Islamist Prime Minister Faces Domestic Challenges, International Opportunities

by James M. Dorsey

At the helm of a country beset by chronic inflation, civil strife and foreign rivalries, modern Turkey’s first Islamist-led government is seeking to convince both Western nations and domestic opponents that it is a responsible partner.

To do so, Prime Minister Necmettin Erbakan, leader of the pro-Islamic Refah (Welfare) Party, will have to honor NATO member Turkey’s international commitments. These include both a customs union with the European Union and a military co-operation agreement with Israel, which Erbakan has criticized. Perhaps even more important both at home and abroad will be whether he demonstrates his ability to take tough economic austerity measures.

While Erbakan has so far given little reason to doubt the sincerity of his pledge to live up to international commitments, his first economic moves are already raising eyebrows, fueling speculation that Turkey may be heading for a period of continued political uncertainty rather than of badly needed stability. Turkey has been without a stable government since the government of then-Prime Minister Tansu Ciller collapsed last September.

Erbakan had two options: to pursue short-term inflationary, populist policies, with the aim of calling an early election in the next six months which he would hope to win with a clear majority; or using his time in office to enact structural economic and political reforms in line with his government’s program. The program calls for speedy privatization, reduction of annual inflation, currently running at 83 percent, and achievement of sustainable economic growth.

By raising the salaries of several million civil servants by 50 per cent rather than by the budgeted 30 per cent, Erbakan appears to be signaling that he is opting for populism and an early election. He has said he would also seek parliamentary approval for a 30 per cent bonus for members of the security forces.

While Treasury officials warned that the moves would fuel inflation and broaden the country’s already yawning budget deficit, Erbakan suggested that he would finance the extra expenditure through the sale of state-owned land. Turkey’s budget deficit was 378 trillion Turkish lira ($4.5 billion) in the first five months of this year. It is expected to rise to $10.5 billion by year’s end.

Economic balances could be further disrupted if Erbakan also makes good on his pledge to write off interest on agricultural loans—a move that could cost the government in excess of $4 billion. Such moves could ultimately jeopardize Turkey’s long-term economic future. Bankers nonetheless urge patience in coming weeks, noting that markets have so far responded calmly to the threat of populist policies.

A Race Against Time

Analysts believe that Erbakan hopes to win sufficient votes to form a government of his own in an election that would be held before the devastating economic effects of his populist moves kick in. That would be a race against time. Triple-digit inflation is likely to catch up with him before he can hold an election, one analyst warns.

Under his coalition agreement with the center-right True Path Party (DYP), Erbakan would serve for two years as prime minister before rotating the job with DYP leader Ciller, who currently serves as foreign minister. Erbakan’s Refah Party emerged as Turkey’s single largest political party from inconclusive elections last December. But its 159 deputies are a far cry from the 276 needed in Turkey’s 550-member parliament to form a majority government.

Some critics of Refah charge that Erbakan’s measures and his willingness to work closely with the military, widely seen as the guardian of secularism in Turkey, are simply smokescreens that distract from the party’s real goal of garnering sufficient power to impose its Islamic ideology. Refah’s party platform advocates a “just order” that would abolish interest and introduce a package of social and economic reforms in line with its vision of Islam.

Ironically, an upswing in the 12-year-old Kurdish insurgency in southeastern Turkey is forcing Erbakan to rely increasingly on the armed forces, even though his party advocates an end to the war that already has cost some 20,000 lives.

A July meeting of the National Security Council that groups the country’s most senior government and military leaders was expected to serve as a barometer of Erbakan’s relationship to the armed forces. Besides the Kurdish issue and Turkey’s strained relations with neighbors Greece and Syria, the council also is likely to review the dismissal over the past year of tens of officers on charges of Islamist sympathies.

Signalling his willingness to cooperate with Turkey’s Western allies, Erbakan already has agreed to a postponement of all military exercises in the Aegean Sea by both Greece and Turkey. U.S. officials hope that this will help to ease tension in advance of efforts to resolve deep-seated bilateral problems that repeatedly threaten to blow-up into open warfare.

Erbakan’s government also has continued to take a publicly tough line toward Syria, accused by past Turkish governments of supporting the Kurdish insurgents in the southeast. Syria has complained repeatedly over Turkey’s withholding of water from the Euphrates River, which originates in Turkey.

Erbakan has said that one of his first foreign trips as prime minister will be to Syria. Whether or not a deal is in the making could have a major effect on the guerrilla warfare in eastern Turkey that has such a huge impact on Turkey’s budget, and also on Syrian-Turkish relations, which have ranged from cool to cold for much of the 20th century, ever since the demarcation of a disputed border between the two countries following World War I.