The effect of the democracy package on the economy

The effect of the democracy package on the economy

The highly-anticipated democracy package was finally released the other day. While there were mixed reactions to the democracy package, we can generally say that an opinion has been formed, that is, certain improvements have been made but they were inadequate.

Prime Minister Recep Tayyip Erdoğan, in his speeches pre-package announcement had raised expectations pretty high. He even said that with the release of the package, the economy would experience a leap up. 

Well, of course it did not happen as such; the economy was not affected by the democracy package announced in anyway. Given that the markets’ concern was the United States budget crisis and how the matter would be resolved, the democracy package impacting the economy would have been a big surprise anyway. 

In the speeches he delivered after announcing the democracy package, the prime minister again said, “Wait - the economy will be affected positively,” but we do not expect this to happen.

Even if the economy package released had contained advanced improvements beyond expectations, it would not have affected the economy. Besides, the arrangements announced were far from meeting the demands of several segments. The lifting of the ban on the headscarf in public offices looks almost as if it is the most effective article of the package. If you take into consideration that this article is for the grassroots of the ruling Justice and Democracy Party (AKP) and that it was being practiced de facto anyhow, then the headscarf regulation should not be expected to affect the economy in any manner.

When we view the international reaction to the democracy package, we can easily say that a climate conducive to foreigners viewing Turkey positively has not been created, as such. The European Union has reported it will assess the package in the Turkey Progress Report, which it will issue in the middle of the month; however, diplomacy circles are not expecting the package to be adequate in dispersing the negative atmosphere formed against Turkey. 

Moreover, the interpretations coming from the US say that the democracy package is a good step but it was disappointing from the perspective of certain articles that were not included. Consequently, we can say that the climate that would restart the “flow of hot money”, which Turkey needs the most lately, does not exist. 

Its effect on the streets 

Besides this, during the implementation of the democracy package, in other words, the debates that will be ongoing during administrative arrangements and laws to be introduced in the next term, and how will they affect the political climate? This may be influential on the course of the economy. For example, regarding hate crime regulations, as in the Fazıl Say example, if articles that restrict freedom of thought are further aggravated, then we may experience the negative, not the positive, effects of the package. 

Even further to that, it can be said that the regulations the package is introducing are not mitigating the conflicting social atmosphere. For the most part, the last minute abandoning of the regulations concerning Alevis and their cemevis (Alevi places of worship), this carries the risk of further heating up the already angry Alevi segment. Also, for the Peace and Democracy Party (BDP) to declare that this democracy package does not contain regulations to enable a functional resolution process is like a sign that this segment will start protests in the next term. 

In short, there is the risk of those segments who may be disappointed by the democracy package inciting possible street movements in the next term, hence affecting the economy negatively, not positively.