Turkey’s external gaps growing rapidly


MUSTAFA SÖNMEZ – Hürriyet Daily News/ February 23 2015

The “equilibrium” situation in countries’ relations with global economy has vital significance. How much a country can cover its foreign debts to global markets and other liabilities with its assets it has contributed to the global economy, in other words, with its investments in the external world and with its domestic gold and foreign currency reserves? If there is a gap in its liabilities versus assets, what is its dimension and where does this stand at its national income?

HDN This indicator and similar ones, reveal the fragility coefficient of countries. The method to measure this has been determined by the IMF and it collects information from member countries with a handbook.

How much are your assets, how much are your liabilities and thus what is the dimension of your gap or surplus?

In Turkey, the Central Bank produces the International Investment Position (IIP), which is the stock value at a certain date of external financial receivables and financial assets versus external financial liabilities. This statistical data is updated every month.

In IIP, the difference between the total financial assets and total financial liabilities, is named the net international investment position. In other words, the net international investment position is the net of Turkey’s receivables from other countries and Turkey’s debts to other countries. The IIP can be negative or positive.

For Turkey and similar countries, the IIP is generally negative. External assets are not enough to meet external liabilities. This situation changes from year to year. The rate of Turkey’s assets meeting its liabilities and the size of its external gap according to its national income are increasing instead of decreasing every year and its risk coefficient is rising.


The picture at the end of 2014

Last week, Turkey’s IIP gap was declared for 2014 as $431 billion by the Central Bank. In the Central Bank data for December 2014, while Turkey’s external asset-receivable amount was defined as $230 billion, the amount of its external debts and other liabilities were reported to have reached $661 billion. In this case, as of the end of 2014, Turkey’s position gap has reached $431 billion and it has surpassed the gap of 2013 by $37 billion.

This means only 35 percent of meeting debts and liabilities and that Turkey has a disadvantage of 65 percent. In the wide sense, external debts are 187 percent more than external receivables.

Turkey’s national income of 2014 will be announced at the end of March and it is estimated to be $800 billion. In this case, debts will reach 54 percent of the national income. This rate was 48 percent in 2013. This means the position gap has worsened $37 billion in one year, increasing 6 points.

Beware the course

While Turkey’s external assets increased only $4 billion in 2014, its external debts and other liabilities increased $41 billion. It looks like the value of foreign direct investments in Turkey has increased $19 billion. While the value of foreigners’ investments in securities has been $10 billion, their investments in state bonds increased 14 billion. There was a $2 billion decrease in foreigners’ external debts.

The picture does not look good as of 2014, with $661 billion liabilities versus assets that can only cover nearly 35 percent of them. The fact that assets can only meet 35 percent of liabilities means that there are no assets to cover almost two-thirds of debts and other liabilities. The size of the gap that reaches 54 percent of the country’s national income is considered a significant fragility.

The situation that has emerged at the end of 2014 is the product of a buildup of years. In the first year of the rule of the Justice and Development Party (AKP), which was 2003, Turkey’s assets reached $74 billion while its liabilities were $179 billion. In other words, assets were able to cover 41 percent of the gap that was 35 percent of Turkey’s national income. The year 2003 was one when the AKP prepared to further integrate with global economy and, from there, draw more loans, hot money and direct investments. In following years, warming and integration accelerated.

For more privatizations and purchases, more foreign capital flew in, more hot money went into the stock exchange and state bonds and more loans from foreign banks started to flow in. As a result, debts and other liabilities increased more than the buildup of assets and at the end of 12 years, in other words, in 2014, the rate of the assets meeting liabilities went quite below what it was in 2003, from 41 percent to 35 percent. The amount of foreign gap, in the same period, went up from $105 billion to $431 billion. The rate of the gap in national income hiked to 55 percent from 35 percent.

Among the fragile

The dimensions Turkey’s position gap have reached, even if only Europe is analyzed, show that it is among the leading of the fragile countries. For the IMF, if the rate of the position gap to the national income exceeds about 40 percent, then it is considered that the red line has been crossed. The place Turkey has reached is 54 percent. This is very fragile and it is a rate that would scare foreign investors.


The burden in terms of Turkish Liras

While the average dollar exchange rate was 1.90 Turkish Liras in 2013, the average dollar exchange rate became 2.20 liras in 2014. Thus the increase in the dollar exchange rate reached 16 percent. Both with the effect of the increase in the exchange rate and also the increase in the debts to foreigners, Turkey’s external liabilities increased in terms of liras nearly 24 percent in one year. Its debts and other liabilities in liras increased 276 billion liras to reach 1 trillion 454 billion liras.

In other words, the increasing foreign dependency has giant costs in difference in exchange rates and only in 2014 this exchange rate burden was 276 billion liras and with the dollar exchange rate of 2014, it was $125 billion.

One does not even want to think of the extra burden that would be brought on the position gap with the likely leap in the dollar exchange rate with the U.S.’ interest rate increase…


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Turkey’s industrial sector highly dependent on raw material imports

Mustafa Sönmez    Hürriyet Daily News – February/16/2015

The Turkish economy, after 2002, by using the foreign capital inflow of an annual average of $40 billion, was able to grow 4.5 percent annually. With this capital inflow, Turkey’s imports and exports also grew rapidly. So much so that the imports, which were $40 billion in 2000, reached $242 billion at the end of 2014. This corresponds to an increase of 505 percent. Imports, which were around 15 percent of the national income in 2000, went up to 30 percent of the national income at the end of 2014. This corresponds to a nearly 100 percent increase in 15 years.

Turkey’s trade with the world economy, even only in the last five years, increased 33 percent from $300 billion to become $400 billion. While foreign trade constituted 41 percent of the national income, in 2014 this figure went up to 50 percent. The average of the past five years is 47.7 percent. Even this shows how much a huge integration has been experienced in a short time. The averages of the past four years, the period from 2010 to 2014, have incredible indicators. Turkey, in these four years, has had $231 billion of importation against $142 billion exports; in other words, the foreign currency gained from exportations was only able to cover 61 percent of import expenditures. As an average, Turkey was a net importer of $89 billion every year, in other words, had a foreign trade gap of $89 billion each year.

vvvWhen agriculture is excluded, which has a share of less than 5 percent in foreign trade, it can be seen that imports of industry and energy, which were $136.3 billion in 2010, increased to $233.6 billion in 2014. These two sectors’ annual average of the past five years is an importation bill of annual $223.5 billion. On the other hand, our industry exports, which barely reached $109 billion in 2010, have been nearing $152 billion in 2014. The average of the past five years is an annual $137 billion of exports of the Turkish industry. The foreign trade gap of the industry was $70 billion in 2010, going up to $82 billion in 2014, averaging almost $87 billion a year.

Export three, import four

Taking the average of the past five years, the annual increase in exports is 9 percent while the annual increase in imports is 12 percent. In other terms, while exports rise by three, imports rise by four. The average increase of the past five years in the foreign trade gap is 22 percent. Again, as the five year average, the rate of exports covering imports is 61 percent. This is the most important indicator of dependency.

The backbone of industry, which is exports, has constituted an average of 18.2 percent of the national income in the period 2010-2014. However, imports are more and are nearing 30 percent of the national income. This means that Turkey’s national income has a foreign trade gap of around 11.4 percent every year, which is quite high. This is a negative feature that makes Turkey quite fragile.  In every sector, there is both exportation and importation. While it varies from sector to sector, there is a distinction between sectors that have strong export power and those that do not.

As a result, when growing foreign trade gaps cannot be closed with foreign currency inflow through the service sector, tourism, etc., then giant current account deficits emerge that are in the 7-10 percent corridor of the national income. And this means more dependency on external resource inflow and in order to provide this inflow, succumbing to several unwanted policies.

An analysis of the 2010-2014 period shows that net exporter or net foreign currency earner sectors constitute 12 of the 29 sub-sectors. In this analysis period, the net exporter sectors exported nearly $64 billion as an annual average, while importing $31 billion. The imports of these sectors made up 49 percent of their exports.
Among net exporters, the first three places belong to wearing apparel-textile and food sectors, followed by non-metallic minerals (ceramics, glass, cement, etc.) and metal products.

Among the net exporter top 10 sectors, the apparel sector constituted nearly 30 percent of the net exports in the past five years; textile has a share of nearly 23 percent. Thus, these two sub-sectors that are complementing each other have a share of 53 percent in net exports. When you add food, which nearly has a 14 percent share to this, these three traditional branches that have a low added value constitute two-thirds of Turkey’s net exports. It has been like this for years and shows the skidding in industry.

ttAmong the 17 net importer sub-sectors, the highest net importation or the highest foreign trade gap, as expected, belongs to energy, in other words, to the importation of crude oil, natural gas, coke, petroleum products and pit coal. In the 2010-2014 period, Turkey’s annual energy importation has reached $52.5 billion. In return for this total importation, the export of energy products are merely $6.1 billion and average annual importation has neared $46.5 billion.

With the setup of “low foreign exchange rate – high interest rate,” they were able to maintain the capital inflow for more than 10 years, but at mid-2013 due to the developments especially in the U.S., the umbrella of the foreign exchange rate upturned. When political and geopolitical risks were added to the increasing economic risks, capital inflow decreased and foreign exchange rate hiked. The dollar exchange rate, which was 1.80 Turkish Liras in 2012, went up to around 1.90 liras in 2013 and closed the year 2014 with 2.20 liras. The depreciation of the lira over 15 percent in especially 2014, even though it relatively decreased imports, did not bring the expected increase in exports. Despite the 15 percent increase in the dollar exchange rate, the increase in exports was below 4 percent. The same year imports decreased around 4 percent.

The course of the exchange rate has a vital importance for indebted establishments that had foreign debts reaching $400 billion, out of which 30 percent were short term loans. The private sector used two-thirds of this debt. It is of huge importance for banks and companies that the dollar exchange rate exceeded 2.50 liras at mid-February. Huge foreign exchange losses will negatively affect many industrial firms.


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“Türkiye için riskler 2009’un çok ötesinde”

İleri Haber, 10 Şubat 2015

“Türkiye için riskler 2009'un çok ötesinde"

Irmak Ildır – İleri Haber

Son günlerde ekonomiyi yakından ilgilendiren ve Cumhurbaşkanı ile Merkez Bankası arasında bir atışmaya dönüşen “faiz tartışmaları” kızışmış durumda. Cumhurbaşkanı Recep Tayyip Erdoğan faizlerin enflasyonu doğurduğu konusunda ısrarcı, Merkez Bankası ise faizleri indirmek konusunda ayak diriyor. İleri Haber olarak “faiz tartışmalarının” arkasındaki niyetin ne olduğunu deneyimli iktisatçı Mustafa Sönmez ile konuştuk.


Cumhurbaşkanı Erdoğan’ın benzer şekilde faizlerin aşağı çekilmesi yönünde zorlamaları daha önce de olmuştu, ancak bu sefer dozajın çok daha arttığını görüyoruz. Nedir sizce Erdoğan’ın tam olarak istediği, neden bu kadar ısrarcı?

Ekonomi, RTE’nin lideri olduğu AKP rejimi için bir araç. 2002 seçimlerinden bu yana, hangi ekonomi politika seçmen artışı getirecekse, o tercih edildi. İç ve dış konjonktürün de yardımcı olmasıyla, seçmen odaklı “popülist” ekonomi politikalar öne çıktı.

AKP, hem kendi organik burjuvazisini yaratacak bir büyüme rotası ile, ağırlıkla inşaat odaklı oldu bu, hem de seçmen oranını yüzde 30’lardan yüzde 50’lere çıkaracak “popülist” politikalarla, kamu harcama politikalarıyla yol aldı. Seçmen kitlesinin büyüklüğü, sandık onayı, RTE için izlediği bütün hukuksuzluklar, yasa dışı icraatlar için bir tür canlı kalkandır. O nedenle bu defa da ekonomiye maliyeti ne olursa olsun Haziran seçimlerine seçmeni sorunsuz götürmeyi ve yeni bir onayı amaçlıyor.

Canlandırılmış bir ekonomi hem durgunluktan yakınan kimi seçmenleri yatıştıracak ve oy kopmalarını önleyecek hem de iç pazardaki durgunluktan yakınan başta konut üreticileri, inşaatçılar olmak üzere organik sermayedarlarının beklentilerine cevap verecek. Faiz indiriminde bu kadar ısrarlı duruşun nedeni esas olarak bu politik beklentilerdir.


Erdoğan’ın konuşmalarının ardından dolar önce 2,45, Cuma günü ABD tarım dışı istihdam rakamlarının ardından da 2,47 ve en son 2,50 rekorunu kırdı. Enflasyonda ise göreceli bir katılaşma var. Mevcut tabloda 24 Şubat toplantısından ne bekliyorsunuz, Para Politikası Kurulu(PPK) ne yapacak, bu kriz nasıl çözüme bağlanacak? Merkez Bankası yasasının seçimlerden sonra değiştirilmesini ve buna bağlı bir kur krizini öngörüyor musunuz?

Kurdaki yukarı yönlü hareket, iç ve dış iklimin etkisiyle sürebilir. ABD’nin faiz artırımı ile ilgili kararını öne çekecek gelişmeler önemli bir etken. Bu, sadece Türkiye’den değil, tüm benzeri ülkelerde geçici park etmiş yabancı yatırımcıları ABD’ye yönlendirici etki yapıyor, dolayısıyla bu, sermaye çıkışı ve/veya yeni girişlerin azalması demek. Haliyle kur yukarı gidiyor. Yanı sıra Yunanistan ve Avro alanı gerilimi, Rusya’nın çöküşü, Orta Doğu’daki gerilim, bütün bunlar ihracatı, dolayısıyla büyüme performansını aşağı çekiyor ve tümü birden dış yatırımcının iştahını azaltıyor. Bu şartlarda 24 Şubat’ta da bir faiz indirimi zor, ya da gerilimi tırmandırmamak için göstermelik bir indirim ancak olur. Merkez Bankası’nın “bağımsızlığının” kaldırılması ise radikal bir karar olur. Göze alınabileceğini sanmıyorum. Zaten seçimle beraber siyasi kaygılar sonlanacağı için, siyasi saik arka plana geçirilebilir.


PPK’nin faizleri indirmesinin Türkiye’ye yabancı para girişini azaltacağı yorumları yapılıyor. Öte yandan 2014 yılında sermaye girişlerinin önceki yıllara nazaran ciddi şekilde azaldığı görülüyor, Peki Erdoğan neye güveniyor?

Erdoğan’a sermaye kaçışının ve kur artışının geçici olacağı anlatılıyor birileri tarafından. Faizler indirilirse ekonomi canlanır, canlanmayla beraber yabancıların iştahı yeniden açılır ve yeniden gelirler, o zaman da kur tekrar düşmeye başlar, dengeye gelir türünden anlatımlarla ikna ediliyor RTE. O da buna inanıyor. 2009 krizini örnek veriyorlar, ekonomiye can suyu verdik, sizin dediğiniz gibi “kriz teğet geçti” ve yabancılar geri geldiler, gibi anlatımlarla inandırmışlar RTE’yi. Oysa 2009 dünya koşulları ile bugünkü aynı değil. O dönemde yabancıların gidecekleri fazla bir yer yoktu. Bugün krizden çıkmaya çalışan ABD seçeneği her şeyi değiştiriyor. Türkiye’nin için riskler 2009’un çok üzerinde.


Toplam finansman içerisinde kaynağı belirsiz sermaye girişlerinin payı oldukça arttı ve bu konu dış basın da dâhil fazlasıyla spekülasyon yapılıyor. Siz net hata noksanda görülen bu artışları neye bağlıyorsunuz?

Net hata noksan, teknik nedenlerle de büyümüş olabilir, kozmik nedenlerle de. Teknik nedenler, firmaların dışarıdaki dövizlerini geç transfer etmeleri, istatistikî kayıtlarda büyüyen “hatalar”, turizm ve öteki hizmetten sağlanan döviz girişlerinin kayıtlarında sorunlar vb. Kozmik nedenler ise, AKP ile dayanışma içindeki güçlerin, Orta Doğu’daki kayıtlı-kayıtsız sermayenin Türkiye’ye girişinin kolaylaştırılmasının da bu kayıt dışı sermaye girişlerde etkisi olabilir. Ama yine de nereden baksanız, cari açığı kapamada dörtte birin üstünde etkisi var kayıt dışı girişlerin. Takip edilmeli.


Merkez Bankası bağımsızlığı kavramına nasıl bakıyorsunuz? Merkez Bankası’nın yalnızca fiyat istikrarı başlığına odaklanması, öte yandan milyonları çok daha yakından ilgilendiren ekonomik büyüme başlığını ikinci plana atması gerçekten Merkez Bankası’nın bağımsız olduğu anlamına mı geliyor, yoksa mevcut yapı sermayedarlara ve yabancı yatırımcılara bir bağlılık anlamına mı geliyor?

Merkez Bankası başta olmak üzere “bağımsız” kurul konsepti, neoliberalizmin bir düsturudur. Başta IMF-Dünya Bankası, bu tür “özerklik” sevdalısıdır. Onlara göre Merkez Bankası öncelikle enflasyonu kendisine dert edinmeli ve buna uygun para politikalarını siyasi otoritenin etkisinde kalmadan izlemelidir. Bunu başarabilir, enflasyonu kontrol ederse, ülkenin beklentisi olan dış yatırımcı için koşullar elverişli duruma gelir. Ana amaç, siyasetçilerin “dar” siyasi saiklerinin ekonomik rasyonalitenin önüne geçmesini engellemektir.

Mesela RTE’nin bugün siyasi beklentileri için ekonomiyi araç olarak kullanmak istemesi, bunun için de Merkez Bankası’nı dilediği gibi faiz indirimine zorlaması, küresel güçler açısından sakıncalı ve oyunun kuralına aykırıdır. Nitekim, “ekonomik rasyonalite”yi ön plana alan Babacan, Şimşek gibi bakanlar, TOBB, TÜSİAD , RTE ile çatışma pahasına MB’nin somut koşullara uyan faiz duruşu sergilemesini destekleyerek RTE ile didişir duruma gelmişlerdir. Bu didişme, ekonomik iklim sertleşirse tırmanabilir de.


Son olarak kısaca sizce Türkiye’nin büyüme performansı ne durumda, Türkiye 2015 seçimlerine nasıl bir ekonomik resimle girecek ve bunun seçimlere etkisi ne olacak?

Türkiye 2011’den sonra düşük büyüme patikasına saplandı. İnşaat odaklı, iç pazara dayalı büyüme paradigması ile yüksek büyüme devri sona erdi. Çünkü her büyüme, yüksek cari açıkla ancak mümkün oluyor. Bu cari açığı karşılayacak yabancı para girişi de eskisi gibi değil. Hem içerinin riskleri arttı, hem dışarıda artık yabancılar için seçenekler fazla. Dolayısıyla bu paradigmadan çıkmadıkça, döviz kazanan yeni bir büyüme kurgusu yaratmadıkça, yüksek büyüme ivmesi yakalamak artık kolay değil. Bu da yeni bir ekonomik mimari gerektiriyor. AKP, eskimiş kurgu ile en çok yıllık yüzde 3 büyüme ile avunabilir ki; bu da resmisi yüzde 10, gerçeği yüzde 17 işsizlik yaşayan bir topluma yetmez. Asgari yüzde 5-6 istikrarlı büyüme hızı gerekli.

Seçimlere 5 ay var. Buraya RTE, seçmeni ürkütmeden ulaştırmak isteyecek. Gerekirse bütçe açığını bir-iki puan artırma pahasına seçmene şirinlikler yapacak, başka “popülist” icraatlardan geri durmayacaklar. Şok kur artışları ummadıkları sorunlar yaratabilir ama onun hasarını da bütçe kaynakları ile onarmayı deneyecekler, özellikle yandaş firmalara öncelik vererek. Ama borçlu, işsiz, düşük gelirli birçok seçmen bu seçim şekerleri ve pansumanlarla artık mutlu olmayabilir. Önceki seçimlerde verdiği desteği çekebilir de. Dolayısıyla ekonomide keyfi kaçmış bazı seçmenler, Haziran seçimlerinde AKP’ye hiç olmasa birkaç puanlık kayıp verdirebilir de…

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Too many payroll workers, too few trade unions in Turkey


MUSTAFA SÖNMEZ – Hürriyet DailyNews -Februrary/ 09 /2015

 Turkish capitalism has experienced a long period of growth in the period since 2002 when the Justice and Development Party (AKP) came to power. The wind of this growth was provided domestically and internationally. This growth, which occurred with the push of a foreign capital inflow totaling an annual average of $40 billion, was mostly oriented toward the domestic market. This rapid growth, which occurred in big cities, primarily in Istanbul, accelerated the migrations both between rural and urban and also between small and big cities.

Domestic market-oriented growth was mostly concentrated on construction, which brought together an increase in employment, though it was distorted and unstable.

A portion of the workforce that moved from agriculture to the non-agricultural sector found employment opportunities in industry, as well as in the services sector. According to the Turkish Statistical Institute’s (TÜİK) household workforce survey, employment went up from 19.6 million to 26.1 million between 2004 and 2014, an increase of 6.5 million. It has to be said that almost all of this hike of 6.5 million was in payroll employment. In the same period, the number of employed went up from 11 million to 17 million, an increase of around 61 percent.

This period was one when the population coming from agriculture was employed in non-agricultural payroll work and when the population who migrated to the cities mostly joined the workforce market.
However, this quantitative boost in payroll employment was never transformed into an organized trade union structure; its qualitative transformation almost never occurred. The AKP preferred to limitlessly take advantage of this without ever touching the obstacles over the dysfunctional trade unions, the obstacles to collective bargaining and strike rights which were implanted with the 1982 Constitution, a product of the Sept. 12, 1980 coup.


Without trade unions

Two weeks ago, while 15,000 workers were preparing to strike in the metal work sector led by the Birleşik Metal-İş union, a member of the Confederation of Progressive Trade Unions (DİSK), it was once more remembered that the country of payroll employment, Turkey, was one that is poor on the rights of trade unions and strikes. In its first day, the strike was postponed for 60 days on the grounds of “national security” by President  RT Erdogan  and the cabinet. We once more understood how eviscerated the rights had become. Postponing the strike meant not being able to use this right again, because according to the law, any postponed strike means a strike which has to be solved through mediators. Now, the entire power rests with the mediating council in this case.

In Turkey where the payroll class exceeds 17 million, the rights of workers and their so-called gains lack content; a fact that has once more been understood. The economic-democratic rights of the working class are defined, on paper, in the 53rd, 54th and 55th articles of the 1982 Constitution. However, there are several thresholds standing before the formation of a trade union; after those are overcome, there are several thresholds before the authorization for collective bargaining. Once past these, in the event of any disagreement, a series of obstacles stand before the strike weapon. As a result, it looks as if there are union, collective bargaining and strike rights in the Constitution, but in practice, it is not possible to apply them.


TÜİK announced the number of payroll workers as 17.2 million for 2014. The Labor Ministry, on the other hand, accepts only the registered ones at 13.2 million. Only 10 percent of them, which means only about 1.3 million are members of a trade union, of whom 700,000 are under collective contracts. In other words, out of the total number of payroll workers, only 4 percent of them can actually use one of their constitutional rights. From 1990 onward, the number of workers able to use this right has rapidly decreased. While 1.5 million workers benefitted from collective contracts between 1990 and 1991, only 1 million had such contracts by the end of the 1990s; today, this figure is just 700,000.

After the 2001 crisis, in those years of AKP governments, economic growth was mostly based on cheap labor used as a competitive force. In parallel with this, public institutions in which collective contracts were relatively more common eroded rapidly with privatizations. When it was 2013, it can be seen that the number of workers benefiting from collective contracts went down to 700,000. This is a decrease of 55 percent compared to the 1.5 million workers in 1990-1991.


What about strikes?

Only 700,000 out of the 13.2 million registered and insured workers have the potential to use their collective contract rights; in other words, not even 6 percent. But graver than this is the situation of the most important defense weapon of the working person, the strike. The ability to strike has been eroded to such an extent that it exists in name only.

Despite the anti-union framework of the Sept. 12 environment and its aftermath, 160,000 workers staged a strike in the late 1980s amid a rising workers’ movement in mining.

In 1995, the number of strikes rose again, only to drop substantially in following years. In 2000, only about 19,000 workers used their right to strike and in 2005, the number of those workers able to strike went down to around 3,500. Between 2010 and 2012, they were not even 1,000 a year. In 2013, only 16,000 people were able to strike. The ministry has not disclosed 2014 data yet.

Non-organized voter

The growth in the 2003-2013 era, which was possible with the inflow of foreign resources that were oriented toward the domestic market and focused on construction caused quantitative boosts in employment, as expected. Those who abandoned agriculture and came to the city to join the workforce found jobs as wage earners. As a result, they have approved AKP rule as “voters.” However, when it comes to organizing for better pay and better working conditions, there was no qualitative transformation; the AKP governments were not facilitators. It was observed that in this field, the AKP governments did not make any changes in the working environment taken from the anti-union 1982 Constitution and, when necessary, they made ample use of them.

The largest union establishment that is mostly organized in the public sector, Türk-İş, lost a significant number of members due to the rapid privatization of public workplaces after 2000. Unemployment, which is over 10 percent officially but is as much as 17 percent unofficially, is the biggest nightmare for workers. While the fear of losing one’s job while trying to organize kept workers distanced from unions, new work models due to changing technology, new business models such as subcontracting and sub-employers are processes that work against trade unions. Trade unions are powerless and ineffective in terms of finances. This is also an obstacle in their efforts to increase the number of their members.

HDN Anti-union AKP

The AKP administration has demonstrated in numerous occasions that it is unhappy that wage earners freely use their rights to form a union and bargain collectively. The AKP is a political power that regards wage earners as “voters” and prefers to be on good terms with them as voters and to achieve this, where necessary, has increased salaries at the rate of inflation. It is also as “charitable” as to distribute social aid totaling as much as 5 percent of the budget for those who are poor, but when it comes to independent organized union movements, things change. It either frightens or intimidates most of the existing unions to make them “harmonize” with the government or become “pro-government,” or it makes them ineffective and, as seen in the last metal strike example, it does not hesitate to ban them with Sept. 12-era laws.


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Social protection in Turkey, too many words with too little content

Mustafa SÖNMEZ – Hürriyet Daily News February 2 2015


After 2003, while the ruling Justice and Development Party (AKP) won successive elections, raising its voter share from 30 percent to the brink of 50 percent, it was considered by many that the number of voters lining-up behind the AKP was associated with various support programs and the coal and food aid it was distributing to the poor.

Following any lost elections, they even scorned AKP voters by saying, “They have sold their vote for coal and bulgur.”

What actually were the AKP’s “social welfare” programs? Would it be correct to say they were at such a dimension to be able to hike the votes to this extent? A ministry was founded in 2011 specifically to deal with this business, named the Family and Social Policies Ministry.

What is the truth? Is the AKP “charitable” to an unusual extent? Or, is it that the propaganda and publicity of it is more than what is actually happening? For example, when compared to the social expenditures of EU and OECD member countries, where does Turkey stand?

It is a right

A template has indeed been developed to measure the public social expenditures of countries.

In this template, a definition has been made which says social protection encompasses all interventions by public or private bodies intended to relieve households and individuals of the burden of a defined set of risks or needs, provided that there is neither a simultaneous reciprocal nor individual arrangement involved.

Data related to social protection expenditures and income in Turkey and several other countries is measured according to the standards set in the manual of The European System of Integrated Social Protection Statistics (ESSPROS).

The ESSPROS manual categorizes social aid under eight categories of risks and needs. These are sickness/health care, disability, old age, survivors, family/children, unemployment, housing and social exclusion.

To define expenditures, there are these items: Pensions paid to the retired, survivors, the handicapped, unemployment payments, sickness and health care, pharmaceuticals, rehabilitation, accommodation costs, funeral aid, birth aid, maternity leave costs, vocational course expenditures and contributions to vocational course participants, among others. The data is collected from establishments and organizational records, as well as through questionnaires for municipalities, foundations and associations.

Where does Turkey stand?

Turkey’s social expenditures in 2013, on this basis, have neared 13 percent of its national income. It was around 8 percent in 2000. In other words, there has been an increase of 5 percentage points in expenditures. However, this is not unique to Turkey; it is the same almost everywhere else in the world. OECD puts the average for its members as 18.4 percent in 2000 and 21.7 percent in 2013.

The dimensions of public social expenditures vary according to the “social features” of different countries. For instance, France leads the group as a country that has increased its social expenditures to 32 percent of its national income, while Turkey, Korea and Chile are not even half of France, with expenditures around 10 to 12 percent of their national incomes. That means, despite the “charitable” policies the AKP seems to have adopted, Turkey is behind several EU countries in social expenditures and exactly 10 points behind the OECD average; almost 12 percent to 22 percent.

Several factors play a role in the differences in expenditures by nation. It can be seen that social protection is high in countries where the “social” principle is prioritized in its constitution, where equal distribution is considered important and where lower classes have the habit of struggling for this. Besides, it is also important whether or not the population is covered by social security and whether they contribute to social expenditures. In countries where unrecorded activities are low and social security is high, social expenditures can be high as a result of premiums paid. When there is no premium, indeed, social spending is also low.

The reason Turkey is left behind in this area is because both the number of those who join the workforce and the number of those who pay a premium are low. Participation in the workforce is only half, meaning only half of those who could work are employed.

As a matter of fact, when we look at 2013, out of the social protection aid that reached 216 billion Turkish Liras ($114 billion), salaries of pensioners and survivors make up 48 percent. For health expenditures, the rate is 30 percent and unemployment aid is only 1 percent.

According to this template, almost half (41.1 percent) of the expenditures for social protection in 2013 was financed by the state. This was followed by 27.7 percent from employers and 25.2 percent from the premium contributions of other people within the scheme of protection. Other incomes were 6.1 percent.

What about the AKP-invented ones?

During the AKP regime, with a huge usage of external resources, an economic growth of an average nearing 5 percent has been experienced annually, but research reveals that a large enough share has not been allocated to the wage/salary earners from this growth. Besides, despite this growth, social expenditures have also remained short and according to international definitions, it was 10 points behind the OECD average, at only 13 percent.

When we say social expenditure or “social protection” here, it is generally understood as the contributions provided by establishments known as “Fak-fuk-fon” founded by the Family and Social Policies Ministry and/or health care provided to the poor who hold a “green card.” These are included as social expenditures and amounted to 215 billion liras in 2013, but in total this, together with AKP-invented aid, constitutes a small slice (almost 10 percent, 20 billion liras, $10.5 billion). This corresponds to a bunch of aid amounting to 1.2 percent of the national income. Another measure would be that the total in 2013 was only 4 percent of the central budget.

The biggest portion, 34 percent, of this 20-billion-lira aid budget coordinated by the Family Ministry is made up of free health care. The “green-card” holding population who receives free health care from the state and who has to prove it with an income test is around 8 to 9 million. The overwhelming majority of them are Kurdish-origin people from the east and southeast. A premium payment of nearly 5 billion liras (almost $2.5 billion) is transferred to the Social Security Corporation (SGK) from the central budget.

The elderly and the handicapped who are paid 230 liras ($115) every month are the second-largest group benefiting from social aid. The money spent for home care of the needy is another significant item. Another one is the aid from the Social Aid and Solidarity Fund, commonly known as Fak-Fuk-Fon, managed by province governors and district governors. The aid from this fund has many forms and can be home furniture, education, rent, clothing or coal aid. Scholarships for needy students and municipal social aid have the least share in social aid programs.

A matter of propaganda

How come aid that constitutes only 1.2 percent of the national income makes so much noise? How come it looks as if it has such an important place and an important impact on voter behavior?

The AKP regime, while distributing social aid from a very limited portion of the budget, which is financed by the taxes of people, presented them as a favor, as an alms-giving of the AKP regime, not as the obligation of a social state, despite the fact that this aid was inadequate at only 1 percent of the national income.

Certain opposition bodies and writers, instead of defining this aid as a “right” and criticizing its scarcity, could not go past criticizing that it is being presented as “alms.” They somehow opted for almost humiliating those who have received these “alms,” instead of recognizing the neediness of those who receive this aid and that most of this aid, which stays at 1 percent, has not reached the poor.

Moreover, instead of criticizing the AKP’s efforts to transfer the gratitude of those who receive aid into votes, they criticized those who have received aid for voting for the AKP, and they did this without any existing scientific data.

The “policies of alms-giving” were used almost as an excuse for their failures, those who were not able to develop alternative and more effective social policies against the AKP regime. Its scarcity and deficiency have not been criticized adequately.

In fact, it could have been revealed that social aid was much lower than it looked and it could have been explained how a more just and equal distribution should have been provided; however, this was not able to be done.


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Her yer inşaat, her yer şantiye!(BirGün’de söyleşi)

ktp27 Ocak 2105 BirGün’de yayımlanan söyleşi;

İnşaat üzerinde büyük paralar dönüyor ve bunu rüşvet şeklinde paylaşma imkânı var. Bunu yaparken hukukun çiğnenmesine göz yumarsınız  ve ortaya çıkan ranttan da hakkınızı istersiniz. Bu sayede de siyaseten  bir mali kaynak ve güç elde edersiniz. Bu nedenle inşaatın AKP tarafından tercih edilmesinin özel bir önemi var

NESLİHAN KARATAŞ neslihankaratas@birgun.net

Bu kadar çok inşaat, kimisini hayrete, dehşete düşürür, kimisinde de hayranlık uyandırır. 2003 sonrasında seçmenleri dev şantiyelerin etkilediğinden emin olabilirsiniz. Gökdelenler, villalar, korunaklı siteler, duble yollar, havaalanları, terminaller, tüneller, Marmaray, metrobüs, içinde adalet olmayan adalet sarayları, Ak Saray… Bütün bunları büyüme, gelişme, iş bilme, iş bitirme, itibar sembolü olarak gören hatırı sayılır bir seçmen kitlesi olduğundan emin olabilirsiniz. Yoksa AKP oyları yüzde 30’lardan yüzde 50’lerin eşiğine nasıl gelirdi?” Mustafa Sönmez, AK Faşizmin İnşaat İskelesi isimli son kitabında bu soruya yanıt arıyor.

>> Yeni kitabınız ‘Ak Faşizmin İnşaatı’ hakkında biraz bilgi verebilir misiniz?
AKP’nin kendi siyasi rejimini ki ben buna ‘Ak faşizm’ dedim, bunu inşa etmek için 12 yıldır ekonomiyi nasıl kullandığına değindim kitapta. Biliyorsunuz, bir inşaat iskele etrafında yükselir AKP’nin yükselişi de inşaat sektörü üstünden gerçekleşti ağırlıkla. Niye 12 yıldır sermaye birikiminin odağında inşaat var, AKP’nin buradan devşirdiği siyasi rantlar nedir, buna parmak basan bir ağırlığı var kitabın. Ana hatlarıyla, AKP’nin siyasi yükselişinde ekonomiyi ve özellikle inşaat sektörünü nasıl basamak olarak kullandığı, parlak günleri ve şimdi inişe geçişinden dolayı kararmaya başlayan günlerini anlattım kitapta.

>> İktidar özellikle seçmenlerini yaptığı yollar, havaalanları metrobüs, terminal gibi yapılarla etkilemeye çalışıyor. Bu seçmen için yeterli bir neden midir?
Seçmen açısından bunun şöyle cazip yanları var: İnsanlar her zaman ekonomik büyümeden etkilenirler. Tarihimize baktığımızda ekonomik büyümenin olduğu yıllarda kim iktidarsa oya tahvil etmiştir kendisini. Çünkü büyüme demek sonuçta iş-aş demek. Seçmene iyi kötü bir istihdam imkanı, reel  ücretlerde büyüme oranında değilse bile enflasyona yakın bir artış, devletin büyümeden dolayı vergi gelirinin artması, propagandasını çok iyi yaptığı sosyal kurumlar ve yardımlar yolsuzluk, hırsızlık olaylarına rağmen oy oranını çok fazla geriletmedi. Büyüme, büyümeyi de inşaat üzerinden sürdürme, seçmende bir iş imkânı, yan sanayileri harekete geçirmesi, tüketici kredisi ile konut satın alma erişimi gibi noktalarda inşaatın diğer alanlarındaki yatırımları ile birlikte hepsi özellikle ilkeli siyasi tercihi olmayan seçmen kitlesini etkileyen ve AKP’ye oy vermeye sevk eden süreçler oldu.

>>Enflasyon, büyüme, işsizlik oranlarına baktığımızda aslında kara bir tablo ile karşı karşıyayız. AKP’nin bu alanları iyileştirme açısından bir manevra alanı yok mudur?  Neden sadece yapı inşa etmek üzerine bir politika izliyor?
2003’ten başlayarak büyüme sürecinin hem iç hem dış gerekçeleri var. İçerde 2001 krizini aşan programın uygulayıcılarından devralınan reforme edilmiş ekonomi mirası rol oynadı. AKP böyle şanslı bir mirası devraldı. Bunun yanı sıra dış dünyada da ekonomi konjonktürü bir likitide fazlası olan dış paranın adres aradığı bir döneme denk geldi. Türkiye’ye eskiden hiç gelmediği kadar para geldi. Bu iki etken birdenbire bir büyüme imkânı ortaya çıkardı. AKP mümkün olduğu kadar burada inşaat sektörünü (Özellikle Toki ve Emlak konutu kullanarak) öne çekti ve bir inşaat odaklı büyümeye yönlendirdi kendisini. AKP’nin bunu inşaat üzerinden yapmasının iki nedeni vardı. Birincisi inşaat mütehitleri gibi kendisinin organik sermayedarlarını inşaat üzerinden yaratmasıydı. Diğer bir neden ise; inşaat hep izinlere bağlı bir sektördür.  Her an resmi otoriterin yönlendirebileceği, müdahale edebileceği kısıtlayabileceği bir alandır inşaat. Dolayısıyla ipleri hep elinde tutmak istedi.  Bunun yanı sıra inşaat üzerinde büyük paralar ve bunu rüşvet şeklinde paylaşma imkânı var.  İnşaat tüm bunlara çok uygun bir sektör. Yani izni verirsiniz, yer yer imar hukukunu çiğnemesine göz yumarsınız ama ortaya çıkan ranttan da hakkınızı istersiniz bu sayede de siyaseten  bir mali kaynak ve güç elde edersiniz. Buna imkân tanıyan bir sektör olduğu için de inşaatın AKP tarafından tercih edilmesinin özel bir önemi var. Bu AKP’ ye ciddi anlamda bir basamak çıkma imkânı verdi.

>>AKP’nin üretimde sanayiye dayalı ekonomi politikası yok. Bu durum AKP hükümeti içerisinde de (Ali Babacan, Mehmet Şimşek) ayrılıklara neden oluyor. Bu fikir ayrılıkları daha da büyür mü? Erdoğan neden bu kadar ısrarcı?
Ali Babacan ve Mehmet Şimşek, dış dünyayla yakın temas içerisindeler ve dış sermaye kaçırılırsa ya da gelmezse Türkiye fena krize girer bunun farkındalar. Dolayısıyla sermayeyi hoşnut tutacak, dış sermayeyi ürkütmeyecek IMF, Dünya Bankası gibi kuruluşların tavsiyelerini ve analizlerini hükümetin dikkatte alması gerektiğini savunuyorlar. Erdoğan, tabii esas olarak kendi rejimini tam manasıyla inşa etmenin derdinde. Ve şunun farkında eğer ekonomi küçülmeye başlarsa kendi arkasındaki sermayeciler ve iç pazara dönük üretim yapan işletmelerin tadı kaçacak. Şu an haziran seçimlerine kilitlenmiş durumda ve seçimlerde oy kaybetmek istemiyor.  En son bu meclisteki hırsızlık oylamasındaki 48 fire kendisini çok tedirgin etti, uykuları kaçtı çünkü hiçbir şekilde bir geri düşüşe tahammülü yok.  Dolayısıyla ekonomiye doğrudan buradan bakıyor.  Uzun vadeli programlardan ziyade kısa vadede beni hedefe hangi politika yaklaştırır iç güdüsüyle davranıyor.

>>Yolsuzluklar ve Ak Saray hala gündemde. Bu durum neden seçmeni etkilemedi?
12 yıllık AKP rejimi siyaseti, seçmen kitlesinde de ilginç bir dönüşüm yarattı. Aslında politik islamın oy potansiyeli yüzde 15-20 civarındadır. AKP, ilk iktidar olduğunda oy oranı yüzde 34 civarındaydı.  Şimdi bu rakama çıkması 2001 krizi ile ilgiliydi. Bu kriz, toplum üzerinde çok fazla hasar yaratmıştı. Bu nedenle kitleler biraz da öfkeyle AKP’ye yöneldiler. İnsanlar iş-aş meselesi, güvencesiz de olsa evlerine para giriyor olması durumu bir ölçüde bu kitleleri etkiledi. Yanı sıra insanlar 2003’ten başlayarak ciddi bir tüketici kredisi kullanmaya başladılar ve hane halkı borç yükü de arttı ve kitlelerin bu uygulanmakta olan rejimin ekonomi politikaları ile bir tür bağımlılık ilişkisi ve rehin alma durumu ortaya çıktı. AKP bu durumu çok iyi kullandı. Bu nedenle yolsuzluk meselesinde bile ortaya bu kadar kanıt dökülmesine rağmen seçmen kitlesinin gözünde de aklandılar. Genel olarak burada seçmen kimyasının değiştiğini, seçmenin değer erezyonu yaşadığının da farkında olmak gerekir.

>>AKP’nin ekonomi kurmayları özellikle yüksek ihracat rakamları ile övünüyor. Siz nasıl görüyorsunuz bu durumu?
Aslında AKP’nin o söylemlerdeki gibi yüksek bir ihracatı yok,  ithalatı daha fazla. Ortalama yılda 70 milyar dolar dış ticaret açığı var. Bunun olabilmesi için sanayiye ağırlık vermesi ve sanayi ürünleri ihracat edebilmesi gerekiyor. Yani bu iddiası sadece söylemlerde kalan bir durum oluyor.

>> 2003 yılında AKP’nin sahneye çıkmasıyla birlikte Türkiye’nin bugünkü durumunu tarifleyebilir misiniz kısaca?
Başta anlattığım gibi dış para girişinin esas olduğu  ve iç pazara dönük bir ekonomi politikası mevcut iktidarın. Madalyonun bir yüzünde; iyi bir bütçe  performansı bunla beraber popülist bir sosyal siyaset uygulaması gerçeği var. Madalyonun arka yüzünde ise, çok ciddi bir kırılganlık, döviz yaratamayan bir ekonomi, 400 milyar dolarlık bir dış borç stoku ve sürdürülemez bir rejimin tıkanması durumu var. Önümüzde artık büyüyen bir Türkiye değil, küçülen, patinaj yapan, yer yer gerileyen, buradan başlayarak kitlelerin yavaş yavaş şikâyetçi olacakları bir yakın gelecek var.

>> Dünya ekonomisine baktığımızda merkez bankalarının uyguladığı para politikaları ne türden yeni kırılganlıklar yaratıyor ve bu politikaların  Türkiye’ye etkisi nasıl olacak?
2008-2009 krizinin üzerinden 7-8 yıl geçmesine rağmen tam aşılamadı. Amerika bunu piyasalara çok yüksek paralar enjekte ederek aşmaya çalıştı. Şimdi ise onun yaptığını Avrupa Merkez Bankası yapmaya çalışıyor.Ülkelerde bu tarz politikaların sonuç vermesi için kamunun dahil olabileceği ekonomi politikalarının izlenmesi şart. Aksi uygulandığında kitlelerin alım gücü düşüyor ve yoksullaşma başlıyor. Buradan şöyle bir kolaycılığa kaçmamak gerekiyor, ekonomi performansı düşse bile bunun hemen oylara ve siyasete yansımasını beklememek gerekir. Yani ekonomik krizden böyle bir medet ummamak gerekiyor.

>> Uygulanan bu ekonomi politikalarına karşı sol siyasetlerin toplum üzerinde ikna edici  ekonomi politikaları, neler olabilir?
Ekonomi  politikalarından ziyade bence topluma adalet, hukuk, insan hakları, demokrasi gibi normlardan yaklaşmak daha anlamlı. Özellikle her gün bir hukuk katliamı yaşanıyor. Ali İsmail Korkmaz’ın duruşmasından çıkan sonuç mesela.. Herkesin gözüne sokularak yapılan yolsuzluk ve rüşvet olayının meclisteki oylaması, Kaçak Saray üzerinden ihlal edilen normlar, değerler ortada. Bunların bence  kitlelere iyi anlatılması gerekiyor. Elbette solun kendi ait bir ekonomi politikası olması gerekiyor ama Türkiye’nin bu konjonktüründe solun esas olarak gerçekten bir Ak faşizme dönen rejimi  teşhir etmesi ve kitlelerin bununla neler kaybettiğini görmesinin anlatılması lazım. Bagajı cesetlerle dolu bu iktidarın bu cesetlerinin teşhir edilmesi gerekiyor.

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Alarming unemployment figures among university graduates in Turkey

MUSTAFA SÖNMEZ – Hürriyet Daily News, January 26 2015

The most alarming aspect of the unemployment reality is that nearly one-fourth of the officially unemployed as of October 2014 consisted of university graduates. DAILY NEWS photo
Economic growth, which is estimated to have dropped to 2.5 percent in 2014, has also made unemployment climb. The Turkish Statistical Institute (TÜİK) recently revealed unemployment data for October of last year; official unemployment, seasonally adjusted, came in at 10.6 percent, while non-agricultural unemployment rate was 12.7 percent.

jjAccording to TÜİK, the official number of unemployed people is now 3,095,000. This figure was around 2.5 million for the same month last year. Thus, while 580,000 people have been added to the ranks of the officially unemployed in the last 12 months since October 2013, unemployment has increased 1.4 points.

Numbers climbing

According to TÜİK data, non-agricultural unemployment is climbing even faster. While the non-agricultural unemployment rate was 10.5 percent in October 2012, in 2013 it climbed to 11.1 percent and then to 12.7 percent in October 2014. Thus, in two years, non-agricultural unemployment climbed 2.2 points. The number of official unemployed has exceeded 3,095,000. The unofficial, uncounted number of unemployed reached 2,457,000. Out of these, 2.4 million have not looked for a job during the past week but they represent a population that says they are ready to work if there is a job opportunity. When these non-counted unemployed are also taken into consideration, then the number of unemployed exceeds 5.5 million, while the real unemployment rate goes up from 10.6 to 17.6 percent, climbing 7 points.

With economic growth dropping in the last quarter compared to the previous quarter, unemployment has climbed; it is estimated that the climb witnessed in September and October will also continue for the subsequent two months.


The most alarming aspect of the unemployment reality was that nearly one-fourth of the officially unemployed as of October 2014 consisted of university graduates.

The number of unemployed university graduates was 725,000 in October 2014, whereas this figure was 488,000 at the beginning of February 2014. This means that in less than a year, the number of college graduates looking for a job has increased by 237,000 people; also, the figure increased 48 percent between February and October.

According to TÜİK data, when the education level of the unemployed is reviewed, 51 percent of the officially unemployed do not have a high school diploma. In second place are university graduates at 24 percent. Regular high school graduates total 11 percent, as do vocational high school graduates. The illiterate unemployed are last at 3 percent.

In the period between February and October 2014, the number of unemployed increased 218,000, almost 8 percent, but in the university graduate segment, this increase reached a striking 48 percent.

The share of this segment in total unemployment was 17 percent at the beginning of February; this went up to 24 percent in October. This is considered an indication that a significant number of 2014 graduates have not been able to find a job and that new graduates will have difficulty in finding a job in the coming years as well and that the number of unemployed university graduates will further increase.

When official unemployment was at an average of 10.2 percent in February 2014, this was 9 percent for university graduates. However, in October, average unemployment was 10.4 percent while unemployment among the higher educated went up to 12 percent.

There is another, more striking reality: It is women who make up a significant portion of unemployed university graduates. Among 775,000 unemployed university graduates, 420,000 of them, in other words 54 percent, are women.

Education, which is an important avenue of upward mobility for women, seems insufficient; there is also the matter of finding a job after graduation where women are again shoved behind and lead the group of “educated and unemployed.”

Quantity over quality

The fact that a portion of the young population looks as if they are receiving higher education actually camouflages real unemployment. As graduates increase, unemployment will increase ever more.

The boom in the number of unemployed university graduates is a result of the inflated number of higher education students during the ruling Justice and Development Party (AKP) regime. The number of universities was increased without taking quality into consideration. Since 2006, 51 state universities and 48 foundation (private) universities have been formed. Thus, universities looked as if they were in all provinces. At the end of 2014, the total number of universities reached 176, with 104 being state and 72 of them being foundation universities.

Separately, the quota of the full-time regular higher education was inflated. Between 2006 and 2014, this quota was increased 83 percent and reached 793,000 students. The number of students exceeded 5.5 million.

In 2014, the number of people applying to sit the nationwide university entrance and placement exam exceeded 2 million for the first time to become 2,008,000.

Despite this increase in quantity, questions about “quality” are mentioned in the Development Ministry’s 2015 Program. It says the high number of applicants for the central examination and the rising proportion of graduates (looking for a second university education) and students (trying to change schools) show the need to increase the quality of higher education.

“In this context, vocational guidance services at the high school level should be improved, the policy of increasing the quotas should be reviewed, and the relationship between the higher education and the workforce market should be strengthened,” it said.

Arguing that the “schooling rate” of the population at the age of higher education or that access to higher education has increased from 9 to 38 percent in just a couple of years is just sweeping the dirt under the carpet. However, the real problem starts with graduation, as each graduate finds himself/herself among the “army of the unemployed.”

As seen in 2014, in one academic year, the number of university graduates can increase 48 percent.

This situation indicates that the young population who had access to a higher education somewhat devoid of quality will soon inflate the “crowd of the unemployed.”

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The political gain of the construction boom

MUSTAFA SÖNMEZ – Hürriyet Daily News, January /19/2015

It could be said that, in the climb of the ruling Justice and Development Party’s (AKP) regime beginning in 2003, in the rise of its voting base from 30 percent to 50 percent, that it was the rapid growth of Turkey’s capitalism experienced in the 2000s which has been the most effective contributor; moreover, it has played the most significant role.

The political Islam that did not reach a 20 percent share of the total votes in the 1970s, 1980s and 1990s was in power after the Nov. 3, 2002, elections with 34 percent of the votes. It increased its votes in subsequent elections and became the first party; in its building of an Islamic regime, economic growth and its economic platform have played the most important role.

This growth was made possible by foreign capital inflow that reached $40 billion annually. This foreign resource was mostly used in the domestic market. In this domestic market-oriented growth, it was construction, especially mass housing, that led the sector.

As of 2014, the AKP regime clung on to this line, insisting on it because they prioritized their political targets more than anything else. It was a preference at the cost of leaving a huge foreign debt of $400 billion (half of the national income) and a series of fragilities and structural malfunctions.
The political gain of focusing on construction is maybe more than its economic gain.

Political benefit

Before the AKP government, Turkey went through a crisis in 2001 and in order to overcome this crisis a bitter program controlled by the International Monetary Fund (IMF) and using IMF loans managed by former Deputy Prime Minister Kemal Derviş was implemented. This bitter program was what the AKP inherited with its “reformed” economic infrastructure after 2002. With the appeal of a revised, updated economy, beginning in 2003, foreign capital rapidly flew into the country, creating the platform for the construction-oriented growth.

In the junction reached in 2002, instead of construction, export-based industry could have been chosen and growth would have proceeded “industry-oriented,” but this was not done. While the AKP chose construction as the locomotive, its political expectations were, at the least, as high as its economic expectations. Construction was quite a suitable track, both for attracting voters and for creating the AKP’s own organic capital-owner.

sssThe rapidly rising housing complexes, skyscrapers, malls, accelerated municipality investments, double-wide roads, highway investments, airports, tunnels, metros and viaducts; these were all accomplishments that the voter would perceive as growth-development.

Moreover, each construction investment meant job opportunity for a significant segment of the population, including producers of construction materials, operators of construction equipment, small and medium-sized construction subcontractors and both qualified and non-qualified workers. The number of people working in the construction sector was around 1 million in 2004; by 2014, this figure had reached nearly 2.2 million. This corresponds to an increase of 115 percent during that period. While the share of the sector in total employment was 5.1 percent in 2004, by 2014 it had risen to 8.3 percent.

These construction-real estate employment statistics are for those workers who are directly involved in construction. Those employed in the production of construction materials, workers in stone quarries and marble quarries or the while collar personnel in the service sector, should also be added to the 2.2 million number. When they are added, then we can say that the share of this sector in total employment will go beyond 10 percent.

It is apparent that this created employment, especially in a country where official unemployment is 11 percent and real unemployment is 18 percent, has a significant place in the political choice of the voter.

Construction permits

The sector’s dependence on “licenses” from the local and central administrations plays an important role in the AKP’s passion for construction. A series of decisions, from construction permits to occupancy permits, to development plans of a plot, to the number of flats or changes in a project, are all in the jurisdiction of municipalities, the Environment and City Planning Ministry and also the Mass Housing Authority (TOKİ). It was observed in the transcripts of the phone recordings that were revealed during the Dec. 17 and 25, 2013, graft operations how Ankara was interfering in these decisions and what kind of unjust profits were obtained.

The construction industry’s dependence on licensing from the political authority also creates the opportunity for favors and look-outs for contractors, the selection of project partners and the way the authority issues licenses. The AKP has found the opportunity to create its own bourgeoisie by using these powers within the constriction-oriented growth.

The General Directorate of Building Land Office, the agency that manages public land, has been associated with TOKİ since 2003, granting vast stocks of land. Emlak Konut, which is the land marketing associate of Emlak Bank, was also made an associate of TOKİ. After this, the most prestigious plots and luxury housing units were built by construction groups such as Ağaoğlu, Aşçıoğlu,Varyap, İhlas, Torunlar, Kuzu and Egeyapı.

While the pro-government contracting firms grew rich through this model, their dependency on the AKP also grew. Contracting groups for public construction bids were added to them. Company groups such as Limak, Cengiz, Kolin, Kalyon and Çeçen peaked by winning infrastructure bids from the state and remaining loyal to the AKP, as pro-government capital owners.

It is of course the decision of the political authority in the construction sector for this much dependence on “state licenses,” to which the profits of a metropolis such as Istanbul would be granted. However, it is also understandable that the entire profit would not be granted completely to the capital owner. A portion of this profit could have been given directly to the AKP or to foundations under its control as donations. It can be said that these donations have become the most important leverage in the AKP’s political climb.

Is it the end of the paradigm?

As of mid-2013, the inflow of foreign capital to Turkey halved. Balance of payment data from November 2014 shows that the total of foreign resources inflow in the first 11 months had been below $42 billion, whereas, in the same period in 2013, this total had reached $68 billion. This corresponds to a drop of nearly 40 percent.

The halving of the foreign resource inflow, causing low growth in the economy, is also associated with the usage of inflowing capital, not in a foreign currency generating context, but in a foreign currency-consuming context during the AKP regime.

The foreign capital inflow, instead of being direct investments, was structured as “foreign loans” to the rate of three fourths. This was used mostly in construction, in other service sectors oriented toward the domestic market, in consumption, in industry intermediate goods and for the import of investment goods.

The construction sector stood out as a foreign currency-consuming sector more than a foreign currency-generating sector, one that pulled down and blinded the economy’s capacity to gain foreign currency.
According to Central Bank records, Turkey’s foreign currency gain from real estate sales has not exceeded an average of $3 billion annually. The fact that an economy where the tourism sector provides around $30 billion annually was only able to gain $3billion annually from construction explains the dependency of the sector anyway.

And stagnation

It was obvious that an economy which was oriented toward the domestic market, which was dependent on domestic demand, two aspects which have been consolidated with the performance of the construction sector, was unsustainable with decreasing foreign capital inflow. The orientation toward the domestic market meant a continuous appetite for foreign currency, a continuous current account deficit and, in order to finance it, foreign loans. The stopping of the money inflow meant the stopping of the economy and stagnation became apparent in 2014.

Here also, the construction sector, more precisely the house-building sector, was the one that began having troubles the earliest. As a matter of fact, the hike in foreign currency rates that was prompted by the drop in foreign resource inflow and the increasing of interest rates to curb this caused house sales to drop. Despite all the campaigns and facilitations of long-term sales, according to Turkish Statistical Institute (TÜİK) data, new home sales in the first 11 months of 2014 increased only 1 percent compared to the same period in 2013. In Istanbul, where 20 percent of the sales take place, new home sales fell 3 percent, whereas in Ankara, which has a 10 percent share in sales, home sales fell 1.5 percent. Mortgage sales in particular fell. While the share of mortgaged new home sales was 40 percent of the total home sales in 2013, this fell to 30 percent in 2014. This should be an important warning for the sector.

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The dollar will again shake the world in 2015


MUSTAFA SÖNMEZ – Hürriyet Daily News/Jan.12. 2015

 The U.S. dollar, which rapidly strengthened in 2014, shook the world’s several local currencies, strong or weak, last year. Many local currencies lost value against the dollar. The euro, especially in the second half of 2014, was seriously shaken, but nevertheless, its annual average value in 2014 was the same as its average annual value in 2013. Thus, its position against the dollar stayed the same on an annual average basis. But it is difficult to say the same for 2015.

The Japanese yen, the British pound, Norwegian, Swedish and Danish  krone and the Canadian dollar were all currencies that continuously lost value against the U.S. dollar. The rates are, of course, different; the currencies of emerging countries, including Turkey, lost values in different rates.

On the other hand, there are also currencies that did not lose value, but gained value, against the U.S. dollar: For example, the Chinese Yuan, as well as the South Korean won and the Australian dollar.

Biggest losers

Most of the 52 world currencies that the IMF monitors were shaken before the U.S. dollar value rose. The fastest devaluating currencies were the Iranian riyal and the Russian  ruble, with the Turkish Lira taking third place.

HDN The local currency of Iran, a country which has been at odds with the U.S. for many years, the riyal, rapidly lost value against the dollar in 2013 and 2014. The annual average of the riyal in 2014 was 38 percent below its annual value in 2013. Iran went through shock devaluation such as 102 percent on July 3, 2013. After the devaluation, the riyal continued its course with small fluctuations.

After the shock fall in oil prices, Iran’s export income decreased and now it is anticipated with curiosity whether or not the country will opt for a new shock devaluation.

The most severe tremor against the dollar was experienced by the Russian ruble. Russia, which has the fifth biggest reserve in the world with $454 billion, had to go through tough times in 2014 against the sanctions Westerns countries imposed upon it because of the Ukraine and Crimea issues. When the flight of capital outside the country was added to the blow of the fall in oil prices, the ruble rapidly lost value. Even though the Russian Central Bank tried to stop the blood loss by increasing interest rates, this did not help much.

The first half of 2014 was calm and one dollar was only about 38 rubles toward the end of September. However, with October, blows came one after the other and at the last day of the year 1 dollar was up to 57 rubles. The annual average of the dollar in 2014 was 38.6 rubles. The average in 2013 was 32 rubles. Thus, based on annual averages, the ruble lost value 21 percent against the dollar.

The loss of the lira 

It was Turkey that emerged after Russia  among the local currencies that devaluated the most in 2014. As of mid-year in 2013, the value loss of the lira increased. Especially with the influence of the political risk that climbed with Dec. 17 and 25 corruption operations of 2013, the devaluation of the lira accelerated.

The climb in the dollar was curbed for a while with the intervention of the Central Bank with high interest rates in January 2014; it accelerated again as of September 2014. Turkey, which always had a dose of political risk as well as economic fragility, had increased geopolitical risks because of the hot war in the Middle East, resulting in receiving one half of foreign capital inflow. While this was a factor constantly pushing dollar prices upward, especially with the news that the U.S. may draw forth the increase in interest rates, prompted foreigners to change position and leave Turkey, keeping the dollar high. The yearly average was 2.20 liras. The dollar which completed 2013 at an average of 1.91 liras, thus, was up 15 percent.


Other emerging currencies

While  Russia and Turkey, among emerging countries, took the top positions on the list in 2014 by losing 21 percent and 15 percent respectively, there were falls in other emerging countries’ currencies. The local currencies of those emerging countries that grew their economies with external source inflow were negatively affected with capital outflow depending on their fragility levels.

The Indonesian rupiah lost nearly 14 percent from 2013 to 2014. The South African rand devaluated nearly 12.5 percent. The Brazilian real lost 9 percent against the U.S. dollar. The value losses of the Mexican peso and the Indian rupee stayed at lower levels such as 4 percent.

A European emerging country, the Czeck Republic’s koruna devaluated by 6 percent, while the Hungarian forint went down 4 percent. The Polish zloty, on the other hand, had a slight gain of 2 in 1,000 against the U.S. dollar.

The euro and other European currencies 

The euro’s annual average of 2013 was $1.33. The 2014 yearly average was the same. Thus there was no change in terms of yearly averages. However, this should not make us underestimate the euro’s rapid loss of value in the second half of 2014.

The euro started 2014 with $1.36 and remained at that level until mid-July. However, it experienced a constant value loss the rest of the year and completed the last day of 2014 with $1.21. While in the first half of the year, the dollar/euro parity was 1.37, in the second half it went down to 1.27. In other words, there was a 7 percent loss of value in the second half, compared to the average of the first half. Expectations are that the loss of value in the euro will continue in 2015.

First of all, the U.S. dollar started 2015 with a strong move and the euro/dollar parity came to its lowest level in the past four and a half years. The rapid devaluation of the euro against the dollar is important in terms of global competitiveness and in terms of the relationship of Turkish exportation and its tourism industry with the euro. The parity first becoming 1.20, then 1.18 and then falling as low as $1.14 would mean an average of 7 percent loss in profits for the Turkish exporters and tourism managers.

Besides the euro, among European currencies, the British pound completed the year with more than 5 percent devaluation against the dollar. The Norwegian krone lost an average of 7 percent yearly against the dollar.

It was not only the currencies of developed countries that lost value against the U.S. dollar in 2014; currencies of central countries also experienced significant losses. Among those non-European rich countries, the Japanese yen lost more than 8 percent value against the dollar in 2014 compared to 2013. The Canadian dollar also closed 2014 with a loss of 7.3 percent against the American dollar.

Among the currencies which did not lose value against the U.S. dollar were oil producing Middle Eastern countries. Bahrain, Saudi Arabia, Oman, Qatar, Libya, the UAE and Kuwait currencies kept their values against the dollar.

Even though 2014 was the year of the U.S. dollar, certain currencies gained value against the dollar.

The main currencies the values of which exceeded their 2013 averages in 2014 averages have been the Chinese yuan with 0.8 percent, the Swiss franc with 1.2 percent, the Korean won with 3.9 percent and Australian dollar with 6.7 percent.

What will happen in 2015?

The shocking climb of the dollar in 2014 is expected to continue in 2015. With the interest rate increases the U.S. has announced, it is possible that the direction of capital movements will turn absolutely to the U.S. This, starting with those emerging countries that manage their economies with foreign resources, will result in the continuation of loss of values of local currencies of those countries that have experienced loss of blood in 2014.

The loss of blood of the euro against the dollar that started in the second half of 2014 is expected to continue in 2015 and the parity is expected to go down to 1.15.

When it comes to Turkey, what kind of a course the dollar that closed the last day of 2014 with 2.32 liras will follow is an important question. The course of the dollar will be determined by, again, capital movements that made it climb in 2014 when the capital inflow to Turkey was one half. The loss of appetite of the capital would bring new losses and especially with the start of interest rate increases in the U.S., one dollar may peak to 2.50 liras; it is expected. Nevertheless, where the annual average of the dollar in 2015 will land after standing at 2.20 liras in 2014 is a wait-and-see situation.

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Expectations not met, confidence decreasing in Turkey’s economy

Mustafa Sönmez – Hürriyet Daily News, /Jan.5/2015

Expectation surveys that measure the confidence of the real sector and consumers regarding the economic policies applied and their expectations related to the future are good way to feel the pulse of both the companies and the consumers, as well as help interpret expectations.

The December 2014 survey results have shown that confidence is decreasing in the economy policies and their results as implemented by the ruling Justice and Development Party (AKP). Especially since mid-2013, when the U.S. announced that it would start a new monetary climate, it is being observed that expectations – even though they show some increases from time to time – are trending downward.

The Central Bank’s survey results on “expectations” revealed that expectations made in 2013 for the upcoming year had not come to pass by the end of 2014.

untitledExpectation surveys are conducted by the Central Bank each month to monitor the expectations related to various macroeconomic variables of decision-making and experts in the financial and real sector. The questions in the survey cover short and long-term expectations about basic macroeconomic variables, such as consumer inflation, exchange rate, current account balance, growth rate of gross domestic product and interest rates. The panel of participants is chosen among decision-makers, experts and professionals in the financial and real sectors, and also among experts in foreign financial institutions. Participation is on a voluntary basis.

Those who participated in the Central Bank’s expectation survey conducted in December 2013 estimated that the dollar exchange rate would be 2.1 Turkish Liras at the end of 2014. However, estimates failed and the expected dollar exchange rate did not happen. The dollar exchange rate, especially under the effect of the rising political risk when the AKP and the Gülen Community clashed and during the Dec. 17 and 25 corruption operations, rapidly climbed. Toward the end of January 2014, the dollar peaked at 2.40 liras. Despite being curbed by interest rate increases, nevertheless, the dollar was mostly high during 2014 and toward the end of the year, with the effect of FED decisions and the political climate, the dollar again saw 2.41 liras at mid-December before dropping to finish the year at around 2.32 liras.

Those participating in the Central Bank survey also estimated that the weekly repo interest rate, which is considered the benchmark interest rate, would be around 5.3 percent in December 2013; whereas the skyrocketing dollar exchange rate disrupted this estimate. To slow down the fire of the foreign exchange rate, the Central Bank did not refrain from increasing interest rates. The weekly repo interest rate was increased 5.5 points at the end of January 2014, from 4.5 percent to 10 percent. This was a shocking increase. Even though there were small drops in the following months, the repo interest rate closed 2014 at 8.25 percent, very much above expectations.

The inflation performance in 2014 was also above expectations. The participants in the Central Bank survey expected 6.7 percent inflation. However, especially with the resistance of food inflation, consumer inflation reached a peak of 9.2 percent annually in the month of November. As a result of the shrinkage in agriculture and its reflection on food prices, also high prices in restaurants and hotels that are affected by food prices, even though the consumer inflation was revised twice, the expectations did not come true and the consumer price index exceeded 9 percent.  Those who participated in the Central Bank’s 2015 survey have publicized their 2015 expectations. Those who responded to the Central Bank’s December 2014 survey expressed that their growth expectation for 2015 was 3.5 percent. In association with this, the current account deficit at the end of the year is predicted to be $44.7 billion.

Those participating in the survey also agree on a dollar exchange rate of 2.41 liras and an annual inflation rate of 7.2 percent.

Consumer confidence  

The results of the consumer trend survey, on the other hand, conducted in cooperation between the Turkish Statistical Institute (TÜİK) and the Central Bank reveals that there is a decline in consumer confidence. The Consumer Confidence Index has fallen 1.3 percent to become 67.7 in December 2014, when compared to November of the same year. Thus the confidence index has fallen 11 points from June 2013, when the world monetary climate started to change and also affect Turkey until the end of 2014.
The probability of saving index decreased 7 percent in the month of December. The index which was 24.7 in November went back to 23 in December. This fall shows that the probability of consumers to save in the next 12 months is lower than the previous month.

Consumers are not positive about purchasing durable goods, automobiles, homes or the possibility to loan for them, and they have all answered the questions negatively, saying that circumstances were becoming tougher.

The Real Sector Confidence Index, which is the survey conducted by the Central Bank among top executives of those businesses that direct the country’s economy, operating in the manufacturing industry, is also trending downward. The confidence index of the real sector decreased 1.5 points in December 2014 compared to the previous month to become 101.2. This figure is the lowest in the last two years. The fall in the index reached 8 points as of June 2013.

In the Central Bank’s statement, it said, “While the assessments related to export orders for the next three months and the total orders of the last three months affect the index toward the increasing direction, the general situation, production, fixed investment expenditures, current total orders, current stock of finished products and total employment for the next three months have affected the index downwardly.”

ssWhile the real sector confidence index neared 112 in June 2013, in the following months it went down. The figure 101.4 seen in January 2014 was the lowest level since December 2012. The figure 101.2 in December 2014 drew attention because it was 0.2 points lower than January 2014 index value.

Expectations for 2015

It is expected that the downward trend and the fall of confidence in companies by consumers will also continue in 2015. It looks as if these, especially with the news of the expected increase in interest rates in the U.S. will prompt the withdrawal of foreign investors from Turkey, pulling down growth. The fact that 2015 is a general election year for Turkey means that the existing political risk will continue, at least until mid-year.

The geopolitical risks in the region, the fact that a solution has not been reached in the Kurdish issue and the deepening crisis in Russia  will be added to the economic and political risks of the country.


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