A Fight for Power: Trump, Erdogan and the Working Class
Relations between the United States and Turkey are at a low point. While Trump’s “America first” policy slows down the Turkish bourgeoisie’s drive for independence as a regional power, Turkish President Recep Erdogan is trying to overcome his country’s economic crisis at the workers’ expense.
September 05, 2018
Since January, Turkey’s currency has lost 40% in value—in the last two weeks alone, its value fell by 25%. Turkish President Recep Erdogan blames a U.S. trade war and is trying to unite his supporters and Turkish capitalists behind him. He has called for the exchange of personal savings into Turkish lira. Erdogan has reacted to Trump’s doubling of punitive duties on Turkish steel and aluminum by increasing import duties on U.S. products. The Turkish state has so far prevented a disaster with the help of emergency measures such as restrictions on banking swaps, but the crisis has consolidated and now the question is, Who will bear the costs?
Why the Turkish Lira Has Declined
Even before the conflict between Trump and Erdogan broke out, the Turkish economy was threatening to collapse. This is why Erdogan announced that the country’s parliamentary and presidential elections would be held early, in June.
The situation is highly explosive. The country’s inflation rate is 15.85%, its highest since 2003. Although fewer than two months have passed since the elections, the country has fallen into a historic crisis. Erdogan and his cabinet blame the U.S. trade war for this.
Although the United States’ imperialist interference in the Turkish economy must indeed be condemned in the strongest terms, the lira has collapsed because the economic model pursued by Erdogan and his party, the Justice and Development Party (AKP by its Turkish acronym), has failed. U.S. sanctions have only accelerated the country’s economic woes.
Economists and institutions are now proposing a deal with the International Monetary Fund to overcome the crisis. The last such loans were requested by the AKP government in 2005. In 2008, the AKP decided to no longer turn to the IMF.
Erdogan still wants to maintain this myth of independence from international institutions, which is why the government has not yet considered the IMF option. Erdogan came to power after a crisis in 2001 shook the country. During the crisis, official unemployment rose by 1 million people, youth unemployment was over 30%, inflation was at a record high and 14,540 companies had declared bankruptcy. But the bourgeoisie saved its profits through IMF loans and state subsidies. But the crisis was a hard blow to the workers and the poor, who no longer had jobs or savings.
Instead of alleviating the plight of the people, the AKP’s economic policy was based on diligently repaying the national debt, which amounted to 75% of national income in 2002 and fell to 30% in the following 16 years. The IMF debt of 23.5 billion euros was fully repaid in 2013. Erdogan presents this as a great success.
But he never talks publicly about one fact: The country’s external debt has almost quadrupled since 2002, having reached $450 billion. The key to this new crisis lies with the private sector and private households. Turkey’s credit-financed economy, the piling up of private debt and investment in construction have resulted in high growth rates (up to 10%) for years. But this bubble will soon burst. Moreover, the banks are heavily in debt to foreign creditors, and the lira’s loss in value makes repayment even more difficult. Many of the loans were taken out when the exchange rate was two lira per dollar. Today, the government is struggling to keep the currency below seven lira per dollar.
“America First”: U.S.-Turkey Relations at a Low Point
The Turkish crisis is the latest in a series of events since the broader capitalist crisis of 2007-8, a crisis of the reorganization of the imperialist system—that is, an organic crisis of the multilateral neoliberal order. The crisis of 2008 began as an economic crisis, but it has now turned into a geopolitical one. Trump’s “America first” policy is not just a demagogic slogan; it reflects a new tendency to renegotiate international treaties and reconfigure the neoliberal order as a whole.
Right-wing and protectionist forces follow, or take over, Trump’s motto according to their own objectives.
The temporary imperialist unity that formed after the fall of the Soviet Union is coming to an end. The interests of the national bourgeoisies are diverging again, and today’s multilateral order is becoming less and less functional for the United States. For Trump’s government, the result is clear: The United States can no longer manage the world arena, and the neoliberal architecture no longer keeps in check its strategic opponents, particularly China. The Trump government has bid farewell to President Barack Obama’s “moderation” and “multilateralism” and is fighting on several fronts simultaneously.
The move from “multilateralism” back to “America first” has hit Erdogan particularly hard: His strategic project was based precisely on exploiting the multilateralism opened up by the crisis of U.S. dominance in the Middle East. This crisis of hegemony came about thanks to the failure of unilateralism and President George W. Bush’s wars of conquest in Afghanistan and Iraq.
The Turkish state had seen this crisis of hegemony as an opportunity to expand the influence of Turkish capital. When the traditional dictatorships collapsed during the Arab Spring, the Turkish government, as a NATO member and strategic U.S. ally, sought to extend the “Turkish model” of parliamentary democracy under neoliberal Islamic leadership to several countries in the region. Obama and the European Union supported this.
But the Turkish model was based on privatizations, foreign loans and oversized construction projects. Together with Qatar, Turkey relied on the Muslim Brotherhood, which lost power everywhere and was finally liquidated by Israel, Saudi Arabia and the United States. In Syria, Erdogan relied on the cooperation of jihadist forces to accelerate the fall of Bashar al-Assad.
Although Syria is now a dead end for him, it is still a touchstone of Turkey’s bid for regional political independence. The recent developments in Syria, especially Turkey’s conquest of Afrin, have encouraged Erdogan and the Turkish bourgeoisie to continue on this course.
Erdogan has so far focused on short-term pragmatic cooperation with various countries. He tries to avoid tensions with the bloc around Iran and Russia without claiming to be organically part of it. He maintains the same course with U.S. allies such as Saudi Arabia, Egypt and Israel. Yet he is challenging the United States. He wants to prove that Turkey has a strong regional position and can form an advantageous pact with the United States.
Turkey was for years a semicolony of the United States. But especially during the Arab Spring, the AKP has tried to increase its influence in the Middle East and North Africa. It has not succeeded, but Turkey will not return to its semicolonial status. This fragile cooperation between the US and Turkey makes Turkey an uncertain factor for the imperialist states and the regional powers alike. It does not have the economic strength to convince its neighbors of its leadership. Neither does it have oil wells that could give it some leverage.
Turkey’s military offensive on Afrin could only temporarily mask its economic and foreign policy instability. The current challenge of Turkish foreign policy is to play a stabilizing role in the region’s new constellation. Its opportunistic tactics have to date become superfluous after Trump’s offensive.
That is why Erdogan uses his relationship with the European Union to negotiate with French President Emmanuel Macron and German Chancellor Angela Merkel on how to emerge from the crisis. If Turkey becomes insolvent, European capital fears a repeat of summer 2015, when refugees fled en masse across western Europe’s national borders.
While Erdogan declares a trade war with the United States, he also points out that Turkey has been a NATO state and strategic U.S. partner since 1952. Erdogan’s rule depends on defending the relative independence of Turkish capitalism in the region. To achieve this, he announced that he would abandon the strategic partnership with the United States and turn to Qatar, Russia and above all China.
According to the Turkish president’s special adviser, İbrahim Kalın, the emir of Qatar, Tamim bin Hamad al-Thani, has pledged to invest $15 billion in Turkey after a meeting with Erdogan. The money will go to the banks and into the financial markets. The countries’ close relationship was established long ago, but they have grown especially close in recent years. When Saudi Arabia, Egypt and the United Arab Emirates accused Qatar of supporting Islamist groups and cut off diplomatic relations, Turkey stood behind Qatar. This was not a coincidence, because they both were involved.
Particularly in recent years, Turkey has begun to cooperate with capital from the Arab region. In Turkey, European capital was concentrated in industrial production, especially the car industry and cheap textiles. Arab capital has instead begun to buy up real estate and take over companies from the entertainment sector, such as the sports channel LIG TV.
Small and medium-sized Turkish company owners, who are part of the AKP base, have begun to export to the Arab markets. Such exports would be impossible to European countries because Turkish goods there could not hold their own. In the first year of the AKP government, Turkey’s exports to the Arab countries amounted to only $3.2 billion; this has now grown to over $30 billion. Steel and hardware head the list of exports, which is typical for a country that has been taking on construction projects abroad for years.
In its previous experiences of pursuing regional power for Turkish capital, the AKP dictatorship learned that, to expand regionally, it needs to maintain socioeconomic stability in Turkey. At the same time, however, the AKP’s efforts to present itself to the public as the region’s hegemonic political force have been repeatedly met with rejection and revulsion.
The state of emergency imposed after the 2016 coup attempt was necessary to consolidate the presidential system, and although it has been formally lifted, it was only put it into permanent legal form, since the president—endowed with massive executive powers—can now rule by decree at any time.
The situation is therefore extremely tense and highly explosive. Erdogan built his bonapartist rule with the whip, but it will be marked by permanent crises.
The European Union has so far been extremely pragmatic toward Erdogan. To protect investments and keep Erdogan in his role as a border guard against refugees, the EU has avoided an open confrontation, both with Erdogan and the US. But the United States’ withdrawal from the nuclear agreement with Iran and its trade war with Turkey are challenging European capital. According to the Bank for International Settlements, European banks have invested $150 billion in Turkey, of which the Spanish banking sector ranks first, with $82 billion. The French and German banking sector are also involved, with $35 billion and 17 billion euros, respectively. As purchasing power in Turkey declines and Turkish companies and banks face existential distress, the unrest is spreading quickly. For example, highly indebted Turkish companies have to pay back $50 billion within the next 12 months, which now seems impossible.
Who Will Bear the Cost of the Capitalist Crisis?
The Erdogan government is stepping in to save big corporations and banks through loan restructuring and bailouts, just as the Turkish government did during the 2001 economic crisis.
But in this case the debt amounts to over 100 billion euros. The main trade associations in Turkey, the Turkish Industry and Business Association (TUSIAD) and the Union of Chambers and Commodity Exchanges (TOBB), have declared their support for the president’s policies. In a recent statement, TUSIAD affirms that the Turkish economy is on stable footing but that immediate action is needed to strengthen the relationship with Turkey’s “most important economic partner,” the EU. The medium-sized trade association MÜSIAD has also expressed its support for Erdogan. The Turkish capitalists have failed to prepare for this crisis and need a strong state to recover. Bonapartist unity is thus guaranteed for the time being.
Capital today recognizes the necessity of “controlling” the economy and of strong state “leadership” to do so. But the language of the bourgeoisie hides something else: The Turkish bourgeoisie needs state leadership to more effectively plunder the workers. Where does the Turkish government find the money to repay its debt? The pockets of workers, pensioners and youth.
In the face of this, a solution is needed for the workers, so that the capitalists pay for the crisis instead. If the working class, together with its allies from the middle class, does not develop a defensive plan of action, Erdogan will survive another crisis.
The government instructs its officials to regulate the banks, but this does not change their capitalist character. The private banks must be expropriated and the credit system unified in state hands in order to create a single investment and credit system for the benefit of the working class and its middle-class allies.
The trade unions and workers’ shop floor organizations must demand the lifting of secret trade agreements in order to expose all the corruption of Turkish and foreign companies. To prevent speculation and capital flight, the state must carry out expropriations without compensation.
Erdogan’s government imposes punitive duties on U.S. goods. But to really assert Turkey’s sovereignty, the government must close the Incirlik air base and withdraw from NATO. Incirlik Air Base is a NATO base, which is mostly under control of American Officers. It is an important strategic point for the imperialism in the Middle East.
That is why the demand of closing the Incirlik is to decrease the influence of imperialism in Turkey.
Turkey, a country of perpetual crisis, is again shaken today. The fighting ability of workers, Kurds, women and youth will be crucial to stop further attacks.