No price hikes, only price adjustments

No price hikes, only price adjustments

During the 1980s there was a short, fat, lovely prime minister. He was an economist with a background in the State Planning Organization, which is now the Development Ministry. Later, he served briefly as president. He died very early. He was Turgut Özal. Most media people were very critical of him. He initiated court cases against many people, including this writer, on grounds of “insult to the president, or premier,” but at the same time decorated corridors of his office with cartoons making fun of him and his policies.

I have to confess, we were all very wrong in our treatment of him. We just could not understand at the time what a great person he was and what great reforms he wanted to undertake in to usher Turkey in an era of liberal economy. One night, Turks went to bed in a Turkey where having few dollars in their pocket or a pack of foreign cigarettes could be punished with months in jail and woke up to a new Turkey where the law on the protection of the Turkish Lira disappeared. All such walls of conservative protection were taken down.

Naturally, there was panic in the country. Since the mid-1960s, the local industry and business communities were adamantly against Turkey’s European integration on the grounds the Turkish economy was not yet ready and the country would be flooded and taken over by the European conglomerates. Turks were condemned to buy bird series of cars produced locally, for example, and offered to the market at such high prices as if they were top quality, world-standard A-class cars. It was the liberal reforms of Özal’s period that Turkey managed to integrate with the global economy, enhanced its economic prospects, and achieved incredible growth and development helping Turks improve the quality of life.

Özal was a cunning politician. It was during his time that bribery, gross favoritism, nepotism and such issues ceased to become random in this country. Bribery in public tenders was institutionalized. A percentage of every tender would go to the ruling party and to the influential people in decision-making positions. “My civil servant knows his business” was his sentence, admitting the legitimacy of bribery at public institutions. We were critical of such issues, but could not sufficiently appreciate the great achievements he helped this country undertake in, particularly in the field of economy.

“I am not the fool who increases prices before the elections” he had once said. Indeed, after the elections he unleashed a huge wave of price hikes, but bravely defended them saying “We have not made any price increases. These are price adjustments produced by the needs of the economy, the increased exchange rates of foreign currencies, etc.”

Seeing the latest bombardment of the country with price increases, I remembered Özal and his words. The state-owned Botaş Petroleum Pipeline Corporation has increased the price of natural gas by 49.5 percent. The “energy board” (not the government) has announced a 9 percent increase for natural gas consumed in homes, followed with a 9 percent increase in electricity prices.

Of course, the pen slingers of the government and the almighty ruling elite will all claim these are not price increases, but adjustments. Does it make any difference? Like Özal, President Recep Tayyip Erdoğan and his administration were clever enough to wait until after the elections were over to unleash the merciless bombardment of price hikes.

What will be the price of bread? At some bakeries, the price of bread has increased by 15 percent. In most places, the government’s ban on price adjustment is still respected. How long? The Central Bank has readjusted the inflation expectation. Already, the July inflation rate is expected to be well over the targeted level, pushing astray the revised inflation expectation. Will Turkey be able to go below the inflation rate revised from 8.4 percent to 13.4 percent?

Seeing the performance of his successors, I have to accept Özal was a great politician.

Yusuf Kanlı, Özal, price hikes, Turkish economy