Government’s lost credibility blights economic prospect
When the world tipped deeper into recession on September 11 it found that Turkey was already there deep down in the hole – a recession veteran. Assisted by the IMF, Turkey has been trying since 1999 to overcome its worst economic crisis since the Second World War. It has had little success. Its support for the US means more funding is likely, but funding alone can’t solve Turkey’s problems.
The September 11 assaults on the World Trade Centre and the Pentagon were a major blow to Turkey because they worsened the international background. The two comparative bright spots of the Turkish economy, tourism and exports, both took a battering. Lenders' heightened aversion to emerging markets forced the state treasury to scale back plans to borrow $1.5 billion by the year-end from the international market. Privatization plans were shelved indefinitely.
On the other hand, the US response to the September 11 events will have improved Turkey's chances of getting new help from the west. The Bush administration indicated that countries that offered help to the US in its war against terrorism were likely to receive help in return. Since Turkey - Nato's only Muslim member - is historically one of the US's staunchest allies, Ankara is virtually assured of a positive response to its application for additional IMF funding.