Corruption: The Turkish Challenge.

• Author: BARAN, ZEYNO

"When countries such as Turkey with weak law enforcement and lack of transparency undertake massive economic reforms that involve lucrative privatization deals, corruption may eat away at the system."

A Stanford political science professor starts her first lecture with this question: What is most important for developing countries--stability, participation, economic growth, equity or justice? Those who raise their hands for stability are exclusively from developing countries, while those who value participation and equity tend to be mainly from the United States or Europe. Being born in Turkey, I had also once raised my hand for stability

Throughout the Cold War, stability was indeed the most important consideration for the countries of the Western bloc. Human rights violations, military coups and massive corruption were not preeminent subjects for international consideration and action. During the past decade, however, as the world became more interdependent, a consensus gradually emerged that stability, without an institutionalized democratic system and the requisite checks and balances, is simply not enough. Consequently, corruption began to be viewed as the root of many political, economic and social problems.

In the old bipolar world, a crude division of "us" and "them" meant that membership in one bloc was sufficient. As long as rulers were able to deliver on their alliance obligations, they were free to do whatever they wanted domestically. However, globalization--based on free markets and the unrestricted flow of capital--requires rule of law and basic regulated markets that safeguard private property, enterprise and capital. The global market has no place for closed economies that hide behind walls of regulations and tariffs, privileged and politically connected elites or domestic cartels and entangled bureaucracies that have no interest in giving up traditional and lucrative access to wealth. In the past, to combat corruption, the World Bank and the IMF would prescribe macro and microeconomic policies to governments and the United Nations would develop other policy recommendations. Nevertheless, many countries, even some experiencing spectacular economic performance, became failed states due to their inability to tackle corruption. More recently; partly because of the work of Transparency International and the focus on corruption by other NGOs, both the World Bank and the IMF have begun to recognize that creating efficient practices that diminish corruption is integral to sustainable development. Similarly, increased application of the United States Foreign Corrupt Practices Act and the anti-corruption program under the Organization for Security and Co-operation in Europe, has ensured greater attention to this cancerous issue.

This paper will focus on two aspects of corruption in Turkey First will be the corruption emanating from Cold War-era state structures. Residual and obsolete Cold War forces, whose related clandestine activities were once valued, have since become a part of the commercial underworld. A second, more widespread form of corruption relates to the abuse of broad, discretionary powers by public officials, with little accountability This involves an unhealthy recipe where commercial interests, resulting in biased government tenders and privatization processes, drive media, business and politics. When countries, such as Turkey, with weak law enforcement and lack of transparency undertake massive economic reforms that involve lucrative privatization deals, corruption may eat away at the system.

TURKEY'S CHALLENGE

Located to the south of the former Soviet Union, and at the crossroad of Europe and Asia, Turkey enjoyed a role as a key NATO ally throughout the Cold War. As a secular Muslim and democratic polity in the Middle East, Turkey has been touted as the model for the rest of the Islamic world. A few years ago, the United States identified Turkey as one of the top emerging markets, attributable to its economic growth potential, get-political location and its large and dynamic population of 63 million people--of which currently half are below the age of 30.(1) The Turkish economy, however, has been infested with chronic inflation and high budget deficits over the last 25 years, which has not only disrupted macroeconomic balances, but also eroded social structures and worsened income distribution. Turkey is one of the few countries in the world left with persistent high inflation. This, in turn, has prevented the economy from fulfilling long-term growth potential, and indirectly created a fertile ground for corruption.

Despite the state's inability to deal with the multiple challenges of corruption, Turkey has not hit rock bottom. However, the electorate has begun to demonstrate its discontent with corruption: They voted for the Islamist Welfare Party in 1995, and the Democratic Left Party and the Nationalist Action Party in the April 1999 elections, attributable mainly to their honest and clean reputations.

For many decades, Turkey has simply been "muddling through" in the effort to eliminate corruption. While many Turkish governments vowed to fight it, none have adequately addressed the problem. Vested interests have been too closely tied and the belief has been that bringing one element down could have led to the collapse of the entire Turkish system. With US$200 billion official gross national product and, at least another US$100 billion unrecorded or untaxed production, Turkey is now the world's 17th largest economy While its shadow economy has so far allowed Turkey to prosper, it has also isolated the country from Western standards of rule of law and transparency In the new global system, Turkey will not be able to sustain corrupt practices.

The choices Turkey makes will have significant implications. As President Clinton underlined in a recent speech, "the coming century will be shaped in good measure by the way in which Turkey itself defines its future and its role today and tomorrow. For Turkey is a country at the crossroads of Europe, the Middle East and Central Asia; the future can be shaped for the better if Turkey can become fully a part of Europe, as a stable, democratic, secular, Islamic nation."(2)

The current challenge for Turks and their allies is to create the necessary institutions to enable Turkey to fulfill its potential. Turkey can either be a Western-oriented fulcrum in the region, or join the pariah states. The 150-year old process of Westernization, combined with recent steps toward the European Union (EU), suggest that Turkey has crossed a point of no return. The question is how quickly this transformation will take place and whether it will be managed without unnecessary upheavals.

FROM EMPIRE TO REPUBLIC

Corruption in Turkey is tied to its history as a rent-seeking and rent-providing state. The Ottoman sultan monopolized national assets--mainly the land--and distributed them temporarily to loyal subjects. Political mistakes of prime ministers not only resulted in their execution, but also in the confiscation of their accumulated wealth. It was no coincidence that the civil servants' wealth amasssed only during their tenure. For the sultan, permanent wealth transfer might lead to alternative power circles that no Ottoman sovereign could tolerate. This prevented the accumulation of private capital that could have enabled the emergence of a more liberal political and economic tradition. Such an economic system was suitable for an expanding empire, which could finance itself with revenue from new territories. When the Empire began to decline, however, old ways of channeling wealth became an unbearable burden.

In the last years of the empire, the Committee of Union and Progress (CUP), comprised of Western-oriented but nationalist army officers, overthrew Sultan Abdulhamit to cleanse the system and try to save the Empire from eventual decline. Since then, the inability of political leaders to govern, and the tradition established by the CUP to periodically cleanse the system through coups, have been a permanent feature of Turkish political life.

When Mustafa Kemal Ataturk created the Turkish Republic in 1923, he wanted to advance industrial growth, while also creating a strong military and bureaucracy that would be loyal to the Republic. Land became a property of the treasury; and the new state assumed another imperial tradition of rent-seeking. Those close to Ataturk's party--the Republican People's Party--received economic benefits. While Oriental culture has always functioned with a little bahsis (tip), it is noteworthy that neither Ataturk, nor his successor, Ismet Inonu, was accused of personal corruption. Nevertheless, since only those supporting the Republican People's Party were able to procure land and industrial benefits, the rest of the population grew resentful.

When Turkey held its first free multi-party election in 1946, those who were previously excluded from the system and were unhappy with the Republican People's Party's corporatism joined together to form the Democrat Party. The next election in 1950 transferred power from the Republican People's Party to the Democrats; but the end of the single-party system only changed the faces and the system continued as usual. The supporters of the Democrats also wanted to reap the benefits of state power. The small businessmen of Anatolia and the landowners who had supported the Democrats demanded that the new government pay their dues. These supporters thereby became the new pressure group, replacing the traditional supporters of the Republican People's Party who had held that role.

In the 1950s, the Marshall Plan introduced US dollars into the Turkish economy for the first time, which allowed the government to launch major infrastructure projects. Inevitably...