Turkey tries free, disciplined economy--and it delivers
For a country that practically had economic reform rammed down its throat by outsiders, Turkey seems to be enjoying the outcome.
The country has just celebrated the second anniversary of its shift to a free-market economy. And despite the fact that the changes were pushed by the International Monetary Fund and several Western governments, the Turks have some cause for celebration.
The progress is the result of many actions, but two are especially important: tax reform, which resulted in a sharp rise in revenue, and a near-freeing of interest rates, which brought savings to record levels.
Final 1981 economic figures, which started coming in recently, provide concrete measures of the economic progress that is perceptible everywhere in Turkey.
* Exports exceeded the year's target by at least a half-billion dollars.
* Remittances from Turkish workers abroad brought in another half billion more than had originally been counted on.
* Inflation has been reduced to about 35 percent (from at least 90 percent in 1980).
* For all practical purposes Turkey's budget is in balance this year, and real economic growth--after three years of no growth or negative growth--was slightly above 4 percent in 1981.
* Coffee--a symbol of economic well-being in Turkey--is again being imported. Food and consumer goods are plentiful.
* Electricity cuts have been held to a minimum this winter. However, this is only because of continuing imports of electric power from Bulgaria and the USSR.
One person who is particularly happy about these gains is the man considered to be country's chief reformer, Turgut Ozal. Mr. Ozal started the task under the former prime minister, Suleyman Demirel. And when Turkish military leaders took power in January 1980--partly to ensure continuation of the reforms--they not only kept Ozal in his job, but elevated him to the post of deputy prime minister for economic affairs, a position he continues to hold.
''Turks are reacting well to economic reform, and people all over the country can see the gains it has brought,'' Mr. Ozal says. ''But we cannot stop. We must keep up momentum, keep reducing inflation and increasing exports.''
Mr. Ozal is especially pleased that Turkey is expanding exports to the Middle East, sending more workers to Arab countries, and winning construction and service contracts.
He sees no conflict in these relationships with Turkey's basic orientation toward the West. He is proud of the fact that Turkey has expanded exports to both Iran and Iraq in spite of the war between them. He believes it is important to keep as many ties as possible with Iran, and he took time to participate personally in negotiations with an Iranian trade delegation in January.
Several days ago, in fact, the Turkish government reached an agreement with Iran to trade $1.8 billion worth of Turkish foodstuffs for a similar amount of Iranian oil.
Even so, the search for domestic sources of petroleum, especially in the southeastern part of the country, is accelerating. Foreign oil companies find the government's new, simplified system for granting concessions attractive. Discipline has kept foreign oil imports down, and Turkey's export earnings, which were too small to pay for oil imports for several years, are now more than sufficient.
For some Turkish businessmen, however, the adjustments have been painful.
''Turkish businessmen support the government,'' declares Ali Kocman, head of TUSIAD, the national industrialists' and businessmen's association. ''And even though some of us are hurting, we all agree with the logic of the reforms and want to see them continued. . . . Most of our businessmen learned during the period of anarchy that there is not much advantage in making profits if the country itself is collapsing.''
While larger conglomerates - called ''holdings'' in Turkey - can balance losses in one area against gains in another, many medium and small-sized companies that lack flexibility have been having trouble. Business failures have reached unprecedented levels and hundreds of enterprises are up for sale or merger. The automobile industry has been especially hard hit.
Some beleaguered businessmen are trying to persuade the government to ease up on domestic credit.
''With inflation still running at 35 percent and banks paying 42 percent for 6-month and 50 percent for 12-month deposits, it is clear that real interest rates are not all that high,'' a leading economist says. ''A short-term increase in private-sector credit would not be highly inflationary and would give some sound businesses the time to make adjustments and reorient themselves.''
There is a remarkable degree of agreement among university professors, economic analysts, and other commentators on what needs to be done to ensure long-term success. Their recommendations include:
* Improved export incentives. The present helter-skelter exporting of everything that can be quickly collected and sold abroad is not considered a rational base for a long-term export program.
* A more comprehensive approach to encouraging agribusiness. New technologies to process, package, and transport meat, poultry, fish, vegetables, and fruit have been called for. Related to this would be more systematic development of the country's agricultural base, including implementation of the ''green revolution,'' still in its infancy in Turkey. This could be helped by expansion of agricultural extension services and encouragement of more private development.