. So, Italians should read this article well and think again before delivering their country to Cottarelli.
During the financial crisis, Turkey was implementing a fixed exchange rate regime designed by the IMF. The Turkish currency was overvalued, and the central bank could not provide the necessary liquidity to the money markets and the banks. So, during those years, Turkey was experiencing something similar to what Italy is experiencing today due to the currency regime depending on the euro. Due to this historical mistake, Turkey experienced the great crisis of 2001 and in line with the lessons it learned from the crisis, it switched to a floating - free - exchange rate regime.
The fact that Turkey is far from Europe's crisis depends on this decision. Here, the fact that the monetary and fiscal policies are different from the facts of the national economy, and production capacity. In addition, the monetary and fiscal policies not matching with each other are a major problem and dynamic of a crisis. Turkey has experienced it and Italy's situation now is not much different. This is a vicious cycle.
Today, Turkey has overcome this vicious circle. The floating exchange rate regime in Turkey is a big gain that should be deepened in the real sense.
With President Recep Tayyip Erdoğan coming to power in 2002, Turkey switched to a fully open economy, which was the basic dynamic of overcoming the crisis. In all Justice and Development (AK Party) periods, the increased infrastructure investments, increased spending on education and health, the increased public efficiency and effectiveness that has grown independent, widespread small and medium-sized enterprises (SMEs) incentives and the concomitant increased exports helped Turkey rapidly recover from the consequences of the 2001 crisis.
In addition, a strong and stable government with full popular support has pushed up long-term foreign investments. During this period, financial markets have been deepened. In this period, money and capital markets have begun to work in a healthier way and innumerable reforms have been carried out to institutionalize and support the market in real terms.
We must say that all this is done under very hard conditions. Take a look at the period since Erdoğan took over in 2002. Coup threats attempts to close the party, global economic attacks, smear campaigns and activities of terrorist organizations like the Gülenist Terror Group (FETÖ) and PKK.
Since 2002, Turkey has slowly healed the wounds from its greatest economic crisis. The point we have reached in the economy today is very important in this respect, however, there is a lot more to be done.
With Erdoğan's re-election in the June 24 elections, Turkey may write a new growth-development story that will set an example even for Europe. Perhaps, this story will also be a remedy for Europe's crisis.
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