Turkish election pledges belie serious economic problems
Mehmet
Cetingulec, Al Monitor, May 14, 2018
Both the
ruling party and the opposition have pledged various incentives and social
welfare benefits ahead of next month's vote.
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| Ozan Kose/AFP/Getty Images. A man walks in front of the portraits of Turkish President Recep Tayyip Erdogan (R) and founder of modern Turkey Mustafa Kemal Ataturk (L), Istanbul, Turkey, May 11, 2018. |
The
pledges Turkish politicians are making to voters ahead of the June 24
presidential and parliamentary polls have come to resemble an auction.
The
ruling Justice and Development Party (AKP) started with enacting a 24 billion
lira ($5.6 billion) incentives package, which bears directly or indirectly on
almost the entire population. In addition, the government plans to spend 38
billion liras on various social
welfare benefits this year.
Opposition
parties have raised few objections to such spending, wary of alienating
millions of voters, mainly pensioners and poor people, who are the primary
beneficiaries of such assistance. Let alone objecting to the payouts, the
opposition is making its own generous pledges.
Commenting
on a government plan to give pensioners two bonuses of 1,000 liras this year, Kemal
Kilicdaroglu, the head of the main opposition Republican People’s
Party (CHP), said earlier this month that “pensioners deserve more.” During the
parliamentary debate on the bill, the CHP submitted a proposal to raise the
bonuses to 1,604 liras each, the equivalent of one month's minimum wage.
CHP lawmaker Tuncay Ozkan
was eager to point out on Twitter that AKP deputies rejected the proposal.
The CHP
plans to unveil new pledges May 24. The talk in parliamentary corridors is that
the party will pledge to raise the monthly minimum wage to more than 2,000
liras and give pensioners two bonuses per year that are
each equivalent to one month's minimum wage. The CHP also wants to convert
existing material aid to the needy, such as food and coal for heating, to
cash assistance. Diesel subsidies for farmers and tuition-free education are
two other pledges expected in the CHP’s election manifesto.
In the
presidential race, CHP candidate Muharrem Ince pledged two
500-lira stipends per year to young people, arguing that slashing the current
lavish spending of the presidency will be enough to cover the cost. He also
promised annual scholarships for 10,000
students to study at prestigious institutions abroad as part of
a drive to stimulate scientific progress in the country.
Meral Aksener,
the chair and presidential nominee of the Iyi or Good Party, pledged a
comprehensive debt relief scheme that covers some 4.5 million people struggling
to repay consumer loans and credit card debts, including complete write-offs
for unemployed people, pensioners, minimum-wage earners, former members of
the security forces who have suffered disabling injuries in the line of
duty and the families of fallen soldiers and police. She also promises to
significantly cut the price of diesel for farmers to 1.5 liras
per liter from the current 5.06 liras.
On May
12, President Recep Tayyip Erdogan’s ally, Devlet Bahceli, the head of the
Nationalist Action Party (MHP), went as far as to call for a widespread
amnesty for Turkish prisoners (excluding child abusers, rapists,
murderers of women, Kurdish militants, and followers of Fethullah Gulen, whom
Ankara accuses of instigating the 2016 coup attempt). According to the
daily Haberturk, some 165,000
prisoners, including many convicted of murder,
assault and drug trafficking, fall into the scope of Bahceli’s amnesty
call. Several crime bosses known
to be close to the MHP's nationalist ideology would also be
given amnesty. For now, both Erdogan
and Prime Minister Binali Yildirim have given the cold shoulder to the amnesty
proposal.
In early
June, pensioners
will receive the first of the two bonuses the government has
promised just weeks before going to the polls. The government is
also targeting the influential youth vote by announcing an amnesty of an
unprecedented scope: Around 680,000
students who have been dismissed for various reasons over the
years will be permitted to return to their universities. In addition, the
government has written off late fees
for 300,000 students repaying higher education credits.
In
another pre-election move, the Health Ministry has announced a plan to recruit 27,000 new
employees.
The wide
range of pledges and incentives shows that both the government and the
opposition expect a close race. Hence, any card that could tip the scale is
being put into play. On May 7, Yildirim announced a
campaign to revitalize sales in the stagnant housing sector. As
part of the campaign, public lenders Ziraat, VakifBank and Halkbank, as
well as the private Sekerbank, cut monthly interest rates on housing loans
to 0.98% from between 1.23% and 1.35%.
The
government also apparently sees major international projects as another trump
card. The inauguration ceremony of the Trans-Anatolian Natural Gas Pipeline,
which will carry Azeri gas to Turkey and on to Europe, has been brought
forward from July to June 12,
before Turks go to the polls.
Selahattin Demirtas, the
imprisoned presidential candidate of the pro-Kurdish Peoples’
Democratic Party (HDP), has sought to communicate his pledges via Twitter,
with the help of lawyers who visit him in jail. His promises include monthly
stipends of 600 liras for young people, pensions of at least 3,000 liras for
retirees, and monthly assistance of 1,000 liras for about 1 million elderly
people who are ineligible for pensions.
While
political rivals compete on the spending front, they lack the same
enthusiasm in explaining how they will finance their projects. The generous
pledges belie a country in the grips of serious economic woes, including a big
current account deficit, unrelenting inflation, a tumbling currency and budget
deficits.
Any penny
spent outside the budget adds to inflation and interest rates, leading,
ultimately, to price hikes for consumers, especially on food items. In April, consumer inflation was up
10.85% from the same period last year, while producer
inflation hit 16.37%. The Turkish
lira has lost 12% of its value this year, and the main index of the
Istanbul stock exchange has tumbled badly as
well. The yield on two-year bonds has exceeded 16%. The
12-month current
account deficit stands at $53.3 billion, which is the yearly sum of hot money Turkey
needs to find to keep its economy glued together.
How the
election pledges will be financed is hard to explain. The central government
budget was already running
a deficit of 20.4 billion liras in the January-March period,
before the government called the snap polls and further loosened the purse
strings.
To cut a
long story short, the election pledges are detached from the realities of the
Turkish economy. And voters are well aware of this. As one pensioner, Mahmut
Guc, told Al-Monitor, “We are going to get the first bonus because it is before
the elections, but I am rather pessimistic about the second one.” A hail of
price hikes is what many voters expect after the polls.
