Unveiling the Turkish government's new programme Prime Minister Abdullah Gul was upbeat. "We will overcome poverty and corruption and create a country in which people live freely in peace and welfare," he said, before delivering a 90 minute outline of just how these noble, yet elusive, goals would be reached. However it is done, it will be a difficult journey. With the economy shrinking by 9.4% in 2001 after a major financial and economic meltdown, Turkey has been trying to pull itself back onto the rails ever since. A major IMF and World Bank backed economic programme has meant massive loans--now around USS 16 billion--tied to a radical economic restructuring. Some two million Turks are thought to have lost their jobs since the crisis, while domestic demand has slumped. Meanwhile, servicing large domestic and foreign debts has produced a number of scary moments over the last 12 months in which rumours of problems in rolling over debt have surfaced.
Behind all this was a three-way coalition government that for many months failed to see eye to eye on a number of key reforms--the principal ones being those designed to bring Turkey into line with European Union criteria. This dysfunctional administration gave investors repeated scares over the spring and summer of 2002, leading to higher interest rates, a falling exchange rate and an increased debt burden. However, on 3 November, that at least changed. The election of the Justice and Development Party (AKP) by a landslide, and the elimination of all other parties bar one from parliament, have given the country something of a rarity in its recent history--a single party government with more than enough votes to make big changes without having to buy deals with the opposition.
"It really ended the uncertainty around the previous government's ability to govern," says market analyst Suat Aktas. "They have a big opportunity to change things; we're all waiting to see how." Gul's speech to parliament announced that the government was set to give some answers. The AKP has long stressed that while it will follow the IMF and World Bank programme, it will also seek to re-emphasise its social dimensions. In particular, this has meant a series of promises to help out the shopkeepers, small businesses and farmers--three traditional pillars of the conservative AKP's support.
Meanwhile though, the government's room for manoeuvre is severely restricted by the terms and conditions of the IMF/WB loans and what...