ISTANBUL - Hürriyet Daily News
The Cabinet members in charge of different fields of economy are developing contradicting ideas, says the main opposition CHP. The party criticizes the government about mismanaging money inflows and failing to protect industries
Artists Halit Ergenç (L) and Meryem Uzerli are seen in a screen shot from ‘Muhteşem Yüzyıl,’ a Turkish soap opera famous over a vast region.
The Turkish economy is entering 2012 with new fragilities as Cabinet members responsible for managing the economy have been losing coordination, according to senior officials of the main opposition Republican People’s Party (CHP).
“The economy has lost coordination,” said Faik Öztrak, the CHP
vice president, who is charge of economy, during a Dec. 29 breakfast meeting with journalists hosted by his party in Istanbul.
The main fields of dispute between Cabinet members include discussion on whether to slow down the economy or not, whether it was possible to become one of the top 10 economies of the world by 2023, whether to count gold sales to Iran
as an exports item or a method of payment and whether the pension salaries were too high, said Öztrak.
Öztrak also claimed Prime Minister Recep Tayyip Erdoğan
was complaining about an “oligarchy in bureaucracy” that hinders the government from making crucial changes, despite his Justice and Development Party’s (AKP) large appointments to seats during the past decade, he said. ‘Wrong growth model’
“One of the main problems of the economy is that the growth model is eliminating industries and agriculture, putting services to the foreground,” Öztrak said, commenting on the CHP’s official 2012-2013 report.
This model is addicted to hot money inflows, the official said. “We cannot manage capital movements well and our competitive power is melting,” he said.
Citing a McKinsey report revealed last month, Öztrak said Turkey failed to find a place among the top 15 manufacturers of the world in 2010 unlike 1990 or 2000, in a list that where so called BRIC nations –Brazil , Russia, India
– have long been maintaining their positions.Growing debt
Another matter of concern is growing debts, Öztrak said, explaining that the sum of foreign debts in the private sector and the domestic public debt and banking loans had accumulated to some 119 percent of the gross domestic product as of the second quarter of this year. This is a jump from 103 percent in 2002, when the AKP came to power, Öztrak said.
“The public sector is loading debts on to the shoulders of the private sector,” Öztrak said, adding that savings were at historic lows. Turkey is entering the New Year with a slowing in production, capacity utilization and a fall in exports when gold trade is excluded, according to the main opposition. Selling the revenues of toll roads, which also include two bridges over Istanbul’s Bosphorus, was another way of taking on long-term debt, said Öztrak. Turkey’s Koç and Yıldız holdings and Malaysian UEM have acquired the rights for toll roads for $5.7 billion for 25 years. However, more conventional ways of receiving debt would be more effective, Öztrak criticized.
Claiming that Turkey ranks ninth globally in terms of acceleration loss in economy in 2012 from a year earlier, Öztrak forecasted growth in 2013 to be 2.5 percent, 0.7 percent below the government’s updated projection. “The AKP’s approach in foreign policy and regional disputes has added to the new economic fragilities in 2012,” said Umut Onan, another CHP
vice president. “The tensions with Syria, Iraq and Iran
are badly hurting the Turkish economy,” he said. “Particularly people living by the Syrian border are very angry.”
“The sound of war trumpets” is not a good sign for the hot money inflows that power the economy, he said.
PROVINCES HURT BY INCENTIVES
Turkey’s new incentive system poses risks for thousands of enterprises and employees as it has automatically lifted the existing one, CHP
Vice President Umut Oran told journalists during an Istanbul meeting.
Sharing his experiences during a recent visit to the eastern province of Malatya, he said particularly many health sector, services businesses and call centers were considering moving to southeastern Turkey, where the new incentive system promises large tax eases. A total of 49 provinces might be badly affected by the lifting of the previous one and his party has offered a new code for a transition process, he also said.
“I had told Economy Minister Zafer Çaðlayan to launch a pilot study before bringing in the new system; they did not take it seriously,” he said.
SOCIAL COUNCIL FORGOTTEN
The Economic Social Council, a constitutional body that joins representatives from the government, bureaucracy, employees and employers, has not been holding meetings for 3.5 years, despite the CHP’s repeated official applications for a meeting, according to party officials.
“As the world is facing the crisis of the century, the government sees no need to convene the council,” CHP
Vice President Faik Öztrak said.
The council is in charge of developing ideas and providing constancy to sustain social reconciliation and cooperation in economic and social policies.