Turkish Economy 1923 2002

TURKISH
ECONOMY AND POLITICS

From 1923, the Foundation
of the Republic until 2002
Prof. Dr. Mkerrem Hi

with Asst. Prof. Dr. Ayen Hi Gencer
Copyright 2009
Mkerrem Hi
Beykent University
Department of Economics
Istanbul, Turkey
http://www.beykent.edu.tr
e-mail: mukerrem@ahg.name
Published by Beykent University Press

Edited by Alp H. Gencer
Typeset in Times and Bitstream Vera
ISBN 978-975-6319-09-3
Certificate No. 11374
All rights reserved.
iii
Contents
TURKISH ECONOMY AND POLITICS:

1923-2002
Foreword...............................................................................................................................ix
Introduction............................................................................................................................x
CHAPTER 1
ATATRK PERIOD: 1923-1938............................................................................................1
1.1. PERIOD OF LIBERAL ECONOMIC REGIME, 1923-1933....................................1
1.1.1.Economic Development........................................................................................1
1.1.2.Political Reforms and Developments....................................................................3
1.2. THE GREAT DEPRESSION OF 1929 AND TATIST ECONOMIC REGIME,
1933-1938.....................................................................................................................5
1.2.1.Brief Review of Developments in the World Following the Great Depression....5
1.2.2.Developments in Turkey: Atatrks Choice of tatist Economic Regime ...........7
1.3. PERFORMANCE OF THE ECONOMY DURING 1923-1938...................................9
CHAPTER 2
NN PERIOD: 1939-1950................................................................................................11
2.1. NNS STANCE IN WORLD WAR II..................................................................11
2.2. NNS ECONOMIC REGIME AND WAR CONDITIONS.................................13
2.3. PERFORMANCE OF THE ECONOMY DURING 1939-1949.................................14
2.4. ENTRY INTO MULTI-PARTY SYSTEM OF DEMOCRACY................................15
CHAPTER 3
DEMOCRAT PARTY PERIOD: 1950-1960........................................................................19
3.1. ECONOMIC REGIME AND DEVELOPMENT STRATEGIES IMPLEMENTED
BY DP.........................................................................................................................19
3.1.1.Liberal Economic Regime, Encouragement of the Private Sector, Closed
Economy, Import-Substitute industrialization..................................................19
3.1.2.The Strategy of Agricultural Development.........................................................22
3.1.3.Foreign Aid and Credit, and Encouragement of Foreign Private Capital Flow
(DPIs)...............................................................................................................23
3.1.4.August 3, 1958 Devaluation...............................................................................24
3.1.5.Application to the EEC for Associate Membership............................................24
3.2. MAJOR INTERNATIONAL POLITICAL RELATIONS..........................................25
iv
3.4. A SOCIO-POLITICAL EVALUATION OF THE PERFORMANCE OF DP...........28
CHAPTER 4
MILITARY INTERVENTION PERIOD: 1960-1961 ........................................................33
4.1. POLITICAL REPRESSION OF THE DP GOVERNMENTS THAT LED TO THE
MILITARY INTERVENTION..................................................................................33
4.2. THE NEW CONSTITUTION, POLITICAL CHANGES AND PLANNED
ECONOMIC DEVELOPMENT................................................................................36
4.2.1.Major Changes Introduced in the New Constitution for the Better Working of
Democracy........................................................................................................36
4.2.2.Changes in the Economic Regime: Mixed Economy and Planned Economic
Development.....................................................................................................39
CHAPTER 5
AFTER THE MILITARY INTERVENTION: 1962-1973..................................................41
5.1. COALITIONS, MINORITY GOVERNMENT LED BY NN AND CHP, 1961-65
....................................................................................................................................41
5.2. POLITICAL DEVELOPMENTS DURING THE AP (JUSTICE PARTY) PERIOD,
1965-71.......................................................................................................................44
5.3. MARCH 12, 1971 MILITARY MEMORANDUM: REFORM GOVERNMENTS
AND REFORM LAWS..............................................................................................50
5.4. ECONOMIC POLICIES AND DEVELOPMENT STRATEGIES PURSUED BY AP
GOVERNMENTS, 1965-71.......................................................................................52
5.4.1.Industry: Encouragement of the Private Sector, DPIs and of Assembly
Industries........................................................................................................52
5.4.2.Petroleum and Effects of the 1973 Petroleum Reform Law...............................54
5.4.3.Construction Sector............................................................................................54
5.4.4.Agriculture and the 1973 Land and Agricultural Reform Law..........................55
5.4.5.Closed Economy, Import-Substitute industrialization Strategy and 10 August
1970 Devaluation..............................................................................................56
5.4.6.Family Planning, Its Implementation and Implications.....................................58
5.5. TURKEY-EEC RELATIONS: ENTRY INTO THE TRANSITION PERIOD AND
THE ANNEXED PROTOCOL..................................................................................60
5.6.1.Growth Performance of the Economy, 1962-64.................................................62
CHAPTER 6
UNSTABLE GOVERNMENTS AND TERRORISM: 1974-1980 ....................................65
6.1. RESULTS OF ELECTIONS, COALITION AND MINORITY GOVERNMENTS
FORMED....................................................................................................................65
6.1.1.Ecevits CHP-MSP Coalition.............................................................................65
6.1.2.Demirels 1st Nationalist Front Coalition..........................................................66
6.1.3.Demirels 2nd Nationalist Front Coalition........................................................67
v
6.1.4.Ecevits Government of CHP + 11 MPs.............................................................67
6.1.5.Demirels AP Minority Government...................................................................68
6.2. MAJOR POLITICAL PARTIES AND THEIR STANDS..........................................68
6.2.1.CHP....................................................................................................................69
6.2.2.AP.......................................................................................................................71
6.2.3.Opposing Philosophies of CHP vs. AP...............................................................72
6.2.4.Dik.P...................................................................................................................73
6.2.5.CGP....................................................................................................................74
6.2.6.MHP....................................................................................................................75
6.2.7.MSP.....................................................................................................................76
6.3. MAJOR POLITICAL AND ECONOMIC DEVELOPMENTS..................................77
6.3.1.Military Intervention to Cyprus..........................................................................77
6.3.2.Economic Developments Up Until 24 January 1980.........................................78
6.3.3.January 24, 1980 Devaluation and Economic program....................................79
6.3.4.Negative Turning Points in Turkish-EEC Relations...........................................82
6.3.5.Mounting Terrorism, Killings, Demonstrations From Both Sides Leading to
September 12, 1980 Military Intervention........................................................84
CHAPTER 7
MILITARY INTERVENTION PERIOD: 1980-1983.........................................................91
7.1. OVERVIEW OF MILITARY INTERVENTION.......................................................91
7.1.1.Historical Overview............................................................................................91
7.1.2.Martial Court Round-ups and Court Sentences.................................................93
7.1.3.Reorganization of Universities and YK...........................................................95
7.1.4.Highlights of International Relations During the Intervention Years................98
7.2. MAJOR ECONOMIC DEVELOPMENTS DURING THE INTERVENTION
YEARS.......................................................................................................................99
7.3. PERFORMANCE OF THE ECONOMY DURING 1981-1983...............................100
7.4. THE NEW CONSTITUTION AND GENERAL ELECTIONS................................101
7.4.1.The New Constitution 1982..............................................................................101
7.4.2.New Political Parties........................................................................................103
7.4.3.The New Election Law and Nov. 6, 1983 General Elections............................105
7.4.4.A Comparison of the 1980 Military Intervention with 1960 Military Intervention
and an Evaluation in Retrospect.....................................................................107
CHAPTER 8
ANAP AND ZAL PERIOD: 1983-1991...........................................................................113
8.1. POLITICAL DEVELOPMENTS AND RESULTS OF ELECTIONS HELD..........113
8.2. ECONOMIC POLICIES PURSUED BY ZAL.......................................................119
8.2.1.Liberalization of Trade, Convertibility of the TL, Free Flow of Financial Funds,
Encouragement of DPIs .................................................................................119
8.2.2.Privatization, Encouragement of Private Enterprise, Private vs. Public
Investments, Impaired Competition ...............................................................121
8.2.3.Public Finance and Tax Policies......................................................................123
8.2.4.Inflation: Real Causes and Reasons Given......................................................126
8.2.5.Wages, Employment and Social Goals.............................................................127
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8.3. PKK TERRORISM....................................................................................................128
8.4. INTERNATIONAL RELATIONS DURING ZAL and ANAP PERIOD..............132
8.4.1.Turkeys Relations with the EEC, Application for Membership in 1987.........133
8.4.2.Normalization of Relations with European Council.........................................134
8.4.3.Economic Relations with Islamic Countries and Others..................................134
8.4.4.Turkish Greek Relations................................................................................135
8.4.5.Pressures Exerted on the Turkish Minority in Bulgaria and Forced Migration to
Turkey.............................................................................................................136
8.4.6.Masses of Kurdish Refugees Fleeing From Iraq..............................................137
8.4.7.The 1990 Gulf War and Turkeys Cooperation with the USA..........................137
8.5.1.Growth of GNP, Per Capita GNP, Population and Inflation...........................138
8.5.2.Employment and Unemployment......................................................................141
8.5.3.The Share of Public Sector in Total Fixed Investments....................................142
8.5.4.Privatization.....................................................................................................143
8.5.5.FPC Flow (DPIs)..............................................................................................143
8.5.6.Selected Foreign Trade and Current Account Items........................................144
8.6. AN EVALUATION OF ZALS POLICIES...........................................................147
CHAPTER 9
PERIOD OF COALITIONS: 1992-2002............................................................................153
9.1. DYP-SHP (CHP) COALITION, 1992-1995..............................................................154
9.1.1.Political Developments, Elections, Formation and End of the Coalition........154
9.1.2.Economic Crisis, 1994......................................................................................159
9.1.3.Developments in the GAP (South-eastern Anatolian Project).........................160
9.1.4.Customs Union with the EU.............................................................................161
9.1.5.Turkish-Greek Relations and the Kardak Crisis..............................................163
9.1.6.Increased Terrorism, the Fight Against Terrorism and Reforms During 1992-95
........................................................................................................................163
9.1.7.Terrorism By Religious Mobs and Underground organizations......................164
9.1.8.PKK Terror and Kurdish Separatism...............................................................165
9.1.9.Reforms Accomplished During 1992-95...........................................................167
9.1.10.The Gazi Incident and Alevi uprising Against Terror leveled at Them..........168
9.2. ANAP-DYP (ANAYOL) COALITION, 1996..........................................................169
9.3. RP-DYP (REFAHYOL) COALITION, 1996-1997...................................................169
9.3.1.Formation of REFAHYOL Coalition................................................................169
9.3.2.Economic Agenda of REFAHYOL....................................................................170
9.3.3.Erbakans Early Attempts to Forge Relations with Islamic Countries............171
9.3.4.Turkish-Israeli Relations During the 1990s.....................................................171
9.3.5.Relations with the EU.......................................................................................172
9.3.6.The Susurluk Incident.......................................................................................173
9.3.7.The Sincan Incident..........................................................................................174
9.3.8.The February 28, 1997 Meeting of MGK.........................................................175
9.4. ANASOL-D (ANAP-DSP-DTP) COALITION, 1997-1999.....................................177
9.4.1.Extending Compulsory Primary Education to 8 Years.....................................178
9.4.2.Closure of RP and Opening of SP....................................................................178
9.4.3.Relations With the EU During ANASOL-D Government.................................179
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9.4.4.Fight Against PKK Terror and calans Capture...........................................180
9.4.5.Global Financial Crisis 1997-98 and Turkey...................................................181
9.4.6.Economic Policies of ANASOL-D Government................................................182
9.4.7.Ending of ANASOL-D by CHP and the Results of Early General Elections, 18
April 1999.......................................................................................................185
9.5. DSP-MHP-ANAP COALITION: 1999-2002............................................................186
9.5.1.April 1999 Elections and Forming of DSP-MHP-ANAP Coalition.................186
9.5.2.IMF Stand-by and Failure of the Foreign Exchange Anchor...........................187
9.5.3.February 2001 Economic Crisis.......................................................................192
9.5.4.Turkish-EU Relations; Becoming a Candidate Member..................................195
9.5.5.The End of the DSP-MHP-ANAP Coalition.....................................................197
9.6.1.Growth Rates, Inflation and Breakdown of GNP.............................................198
9.6.2.Employment and Unemployment......................................................................201
9.6.3.Fixed Investments.............................................................................................202
9.6.4.Developments in Turkeys Balance of Payments..............................................204
References..........................................................................................................................207
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ix
Foreword
My experience in teaching Turkish economy courses at stanbul University,

Columbia University, as well as at Beykent University has proven that there is need
for a compact and concise textbook in English on this subject. The book in your hand
tries to fulfill this need.
This book is essentially a shortened version of my book titled "A Survey of
Turkey's Economy and Politics: 1923-2007", which was published in the USA. Indepth analysis of the subject as well as the governments in 2002-2008 period are
covered by this extended version (Hi, 2008).
Up to date questions, such as the 2008 global financial crisis and its effects on
Turkey's economy, can be followed in my book titled "Kresel Ekonomik Kriz ve
Trkiye (Global Economic Crisis and Turkey)", which was published by Beykent
University Press (Hi, 2009).
Herewith, I wish to express my thanks to Beykent University Administration,
faculty and staff, who took on the task of publishing my latest two books. I also wish
to express my special thanks to my daughter, Ayen, who contributed section 9.3
based on her previous work published in Germany (Gencer, 1998).
Prof. Dr. Mkerrem Hi
Beykent University
February 2010
Introduction
An attempt has been made in this book to survey major economic and political
developments in Turkey since the foundation of the Republic by Atatrk in 1923
until 2002.
Economic performance and developments are the result of economic regime,
economic strategies and policies pursued and these, in turn, depend upon the
philosophy and the stand of different governments and political parties. Hence
economy, political economy and politics are intertwined and it is impossible to
abstract economics from politics. This is particularly pronounced in the case of
developing and newly industrializing countries, including Turkey.
Therefore, both political and economic developments are taken jointly and the
sub-periods studied in this book follows the developments that has taken place under
different governments. It would have proved futile and artificial, for instance, to
follow sub-divisions according to Five Year Development Plans (FYDPs) prepared
by the State Planning Organization (SPO) since 1963 because economic policies,
hence the performance of the economy changes conspicuously not according to
FYDP periods but according to governments in power.
The sub-periods studied in the book follow consecutive government periods as
listed below:
Atatrk Period, 1923-38.
nn Period, 1938-50.
Democrat Party Period, 1950-60 (led by Celal Bayar as President, and Adnan
Menderes as PM).
27 May 1960 Military Intervention, military intervention period, 1960-62.
The Years 60s, 1962-73:
o CHP-AP coalition (CHP led by nn as PM, AP led by Sleyman
Demirel), 1962-65.
o AP government (led by Demirel as PM), 1965-71.
o 12 March 1971 Military Memorandum and Reform Governments,
1971-73.
The Years 70s, Unstable Coalitions, 1973-80:
o CHP-MSP government, 1974 (CHP led by Blent Ecevit as PM and
center-left; MSP led by Necmettin Erbakan and radical religious
right).
xi
1st and 2nd National Front governments 1975-78, led by AP (centerright; with Demirel as PM) 1st NF government coalition joined by
MSP (led by Erbakan, radical religious right), CGP (center-right, pro
Atatrk, led by Turhan Feyziolu), MHP (radical nationalist right,
led by Alparslan Trke). The 2nd NF government coalition joined by
MSP (same), MHP (same) and Dik.P (center-right, in the vein of
former DP, led by Ferruh Bozbeyli).
o CHP government, 1978-79 (center-left and Ecevit as PM).
o AP minority government, 1979-80 (led by Demirel, as PM, centerright) supported from outside again by MSP, MHP and Dik.P (all as
above).
12 September 1980 Military Intervention, and military intervention period, 198083.
ANAP and Turgut zal Period, 1983-1991.
The Years 90s: Coalition Governments till 2002 General Elections: 1991-2002:
o DYP-SHP coalition, 1992-96 (DYP initially led by Demirel, centerright, SHP initially led by Erdal nn, center-left).
o Short-lived ANAP-DYP coalition, 1996, (ANAP center-right led by
Mesut Ylmaz as PM, DYP center-right led by Tansu iller).
o RP-DYP coalition, 1996-97, (RP radical religious right led by
Erbakan, as PM and DYP center-right led by iller).
o The collapse of RP-DYP coalition government following warnings
about religious reactionary threat in the National Security Council,
28 February 1997.
o ANAP-DSP-DTP coalition, 1997-99 (ANAP center-right led by
Ylmaz as PM; DSP led by Ecevit center-left; DTP led by
Hsamettin Cindoruk, center-right; coalition supported from outside
by CHP (led by Deniz Baykal, center-left).
o DSP-MHP-ANAP coalition 1998-2002, DSP center-left led by
Ecevit as PM; MHP radical nationalist right led by Devlet Baheli;
ANAP center-right led by Ylmaz.
Despite its wide expanse, in order to shorten the book as much as possible, I
have refrained from giving all the relevant economic, social and political statistics in
detail and have contended only with the most basic indicators. All the statements,
arguments and evaluations made in the book, however, are based on detailed data,
statistics and quantitative analyses that are readily available from conventional
sources. These include SPO yearly programs and FYDPs, State Institute of Statistics
SIS; presently called the Turkish Statistics Institution TIK), Turkish Central Bank,
and the Ministry of Public Finance reports and publications. Second-hand and
systematic data are also available in the yearly reports by the Union of Chambers of
Commerce, Industry and Stock Exchanges (TOBB) in Ankara; and the Turkish
Industrialists and Businessman's Association (TSAD) in Istanbul, as well as
others.
o
xii
Turning once more on the sub-divisions which follows different government

periods, even the short listing of the succeeding governments given above could raise
eye-brows because there are so many short-lived government coalitions, many
between parties with different philosophies. Tracing Atatrk, nn, DP (Menderes),
AP (Demirel) and ANAP (Turgut zal) could be straight-forward. Atatrk was
already mentioned above, nn implemented a more intensive tatism; DP, AP and
ANAP were all center-right and liberal in the sense that they encouraged private
enterprise and DPIs. But what about coalitions of political parties with different
philosophies? Both CHP and MSP in 1974 were anti NATO, anti USA. etc. in
rhetoric; but the CHP-MSP coalition government was too busy with the Cyprus
operation. NF governments in the 70s (1975-77) pursued center-right economic
policies favoring private enterprise. In the 90s, DYP-SHP (1992-95) was again
center to center-right in economic policy, so were RP-DYP (1996-97) and ANAPDSP-DTP (1997-98). DSP-MHP-ANAP (1999-2002) was de facto also center in
terms of economic policies, busy to fight the economic crises, and also busy to attain
for Turkey the status of candidate member to EU. The AKP presently in power also
follows center-right economic policies.
Single governments commanding absolute majority in the parliament and
implementing center-right economic policies generally fared better than coalition
governments with different philosophies and actually implementing center-right or
centrist economic policies.
Turkey started with rapid economic development under tatism during the
Atatrk period. But in the subsequent periods intensive tatism or policies not
favoring private enterprise generally caused a lower GNP growth while center-right
economic policies fared better in terms of growth. These policies progressed over
time from a closed economy to opening to world markets or outward orientation
since 1980, to market economy since 1983, and Turkeys entry into globalization
process accelerated particularly during the recent years. Growth performance was
markedly poor during the nn period, partly due to war conditions. It was also low
during center-left CHP under Ecevit. He faced economic difficulties during 1977-79;
and the Ecevit-led coalition DSP-MHP-ANAP 1999-2002 had to fight serious
economic crises.
The author of this book wants to underline at this point that amongst leaders
only Atatrk stands incomparably tall, with a very grand vision and its
implementation. He had already shown his military genius in the defense of
Dardanelles; he showed it once again in the War of Independence. He carefully set
the target for new Turkey and its limited boundaries and won the War of
Independence with scarce arms and ammunition against very well-supplied invaders.
The only strong point on his side was the natural impulse of the people to throw the
invaders off their homeland. It was only because Atatrk had saved Turkey that he
was able to set an entirely new course for the new state as secular republic by
abolishing both the sultanate and the caliphate. Turkish people at the time were
overwhelmingly (nearly 100%) pro sultanate and pro caliphate. Many of Atatrks
xiii
colleagues were also in favor of keeping at least the caliphate in Turkey. His reforms
for the westernization of Turkey, his attempts at multi-party democracy further sheds
light in the direction of the new republic Atatrk envisioned.
Laicist (secular) republic, westernization, multi-party system of democracy
should have been owned by all shades of movements and political parties from left to
right; excepting only the most radical religious right which aims at a religious state,
the most radical nationalist right which is racist and bent on uniting Turks all over the
world, and also excepting communism. It should be underlined that not all those who
voted for radical parties at the nationalist right and the radical religious right in the
later years were radicals in the narrower sense mentioned above. Similarly only a few
at the left were adherents of communism and Marxism.
Atatrks followers, both in intellectual fields and in politics, should range
from center-right to center to center-left but even a number of radical left thinkers
have accentuated only his fight of independence against imperialist powers and
have tried to own him on their side. On the other hand, only the more religious and
those politicians who played for their votes considered laicism and Atatrk as against
Islam. This was a grotesque misinterpretation of Atatrk as well as of Islam and the
move was always most harmful and a threat to Turkeys political hence economic
stability in the long run. And more recently we have another group of self-proclaimed
Kemalists who interpret him so rigidly that such a regime cannot have any chance
of allowing Turkey to progress both economically and politically in the world of
today.
nn as a statesman also has a number of unique achievements; first as
representing Turkey in the Lausanne negotiations, secondly he was most careful not
to drag Turkey into W.W. 2 despite heavy pressures from both sides. He also did the
right move, siding with allied countries towards the end of the War upon territorial
claims of USSR under Stalin. nns introduction of multi-party democracy is
another benchmark.
nn also played a critical statesmanlike role during and after the 1960
military intervention. The signing of Ankara treaty with the EEC to make Turkey an
associate member was still another benchmark. But economic growth during his
period 1938-50 was poor, in fact, negative and his implementation of tatism too
intensive.
Although economic growth was faster generally during the period of centerright parties or coalitions implementing center-right policies this does not mean to
say that the over-all governance of Turkey by center-right parties was superior. Some
of the gravest mistakes of center-right political parties was to play on and hence
strengthen both radical nationalist and, in particular, radical religious right. This fault
accelerated over time and eventually radical religious right (called moderate
Islamism by many Europeans and Americans who compare it only with Middle
Eastern and North African Islamic countries rather than within the context of
Atatrks secular republic) became mainstream and center-right parties were
xiv
marginalized. Another major defect of particularly those political parties at the right
was corruption which again seems to have accelerated over time.
The center-left parties, on the other hand, particularly in the earlier years
assumed an intensively tatist stance; they had been generally anti private enterprise,
anti DPIs, anti Turkish-EEC (EC and later EU) relations, and anti USA. Hence,
though professing to be center-left this stand was near to radical left rather than
center-left. Their economic and political stance became more moderate over time,
hence more applicable in the world of today. One great disadvantage of center-left in
Turkey was that it did not start as a mass movement. Left-of center stance was owned
from the top by CHP in the second half of 60s. By that time the center-right DP
and later AP had already captured with economic growth and political rights the
majority votes of workers, small businessmen, and farmers including those with
smaller land. For the rural Turkish population, in addition, any pronunciation of
left brings to mind hostilities with Russia; more recent example had been Stalins
claims after World War II on Kars, Ardahan, Artvin and the straits.
In Europe, in contrast, the left had been a mass movement of workers and the
poor who were joined by intellectuals. Over time the left in Europe first dispensed
with many of Marxist maxims, became democratic and eventually moved to centerleft in the more recent times. In Turkey since it was movement from the top it was
always under exceptional conditions that a left-of-center party became a convincing
alternative to come to power, leaving this opportunity to the radical right. And the
cause is not merely fragmentation of political parties, because both the center-left and
the center-right are split just as much. Fragmentation stems from the 1982 law on
political parties that assigns too much power to the chairman of the party, lack of
experience of the politicians to live by consensus, plus opportunities of receiving
large sums of money from the Treasury. Intra-party democracy is also generally
absent.
Chapter 1
ATATRK PERIOD:
1923-1938
1.1. PERIOD OF LIBERAL ECONOMIC

REGIME, 1923-1933
1.1.1. Economic Development
Mustafa Kemal Atatrk has laid firm foundations for the economic regime of
the new Republic just as in all other fields. The mistakes made by leaders,
governments and political parties following him can, in no way, be traced down to
him. Despite its importance, Atatrk period will be treated here in summary because
there are many studies available on Atatrk by myself, other Turkish writers as well
as well-informed foreign experts.
When he founded the new Republic, Atatrk had inherited a nation which had
not entered the age of enlightenment and a backward economy torn by wars. A
nation-state was lacking both in spirit and in organization. At a time when the
negotiations in Lausanne were discontinued, Atatrk organized the 1st zmir
Economic Congress in 17 February 4 March 1923 in order to make advisory
decisions on the economic regime and economic policies to be pursued by the new
Republic. In this Congress, the delegates advised that private enterprise and its
encouragement should be taken as the basic principle. Despite the adverse experience
with capitulations during the Ottoman period, the Congress also accepted that
Foreign Private Capital (FPC, or Direct Private Investments DPIs in todays preferred
terminology) be also encouraged if it is useful for the economy. The advisory
decisions of the Congress were of strategic importance. During the War of
TURKISH ECONOMY AND POLITICS
Independence, the Soviet regime established in Russia in 1917 in World War I years
had lent some material support to Atatrks national struggle. The Soviets were well
aware that Turkey was not experiencing a communist revolution while Atatrk was
also careful to keep Soviet aid within safe limits. Nonetheless, many European
delegates at Lausanne had doubts and anxieties as to what economic regime and
political relations the new Turkish Republic would follow. The 1st zmir Economic
Congress organized at a time when Lausanne negotiations were stalled dispelled such
fears. In the second phase of negotiations, started after the zmir Congress, major
questions including Mosul petroleum, capitulations, the debts of the Ottoman Empire
were all solved and Lausanne Peace Treaty was signed on July 24, 1923.
The new Republic established on October 23, 1923 went about implementing
the liberal economic principles accepted in the zmir Congress. It was decided that
FPC firms operating in the defense and transportation sectors were to be nationalized,
i.e. turned over to the government, by means of paying their worth. But those in other
fields, such as banking and commerce were allowed to operate, stripped, however, of
capitulations. Nationalization proceeded very slowly during the Atatrk period due to
lack of financial means whereas it was speeded up during the nn period.
According to the Lausanne Treaty the government had to keep the low-rate specific
customs taxes on imports unchanged up until 1929 while it also had to start paying
the General Debts (Dyunu Umumiye) of the Ottoman period from 1929 on. In
1924, the bank was established by mixed capital in order to develop private
industry both by credit financing and also by means of direct bank participations. In
1925 the Industry and Mining Bank (Sanayi ve Maden Bankas) was founded in order
to finance the investments of the public enterprises to these sectors. In 1927, the
government issued the Law for the Encouragement of Industry intended to
encourage the private sector with the limited means available, such as subsidies on
transportation fees, etc.
In the field of agriculture, the new Republic abolished in 1925 the tithe
(aar), i.e. the 10% flat tax on agricultural produce, implemented during the Ottoman
period and subject to much complaint.
On 1929, according to the stipulations of Lausanne Treaty, the Turkish
government became free to establish new customs taxes, scrapping those left over
from the Ottoman Period. With the Lausanne Treaty debt payments organization had
already lost its overall political influence and had become a mere transfer agency.
Yearly debt payments were also reduced. In 1929 they were further reduced and final
payment was made in 1954.
As the following section will indicate, the new Republic had its hands full with
the institution of very radical political reforms in these initial years. But despite the
serious political questions as well as uprisings or religious resurrections of
reactionary groups and forces, economic growth was remarkably high during these
first years. Indeed, according to SIS statistics GNP rose from 11,378.8 million TL in
1968 prices in 1923 to 21,274 million TL by 1930, an average yearly growth rate of
9.4% for the first seven years. One reason for this high rate is obviously the very low
GNP in 1923 due to the destruction and disruption of production during the war.
ATATRK PERIOD:
1923-1938
There was scanty manufacturing capacity left over from the Ottoman period while
the war of independence must have severely affected agricultural production.
On October 28, 1927 the first population census was held and it showed the
population was 13.6 million, very high birth and death rates and child birth, and a
very low life expectancy.
1.1.2. Political Reforms and Developments
Political developments, radical political reforms undertaken during the Atatrk
period are so profound that a mere listing attempted here can do little justice to their
importance. The subject, however, is dealt in depth and in detail in very many studies
published on Atatrk. Even the summary or listing below would prove that Atatrks
political reforms have paved the future of the new Republic as regards both the
political and the economic regime. And this is why Atatrk is very much alive today
while Hitler, Mussolini, Stalin all died.
During the first years of the New Republic, the government decidedly gave the
priority to the carrying out of the major political, social and cultural reforms, as well
as the prevention of uprisings and insurrections of religious reactionary groups who
were more against laicism than the Republic, and against the abolishment of caliphate
and acceptance of European codes.
It was a tremendous task, and nobody little less than Atatrks caliber could
have achieved it. Luckily, his military genius in the Dardanelles and later in the War
of Independence was supplemented with his genius in choosing the right political
vision and in laying sound political strategies and tactics to attain his goal (Lloyd
George, British PM at the time of War of Independence had also referred to Atatrk
as a genius). He had to accomplish this goal in the context of a one-party system.
Any move in the way of multi-party system of democracy backfired because
reactionary forces seized the opposition parties established. He also had his hands full
subduing insurrections of reactionaries.
Just before the new Republic was established on October 23, 1923, Atatrk
first founded in September 1923 the Republican Party (Halk Frkas; Cumhuriyet
Halk Partisi; CHP: Republican Peoples Party as it was later called). As he visualized
it, this party was to represent and work for the welfare of all the social classes of the
nation. The former regional groups which had carried on the War of Independence
formed the backbone of the party. Its formation and aims, that is, Atatrks vision
was manifest; he never had in mind the Bolshevik model based on social class. He
envisioned a secular republic and a nation-state based on the Western civilization. He
had to abolish the sultanate and the caliphate and carry out several radical reforms to
westernize Turkey.
It must be underlined that abolishing the Sultanate in Nov. 1, 1922 and
declaration of the new Republic in Jan 20, 1923 was a gigantic step by itself. The
first parliament had convened on 23 April 1920 as the political body behind the War
of Independence. It had already accepted in 1921 the principle sovereignty
unconditionally belongs to the people as a first step towards the future Republic.
The Lausanne Treaty was signed on 24 July 1923, and the new parliament that
convened in August 23, 1923 declared on 29 Oct. 1923 that the state was a Republic.
Atatrk was elected President, and smet nn was elected Prime Minister. This step
was then followed by abolishing the caliphate on March 3, 1924 and concomitantly
the Law of the Unification of Education was accepted.
Following, in April 1924 a New Constitution was accepted that still retained
the statement that Turkey was an Islamic state, but the abolishment of the caliphate
required the abolishment of the Sharia Ministry and the religious courts while the
acceptance of the Law of Unification of Education required that madrasahs (medrese:
theological higher school of learning) should be dismantled. Ottoman dynasty was
sent abroad. To fill the void, faculties (departments) of theology were to be opened
up in universities and new intermediate schools for training imams and preachers
would be tied to the new Ministry of National Education. Foreign schools were also
brought under the control of the said Ministry.
But abolishing the caliphate on top of the Sultanate naturally caused deep and
widespread resentment among the religious conservatives who were an
overwhelming majority at the time. Even many of Atatrks former close and
prominent co-operators and supporters, both military and civilian (including Kazm
Karabekir, Ali Fuat Cebesoy, Refet Bele, Adnan Advar and H.Rauf Orbay), left
ranks. Atatrk allowed them to establish another party: Terakkiperver Cumhuriyet
Frkas (Progressive Republican Party) on Nov. 17, 1924 to give vent to the rising
opposition and elected Fethi Okyar, a moderate as Prime Minister instead of smet
nn. But the said party was swelled by antagonistic religious ultra-conservatives.
At about the same time, on February 17, 1925 Seyh Saids religious uprising started
and immediately gained ground in Eastern provinces. smet nn was re-elected as
Prime Minister and the government accepted on March 4, 1924 a very severe
disciplinary legislation called Takriri Skun Kanunu (Law Concerning Order).
Martial law was instituted in the Eastern region. The above-mentioned law gave the
government vast powers including the use of military force and institution of special
courts to suppress the anti-secular uprisings. Seyh Said uprising was wiped out by
April and Seyh Said and other leaders of the insurrection were executed. Shortly
before, on June 3, 1925 the Progressive Republican Party was closed down by the
government on grounds it provoked religious reactionary movements. An attempt on
Atatrks life, again by a reactionary group in June 1926 had shown that the severe
disciplinary measures were necessary to protect the newly established secular
republic.
It was under the umbrella of such a strict and severe legislation that Atatrk
launched his subsequent radical reforms. These included the closing down of
religious orders (tarikat), lodges (tekke) and cells (zaviye) on Sept 2, 1925;
acceptance of the law that outlawed the fez and introduced the European hat on Nov.
25, 1925; acceptance of the international calendar and hours on Dec. 26, 1925;
acceptance of the new secular Civil Law on February 17, 1926; and the Criminal Law
on March 1, 1926. The new civil code based on the Swiss introduced equality for
citizens of different races, religions and sex. This was a great step forward for
womens rights and introducing monogamy, divorce, equality of women and men in
ATATRK PERIOD:
1923-1938
inheritance and as witnesses in courts, etc. It also laid the ground for women to seek
professions. Later, in 1931 women were granted the right to vote and to be elected in
the municipality elections. In 1934, a law was passed that recognized the women to
vote and to be elected as parliamentarians. Accordingly, in the 1935 general elections
18 women entered the Parliament.
The Criminal Law, on the other hand, was modeled after the 1930 Italian Code
and included clauses that protected the regime. The new alphabet using Latin letters
and numbers instead of the Arabic was accepted in May 20, 1928. The 1924
Constitution had stipulated an Islamic (Republican) State. In April 1928 the word
Islamic was deleted as a sign of true laicism. Consequently, further minor
consequent changes were also made. It was, however, in 1937 that the word
laicism was explicitly introduced into the Constitution.
Once reactionary uprisings were prevented and the reform steps completed the
government slackened the strict disciplinary measures; special (independence) courts
were closed in 1927 and the Law Concerning Order was discontinued by March 4,
1929.
All of the above reforms had an enormous influence in modernizing Turkey
and in carrying her up to the present times, including attempts at the implementation
of multi-party democracy. But even this cursory listing proves that the establishment
of a truly secular republic could not be achieved if full-fledged democracy had been
implemented under the conditions prevailing in Turkey at the time simply because an
overwhelming percentage of people at the time, including Atatrks many prominent
associates who took part in the War of Independence were in favor of the sultanate
and, at least, the caliphate. Though only Seyh Said uprising is mentioned above, all
throughout the years many other reactionary uprisings, bloody protests against
reforms had also taken place.
To safeguard his political reforms along contemporary Western civilization,
Atatrk had to be wary not only of religious reactionary movements but also of
communism. Hence communists, including the famous poet, Nazm Hikmet had also
had to be persecuted. Atatrks reforms, once having taken ground, however, would
pave the way towards full-fledged democracy. This, obviously was also Atatrks
long-range vision, given the experiences first with the Progressive Republican Party
in 1924, and later with the Free Republican Party in 1930.
1.2. THE GREAT DEPRESSION OF 1929 AND

TATIST ECONOMIC REGIME, 1933-1938
1.2.1. Brief Review of Developments in the World Following
the Great Depression
The Great Depression 1929-31 ushered in major changes in economic
philosophy and in economic and political regime throughout the world. Classical
macroeconomics which contended that the economy would attain full employment
automatically and advised complete laissez-faire fell from favor with Keynes in
1936. Instead, Keynesian demand management or state interventions at the macrolevel to prevent unemployment and business cycles gained wide acceptance, starting
in the United Kingdom. According to Keynes system, adverse cost effects of a wage
rise on unemployment were partly offset by the resultant increase in consumption
expenditures. In the developed countries, in fact, even long before Keynes, the states
had intervened to solve the social, that is, the workers problem by means of
legislation concerning child labor, work hours, work conditions, minimum wages, the
social security system, labor unions and collective bargaining. Agriculture was
another subject of government intervention at the sectoral level with the purpose of
raising and stabilizing the income of farmers. In the USA, with the Great Depression
the Democrat Party came to power the first time in 1933 and Franklin D. Roosevelt
launched a program called the New Deal which provided social welfare to the
workers and the unemployed. This was even before Keynes 1936 General Theory.
But far more radical changes occurred in Germany and Italy. In Germany
widespread unemployment brought about by the Great Depression and Communist
threat, on top of heavy reparation payments from World War I all combined to give
rise to political upheavals which brought Hitler and his National Socialist Party to
power in 1933. This was the first big step towards the World War II. In Italy,
Mussolini and his Fascist movement had already made progress by 1929. Mussolini
had strengthened his dictatorship during 1922-27. Fascist Italy became a satellite of
Germany in the depression years. The Fascist and the National Socialist dictatorships
allowed the existence and operation of the private sector. But the state retained the
right to intervene to its operations at any stage. Of paramount importance, the private
sector had to be politically subservient to the regime and the state. The
dictatorship of the two axis countries was in direct contrast to the deeply rooted
democracy prevailing in Great Britain and the USA.
Another radical development was the Marxist-Leninist Revolution and the
establishment of communist dictatorship in Russia. This had already occurred in
1917, even before the end of World War I in a milieu of weariness on the part of
Russian, soldiers, workers and the people. After Lenins death Stalin had taken on the
leadership in 1924. Despite the ruthlessness of the political regime, Russian industry
and economy seemed to be making significant strides under the New Economic Plan
(NEP) and the first 5-year central plan implemented in 1928. Thus, at a time when
the rest of the world faced a severe depression Russia was giving, at the time, the
image of steady economic progress.
The above tedious summary of world events is intended to stress the examples
Atatrk had before him and his wisdom. Atatrk studied Russias Communism,
Germanys National Socialism, Mussolinis Fascism as well as the USA and UK
models before laying the foundations for the economic regime he would select for
Turkey.
ATATRK PERIOD:
1923-1938
1.2.2. Developments in Turkey: Atatrks Choice of tatist

Economic Regime
With the onset of the Great Depression in 1929, its indirect negative effects
began to hit the Turkish economy. Balance of payments deficit, in particular, forced
the government to issue in February 1930 the Law on the Protection of the Value of
the Turkish Lira which introduced barter and clearing to foreign trade. The Law on
the Turkish Central Bank was passed on June 11, 1930 and the Central Bank was
established on Oct. 3, 1930 to take over its functions from the Ottoman Bank. The
decline in domestic sales due to the depression left the commercial private sector
with unsold inventories, hence with financial problems. Just at that time many in the
government circles led by Prime Minister smet nn, expressed dissatisfaction with
the results obtained under the liberal economic regime, although despite the
depression Turkey had experienced an average yearly growth rate of 7.5% during
1929-33. nn first pronounced tatism explicitly in the speech he gave in Sivas.
His philosophy was shared by another heavy-weight, Recep Peker, secretary general
of CHP at the time.
In 1931 the general assembly of the CHP accepted the principle of tatism and
included it in the six arrows or principles. These developments had given vent to
serious suspicions and anxiety among the private sector. To quell such fears, Atatrk
allowed Fethi Okyar, a close associate and an economic liberal to found a new party,
the Free Republican Party (Serbest Cumhuriyeti Frka) in August 1930. But this
party, as in the case of the former experience, fell prey to religious reactionary forces
and Okyar himself took the initiative to close it by November 1930. Meanwhile,
smet nn visited Moscow in 1931 to obtain technical aid and credit. He then
visited Italy.
There were, in fact, three distinct movements or philosophies in Turkey at the
time concerning economic regime, of which one was in the minority and was soon
repressed. This was the so-called cadre (kadro) movement. Its leader, evket
Sreyya Aydemir was an internationally well-known intellectual educated in
Moscow University. So were many other prominent members of the movement. They
had studied in Russia the implementation of the communist regime in the developing
countries that had not yet reached the mature industrialization stage and, rather, were
in the feudal stage. The cadre people did not propose communism outright for
Turkey but interpreted Kemalism (implying the doctrine of following up Atatrks
principles) as the Third Way, in between socialism and capitalism and as a
defiance against the imperialist west. The cadre movement did not spread much in
Turkey because Russia and ipso facto communism was abhorred by the masses of
Turkish people. Nonetheless, the government of the newly established Republic,
sensitive against both religious extremism and reactionary forces as well as
communism, fearing the consequences of the cadre movement, suppressed it.
Aside from the cadre movement, there were two major rival movements. One
was led by smet nn and followed by bureaucrats as well as a part of CHP
parliamentarians. They advocated an intensive and permanent participation of the
government in all economic activities, both as public investments and production,

and as government interventions and controls, including intensive protectionism in
foreign trade. This can be termed as the doctrinaire or an intensive version of
tatism. It should be noted that such an interpretation of tatism, if left unchanged,
would not quite accommodate the present day movement towards the market
economy, outward orientation and globalization.
The second movement was led by Celal Bayar, director of the bank at the
time, and was followed mostly by businessmen. They had advocated liberal
economic regime in the past years. This time, under the conditions of the Depression,
the proponents of this movement saw the role of the state and public investments as a
temporary measure, in order to achieve a more satisfactory growth rate and
industrialization. Their motto was public investments should go to those fields in
which private sector is lacking. This version could be termed the moderate version
of tatism; it is pragmatic and dynamic. As such, it should again be noted here, it is
compatible with the present day movement towards the market economy, outward
orientation and globalization. Apparently, Atatrk accepted this second version of
tatism. In 1932 Atatrk forced the resignation of the then minister of economics and
installed Celal Bayar instead to implement tatism; nn was retained as Prime
Minister. In later years, however, Atatrk forced the resignations of some of the other
ministers, leading to a strained relationship with smet nn. Finally, in September
to October 1937 Atatrk forced nns resignation and appointed Celal Bayar as
Prime Minister.
As had been pointed out above, before accepting the moderate version of
tatism Atatrk had studied carefully the three economic regimes prevalent at the
time: i) The economic regime in Great Britain and the USA that kept the private
sector as the basic element and introduced interventions at the macro level to avoid
depressions and inflations, plus interventions to raise the welfare and incomes of
workers and of farmers, ii) The fascist and national socialist dictatorship in Italy and
Germany and iii) The communist dictatorship, public ownership of all means of
production and central economic planning in Russia.
tatism as Atatrk envisioned it, first appeared in CHPs program in 1933
during which year the 1st Five Year Industrial Plan was prepared to become effective
1934-1938. tatism also entered the Constitution in 1936. That it was moderate and
pragmatic rather than doctrinaire will become evident with a short scrutiny of its
main principles, cited below.
The private enterprise is basic. Only those industrial sectors not taken up by the
private sector would be developed by means by public investments in order to
accelerate growth and industrialization.
The state enterprises would, in principle, operate in industry that is
manufacturing, energy and mining. Transportation was also undertaken in major
part by the public sector. In addition, two public banks were established to take
the place of Industry and Mining Bank since 1932: the Smerbank for financing
public enterprises in the manufacturing sector, and Etibank for those in the
mining sector.
ATATRK PERIOD:
1923-1938
The government would not conduct production activities in the agricultural

sector. The public sector farms would carry production not for the market but for
research and development purposes, to be passed on to farmers.
When private enterprise grows and matures in any industrial sector, that sector
would be left to private enterprise.
The law on State Economic Enterprises (SEEs) put in force in 1934 required
the SEEs to operate like prudent businessmen. This meant that Atatrk intended
them to take into account profitability as well as social productivity.
With the establishment of SEEs in iron-steel, coal, copper and chromium the
mining sector began to be developed. In addition, such import-substitute
manufacturing sub-sectors as textiles, sugar, paper and pulp were started. Some SEEs
were financed by Soviet credit as the only outside finance available in addition to
Etibank and Smerbank credits. The bank, the large commercial bank founded in
1924 with mixed capital participated largely to establish the glass sector.
In transportation, rail roads received priority to be undertaken by the public
sector. Most importantly, following the acceptance of the Latin alphabet Atatrk
emphasized education, and the literacy rate was raised considerably while
universities were drastically overhauled and improved. Many scientists of Jewish
origin who had fled Germany took an active part in raising the level of university
education. Needless to state that education is the most important ingredient and field
of investment for long-run growth and development. Atatrks education drive had
incalculable positive effects on Turkeys longer run development.
Since population was scanty and had been broken during the incessant wars
(only 16.1 million in 1935) Atatrk encouraged childbirth. The motto was: one child
for the mother, one for the father and one for the country.
Throughout the Atatrk period as well as nn later, strict quantitative
restrictions were placed on imports. Trade was carried by means of bilateral clearing
and barter arrangements in order to keep foreign trade deficit at minimum levels.
Foreign trade was a very meager ratio of GNP.
1.3. PERFORMANCE OF THE ECONOMY

DURING 1923-1938
Yearly GNP rates during the Atatrk period is given below in table form. It
should be borne in mind, however, that though the figures belong to SIS (State
Institute of Statistics), the SIS began relatively comprehensive national income
statistics since 1948; hence the figures for earlier periods should be understood as no
more than estimates.
GNP growth Rates %, 1923-38*
1923 1924
1925
1926
1927
1928
1929 1930
14.6% 12.9% 16.2% -12.6% 11.0% 21.6% 2.2%
10
1931
1932
1933 1934 1935
1936 1937 1938
8.7% -10.7% 15.8% 6.0% -3.0% 23.2% 1.5% 9.5%
* Source: State Institute of Statistics (SIS), Publication No.1883; Statistical Indicators
1923- 1995, Ankara 1996. p. 426, Table 21.4 (Note GNP was calculated in
1948 prices).
This means that during the first phase of Atatrk period under liberal
economic regime, 1923-1930 (7 years). the yearly average growth rate was 9.12%.
This is quite a high rate, one reason being Turkey started in 1923 with a very low
GNP due to the War of Independence. The discontent following the Great Depression
about unsatisfactory growth attained under liberal economic regime must, therefore,
have been partly speculative and partly influenced by the low rate in 1930. During
the years affected by the Great Depression 1930-35 (5 years) the yearly GNP growth
rate was 2.94%, the years after the Depression 1933-38 (5 years) the rate was 7.08%,
(the overlapping is deliberate). For the entire Atatrk period 1923-38 (15 years)
including the years under liberal economic regime and under tatism, the yearly
average was 4.16%; obviously influenced by the Great Depression.
The population growth rate for the period 1927-38 was 2.1% (SIS, ibid, pp.15,
16). Population census before 1927 is not available, the first census by the State
Institute of Statistics having been made in 1927. This brings per capita GNP growth
down to about 2.1% for the entire period 1923-38. Laying the foundations of a new
modern Turkish Republic, preventing insurrections of reactionary forces was
obviously much more important than economic performance. For economic
performance, on the other hand, one should not forget that the new Turkish Republic
started in 1923 virtually with no capital, little technology, a broken down population,
scarce domestic savings potential, and very limited foreign credit (from the USSR).
Even with these handicaps, during the period 1933-38, the years after the Great
Depression and under Atatrks tatism, the average per capita GNP growth rate was
about 5%. This is evaluated as Turkeys first development effort by many
researchers.
When the new Republic was founded, the economy was predominantly
agricultural and remained so for some years. But the industrialization drive started
with the tatist regime started to change this picture significantly. To wit, in 1927
agriculture was still 53% of GDP, industry 12.9%, services 34.1%. In 1938 the share
of agriculture had gone down to 40.2% though still considerable; the share of
industry had risen to 16.7% and services had also increased to 43.1% (SIS, ibid
pp.398, 401).
According to SPO, The First Five Year Development Plan, 1963-67, p.9,
however, in 1927 shares of agriculture, industry and services in national income were
67%, 10% and 23% respectively; and by 1939 the respective shares were 48, 16%
and 38%. The author believes the former to be a more accurate estimate.
Chapter 2
NN PERIOD:
1939-1950
2.1. NNS STANCE IN WORLD WAR II

Following Atatrks death on Nov. 10, 1938 nn was elected President the
next day, and later, on Dec. 26, as unchangeable chairman of CHP and received the
title National Leader (Milli ef). In Jan. 1939 Celal Bayar resigned and Refik
Saydam was elected Prime Minister. With the general elections held on March 26,
1936 smet nn liquidated many prominent CHP parliamentarians formerly in
Atatrks circle who were anti-nn. But he brought many of the former dissenters,
including Kazm Karabekir, Fethi Okyar, Ali Fuat Cebesoy, Rauf Orbay, Refet Bele
and others back into fold as CHP parliamentarians. Soon after nn was elected
president, World War II broke out, Germany attacked Poland on Sep. 1; Britain and
France declared War on Sep. 3. There is common agreement that the greatest
achievement of nn was political, not concerned with economics. He kept Turkey
away from entering World War II despite very heavy pressures and provocations
coming from both sides. Many observers underline that Atatrk had once talked
about the possibility of another world war in future and that Turkey should be kept
out of such a war.
It was no easy task. Claims by Stalin that the Montreaux agreements
concerning the straits be subjected to revision by Turkey with Russia and Black Sea
countries prompted nn to sign on Oct. 19, 1939 an agreement with Britain and
France. According to this agreement Britain and France would help Turkey militarily
in case Turkey is attacked. Turkey, however, was not obliged to enter the war if in
12
case France and Britain were attacked but if the situation did not need Turkeys
participation. Thus Turkey loosely sided with the allies not only against Russia which
was not yet close to allies but also against the axes, Germany and Italy. But as the
War proceeded and Turkey became encompassed by German and axis forces, on June
18, 1941 Turkey this time signed a non-aggression pact with Germany. Though the
move held Turkeys agreement with Britain and France intact, it was still disliked by
Britain. The meeting of nn with Churchill in July 1943 in Adana, and with
Churchill and Roosevelt in December, same year in Cairo ended up Turkey accepting
to enter the War on the side of the allies in principle; but first Turkish army had to be
modernized. Only towards the end of World War II, on February 23, 1945 Turkey
declared war on Germany and Japan. This allowed Turkey to become a founding
member of United Nations, accepted in the August 15, 1945 session of the Turkish
parliament. Following the Yalta Conference held on February 11, 1945 Stalin gave a
memorandum to Turkey demanding bipartite negotiations between Turkey and Black
Sea states to change the Montreaux agreement and also for Soviet military bases for a
common defense of the straits. Russians also demanded changes in the TurkishRussian borders. It implied they demanded Eastern provinces, Kars, Ardahan, Artvin
and others, presumably to annex them to Armenia within their sovereignty. Though
Turkeys standing with Britain and the USA was weakened because of Turkeys
reluctance to enter the war earlier, Russian claims on the straits was disliked even
more. The USA and Britain gave a memorandum to Russia on October 9, 1945
declaring that Montreaux agreement concerning the straits could not be changed by
bipartite agreements and that Turkey should remain the sole responsible state for
their defense. On April 5, 1546, an American warship paid a friendship visit to
Istanbul as a gesture of USA support.
Thus, Stalins claims, particularly about the straits had helped to strengthen
Turkeys relations with the Western world after World War II despite the fact that
Turkey had not actively participated in the war.
Later, when the rivalry between the West and the Communist bloc came to the
fore, US president Truman signed an agreement on July 12, 1947 for military aid to
Turkey. The Truman doctrine also enabled Turkey to apply for entry to NATO.
Turkey entered NATO on Feb. 18, 1952, after Celal Bayar and the (Demokrat Parti,
DP: Democrat Party) came to power in 1950, following her participation in the
Korean War.
Thus, nn was able to steer away from entering World War II. Eventually,
however, Turkey became an important member of the Western World; nn had also
brought to naught Russian claims concerning both the straits and territory from the
Eastern region.
Such questions as had Turkey entered the war at an early phase would
Russians have refrained from making similar claims or not would be highly
speculative and unanswerable. Similarly, had Russians not have made the claims they
did, would nn have insisted strongly in becoming a close member of the Western
World or would he have preferred to remain neutral between the West and USSR, is
also a highly speculative point and unanswerable. Suffice it here that Turkey did
NN PERIOD:
1939-1950
13
remain outside the War, that it became of member of the Western World and
repudiated Russians claims about the straits and territory.
2.2. NNS ECONOMIC REGIME AND WAR

CONDITIONS
nns record in the field of economics, however, is subject to debate. The
War obviously inflicted considerable negative effects on the economy. Therefore, the
performance of the economy during the nn period is conspicuously poor; a falling
GNP level and rampart inflation during the war years.
Many students attribute this negative performance entirely on the war
conditions. But, according to the interpretation of some authors, including myself,
nns economic philosophy, implementation of an intensive and permanent form of
tatism, rigid controls on economic activities also had a substantive share. It is, of
course, impossible to come to a quantitative and definite conclusion on this topic or
to estimate, for instance, what the performance could have been in case a moderate
economic regime had been implemented. Therefore, only the major economic
policies implemented by nn during and after the War will be listed here.
First, due to difficulties of implementation under war conditions, nn felt
compelled to cancel the 2nd Five Year Industrial Plan, 1939-43. Again, based on the
excuse of war, prevention of black markets, speculation and stockpiling for
speculation, he put in force on June 27, 1940 the Law on National Protection.
Because of its importance and political implications, the said law will also be
mentioned subsequently; suffice it here that it not only defied market forces and
economic laws but ushered in bureaucracy, government fiat and harsh controls on
production and trade. Going even further, nn repealed the 1927 Law of
Encouragement of (Private) Industry in 1942, declaring that private sector had by
then already developed and did not need incentives any further. In fact, during the
first years of the nn period, and prior to 1942, part of the encouragement measures
had already begun to be funneled to SEEs. nn brought a strict government
official status to SEE executives and employees with equal salaries depending on
their position and seniority and not depending on the profitability of the respective
SEEs. Atatrks dictum that SEEs should be run like prudent businesses was thus
hollowed.
In Nov. 1942, nn introduced a once-and-for-all Wealth Tax to finance the
war, the actual implementation of which heavily disfavored the minorities. Those
who could not pay the tax were sent to forced labor in Akale, Erzurum, causing
further tragedies and resentment. In fact, when defending the law in the CHP group.
kr Saracolu, Prime Minister at the time, had argued that one of the aims of the
law was to rid the Turkish economy of foreigners (minorities) and give it to the
hands of the Turks. On account of widespread resentment and criticisms also
coming from international circles, nn started the liquidation of the law in
14
September 1943, which ended by March 1944. The unpaid tax debts were all written
off.
Atatrk had merely mentioned the need for land reform in his 1936 budget
speech but had not taken any concrete steps. In fact, since 1934 and per Law
Concerning Settlement attention was given up until 1944 to the distribution of
publicly owned land, a total of 4.6 million decares (one decare is 1000 square meters
or 0,247 acres) to Turks who migrated to Turkey from Balkan countries in
accordance with bilateral agreements. In 1945, however, nn passed a Law on
Providing Land to Farmers. He nationalized forests, expropriating those that were in
private hands. But he refrained from expropriating the land of big landowners
mentioned in the Law on account of the heat of political competition coming from
the newly established DP which was openly antagonistic towards land reform but in
favor of agricultural reform. When the DP came to power in 1950, they distributed
again some of the vast publicly owned lands (1.5 million decares) to farmers with no
or insufficient land within the context of the said law.
Obviously, nn had implemented a rigid, intensive and doctrinaire version of
tatism that he had defended at the time of Atatrk when faced with the negative
effects of the Great Depression of 1929-34. One can easily deduce that this time too,
although World War II conditions required increased interventionism, the question
here is whether interventionism and controls that nn implemented were excessive,
and whether poor GNP growth was the result of war conditions and nns
economic regime combined, rather than attributable only to the former cause. Below
follows a summary of the GNP performance of the economy during the nn period.

DURING 1939-1949
GNP growth rates during the nn period according to State Institute of
Statistics (SIS) is given below in Table form.
GNP growth Rates %, 1939-1949*
1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949
+6.9% -4.9% -10.3% +5.6% -9.8% -5.1% -15.3% +31.9% +4.2% +15.9% -5.0%
* Source: SIS, ibid; pp.401-3.
The above figures imply that during the period affected by World War II
(1939-45; 7 years) there was a precipitous decline in GNP. The average yearly
decline was about 6.6% per year. With an average population growth rate of about
1.4% for the same 7 years, it meant that per capita GNP declined at an average
yearly rate of about 8%.
There was a considerable recovery after World War II ended, as the above
figures indicate. To wit, during the sub-period 1946-1949 (4 years) the average
yearly GNP growth rate was about 11%. With a population growth rate of about
NN PERIOD:
1939-1950
15
2.2%; this means a yearly per capita GNP growth rate of about 8.8%. There should,
however, be some reservations to this figure. Firstly, after the precipitous decline of
GNP in 1945, 1946 should always show a considerable increase. Secondly, the SIS
figures are at best estimates, and one should not attribute too much precision to them.
They are useful only if they are interpreted as general tendencies. Thirdly, the
absolute level of GNP in 1938 was surpassed only by 1948, and then in 1949 there
was a decline. So the high rate of recovery after the war years did nothing more than
to bring the level of GNP more or less to about its 1938 level. For the entire nn
period 1939-49 (11 years) the yearly average GNP growth rate was only 0.5%. With
an average population growth rate for the 11 years at about 1.7% this meant an actual
yearly decline in per capita GNP of about 1.2% (i.e. 1.2%).
We should underline here once again that those who argue that nn years
were strained only because of World War II conditions cannot use the above GNP
figures as definitive proof. Neither can those, including the author, who believe that
part of the fault lied with nns strangling economic regime and controls. This is
simply because we have no way of calculating what the growth rate would have
become if optimal economic policies and strategies had been implemented. Simply
stated, no precise quantitative analysis is possible on this point.
Inflation during the war years, on the other hand, was rampant. Price increases
were only 1.8% in 1939 but 22.6% in 1940, 38.8% in 1941, 96.8, in 1942, 65.2% in
1943. It showed a slight decrease thereafter from 1944 to 1946, and were again
normal, that is, non-inflationary from 1947 on to 1949. The high rate of inflation
stemmed from decreased production on account of manpower shortages since
millions of men had to leave work and production for military enlistment. Another
reason for the inflation was increased military expenditures which gave rise to large
budget deficits while public investments had been dwindled. In short, both in
production and the budget, defense considerations overrode economic considerations.
The high inflation rate during the war years necessitated a large-scale devaluation on
September 7, 1946, following a minor one in 1943.
All throughout 1939-49 the economy remained predominantly agricultural. In
1938 the share of agriculture in GDP (in current prices) was 40.2% and in 1949 still
40.3%. The share of industry, on the other hand, had declined from 16.7% in 1938 to
14.9% by 1949. In constant prices, the absolute level of industry had remained about
the same (SIS, ibid, pp.401-3).
2.4. ENTRY INTO MULTI-PARTY SYSTEM OF

DEMOCRACY
Another major political event during the nn period is entry into multi-party
system of democracy and CHP ceding power finally to DP in 1950. The term multiparty system of democracy is used here deliberately to accentuate the basic and first
ingredient of democracy; further refinements concerning parliamentary
16
representation and human rights, or their insufficiency being left in the background.
One reason for Turkeys acceptance of multi-party system of democracy during the
nn period was that in the bipolar world that emerged after World War II, Western
powers insisted on liberal economic regime and on multi-party system of democracy
for countries on their side. One-party political regimes had fallen from favor
following the examples of Germany, Italy and Russia. Another reason was that in
Turkey, due to economic difficulties as well as political pressures, discontent with
and opposition to the CHP government had become widespread but there were no
appropriate political channels to voice it.
Communist movements as well as Pan-Turanism (Pan-Turkic ideology), that
is, those who advocated an early entry to World War II on the side of the Germans
and annex the Turkic countries in Caucasia and Central Asia were either persecuted
or repressed. Both were, at any rate, marginal movements.
The discontent of the masses of people, on the other hand, concerned the
economy as well as political freedoms. One important reason for discontent about the
economy was the implementation of the 1940 Law on National Protection as
affecting both the tradesmen and the farmers. In addition, enlisting about 2 million to
the army out of a population of about 17.3 million in 1939 and 18.6 million by 1945,
mostly from rural population and agricultural workforce had truly caused serious
declines in agricultural production. Thirdly, at a time when inflation was rampant, in
order to implement a low government fiat on, say, wheat, nn government forced
the farmers to sell 25% of their produce at low prices to the Soil Products Office, the
SEE that buys wheat and soil products. The farmers could then sell the rest of their
produce to private tradesmen. Similarly with other agricultural produce. The
government finally rationed bread in 1942 which ended by 1944. It also put into
practice harsh measures against black marketers, speculators and those who
stockpile for black marketing. Many tradesmen were jailed. The farmers suffered
both due to low produce and the tax. They were also resentful of the harsh treatment
of gendarmes which, according to the government, had stemmed from the need for
discipline in war conditions. Thus, nns regime had brought deep discontent to
rural population which comprised at the time about 80% of total population.
Tradesmen also suffered from the same law. Implementation of the law was
toned down after the end of the war, but this change towards moderation was
apparently of little political avail. Private sector in general, including industrialists,
tradesmen, small tradesmen, artisans, all fared badly both due to war conditions and
also because of intensive interventionism, excessive controls and penalties of the
nn period. The minorities had been most seriously inflicted with the Wealth Tax.
The workers, on the other hand, had witnessed their wage in real terms decline
seriously throughout the war years; they did not enjoy much social security and labor
rights either. Thus, the main motivation behind the discontent towards the nn
governments was economic and social. Religious reactionary forces may have joined
hands, but their thrust was comparatively marginal at the time. In comparison, during
the Atatrk period the main threat of discontent, opposition and insurrection came
NN PERIOD:
1939-1950
17
from religious reactionary forces opposed to the abolishment of the sultanate, and
particularly the caliphate; it did not have an economic content.
The preferences of the mainstream opposition in Turkey during the later years
of the nn period, that is, multi-party system of democracy and liberal economic
regime were also in perfect accord with the developments and preferences of the
Western World. Thus, in May 19, 1945 nn made a speech to the youth, hinting
that as difficulties due to war conditions are reduced, Turkey should move on
towards democracy. This hinted that nn would allow the establishment of new
political parties. Immediately there was an attempt by Nuri Demira, and his new
party was established in July 15, 1945; but it was doomed to failure. The main
opposition came from Celal Bayar, Adnan Menderes, Fuat Kprl, Refik Koraltan
and others who were prominent CHP parliamentarians. They were liberal, that is,
in favor of private enterprise in economic regime. They were also anti land reform,
particularly the article which allowed the government to expropriate land from big
landowners, and instead preferred agricultural reform and that vast state-owned,
unused lands should be distributed instead of expropriation. But land reform was only
a small part in their economic and political program. They also criticized the 1945
budget and on June 7, submitted an open statement to the government calling for
economic and political liberalism. The call was voted down in the parliament.
Therefore, they resigned from the CHP and founded the DP on January 1946. Their
ranks were swelled both by former CHP parliamentarians, as well as lower echelon
CHP hands, and also with new hands. So the DP began to spread its organization
throughout the country very fast. Initially nn had welcomed and supported the
establishment of the DP and saw it as a tool to control and tune the CHP. So much so
that the DP had to explain to the people that they were not a fictitious opposition
party like the former Free Republican Party. Upon the growing popularity of the DP,
on 5 June 1946 CHP decided to hold early general elections and thus catch the DP
incompletely prepared. The 5 June 1946 election law allowed the multi-party system
and for the first time allowed one-phase election directly by voters. In the one-party
regime, we had two-phased elections, the voting public first elected those delegates
who were then allowed to elect the MPs in the second phase. The general elections
were to be held on July 21, 1946. Since its preparations were incomplete, DP
hesitated but decided to enter the elections with an incomplete list. The results, on the
surface, was a big victory for the CHP; it had won 395 seats out of a total of 465; DP
had won 66 seats and there were 4 independents. The system of absolute
representation was used. But 1946 elections is claimed as the most foul election in
the Turkish history of democracy. Firstly, all the MP candidates of DP and other
CHP opponents were followed by the police, and they were held under constant
pressure. But more importantly, CHP had decreed open balloting and secret
counting, the latter uncontrolled by any objective body or organization. Therefore,
no student can be in a position to deduce the true preferences of the voters from the
CHP-government-gauged results.
Following the 1946 elections the moderates in the CHP had the upper hand
in the party organization and the government; nn as president was also
18
conciliatory towards the opposition. Furthermore, after the war, the economy had
began to show marked improvements. All, however, were obviously of little avail
because when the next general elections were held on May 14, 1950 DP obtained 408
seats out of 450 with 53.3% of total votes cast, thus ending 27 years of CHP
governments.
The CHP government, upon DPs suggestions had let a large body of objective
institutions to prepare the new election law under which the 1950 elections were
carried. In this election, the principle applied was the normal, that is, secret balloting,
open counting, Repressions by the police, though still existent, was also minimal.
The DP had obtained 53.3% of total votes. But the absolute majority system which
was CHPs reference as opposed to DPs preference of proportional representation
enabled the DP to obtain an overwhelming majority in the parliament. The CHP had
fared better mostly in Eastern provinces. The result of the 1950 elections was labeled
as the white revolution.
Chapter 3
DEMOCRAT PARTY
PERIOD: 1950-1960
3.1. ECONOMIC REGIME AND DEVELOPMENT

STRATEGIES IMPLEMENTED BY DP
3.1.1. Liberal Economic Regime, Encouragement of the
Private Sector, Closed Economy, Import-Substitute
industrialization
Having won the 1950 and the subsequent 1954 and 1957 general elections, the
DP (Demokrat Parti: Democrat Party) remained in power till May 27, 1960 Military
Intervention. All throughout, DP adhered to the principle of encouragement of private
enterprise and flow of Foreign Private Capital (FPC), that is, Direct Private
Investments (DPIs) in todays terminology. This was crucially different from the
intensely tatist economic regime implemented by CHP during nn period, but
later had wrongly been attributed to Atatrk. Hence, it was generally said at the time
that DP implemented a liberal economic regime. But care has to be taken in
interpreting the meaning of liberal in this context and differentiating it from the
market economy as it is conceived today.
Truly, the liberal economic regime implemented by DP took the private
enterprise as basic and encouraged private investments and production. But it
involved intensive government interventions to market forces both at the macro and
the micro or sectoral levels, as well as intensive protections in foreign trade. It also
had intensive recourse to public investments and SEEs. Therefore, the consistency of
these policies needs a short explanation.
20
Private enterprise and private investments were still inadequate at that time to
achieve a satisfactory rate of growth and industrialization. In fact, when DP came to
power, it offered SEEs to sale, following Atatrks dictum that they should be
transferred to the private enterprise when the latter has grown sufficiently in that
sector. But no sales could be effected. Hence, the DP had to have recourse to public
investments and SEEs. But the principle here is that they were complementary to the
private enterprise, not competing or substitute. This meant undertaking not only
social and productive infra-structural investments but also super-structural fields. The
principle, however, was establishment or otherwise expansion of basic and
intermediate industrial as well as agricultural goods, such as iron and steel, chemical
fertilizers, insecticides, etc. These fields required relatively large capital and
relatively high technology that was not yet available by the private sector. These
public investments and SEEs actually helped encourage private industrial
investments in super-structural fields that needed them as inputs. Similarly, those
serving the agricultural sector helped to increase the production and income of
farmers. A comprehensive law on the encouragement of FPC put in force in 1954
helped some flow of direct private investments and technology and this allowed the
establishment of many so-called assembly industries, including automotive such as
cars, tractors, buses, trucks; the whites; electrical appliances; elevators; telephone
exchanges, etc. Most were started by merely assembling the components imported;
initially they had a low domestic production ratio. The encouragement of FPC and
assembly industries was criticized severely by CHP. For petroleum, a separate
comprehensive law for the encouragement of FPC was accepted again in 1954 upon
which FPC started oil explorations, production and refining alongside the SEEs
operating in these fields. The move concerning petroleum was criticized even more
harshly by CHP which preferred state monopoly for the sector.
One point of interest in this connection is that the share of public sector in total
fixed investments during the liberal DP period rose significantly compared to the
tatist period during nn, from 39% in 1950 to 50% in 1960. This had led some
students of the Turkish economy to conclude that the DP too was in fact, as tatist
as the CHP, if not more. This argument, however, crumbles when we observe the
areas to which public investments had flown during the DP period. The main focus
here is that during the DP period public investment in primary and intermediate
inputs as well as those in infra-structure were complementary to the private sector.
Government interventions on prices similarly carried the same purpose of
encouragement. The DP government applied, for instance, low prices (government
fiat) on agricultural and industrial inputs manufactured overwhelmingly by SEEs. For
agricultural produce, on the other hand, it offered support prices higher than their
world market prices at the ongoing official exchange rate.
Closed economy, protectionism, fixed exchange rates below the equilibrium
rates were all implemented with the same motivation. The low foreign exchange rate,
over-valued currency principle was implemented to enable the industry to import
investment and intermediate goods and components cheaply. Import restrictions and
prohibitions on consumer goods was again intended to raise the profitability of
DEMOCRAT PARTY PERIOD: 1950-1960
21
private sector and stave off competition from imports at this early establishment
stage. Low interest was fixed by the Central Bank, on the other hand, again
encourage private enterprise to raise the profitability of private industry, trade,
tourism and agriculture.
But the fixed and low exchange rate hindered exports; they mainly comprised
at the time of agricultural products and a small share of agriculture- based industrial
goods. The government applied differentiated export subsidies, thus leading to a
multiple exchange rate regime while a high black market exchange rate developed
alongside the low official rate. All of this was definitely contrary to GATT of which
Turkey was a signatory. But similar protectionism and fixed exchange rate regimes,
over-valued currency practices, multiple rates were resorted to by most of the
developing countries at the time.
Whenever developing countries following the closed economy, importsubstitution industrialization strategy, including Turkey faced a balance of payments
crisis and applied for aid, the IMF and the WB advised a devaluation, bringing the
artificially low exchange rate to its market or equilibrium level. They also advised a
stabilization program aimed at preventing inflation and closing or reducing the
budget deficit. The stabilization program generally involved raising the prices of SEE
produced primary and intermediary goods, that is, reducing subsidies, raising the
interest rates, and keeping agricultural support prices as well as wage rises in check.
This was the case for Turkey in the 1958 devaluation during the DP period as well as
in the subsequent 1970 and 1980 devaluations. In sum, we could say that DP
implemented an economic regime based on the encouragement of private enterprise
but under intensive interventionism and protectionism; it also involved a large share
of public investments. But interventions, protectionism and public investments aimed
at encouraging and raising the profitability of the private sector, including those with
foreign private capital participation. In contrast, tatism of CHP during the nn and not during the Atatrk - period was based on public investments and SEEs, with
again intensive interventions but to protect the public sector and control the
private sector. Both, therefore, implemented closed, inward-looking, importsubstitute development strategy with the crucial difference that nn relied on public
investments and discontinued encouragement of private sector while DP took the
encouragement of the private sector as basic. This is the first crucial step towards a
truly liberal economic regime, just as entering the multi-party system is for moving
towards a full-fledged democracy.
Closed economy and import-substitute industrialization strategy as well as
fixed exchange rates, over-valued currency et al., it must be underlined, was followed
by most of the developing countries. There were differences, of course, concerning
left-of-center vs. right-of-center philosophy and reliance on five-year plans, some of
which, including India was inspired by the Soviets. The only group that implemented
a radically different development strategy at the time was S. Korea, Taiwan, HongKong and Singapore, following Japan. They too relied on the encouragement of the
private sector which was already fairly developed in most by the end of World War
II, and encouragement of FPC (DPI) which had flown relatively lavishly to these
22
countries. Therefore, public investments were channeled only to social and

productive infra-structure and not to super-structure. Most importantly, they
implemented a growth strategy based on developing export-industries. To follow an
export-led development drive was possible for these countries because FPC (mostly
from the USA) had flown abundantly to these countries to produce cheaply and sell
these at home. An important tool in encouraging exports was fixing high foreign
exchange rates, that is, recourse to under-valued currency principle. It must be
underlined here, however, that the economic regime they implemented was not the
market economy as we conceive it today, either. For they also were intensely
interventionist and protectionist; protections and interventions being geared to the
private enterprise, DPIs and export-industries. In addition, they had the advantage of
not having to indulge much in military expenditures in contrast to Turkey which, on
account of her history and geography, had to apportion a large share of her budget to
the military. Again, though they were further away from a true democracy compared
to Turkey, generally all had relatively good governance. This includes their stress
on general as well as technical education.
It must be underlined here that whatever the flaws of closed economy and
import-substitute industrialization that the DP government implemented, it gave a
remarkable boost to economic growth and industrialization, which compares starkly
with the poor economic performance during the nn regime. This statement is
based on a comparison of GNP growth rates and per capita income levels. CHP and
opponents of DP, however, not only criticized the repression of democracy during the
latter years of DP government which was a justified point, but also the economic
policies of DP, which is a debatable point because these criticisms generally pointed
towards less encouragement of private enterprise, and much more strict limitations on
FPC flow.
3.1.2. The Strategy of Agricultural Development
One of the more conspicuous strategies of economic development DP followed
was the importance given to the agricultural sector. Up until the fifties economic
development was considered synonymous with industrialization while agricultural
development had received little emphasis. But economic development literature that
began to be published during the 50s brought to the fore the importance of
agricultural development and its positive effect on industrialization and overall
growth. This view found its way to Turkey and was implemented by the DP starting
1950. Since 75% of the population of 20.6 million in 1950 was rural and about the
same majority of employment was in agriculture, the development of the agricultural
sector had important social and political implications as well as economic.
CHP and nn had advocated land reform but had not implemented it in the
face of the 1950 elections. In contrast, DP stood openly against land reform and
promised instead agricultural reform. When in power, the DP implemented intensive
agricultural reform measures such as spreading the production and use of tractors,
expanding lands irrigated, agricultural support prices well over world prices at the
prevailing exchange rates, sales and credit cooperatives for support purchases, low-
23
interest-rate agricultural credits by the Agricultural Bank, subsidies and low prices
for chemical fertilizers and for petroleum (diesel oil for tractors). Expansion of
highways, though at the expense of neglecting railways and maritime transportation,
also helped agricultural sector by joining agricultural production centers to domestic
and international markets.
Use of tractors enabled the expansion of area sown. Based on the hypothesis
that tractors could be purchased only by the richer landlords, many experts on
agriculture had jumped to the conclusion that mechanization of agriculture would
cause further concentration of land. But a more careful study of statistics on land
distribution, the number of tractors in use, new areas opened to cultivation should
show conclusively that the above argument was wrong. With the spreading of the use
of tractors, pasture lands already in abundance were opened to cultivation, not by big
landlords but by smaller farmers. Village roads and electrification of villages were
also given a boost for the first time.
Development of the agricultural sector by means of agricultural reform had
two effects. One is political, the increase in the welfare of farmers as a whole, when
added to other attitudes and policies of the DP, such as easing of pressures from
gendarmes, the sharing of political powers with the rural population, a lenient
attitude towards religion, all taken together, caused an overwhelming majority of
farmers, already conservative by nature, to adhere to and support the center-right
political parties and movements. So much so that, even when CHP having embraced
center-left philosophy, promised land reform in the late sixties and early seventies,
the rural population still continued to vote for center-right, more specifically for the
Justice Party (Adalet Partisi) which was the follower of DP.
The second effect of agricultural development was economic. As had been
pointed in the economic literature that had come out at the time, development of the
agricultural sector did stimulate industrialization through several ways: firstly by
providing raw materials as well as cheap labor through rural to urban migration,
secondly by providing markets and expanding the sales of industrial goods. As a
result, during the DP period, industry developed even at a faster rate than agriculture.
Thus, the share of agriculture in GDP (in current prices) fell down, from 41.9% in
1950 to 38.0% in 1960 while the share of industry rose from 14.6% to 17.4%.
Respective share of manufacturing rose from 13.1% to 1.6%; of construction from
3.9% to 4.9%. Rural population also declined from 75% in 1950 to 68.1% in 1960.
The decline accelerated in the later decades (SIS, ibid., pp.16, 21, 403, 405).
3.1.3. Foreign Aid and Credit, and Encouragement of
Foreign Private Capital Flow (DPIs)
International economic relations expanded during the DP period though this is
not to be interpreted as entry to the open economy model and outward orientation of
the economy. In conformity with GATT, there was an attempt to liberalize foreign
trade in 1950. But after the favorable terms of trade caused by the Korean war
evaporated, Turkeys balance of payments deficits enlarged. Therefore, trade
liberalization was discontinued in 1953 and import restrictions were re-installed. Two
24
factors may have played a major role in this result. Firstly, the exchange rate had not
been allowed the required flexibility to close the balance if payments deficit.
Secondly, production of exportable goods, mainly comprised of agricultural raw
materials were not sufficiently elastic during the time. Following 1954, the bad
harvest year in which GNP shrank, the DP government openly endorsed the strategy
of import-substitute industrialization and an inward-looking economy model.
The aftermath of the World War II had opened great opportunities for foreign
aid and credit to the developing countries that joined the Western World, not
available during the pre-World War II decades. The major institutions and credit
programs were the IMF, the WB, Marshall Aid and Truman Point 4; Turkey obtained
her share. From 1950 to 1953 along with trade liberalization, private bank credits
from abroad were also allowed. But these carried high interest rates and high costs at
the time and were discontinued; from 1953 on only program and project credits were
obtained.
During the DP period FPC flow began to be encouraged radically.
Encouragement of FPC was first attempted by the CHP government in 1950 but not
carried through because soon the general elections had set in. The DP government
first gave temporary encouragement to FPC immediately in 1950 and in 1953 issued
two major laws: Law no 6224 on the encouragement of FPC for the industrial sector,
and Petroleum Law no 6326 for FPC in petroleum, both to be effective starting 1954.
3.1.4. August 3, 1958 Devaluation
The increasing inflation, budget deficits and balance of payments problems,
inability to pay back external debts finally led the DP government to make a largescale devaluation in August 3, 1958. First the DP government sought to obtain credit
from the USSR but since it failed, Turkey had to comply with the advice of the IMF
and the WB and put into effect a large-scale devaluation to bring the fixed exchange
rate up towards its equilibrium value. This measure was accompanied by a
stabilization program in order to reduce the budget deficits and inflation. The
program involved raising the prices of industrial and agricultural inputs produced by
the SEEs to reduce their losses, and limiting the Central Bank credits opened to the
latter. Rise in agricultural support prices were also taken into control. As a result, the
balance of payments deficits was reduced, external debts were consolidated and
began to be paid back. But the GNP growth rate also fell down to 4.5% in 1958, 4.1%
in 1959.
3.1.5. Application to the EEC for Associate Membership
A very important decision by the DP government was to apply to the EEC in
July 1959 for associate membership, following that of Greece. The EEC at the time
was comprised of the 6 initial members, it was in competition with EFTA (European
Free Trade Association) and the two applications were a source of prestige. But since
Turkey implemented, in essence, a closed economic regime, had a low per capita
income compared to the EEC and had relatively a large population, the negotiations
took time. They were discontinued during the 1960-61 Military Intervention and
25
resumed after Turkey re-entered democracy. The Ankara Treaty was concluded in
1963 to become operative from 1964 on, laying the conditions and terms of Turkeys
associate membership and possible full-membership. The treaty was signed by the
CHP-AP (AP: Adalet Partisi: Justice Party, the follower of DP) coalition government
led by nn of CHP as Prime Minister.
3.2. MAJOR INTERNATIONAL POLITICAL

RELATIONS
Major stands of the DP government in Turkeys international political relations
should also be noted at this point because of their important implications.
One such important step during the DP period was Turkeys entry to NATO in
1952. Towards the end of World War II, CHP and nn had also lately but
decisively sided with the Western World and had applied for NATO membership on
April 4, 1949. To convince Turkey of her firm intention to become a NATO member,
the DP government readily sent troops to Korea and Turkish military accomplished
outstanding feats there. This led to Turkeys acceptance as member to NATO and the
Turkish Parliament ratified it on February 18, 1952. The Russian claims concerning
the straits and territorial demands were negated. As a militarily strong NATO
member guarding the South-eastern flank of the Western World, Turkey was able to
obtain military aid that enabled a faster modernization of her army.
Another major related step was the Baghdad Pact signed in 1955 between
Turkey, Iran, Iraq, Pakistan and the UK against possible expansion of USSR. Upon
Iraqs withdrawal, the agreement was retained by the rest of the group and named
CENTO (Central Treaty organization), so called because geographically it was
positioned between NATO and SEATO. The USA made bilateral agreements for
military aid with all the countries involved. CENTO agreement was severely
criticized in the parliament by CHP, its spokesman being Blent Ecevit. The First
CENTO meeting was held in Washington in October 1959 under the chairmanship of
US Secretary of State.
Still another political problem that the DP government began to tackle and
continues unsolved as of present was the Cyprus question. It was started in 1954
when Greece applied to the UN for self-determination of Cyprus. Cyprus, a long time
Ottoman province had a mixed population of Greek Cypriots with Turkish Cypriots
in the minority. It was annexed to the UK with the Lausanne Treaty of 1923. Upon
Greeces application, Cypriot Turks and Turkish government demanded the division
of the island between Greek and Turkish Cypriots. A demonstration held in Istanbul
on 6-7 September 1955 with the slogan either division or death unfortunately
turned into mobbing and looting of the shops of Greek citizens in Istanbul. It was an
unfortunate event and many Greek citizens later sold their property and left for
Greece, diminishing the Greek minority of Turkish citizens in Istanbul. The efforts of
the UK for a compromise, organizing London conferences finally bore a result. The
26
Prime Ministers of Turkey (Menderes) and Greece (Karamanlis) met in the Zrich
Conference in February 1957 to decide upon a third alternative. While Greeks had
demanded ENOSIS (annexation of the island to Greece) and Turkey insisted on the
division of the island into two independent states, the agreed upon alternative was to
create one independent Cypriot Republic comprised of two communities, the
president would be Greek and vice president Turkish. In the later years, however,
Greece and Greek Cypriots organized uprisings and killings of Turkish Cypriots
which triggered Turkish military intervention to the island. The solution is still
pending by 2007.

DURING 1950-1959
Growth performance of the economy, the yearly GNP, population and per
capita GNP growth rates and price increases (implicit GNP index) is submitted
below in tabular form.
Years
Price increases
GNP growth
rate
1950
-3.0%
9.4%
1951
6.4
12.8
1952
2.7
11.9
1953
3.6
11.2
1954
5.0
-3.0
1955
11.2
7.9
1956
11.0
3.2
1957
23.3
7.8
1958
14.0
4.5
1959
19.9
4.1
* Source: SIS, ibid, pp.5, 16, 403-405.
Population
growth rate
2.2%
2.3
2.4
2.5
2.7
2.8
2.8
2.8
2.8
2.8
Per capita GNP

growth rate
7.2%
10.5
9.5
8.7
-5.7
5.1
0.4
5.0
1.7
1.3
During the entire DP period 1950-59, the average yearly GNP growth rate was
6.9%. With an average yearly population growth for the period of about 2.7%, the
average yearly per capita GNP growth rate was a significant 4.2% because it was
attained despite the high increase in the population rate. The yearly average price
increase was 9.1%. This contrasts favorably with the nn period 1939-49 for which
the yearly average GNP growth rate was 0.5% and yearly per capita GNP growth
rate was 1.2% with an average population growth rate of 1.7%. In fact, many
researchers consider the DP period, particularly during the initial years, as a second
development effort following Atatrk, based this time on a liberal economic
regime, that is, encouragement of private enterprise and FPC (DPI) flows.
In particular, during the initial years of DP government, the sub-period 195053, growth performance was remarkable. For the said 4 years the average yearly GNP
growth rate was 11.3%, average yearly per capita GNP growth rate was 8.9% and
27
average yearly price increases only 2.4%. Such a high growth rate could never be
achieved in future. 1950-53 was followed by a bad climate and bad harvest year
1954, in which GNP growth rate declined by 3%, hence per capita GNP by 5.7%.
This was followed by a slower growth rate of about 5.5% for 1955-59. Thus, for the
sub-period 1954-59 the yearly average GNP growth rate was 4%, the yearly average
per capita GNP growth rate 1.2% and yearly average price rise 13.9%. During 1955
to 1959 as GNP growth declined gradually, inflation rate increased. This was on
account of the balance of payments problems the DP government faced and failed to
tackle efficiently. Instead of a prompt devaluation at a satisfactory rate, the customs
taxes for imports and subsidies, premiums for exports had been increased gradually
until a devaluation had become inescapable by 1956 on to 1958 and 1960.
The inflation and budgetary deficits, in turn, was the result of budgetary
deficits caused by public investments, various subsidies offered to industry and
agriculture as well as high agricultural support prices, financed mostly by Central
Bank printing of money. Foreign aid and credit (foreign savings) had increased
markedly after World War II mostly directly from the USA as well as some from
international financial institutions. But investments undertaken by foreign savings
were not enough to obviate the need of the DP government to go into deficit
financing for growth and social welfare.
Therefore, the DP period was criticized severely because it gave rise to
inflation. The proponents, in turn, dwelled on the inevitability of inflationary
financing during the initial phases of economic development. But in the second half
of the DP period inflationary pressures had indeed become somewhat excessive. Yet
Turkey had to face a more truly severe inflation starting with the second half of the
decade 80s that eventually surpassed 100% by 1994.
In 1949 the share of agriculture in GDP (in current prices) was 40.3%; of
industry 14.9% of which manufacturing comprised 13.1%; services was 44.8% of
which 3.8% was construction. By 1959 the respective shares had become as follows:
agriculture was 38.0% signifying a gradual decline; industry 18.2% of which
manufacturing was 15.6% signifying an increase in both; services was 43.9% of
which construction was 4.6%; construction had also registered an appreciable
increase. Ratios in constant prices also denote similar trends (all calculated from SIS,
ibid., pp.403-5).
The above ratios also indicate that, as observed before, agricultural sector had
received a significant boost during the DP period. But, in turn, it had induced even a
faster growth in industry and the manufacturing sector. Hence the share of agriculture
in GDP had declined while that of manufacturing (and industry) increased.
A significant rise in the population growth rate and rural to urban migration,
still leaving the agricultural sector with disguised unemployment is an important and
noteworthy phenomenon that started during the DP period. The population growth
rate for 1927-35 was 2.1% for 1935-40 it was 2.0% (which includes a population
increase due to the annexation of Hatay, without which it would have been 1.7%);
and for 1940-45 coinciding with the World War II years the rate was significantly
reduced to 1.1% In contrast, during 1945-50 after-war years the rate went up to 2.1%
28
for 1950-55 to 2.7% for 1955-60 it hit the maximum for Turkey which was 2.8%,
peaking at 2.9% in 1960 (SIS, ibid., p.21, 22) This significant increase in the
population growth rate during the decade 50s was due to increased income,
improved health services, health awareness and copying of health measures, all of
which reduced the death rate while the birth rate remained at about the same high
level. The birth rate of the rural population was particularly high and, despite rural to
urban migration, still comprised the main bulk of the population. It had gone slightly
down from 81.5% in 1950 out of at total population of 20.9 million to 73.7% in 1960
and out of a total population of 28.8 million (SIS, ibid, p.21, 22). This population
increase in Turkey was parallel to the increase in population in most of the
developing countries and raised the specter of population explosion at the time.
Excess population as against scarce capital must have affected the GNP growth rate
and per capita income adversely. Therefore, it is remarkable that such a high per
capita GNP growth was attained during the DP period.
3.4. A SOCIO-POLITICAL EVALUATION OF

THE PERFORMANCE OF DP
Although relatively a very high growth rate was obtained by the DP in stark
contrast to the fall in per capita income during the nn period, many researchers
leaning to CHP explained this situation with external factors only, namely World
War II. They defended nns intensely tatist economic regime and controls with
wartime conditions and shortages. They also criticized DPs economic policies for
being excessive in the encouragement of private enterprise and FPC flow. In turn,
liberal economists and researchers find nns tatist regime and controls excessive
even in the face of World War II conditions. We may underline here that by
encouraging the private enterprise and FPC flow, the economic regime implemented
by the DP was, in broad outline, more in line with the trends, preferences and
requirements of the Western World at the time. In contrast, the criticisms leveled by
CHP with regard to excessive encouragement of the private sector and of FPC flow
seemed out of tune with the times as well as the needs of the Turkish economy. DP
was also in line with the West in its political international relations, particularly as a
staunch member of NATO and as a founder of CENTO. Some economic policy
mistakes, however, were made during the DP period and these stemmed, according to
this author, not because DP followed a liberal economic regime but from lack of
education on the part of the population, lack of technical knowledge as well as from
populism and partisanship. The political inexperience with democracy and, in
particular, political repressions, on the other hand, were unnecessary and fatal,
leading to the military intervention, as will be dealt following.
One could at this point take up the strategy of import-substitute
industrialization followed by DP. Although opportunities for carrying out an exportled industrialization growth implemented at the time by South Korea and Taiwan was
29
not quite possible for Turkey, one could still rightly state that it was excessive.
Indeed, the excesses of import-substitution industrialization and closed economy,
coupled with excessive subsidies and budget deficits did lead to an economic crisis
by 1958 when a high-ratio devaluation had to be made and a stabilization program
implemented.
An important criticism leveled at DP was that income distribution had
worsened during the DP years. This argument, however, does not seem to be backed
up by hardcore statistics. On the contrary, there are numerous indicators pointing out
that material welfare of the masses of people have increased.
Taking the farmers first as the largest social group, since Turkey had a rural
population of 68.1% out of a total of 27.775 thousand even by 1960; with many
living in the cities still retaining close ties to their families farming in the villages and
towns, agricultural reform measures implemented by the DP, coupled with the
expansion of highways connecting farmers to consumption centers, their material
well-being had definitely increased. Added to this was the freedom from gendarmes
suffered before; and they also enjoyed some political power as well through
democracy. Thus, the rural population and farmers became overwhelmingly pro-DP,
or pro-center right, voting for the political party succeeding the DP. Some
researchers, on the other hand, had argued that income distribution in the agricultural
sector had worsened, pointing out that because land reform had not been
implemented, agricultural reform measures benefited only the big farmers. They also
added that mechanization and the use of tractors meant that areas opened to
cultivation as a result of mechanization became mostly the property of big
landowners. The statistics available, however, refute such an hypothesis squarely.
Firstly, land ownership differs in Turkey from region to region. For instance, in the
Black Sea region there were only small farms and all of them benefited greatly from
high support prices and export premiums offered to tobacco, tea and hazelnuts, all
mostly produced in this region. Secondly, unlike Latin America, where large
plantations existed side by side with the landless and unemployed farmers, in Turkey
renting of land is prevalent in the fertile Aegean, Marmara and Mediterranean
regions. Hence, the landless and those with insufficient land always rented land and
thus benefited from all the agricultural subsidies. Thirdly, when we note the increases
in the number of tractors and increases in the acreage opened to cultivation, it
becomes apparent that the argument these were acquired only or mostly by big
landowners is inconceivable. In fact, the farmers, on the whole, were so content with
the increase in their material welfare during the DP period that in the sixties and
seventies when CHP advocated land reform, they continued to vote in majority for
the successors of DP. And the land reform forced from the reform governments after
the 1971 Military Memorandum and implemented in Urfa province as pilot failed and
was scrapped even by the left-wing, pro-land reform CHP then in power.
The workers comprise another relatively large mass whose real wage had
decreased during the nn period and World War II years. In contrast, during the DP
period their wages in real terms began to rise and employment expanded. In addition,
social security measures were also increased significantly. The latter included
30
improvements in old-age social insurance, paid week-end leaves and increased social
security hospitals. Therefore, the majority of workers also voted for DP and
subsequently for pro center-right parties.
The same was true for artisans and small tradesmen. The increased income in
rural areas as well as of population at large was reflected squarely on the sales and
income of small traders and artisans. And they and their organizations were also proDP and subsequently pro center-right parties. All enjoyed, in addition to increased
income, some political power that did not exist during the nn period. The list also
includes, of course, big industrialists and businesses.
The above definitely suggest significant increases in the absolute level of
material welfare of masses compared to the past, enough to be content. But, most
probably improvements in income distribution must also have been registered.
Opportunities for business and work also definitively increased during the DP period.
This leads us to conclude, therefore, that the majority of masses of people
supported the DP because their material well-being increased during the DP period.
Same masses were less sensitive to the political repressions implemented by the DP
governments on the opposition and the CHP. In contrast, bureaucrats, high-level
government employees, including the military, majority of journalists, university
professors, intellectuals, university youth were all more sensitive about a better
working democracy and were very much against the political repressions carried out
by the DP and mostly addressed to them.
Another important conclusion from the above concerns the fate of left-ofcenter parties in the years after the DP but should be mentioned, however, briefly at
this point. Obviously, the majority of low-income masses of people in Turkey,
including small farmers, workers, small tradesmen and artisans identified themselves
with the center-right, and they remained reluctant towards CHP which adopted leftof-center philosophy in the late 60s. Thus, the left generally remained in the
minority; the left-of-center parties very seldom obtained the majority in the
parliament or else participated in coalitions.
Attitudes towards religion on the part of center-right DP vs. center-left CHP
must have also played a significant role in the sympathy particularly of lower-income
groups, including farmers, workers, small artisans and tradesmen. DP and later other
center-right parties such as AP and ANAP were more lenient towards religion and the
religious in contrast to CHP which (mis-)interpreted laicism as standing away from
the religious. This also resulted in DP (and later, other center-right parties) increasing
their votes from the lower-income groups. Unfortunately this led to increasing
reactionary forces whenever center-right parties came to power. In contrast, since
CHP (and later other center-left parties) ended up seeming as if they were against the
religious and, therefore, had difficulties of expanding their votes because of laicism
or the religion factor.
Many left-leaning writers argued that the DP had obtained absolute majority of
votes because of the religion factor and in spite of the deterioration of income
distribution during the DP period. This argument was fallacious. All statistics
indicate that definitively the absolute income-level and possibly also income
31
distribution improved during the DP period. Hence, material well-being was the
major factor in the popularity of DP among lower-income groups. Political
empowerment was another factor. So, definitely was DPs stand about religion vs.
CHPs stand. But the latter was not the most important factor, and neither was it a
factor that gave DP majority of votes despite economic drawbacks.
One symbolic issue concerns ezan or call to Muslim prayer. During CHP
and nn period, Arabic ezan was translated into Turkish and it was a
disagreeable translation at that. When the DP came to power, it changed the ezan
back to the initial Arabic, and the majority was pleased.
In this respect, again Atatrk was right. Thinking that reading the Koran in
Arabic would not convey any idea about religious principles to the people, he had the
Koran interpreted meaning, in effect, translated to Turkish. Prayers and readings
could be made in the original Arabic, while to understand religion and all the prayers
involved, one could have recourse to a Turkish interpretation by a serious, competent
theologian. The ezan, however, was only a short call and there was not much need
to translate it into Turkish, since the meaning was easily understood.
I would refrain here from going further into the issue, such as the really bad
translation of ezan made during the nn period, and whether prayers can be cited in
Turkish and not in Arabic to be acceptable for worship. Surely, Allah (God) was
not versed only in Arabic language.
32
Chapter 4
MILITARY INTERVENTION
PERIOD: 1960-1961
4.1. POLITICAL REPRESSION OF THE DP

GOVERNMENTS THAT LED TO THE
The main reason for the military intervention was political; political repression
particularly on the major opposition party, CHP. Surely the economic policies of the
DP were also criticized severely, again by CHP. The liberal economic regime the
DP implemented, encouragement of the private sector (over-encouragement
according to the CHP), the encouragement of FPC flow (again, over-encouragement
according to CHP), lack of interest in land reform and insistence only on agricultural
reform, even neglect of railway transportation and expansion of highways were
criticized by the intensely tatist CHP of nn. But, in the opinion of this author, had
the DP governments refrained from political repression, particularly towards CHP
and nn, the military would have been hard pressed to intervene the democratic
system just to make changes or adjustments in the economic regime and economic
policies pursued by DP. Hence, a short view of the political repression will be
undertaken at this point to highlight why an intervention had become inescapable
according to the military as well as many intellectuals from all civilian circles,
opposed to the undemocratic practices of DP. It should also be underlined that the
military, bureaucracy and the intellectual circles including journalists and university
members, all carried a much greater weight in the Turkish society at the time while
today, they may have lost much of this social or political weight.
34
It is interesting that political repressions started especially after DP won a

significant victory in the May 2, 1954 general elections. With a participation ratio of
88.6%, DP obtained 57.6% of votes and 503 seats, CHP 35.4% of the votes and only
32 seats due to the absolute majority system and the fact that DP was ahead, however
slightly, in most of the provinces. From 1950 all throughout 1960 Bayar was always
elected president and Menderes as Prime Minister although their views were not
always the same; Koraltan was always elected Chairman of the Parliament.
The political repressions of the DP were addressed to journalists, university
professors, who criticized the DP and to opposition parties and politicians, including
CHP and nn. The military, particularly the career officers, on the other hand, were
belittled and also squeezed by low salaries. The repression on the extremist religious
movements, extremist nationalists and communists also continued during the DP
period but this was considered by the majority of public opinion as a necessary
measure to safeguard the secular republic. Hence, the latter was not to be considered
a reason for military intervention. Political repression of the DP on the mainstream
opposition, intellectuals and bureaucrats, intensified over time despite mounting
discontent.
A law passed on June 21, 1954 soon after the 1954 general elections
authorized the government to retire university professors and judges who had passed
the age 60 and had completed 25 years of service. Based on this law, Blent Nuri
Esen, a famous law professor from Ankara University was retired in 1954. In 1956
another renowned professor, Turhan Feyziolu, then dean of the Faculty of Political
Science, Ankara University was removed from his post, on grounds he was making
political (anti-DP) speeches (he later entered politics). This move led to the
resignation of many other well-known professors, erif Mardin, Aydn Yaln,
Muammer Aksoy and Cokun Krca. With the exception of one left-wing, all others
were, in fact, center-right. Later, in 1958 still another famous law professor, Hseyin
Naili Kubal from Istanbul University also faced a temporary suspension from his
post, again based on the same reason. High level judiciaries including the chairman
of the Supreme Court of Appeals and Attorney General were also retired.
Another law passed on June 30, 1954 presented those who applied as
candidate for MP to a political party but lost the candidacy election (or selection)
from applying as an MP candidate from another party. The aim was to prevent those
who were denied MP candidacy by the DP from entering opposition parties. Many
provinces in which the DP lost the elections were divided into two provinces, or
demoted to township, e.g. Malatya and Krehir.
DP was particularly repressive towards the journalists; several laws, and
amendments were passed limiting the freedom of the press. 1954 and on, many
journalists were sentenced and jailed on pretense they insulted the state (the DP
government). The list included renowned senior journalists such as Hseyin Cahit
Yaln who was jailed in September 1954; Nihat Erim, a CHP heavy-weight who was
sentenced to indemnity payment by the same court; and later, Metin Toker, still
another famous journalist, was sentenced to jail in February 1957. From 17 March
MILITARY INTERVENTION PERIOD: 1960-1961
35
1954 to May 1958 in all 1.161 journalists were brought to court and 238 had received
sentences.
The repression on journalists found important opponents even within the DP.
Following the 6-7 September 1955 uprisings concerned with Cyprus and looting of
shops owned by Greek citizens, the DP government had increased repression on
journalists. A group of prominent DP members, however, demanded that the right to
prove (their statements) should be given to the journalists. Despite the tumult this
demand created within the DP, the right to proof was rejected; some of the defenders
of the right to proof were ousted from the DP, whereupon many others also resigned
and established a new party, the Hrriyet Partisi (Freedom Party). The founders
included Turan Gne, Fethi elikba, Ekrem Alican and Fevzi Ltf
Karaosmanolu. The party, however, fared poorly in the 1957 general elections and
was dissolved in November 1958; most of the members transferred to CHP. On June
19, 1956 Fuat Kprl, one of the four senior founders of the DP who had also
favored the right to prove resigned from his post as Minister of Foreign Affairs and
on September 7, 1957 he resigned from DP.
Following a law that introduced further repressions on the press, a law on
Meetings and Demonstrations was passed in June 27, 1956 with the purpose to
repress political meetings and gatherings (of the opposition). Based on this law,
Kasm Glek, the popular general secretary of CHP at the time was sentenced to 6
months in jail in August 1956 for handshaking with tradesmen and artisans who had
come to great him during his Black Sea trip. His jail was deferred. Several other
important politicians shared a similar fate, including Osman Blkba, chairman of
Republican Nations Party.
Mounting opposition and discontent led the DP to hold early elections on
October 27. 1957 (thus also closing the door for Fuat Kprl to enter another party).
This time, with a low participation ratio of 76.6% DP obtained 47.9% of the votes
and 424 seats, CHP 41% of the votes and 178 seats. Obviously DP had lost ground
while CHP had increased its votes. But DP still retained a comfortable majority in the
parliament on account of the absolute majority counting system. After the elections,
instead of becoming moderate, DP got still more repressive. This time antagonism
was aimed at nn and the CHP. During the visits of nn (to Zile in Oct. 1958),
Kasm Glek (to Bolu in Dec. 1958) clashes with DP partisans, police and gendarme
interferences started to show up. nns visit to Aegean provinces in April 1959 and
his talk with people was prevented by the police. Serious problems arose during
nns Uak visit, April 30, 1959. nn was injured by a stone thrown at him; his
speech to the press on May was censored. Those coming to see him in zmir, in May
1959 were dispersed by the police. CHP zmir provincial meeting was prevented by
the Governor. On his return to Ankara in May again problems arose, the people who
came to see nn were dispersed by the police. Meanwhile, one weekly and one
newspaper in Turkey were again temporarily closed and the responsible editors
sentenced to jail for translating and publishing an article an American journalist
(Pulliam) wrote about Turkey. The DP, in an effort to prove their popular support,
established the so-called nations front (vatan cephesi); the (state) radio constantly
36
announcing the list of citizens who joined the front, hence the DP; it was
unconvincing, with many fake names. The last straw was the establishment of an
Investigative Committee of DP parliamentarians on 18 April 1960 to investigate the
destructive and disruptive activities of CHP with a view to close it. Istanbul
University youth gathered in the university premises to protest the move. The police
intervened; the rector, Sddk Sami Onar demanded the police to leave university
premises. The police refused and instead took Onar to the police station. A number of
university students died from police fire. The protest meetings by students spread to
Ankara University. On May 5, 1960 DP wanted to organize a counter youth meeting
but it was outnumbered by the pro CHP youth. When Menderes and Bayar reached
the Kzlay square in Ankara, Menderes was harassed by the youth opposed to DPs
political repressions.
Thus, the 27 May 1960 Military Intervention had become inescapable. Even
without going much into details, it is obvious that so much repression was absolutely
unnecessary and it is difficult to understand why the DP, in particular, under
Menderes initiative rather than Bayars, had to choose an unnecessary and antidemocratic path that brought political disaster to them and certainly retarded
Turkeys development. To think, the masses of people at the time were still happy
with their increased material well-being under the DP government, but seemed to
care less about democracy. In the meanwhile, some of DPs major steps, like
securing the London and Zrich agreements for the Cyprus issue, establishment of
CENTO, application to the EEC for associate membership, all commendable policies,
were lost of sight amidst the storm of unnecessary political repression.
4.2. THE NEW CONSTITUTION, POLITICAL

CHANGES AND PLANNED ECONOMIC
DEVELOPMENT
4.2.1. Major Changes Introduced in the New Constitution
for the Better Working of Democracy
The military intervention group comprised of 28 officers ranking from general
to captain and the spokesman reassured in his radio talk that the intervention would
be temporary and that steps would be taken to ensure a smoother working of
democracy in future and then they would leave. It was also declared that Turkey
would remain faithful to NATO and CENTO. The Parliament was dissolved, the
activities of all political parties was stopped, President Bayar, Chairman of the
Parliament Koraltan, Prime Minister Adnan Menderes, all the ministers and all the
DP MPs were taken into custody and brought to Yassada. Separately, 55 Kurdish
tribe heads were also jailed. Cemal Grsel, a general outside the military intervention
group was elected President on May 28 and the formed a cabinet of objective
civilians and the military. On May 28, the rector of Istanbul University, Sddk Sami
37
Onar declared that the DP government had lost its legitimacy. A group of law
professors from the university was given the task of preparing the new constitution.
Meanwhile, a temporary constitution was announced which declared that the former
DP government had lost its legitimacy because of its dictatorial actions. It gave the
powers of preparing the new constitution and relevant new laws to the military group
which had initiated the intervention, thenceforth called Milli Birlik Komitesi (MBK:
National Unity Committee: NUC). A Representative Assembly comprised of
selected civilians was also formed to act in advisory capacity, or to function like a
first level parliament before the MBK. The military retired 147 university professors
as well as a large number of military officers. Sddk Sami Onar and a number of
other university rectors resigned from their posts in protest against the unlawful
retirement of 147 university professors. He was, however, re-elected by Istanbul
University in November.
A special military court was organized to try the DP parliamentarians and
others, and it finally gave death sentences to Bayar, Menderes, Fatin Rt Zorlu,
former Minister of Foreign Affairs, and Hasan Polatkan, former Minister of Public
Finance. Bayar only was saved execution on account of age. But many more
ministers and MPs died of heart attack and one minister committed suicide. The
proceedings of the court, the lawsuits, the sentences given, however, were all very far
from satisfactory, if not disappointing, it was a tragedy and a farce. A number of
attempts to explain the reasons for the military intervention to the rural population,
on the other hand, was met with distinct resistance by the rural people. On November
19 an Amnesty Law was passed which saved about 15 thousand convicts and
accused.
In November 1960, a schism within the MBK (NUC) resulted in the ousting of
14 members who had shown a preference for permanent military rule rather than
return to democracy. Included in the 14 was Alparslan Trke who later entered
active political life as chairman of the radically nationalist Milliyeti Hareket Partisi
(MHP: Nationalist Action Party). All the 14 were sent abroad as members of
diplomatic corpse.
The new constitution prepared by the Constituent Assembly involved the
following major changes to bring about the smoother working of democracy in
future. To ensure a better representative parliament, the system of absolute majority
was discarded and instead the principle of proportional representation was accepted.
The absolute majority system, it was rightly observed, allowed the opposition an
unduly small percentage of seats in the parliament (because the DP always obtained
only a slight majority in most of the provinces, taking all the seats for the province in
question). It should be remembered that for the 1946 and 1950 elections DP had
advocated proportional representation while CHP in power then had insisted on
absolute majority. The roles were changed when the DP was in power; CHP this time
had advocated proportional representation, DP in power insisted on continuing with
the absolute majority system. But absolute majority did not indeed lead to an accurate
representation of the preferences of the voters.
38
Another measure was the establishment of a senate over the parliament with
the expectation that it would create another layer of control and refinement before the
final passage of laws. Later experience, however, showed that this move did not work
because both the parliamentarians and the senators were tied to their political parties
and hence to the party leaders, and de facto did not have the option to vote
independently of their parties and leaders. With the new constitution members of
MBK were appointed life-long (natural) senators.
Still another major measure in the new constitution was to secure government
employees, high-level bureaucrats against politically motivated retirements and
displacements by the government. The DP government, particularly since 1954 and
on had ousted many CHP-leaning bureaucrats from the positions they held.
Therefore, the intention of this measure was to prevent government misuse of
political power on bureaucrats in future. But, particularly during the 70s this
measure, in turn, gave rise to another set of problems. It left the government unable
to remove from their posts Marxist-leaning bureaucrats and those, in particular,
involved or else supportive of activities of radical left. Therefore, it was again
changed in the 1982 Constitution with the aim this time to remove such active
ideological radicals. But the power was again misused by the succeeding democratic
governments and they used their powers to remove competent and non-partisan
bureaucrats and to install, instead, partisans, whether competent or incompetent.
Another important step in the new constitution was the establishment of a
Constitutional Court. The aim was to ensure that future laws would conform with
the Constitution or otherwise be canceled by an independent, highest-level judiciary
organ. Several other measures were also taken to ensure the independence of the
judiciary organ and safeguards were introduced for a just trial and defense rights, and
the so called the right to prove on the part of the accused. The latter was not
granted by the DP and had given rise to bitter resentments, resignations from the DP,
and establishment of new parties.
The new constitution was put to referendum on July 9, 1961 and accepted,
with (only) 61.5% of the voters having voted in favor. New parties were established
and on Oct 15, 1962 general elections were held. MBK and the Representative
Assembly were dissolved and the military returned to the barracks. Temporary
interventions only to smooth out the political process, and enable the future smooth
working of democracy (1960, 1980), or on account of the inability of the democratic
governments to prevent mounting terrorism (1980) plus the 1971 Military
Memorandum have remained a special feature of the Turkish military. Interventions
were not intended to be permanent. And the Turkish military considered it one of its
functions to enable the smooth working of democracy, prevention of terrorism,
prevention of religious reactionary activism (to safeguard secular Republic) alongside
defending the country against foreign military aggression. This function was
interpreted as a dictum following Atatrk.
39
4.2.2. Changes in the Economic Regime: Mixed Economy

and Planned Economic Development
In the field of economic regime, the new Constitution and relevant laws
brought about changes with a view to correct the mistakes of DP as interpreted by the
opposition. The major changes included discarding the liberal economic regime in
favor of a mixed economic regime, also accentuating that one of the functions of
the state is to attain social justice with the financial means available. It also
introduced planning and planned development; retaining the encouragement of FPC
(DPIs) in principle but to be controlled to secure their usefulness to the Turkish
economy. In agriculture, the Constitution stipulated land reform alongside
agricultural reform. A State Planning organization was established following the
stipulation of planning in the 1961 Constitution. It would be an advisory body and
prepare 5 Year Development Plans and Yearly programs to be discussed and passed
as law in the Parliament. The 1962 program and following the First Five Year
Development Plan (1st FYDP), 1963-67 was prepared and put into effect. The 1962
program accentuated that Turkey would have a mixed economic regime, with both
the private sector and SEEs retained and existing side-by-side.
It was stipulated, however, that the SEEs would be subjected reorganization in
order to secure their productivity and profitability. The plan targets were to be
compulsory for the public sector and indicative for the private. A broad
comparison reveals that the mixed economy and planned development envisioned in
the 1961 Constitution and the ensuing plans and programs were not associated with
the Russian central planning. It was envisioned at a time of two distinct, rival worlds,
the Western World defending democracy and liberal economic regime, and the
Soviet bloc advocating socialism and central planning. A Third World of neutral
developing countries, on the other hand, relied more on the role of the state in the
economy. In contrast to the Turkish, the Indian Mahalonobis model implemented
during 1955-1961, for instance, was definitely inspired by the Russian plan and
development strategy.
Thus, in Turkey planning had to be implemented in a milieu of democratic
regime while encouragement of the private sector and of FDI (DPI) flow was in
principle retained within the context of mixed economy. In the subsequent years,
however, those politicians and intellectuals who favored intensive tatism interpreted
the mixed economy as a regime in which the government sector would be
dominant and called for only minimal encouragement of the private sector and for
tight controls on FPC. The liberal or center-right politicians when in power, on
the other hand, gave priority to encouraging the private sector, and were less tight
with regard to controls on FPC flow. Ambiguity over the meaning of mixed economy
increased over time. In fact, mixed economy began to be interpreted more as an
intensive version of tatism and hence fell from favor among the business
community, big and small. Instead, in the 80s alongside the developments taking
place in the world during the years 70s, Turkish politicians also started using the term
market economy. In fact, however, since even in the most developed and liberal
40
economies like the USA and UK, some ratio of public investments exist side by side
with the private, and there is some interventionism as well as controls alongside
market forces, it could tightly be stated that all countries display mixed economy
character. This is therefore, true also of the current concept market economy. But
this is a theoretical point; in Turkey mixed economy had soon become synonymous
with intensive tatism.

DURING 1960-1961
The performance of the economy during the military intervention years was, as
expected, negative. We had a stagnating economy on account of decreased public
investments, uncertainty and decreased private investments as well as private
consumption. Thus, for the years 1960-61, the average yearly growth rate was 2.7%.
With a population growth rate of about 2.8% (28.53%) for 1960, 27.75 for 1961)
the average yearly per capita GNP growth rate was minus 0.1%. Due to stagnation
the average price rise was also low and stood at 3.7%. The respective rates by years
were: in 1960 the price increase was 3.3% (implicit GNP index), GNP growth rate
3.4%; for 1961 the rates were 1.0% (prices) and 2.0% (GNP) Obviously, the would
be favorable effects of the recent devaluation had been negated by the uncertainties
caused by military intervention.
Chapter 5
AFTER THE MILITARY
INTERVENTION:
1962-1973
5.1. COALITIONS, MINORITY GOVERNMENT

LED BY NN AND CHP, 1961-65
General elections were held on Nov. 15, 1961; the parliament convened on
Nov. 25, 1961 and the army returned to the barracks, so to speak. The expectation
of permanent military rule on the part of a minor group of the military and
intellectuals did not materialize. In the elections, CHP under smet nns leadership
came out as the first party but was far from obtaining the absolute majority. In fact,
the center-right votes were divided into two parties, both claiming to be the follow-up
of the former DP, and with similar programs. One was the Adalet Partisi (AP: Justice
Party); Ragp Gmpala, an ex-general of high rank had been elected chairman of
AP, likely for strategic reasons. Indeed, Gmpala proved instrumental in the later
years in reducing the tension between AP and the military. Behind were Sleyman
Demirel, Saadettin Bilgi, accompanied by many former second-level DP hands. The
other center-right party was Yeni Trkiye Partisi (YTP: New Turkey Party) headed
by Ekrem Alican, former minister of public finance in the government established
following the 1960 Military Intervention. Its cadre too included former DP members,
all of lower rank, but most had been anti Menderes and anti Bayar. The YTP, and not
the AP was the center-right party preferred by the MBK. Since there was very little
42
time for the two parties to prove which was the true follower or inheritor of DP, the
center-right votes were divided. Otherwise, taken together they obtained votes far
greater than that of CHP but was still slightly below 50%. Another party to the right,
CKMP had also entered and obtained votes about as much as the YTP. CKMP
(Cumhuriyeti Kyl Millet Partisi: Republican Peasants and Nations Party) was
led by Osman Blkba.
The precise votes and seats of the respective parties were as follows. The
participation ratio was 81%; AP obtained 34.8% of the votes and 158 seats in the
parliament; YTP 13.7% of the votes and 65 seats; CHP 36.7% of the votes and 173
seats; CKMP 14% of the votes and 54 seats. The total was 450 seats.
Similar results also obtained in the senate elections. AP obtained 35.3% of the
votes and 71 senate seats; YTP 13.9% of votes and 27 seats; CHP 37% of the votes
and 36 seats; CKMP 13.4% of the votes and 16 seats. The total was 150 seats plus
natural senators. The disproportion between the votes versus seats obtained
resulted from the absolute counting system. Natural senators (tabii senatrler) were
former MBK members who were made senators for life.
According to the results of the election a coalition was inevitable, even a
coalition leaving the CHP out was an arithmetic possibility. This led a small group of
military outside of the MBK, which called itself Silahl Kuvvetler Birlii (Union of
Military Forces) to prepare a protocol on 21 October which declared that democracy
would be ended permanently and the new parliament ousted even before it convened.
Therefore, the MBK immediately called in the leaders of the political parties to agree
on another protocol with the military on October 23. This protocol ensured that: i)
The political parties, the government and the parliament would not breach the 1961
Constitution; ii) They would not stand against the 27 May 1960 Military
Intervention, iii) They would not offer amnesty to the former convicted DP
politicians, neither would they attempt the return of officers retired by the MBK back
to the military, and iv) They would elect Cemal Grsel as president (implying not
Prof. Ali Fuat Bagil who was the preferred presidential candidate of some of the AP
members).
The protocol having been signed, the MBK let the new Parliament to convene
on Oct. 25. It elected Cemal Grsel as President and the next day Grsel, in turn,
gave the task of establishing the new government to nn as the chairman of the
party with the largest number of seats. Soon, on Nov. 1961, AP agreed to enter a
bipartite coalition with CHP; nn became the Prime Minister. The CHP-AP
coalition was a unique experience in compromise and restraint. It brought together
two major and rival parties with different economic and political outlook. It also
thereby prevented the formation of a coalition in which political parties openly
opposed to the 1960 military intervention could have the upper hand; likewise it also
prevented any attempt for a permanent military rule.
Once we realize that entering a full-fledged democratic system is a process,
and returning to the barracks for the military after an intervention carries several
risks, we should conclude that the actions of the major players concerned were all
cautious and prudent. This includes the mainstream core of the military bent on
AFTER THE MILITARY INTERVENTION:
1962-1973
43
returning to democracy, the CHP and the AP. In fact, in February 1962, a small group
of military led by col. Talat Aydemir attempted a coup to establish a permanent
military rule. Talat Aydemir had previously been in the junta which prepared the
1960 intervention but since he was sent outside as military attach, he was not
included in the MBK. He was appointed commander of Harbiye, the military school
for officers. He was the leading figure in the group of military who declared after the
general elections that the military rule should become permanent. The February coup
of Talat Aydemir was thwarted and President Cemal Grsel and the military arrived
at a unique solution. They provided amnesty to Aydemir, other officers involved and
the Harbiye students who participated in the attempted coup on condition they were
all expelled from the military. Talat Aydemir still with close ties with the military,
though retired, attempted still another coup in May 1963. He was again unsuccessful,
he was brought to military court and this time received the death sentence which was
implemented.
Fundamental differences between the outlook of CHP versus AP brought the
coalition to the breaking point by May 30, 1962 upon which nn resigned. Cemal
Grsel gave the task of forming the new government to nn again and this time
CHP formed a coalition with YTP (center-right), CKMP (right wing) and backed by
a number of independents who had resigned from AP. The new coalition obtained the
confidence vote from the parliament on July 7, 1962.
The local elections held on Nov. 17, 1963, however, gave interesting results.
The votes of CHP, YTP and CKMP had all declined significantly compared to the
1961 general elections while that of AP had increased. This led YTP and CKMP to
the interpretation that their voters were dissatisfied with their cooperation with the
CHP and both parties resigned from the coalition. Grsel again asked nn and
nn having failed, to Ragp Gmpala, the chairman of AP to form the new
government. After his effort also failed Grsel gave the job to nn again. In the
meantime, Cyprus crisis had convinced the YTP that Turkey should not meet a
government crisis in addition to the Cyprus crisis. Therefore, on Jan, 4, 1964 YTP
gave its vote of confidence from outside to the third nn minority government
comprised of CHP plus independents who had resigned from AP. This government
remained in charge till the 1965 general elections in which AP obtained the absolute
majority in the parliament.
Significant political developments and events took place during this period
surveyed. First, a set of reorganization steps were taken to conform with the 1961
Constitution. These involved the establishment of State Planning organization (SPO)
and entry into planned period; establishment of the Constitutional Court and the
Higher Council of Judges; opening of the Senate in addition to the Parliament;
establishment of Milli Gvenlik Kurulu (MGK: National Security Council)
comprised of the President, Military chiefs-of-staff, the PM and a number of
Ministers, as an advisory body to the government on matters of national security; the
passage of two laws for workers, one on unions, the other on collective bargaining,
strikes and lockouts. Corrections concerning the press and press freedom had been
taken up before, in 1961.
44
In international political relations two important developments took place. One

was the signing on Sept 1963 of the Ankara Treaty that made Turkey an associate
member to the EEC, to become effective from 1964 on. Application to the EEC had
been made by Turkey on July 1961 under the DP government but negotiations had
been frozen due to the military intervention and the lapse from democracy. The
Treaty was signed by nn as PM and a coalition government of CHP, YTP, CKMP
plus a number of independents resigned from AP. It is noteworthy that in the later
years CHP was reluctant in an accelerated development of Turkish-EEC relations. In
contrast, AP as inheritor of DP, was in favor.
The second was the eruption of the Cyprus issue. In April 1963, President of
Cyprus, Makarios had asked for the restriction of rights granted to Cypriot Turks
with the London and Zrich Agreements, which the Turkish government refused in
December. This led to spelling of blood in Cyprus; Turkey asked UK and Greece as
guarantors for joint intervention. But bloodshed by Greek Cypriots, the EOKA
continued. The conferences between guarantors and the intermediary of the UN being
of no avail, the Turkish government started to contemplate a military intervention
single-handedly as a guarantor state. But the attempt at military intervention was
tersely stopped by L. Johnson, the US president at the time. nn went to the USA to
interview Johnson. But it was to no avail because of the fear that a single-handed
military intervention by Turkey on Cyprus could open the possibility of a military
clash between Turkey and Greece. This cooled Turkey and specifically nn
towards the USA. Though Turkey did not join the side of the neutral Third World,
she began to strengthen her relations with the USSR and also the EEC, the latter
within the context of associate membership.
5.2. POLITICAL DEVELOPMENTS DURING

THE AP (JUSTICE PARTY) PERIOD, 196571
The AP led by Sleyman Demirel, having obtained the majority in the
parliament in 1965 with 52.7% of votes also captured the majority in 1969 this time
with a narrower 46.5% of votes and stayed in power until it was ousted by the 12
March 1971 Military Memorandum.
At the time general elections were held on October 10, 1965 Sleyman
Demirel was the new chairman of AP, having been elected in November 1964 after
Gmpala died. The participation rate in the 1965 elections was 71.3%. AP had
obtained 52.9% of the votes and 240 seats out of 450; CHP 28.7% of the votes and
134 seats; Millet Partisi (MP: Nations Party) 6.3% of the votes and 31 seats; YTP
3.7% of the votes and 19 seats; Trkiye i Partisi (TIP: Turkish Workers Party) 3%
of the votes and 15 seats; and CKMP 2.2% of the votes and 21 seats. The counting
system called the national residue system that had been introduced for this election
by CHP government had given results similar to the proportional system, except that
1962-1973
45
it was unrepresentative of MPs elected based on the national residue part. CKMP
formerly center-right and led by Osman Blkba who had later resigned was, just
before the 1965 elections, captured by Alparslan and his followers who were radical
nationalists. Osman Blkba in the 1965 elections was chairing the MP (Millet
Partisi: Nations Party). TP was a socialist party led by Mehmet Ali Aybar.
The 1965 election results enabled AP and its new leader Sleyman Demirel to
form a government single-handedly. In the next general elections, held on October
12, 1969 AP retained its absolute majority in the parliament, albeit with some loss of
votes compared to 1965; CHP had also lost votes. Before the 1969 elections AP had
canceled the national residue system and the results were as follows. The rate of
participation was down to 64.3%; AP had obtained 46.5% of the votes and 256 seats
out of 450; CHP obtained 27.3% of the votes and 143 seats; Gven Partisi (GP:
Reliance Party) 6.6% of the votes and 15 seats, MP 3.2% of the votes and 6 seats;
Milliyeti Hareket Partisi (MHP: Nationalist Action Party) 3% of the votes and 1
seat; Birlik Partisi (BP: Union Party), 2.8% of the votes and 8 seats, YTP 2.2% of the
votes and 6 seats, TP 2.8% of the votes and 2, seats; independents 5.6% of the votes
and 13 seats.
GP was a centrist, pro-Atatrk party and anti left, a splinter from CHP when
CHP had adapted the left-of-center stance and nn had backed Blent Ecevit to
become its general secretary. GP was led by Prof. Turhan Feyziolu. MP, on the
other hand, was, as previously mentioned, led by center-right Osman Blkba.
CKMP had by 1969 elections changed its name to MHP, it was led by Alparslan
Trke and was radical nationalist right. BP was a party with alevi (alevite) roots,
established in October 1966; they were pro-Atatrk and reformist. Though they
obtained a small percentage of total votes (2.8%) they were able to capture 8 seats
because their votes were concentrated in a limited number of Eastern provinces.
The absolute majority obtained by AP is decidedly the most important
outcome of the 1965 and later the 1969 elections. AP, as inheritor of DP had a centerright economic program. It was in favor of a liberal economic regime, meaning
encouragement of the private enterprise and FPC (DPI) flow. It relied on agricultural
reform rather than land reform. This stance was severely criticized by both CHP and
the leftist movement which had gained considerable strength during the period in
question. CHP of nn had adhered to an intensive version of tatism and in 1967 it
had adopted the principle left-of-center. The leftist movement at the time was
heavily influenced by Marxist philosophy and Soviet central planning. Thus, it was
against private sector, FPC, NATO, the USA and the EEC. Interestingly, the stronger
voices coming from the CHP were also similar, although nn, when adopting the
principle of left-of-center, had spelled out openly that the principle of left-of-center
had nothing to do with socialism.
Although CHP and leftist movement together carried a great weight with
support coming from most of the intellectuals, journalists, academia, bureaucrats and
university youth, this did not mean that AP did not have strong trenches. Firstly, the
businessmen and industrialists, including Union of Chambers, and Chambers of
Commerce and of Industry were overwhelmingly in favor of APs liberal economic
46
policies encouraging and protecting the private enterprise. Small industrialists

and traders were also overwhelmingly in favor, as well as the farmers who again had
benefited from APs policy of agricultural reform, subsidizing and encouraging the
agricultural sector. The majority of Turkish workers were also anti left. Thus, the
larger confederation of labor unions, TRK- was in favor of AP while DSK, the
revolutionary confederation of labor unions, which had a far smaller membership
compared to TRK- was against AP.
Political rivalries, some extent of differences of view, however, existed within
AP. By 1967 Demirel seemed to have consolidated his leadership over his major
opponent within the party, Saadettin Bilgi, who had lost the chairmanship to
Demirel in the 1965 party congress. But in 1972 when Demirel condemned the
opposition within the party as more to the right (and, indeed Bilgi was more
conservative compared to Demirel) the schism surfaced; 72 AP MPs gave a
memorandum to Demirel and 41 MPs refrained from voting yes for the budget.
Consequently, many AP MPs were thrown out, while many resigned and established
a new party: Demokratik Parti (Dik.P: Democratic Party) chaired by Ferruh Bozbeyli,
former chairman of the Parliament, with Saadettin Bilgi and Yksel Menderes
(Adnan Menderes son) as vice chairmen. The Dik.P strived for the political rights of
former DP parliamentarians and ministers, a step strongly opposed by the military.
An interesting dilemma brought to the fore in particular by CHP was that AP
breached the 1961 Constitution with regard to economic program. One obvious
example given was land reform. Although the Constitution stipulated that land
reform should be implemented, AP government had neglected it. The same was true
for all other reforms. Again, criticisms were leveled to the AP government also
because of excess encouragement of private enterprise and of FPC, disregard of the
mixed economy, neglect of reorganization of SEEs, etc. In short, the interpretation
was that the Constitution called for a compulsory implementation of an (unspoken)
center-left economic regime; therefore AP was breaking the Constitution by
implementing center-right policies. Many bureaucrats and military at the time, not
initiated with political economy and economics, thought there was only one
optimal economic (plus social) program, the one in the Constitution and the plans,
and any political party that came to power should implement it. Furthermore, it was
argued, the students unrest stemmed from the fact that AP had neglected reforms,
and once the reforms were implemented unrest and anarchy (the term used at the
time instead of terror) would subside. This was the basic thinking of the 12 March
Military Memorandum and (forced) election of a reform government by the Military
to the parliament to prepare and implement reforms while anarchists (terrorists)
were brought to trial.
Other developments during the period in question also merit some further
attention. First, on CKMP which had entered the 1965 elections chaired by Alparslan
Trke. Previous chairman was Osman Blkba, a veteran politician, center-right
but against both CHP and AP. But upon the decision of CKMP to join nns
second coalition government in 1962, he had resigned from his party. He and his
followers had then established the new Millet Partisi and MP had entered both the
1962-1973
47
1965 and 1969 elections chaired by Blkba. Trke and followers, on the other
hand, were (radical) nationalists. Trke was long known for his nationalist stance
even before the 1960 military intervention. He was in the military junta as colonel
and in the MBK. But later he was dismissed and retired among the 14 MBK members
because they were not in favor of returning to democracy. Trke and followers had
taken advantage of the void in leadership in the CKMP and had captured it just
before the 1965 elections. The name of the party was later changed to Milliyeti
Hareket Partisi (MHP: Nationalist Action Party) and it entered 1969 elections under
that name. Before the elections and in 1969 MHP had organized nationalist militant
youth under the association: lk Ocaklar Dernei (Idealist Hearth Association):
The idealist youth was to take up armed struggle against the radical leftist youth
(communists in their terminology) that indulged in terrorist activities. The pretense
was that the police force and gendarmes were unable to stop radical leftist terror. The
militant radical leftist youth organizations, however, were by far the larger group
compared to radical right youth and they aimed at the Americans, and people at large.
The radical religious right, on the other hand, preferred at the time to be within
the AP, the center-right party. Necmettin Erbakan was elected as general secretary of
Union of Chambers, Ankara as an AP hand in 1967 but was thrown out later by AP.
He entered the 1969 elections as an independent and was elected. He established his
party Milli Nizam Partisi (MNP: National Order Party) as a radical religious party
but MNP was closed down in 1971 by the Constitutional Court and Erbakan
established in 1972 the Milli Selamet Partisi (MSP: National Salvation Party) which
entered the 1973 elections held after the 1971 Military Memorandum.
Another important development in the 1965 general elections was that TP, an
avowed socialist party had entered general elections the first time in Turkeys history
and had captured 15 seats, though all except one, thanks to the national residue
system. The party was founded only recently, in February 1964 and was chaired by
Mehmet Ali Aybar. Previously, as early as in December 1962, however, a group of
intellectuals had established the Sosyalist Kltr Dernei (SKD: Socialist Cultural
Association), chaired by Osman Nuri Torun, a former under-secretary of SPO. Its
members likely had differing views. For one, Doan Avcolu, a prominent figure in
the association interpreted Atatrks war of independence as a fight against Western
imperialism and advocated that Turkey join the neutral Third World. The members of
SKD likely ranged from Marxist to Social Democrat. Since the national residue
system was waived in the 1969 elections, TP could obtain only 2 seats in the
parliament with 2.8% of the votes. Prior to that, in 1969 when Russians crushed
Czechoslovakia, Mehmet Ali Aybar had shown his preference in favor of Dubcek
and socialism with a smiling face and believed it would increase TPs votes. But
when TP lost votes and seats in the 1969 elections, in the 1970 party congress Aybar
was ousted from chairmanship; instead Behice Boran, a retired orthodox Marxist
became the chairperson, She was supported by etin Altan, Sadun Aren and etin
Altan, Aybar resigned from the party, followed by Yaar Kemal, the famous leftwing writer.
48
During this period we witness a proliferation of socialist publications, both

translations and by Turkish writers, starting with the full translation and publication
of Marxs Das Capital in 1965, followed by Engels, Lenin and Mao. Several leftist
periodicals also appeared. Some socialists published studies investigating why
economic organization during the Ottoman period had not entered the capitalist stage
and hence was different. The left carried so much prestige in the intellectual circles
that it was considered synonymous with being progressive, realist and intellectual.
But the Turkish rank and file and rural population was firmly opposed. The DISK
(Devrimci i Sendikalar Konfederasyonu: Confederation of Revolutionary labor
Unions) was established in 1967, after the passage of labor laws in 1963 concerning
labor unions. Until then the only confederation of labor unions was TRK-
(Trkiye i Sendikalar Konfederasyonu: Turkish labor Unions Confederation)
established long ago, in 1952 during the DP period and was, on the whole, centerright. TSK (Trkiye veren Sendikalar Konfederasyonu: Turkish Employers
Unions Confederation) had been established in 1962. In February 1968 DSK
decided to support TP. It also sympathized with and supported the activities of
radical leftist youth.
The rise of leftist movement among university youth and youth in general was
more significant compared to the leftist movement among workers. Leftism among
students commanded the majority at the time whereas among the workers it was a
distant second to center-right. The leftist university student movements started in
1967; it burst out in 1968 parallel to those in Western Europe, North America and
Latin America. The students were organized under Fikir Kulpleri (Idea Clubs) and
Fikir Kulpleri Federasyonu (Idea Clubs Federation). The First Idea Club was
founded in 1956 in Ankara; other universities and faculties followed and in 1965 the
federation was established. Student demonstrations, and activities escalated rapidly.
They were addressed against the USA, visits of USA warships, US ambassador,
against NATO, against EEC, against university administrations for reform, and
against private universities, calling for closure.
Since 1968 orthodox Marxism was the dominant ideology shared by TP. But
since 1968, a movement called Milli Demokratik Devrim (National Democratic
Revolution) began to gain ground. According to this group, Turkey was not ripe for a
socialist revolution because it had not entered the capitalist phase, but remained
quasi-feudal plus with a small class of compradors. Hence, first there should be an
anti-feudal, anti-imperialist revolution. This movement captured the majority in the
January 1969 congress of FKF. It soon changed its name to Dev-Gen (Devrimci
Genlik Federasyonu: Federation of Revolutionary Youth). But soon differences of
opinion proliferated, and different organizations were established just before the 12
March 1971 Military Memorandum.
To student unrest, demonstrations and anarchy, was added demonstrations
organized by DSK. AP and CHP changed the law on labor unions with a view to put
a lower limit to the number of workers to establish a separate union in order to
prevent the proliferation of unions. This bill was passed in the Parliament on June 11,
1970 with only TP voting against it. DSK interpreted it as a step to restrict their
1962-1973
49
confederation. Therefore, they organized demonstrations of workers on 15 and 16

June 1970 with huge numbers that reached thousands in Istanbul the first day and 150
thousand the next day in Kocaeli. Martial Law was established in the two provinces
and 21 DSK managers were brought under police supervision. TP, followed by
CHP, applied to the Constitutional Court to annul the changes introduced to the law
on labor unions. In February 1971 the Constitutional Court decreed in favor of
annulment.
Most interesting developments and changes also took place within the CHP
since 1965. In October 1965 nn, in an interview with famous journalist Abdi
peki (who was later killed by Aca) talked about ortann solu left-of-center
which was adopted in the 1966 party congress as the official line. The pioneer of leftof-center was Blent Ecevit. nn had warned, however, that CHP was never a
socialist party nor would ever be. Turhan Feyziolu, a centrist, expressed his
opposition; Turan Gne his acceptance. The congress elected nn as chairman and
Blent Ecevit as general secretary of the party. nn had thrown his full support
behind Ecevit against centrists led by Feyziolu who seemed to have the edge before
nn backed Ecevit squarely. The showdown in the next, 1967 party congress ended
in nns favor. Therefore, in April 1967 Feyziolu and friends, totaling 48 MPs and
senators resigned from CHP and established the centrist, pro Atatrk Gven Partisi
(GP: Reliance Party). Many more who remained within the CHP did not own the leftof-center but remained in CHP only because of their loyalty and allegiance to nn.
GP fared relatively badly in the 1969 elections, obtaining only 6.6% of the votes and
15 seats.
nn always favored an intensive version of tatism; he adopted the left-ofcenter stance at a time when Leftism rode very high among intellectuals, academia,
bureaucrats journalists and the youth. There was much confusion at the time about
the line separating orthodox Marxism with social democracy prevailing in the West.
Although nn had warned that left-of-center did not mean socialism, soon CHP,
though not nn personally supported the same slogans or supported those who used
the slogans that were anti private enterprise, anti FPC flow, NATO, USA and EEC.
In fact, the tide of a rigid interpretation of left-of-center eventually overrode nn
himself. In the May 1972 CHP party congress Ecevit was elected as chairman of
CHP instead of nn. In November 1972 nn had to resign from the party.
Just as when CHP of nn implemented an intensive version of tatism many
people had been led to believe that that version was Atatrks choice; so when CHP
accepted the left-of-center, many people were led to believe that Atatrk and the
initial 6 arrows (principles) of CHP represented a left-of-center stance. After all, at
that time one was deemed an intellectual and a reformer only if he or she was leftwing! But this is a mistaken notion. When Atatrk had won the war of independence
the notion of Turks as a nation was largely absent; the intelligentsia considered
themselves Ottoman. So Atatrk first had to build a nation, or to infect confidence in
Turks as a nation, and then to build a nation-state. And the nation-state had to be a
secular Republic against an overwhelming majority of people who preferred both the
sultanate and the caliphate; and if not the sultanate, at least the caliphate to remain.
50
Under these conditions, it was inconceivable that Atatrk would bring in any social
class preference, nor any dispute of left versus right. Atatrks war of independence
and reforms had no affinity whatsoever to the Marxist-Leninist revolution in Russia.
Atatrk, had fought against radical religious right; and he had expressly
rejected communism (Bolshevism); his relations with Enver Pasha, on the other hand,
reveal that Atatrk was very skeptical about the Pan-Turanist (Pan-Turkic)
movement. Unfortunately, however, political slogans, attitudes, tactics have distorted
this picture. Generally the left-of-center people are openly pro-Atatrk, many
considering Atatrk as left-of-center. There are centrists who are pro-Atatrk, but
they are in minority. The right-of-center parties usually stay way from endorsing
Atatrk lest religious votes would be lost. The radical religious is openly against
Atatrk while the radical left mostly state they follow Atatrk on the pretense that
their philosophy coincides with Atatrks! When we think that radical-left was antiprivate enterprise, FPC, NATO, EEC, USA it becomes obvious, however, these never
would be the intentions of Atatrk. The radical religious is against Atatrk for a
number of reasons. Firstly, Atatrk abolished the caliphate and banned the activities
of tarikats (religious orders); he also waived the sharia and introduced non-religious
Western codes. Furthermore, he changed the dresses of both men and women; the fez
and the veil was out. And finally, he was not a devout practitioner of Muslim rules.
But Atatrk have never thought of belittling religion; he probably was an implicit
reformer of habits around the religion; and a believer if not a careful practitioner.
5.3. MARCH 12, 1971 MILITARY

MEMORANDUM: REFORM
GOVERNMENTS AND REFORM LAWS
Mounting student unrest calling for reforms, and terrorist activities, and
mounting criticisms of the AP government for not implementing the reforms
stipulated in the 1962 Constitution prompted the highest echelons of the military to
use this time a novel, milder form of intervention. Instead of ousting the prevailing
parliament and government, on 12 March 1971 they submitted a Memorandum to the
parliament declaring that in view of the failures of the present government, a reform
government should be elected to take up the reforms stipulated in the Constitution
within the context of Atatrks vision and thinking (thereby obviously implying not
within the context of radical left). The Memorandum was submitted at a time when
many radical leftist intellectuals, e.g. Doan Avcolu and many others were
encouraging the military for a leftist and permanent intervention to democracy; and a
number of military at lower echelons did lean towards such a permanent intervention.
Obviously the radical leftist intellectuals thought there was no hope in Turkey for a
radical leftist revolution at the grass roots level since majority of workers, most of the
low-income and mid-income groups and farmers stood against it; their only hope was
a military junta.
1962-1973
51
Upon the subsistence of the Memorandum, Demirel immediately resigned

from Prime Ministry, declaring the Memorandum was unconstitutional. Cemal
Sunay, the former joint chief-of-staff who had been elected president in 1966 when
Cemal Grsel fell seriously ill, declared that the military was only doing its duty.
nn, chairman of CHP, the main opposition party, declared Demirels resignation
was democratic. Nihat Erim, a veteran politician was asked by Sunay to form the
reform government. He resigned from CHP and offered this reform cabinet for vote
of confidence in the parliament. His cabinet of 25 ministers included 5 MPs from AP,
3 MPs from CHP, 1 from MGP (National Reliance Party) and 14 others from outside
the parliament. He obtained the vote of confidence on April 7.
The chiefs-of-staff lost no time to oust the radicals in the military who were
planning a permanent leftist military takeover. They also clamped down hard on
radical leftist activists and terrorists (for instance, those who had kidnapped and
killed Israels Istanbul Consulate). Many radical terrorists went to trial and executed,
many were jailed. Many radical leftist intellectuals who had supported terrorism and
a military takeover were also jailed. The 1971 Memorandum also affected DSK,
whose development slowed down considerably.
Thus, the 1971 Memorandum could be interpreted as a careful balancing set.
It tried to halt radical leftist terror and a radical leftist military take-over attempt by a
minority of lower echelon military staff. But it also blamed the previous AP
government for failure to implement reforms and thus cause social unrest (leading to
anarchy and terrorism). When asking for the reform government to prepare the
reforms stipulated in the Constitution, it underlined they should be prepared within
the context of Atatrks vision, implying not that of radical left.
Nihat Erims reform government broke down when 14 ministers resigned
declaring it was impossible to carry out the reforms. Erim was succeeded by Ferid
Melen, a former CHP member and a centrist who had resigned from CHP when the
latter adopted the left-of-center stance; he was one of the founders of CGP
(Republican Reliance Party) and was minister of defense in Erims cabinet. And
Melens reform government was succeeded by Naim Talus. Talu was a minister
from outside in both Erims and Melens cabinet; he too was center to center-right.
Talus government finally prepared the reform laws, which were passed in the
parliament and thus general elections were held on October 14, 1973.
But prior to the elections, the military - or at least a group of military - suffered
a setback in the parliament in the election of the new president. Faruk Grler, who
had taken over as chief-of-staff after Memduh Tama had retired, became a
candidate for president when Cemal Sunays period was about to end. As the
commander-in chief of the army, Grler had his signature in the 1971 Military
Memorandum. He contacted the opposition parties and other MPs and resigned from
the military. One senator resigned and Grler was elected by Cemal Sunay as quota
senator, thus fulfilling the requirement that the president should be in the parliament
or the senate. But AP MPs in total voted for other candidates of their choice. So
Grler had to give up and withdrew from the election. Finally a compromise was
found as president in Fahri Korutrk, a former chief-of-staff of the navy and already
52
a quota senator. He was elected president by the parliament in April 1973; 14

October 1972 general elections were held when Korutrk was the president.
Of the two major reform laws one concerned the field of petroleum, and the
other was land and agricultural reform. Petroleum Reform Law No. 1702 accepted on
January 3, 1973 was radical in the sense that it changed the priority in petroleum
explorations and production to the public sector whereas the previous Law No.6326
put into effect during the DP period had given priority to the private sector and FPC.
It also prevented further expansion of refinery capacity of the private (and FPC)
sector. Although the principles accepted in Law No.1702 were radical, it still opened
room for a moderate implementation. Obviously, the majority of politicians,
intellectuals and the military seemed to agree with CHPs interpretation that
petroleum was a strategic field and should basically be a public sector. As will also
be taken up in the following chapter, in the subsequent years the law was interpreted
rigidly in favor of the public sector and against the private sector and FPC. As a
result, the adverse effects of 1973 petroleum price rises were compounded by
decreased domestic production.
Land and Agricultural Reform Law no.1757 was passed in June 25, 1973. It
stipulated that land should be continuously cultivated, production increased, farmers
with insufficient or no land should be distributed land, Land and Agricultural Reform
Cooperatives be established, land lease and partnership be regulated and model
villages be established. It envisioned expropriating large private lands for
distribution to farmers with no or insufficient land and not a mere distribution of vast
publicly-owned pasture lands. Implementation would be started in anlurfa (then
called Urfa) province as pilot. Either 287 decares (1 decare equals 1.000 m 2 or 0,247
acres ) non-irrigated, or 60 decares of irrigated land was to be distributed to each
landless family. The fate of the Land and Agricultural Law will be taken up in the
following chapter; suffice it to note here that it was annulled for good in 1978 during
Ecevit and CHP government.
5.4. ECONOMIC POLICIES AND

DEVELOPMENT STRATEGIES PURSUED
BY AP GOVERNMENTS, 1965-71
5.4.1. Industry: Encouragement of the Private Sector, DPIs
and of Assembly Industries
When in power, AP led by Demirel pursued the same liberal economic
regime and center-right economic strategies and policies as the inheritor of DP. This
meant, in principle, encouragement of private sector and of FPC flow. According to
the radical leftist intellectuals as well as the left-of-center CHP, therefore, this was
different from the requirements of the 1962 Constitution which stipulated a social
(welfare) state to be implemented as far as finances permitted; it was also against the
1962-1973
53
principle of mixed economic regime in which both the public and the private sector
would operate based on their profitability and productivity.
The strategy was again closed economy, import-substitute industrialization
with fixed exchange rates, leading to over-valued currency practices, quantitative
import restrictions particularly on consumer goods, high customs taxes, and export
premiums to alleviate export difficulties in view of low foreign exchange rates; in
short, it was interventionist and protectionist.
Since the industry already comprised 18.5% of GNP by 1964, the AP
government accepted it as the leading sector for growth and development. But since
during the AP period 1965 to 1970 services also had a high growth rate while
agriculture also showed satisfactory growth despite infrequency of good climate and
harvest years, by 1970 the share of industry in GNP had risen only to 19.9%. Many
manufacturing industry sectors had been established since 1953 mostly at the
assembly stage, assembling mostly imported inputs and components. In 1964, with
the initiative of SPO, the Ministry of Industry started to issue each year a Regulation
of Assembly Industries which facilitated the use of import quotas by the assembly
industries and were given import protection aimed at raising their domestic
production contents. The assembly industries included the automotive, electronics,
electrical home appliances, typewriters and calculating machines, telephone
exchanges, elevators. The AP government gave serious attention to raising the
domestic production content of assembly industries which meant domestic
production of components and inputs, including the motor. It is significant to note
that many of these sectors, foremost the automotive export extensively today,
including exports of component parts as well. But at the time this strategy was
severely criticized not only because these industries were at the assembly stage only,
but most had either FPC participation or worked with licenses obtained from abroad.
The criticisms came from both the radical left and also from the left-of-center CHP.
Many leftist observers argued that assembly industries were a means for foreign
firms to avoid quantitative import restrictions on consumer durables. Instead of
assembly-stage industries, it was advocated that heavy industries, and motor industry
should first be established, obviously with no FPC participation. It is interesting that
radical religious right, Erbakan and MSP also leveled the same criticisms at assembly
industries, again also suggesting heavy industries and motor industry should be
established first. The only difference between radical left and radical right was that
while radical left preferred production by the public sector, Erbakan and MSP was
only against the big industrialists in Istanbul. They preferred to encourage Anatolian
industrialists, very likely not from the point of view of improving the distribution of
ownership and income, but because they thought Anatolian industrialists could look
more favorably to a radical religious party. Critics of assembly industries, motivated
by the doctrine, were obviously mistaken as time showed.
54
5.4.2. Petroleum and Effects of the 1973 Petroleum Reform

Law
In the field of petroleum, following Law no. 6326 put in force in 1954 during
the DP period, many foreign companies had started entering Turkey for explorations
and drilling of wells. The share of FPC in this sector rose to 90-97% during 1956-59.
It began to decline gradually down to 62% in 1962. During 1955-60 FPC firms had
not yet entered production and all of production was carried by the public enterprise
TPAO (Trk Petrolleri A.O.). After returning to democracy in 1962 the share of
TPAO in explorations and drilling rose but in the production phase, the share of FPC
firms, particularly of Shell and Mobil started to rise, increasing from 18% in 1963 to
69% in 1969 and 72% in 1972.
Following the 1971 Military Memorandum the reform government had
enacted in 1973 a petroleum reform law no.1702 which had given priority in
petroleum production to the public sector as opposed to the private, the latter also
involving FPC firms, whilst further establishment of refineries by the private sector
was prevented. As a result, FPC firms gradually left production and their production
declined. TPAO production, on the other hand, was stagnant and hence could not
compensate the loss. Therefore, total production of petroleum declined. The only
private refinery that existed, ATA was taken over by the public sector in 1978 when
CHP was in power; Deniz Baykal had been the Minister of Energy at the time. Thus,
the 1972-73 petroleum crisis and oil price increases caught Turkey with a
considerably diminished domestic production versus increased consumption
requirements. Therefore, the precipitous increase in Turkeys petroleum import bill
that reached from 202.1 million dollars in 1973 to about 1.1 billion dollars per year in
1977, 78 cannot be attributed to petroleum price rises alone. In short, the wisdom of
the 1973 petroleum reform law was very questionable.
5.4.3. Construction Sector
Construction is another sector that received a boost during the AP period. In
1966 the AP government issued a law that permitted separate apartments within a
building to be owned separately and to be allowed a separate title. The law also set
the rules for joint administration of such a building. This opened the way for a
massive surge of construction of apartment houses in the cities. Apartments were sold
independently by the contractor. The contractor generally took on a patch of
building-land from the owner on promise of giving the landowner a certain ratio of
apartments to be built, and sold the rest to cover costs and reap profits. The rate of
growth of the construction sector during the AP period 1965-70 was above that of
GNP, industry and agriculture.
Another question related with the construction sector is the gecekondu
(squatter housing) problem. Rural to urban migration and the rise of squatter housing
in the periphery of big cities, particularly Istanbul, Ankara and zmir had started in
the 50s during the DP period. People migrating to the cities, and also those already
living in the cities as tenants built squatter houses on lands they did not own. In some
1962-1973
55
cases these were public (municipality) lands, in some cases there were private owners
and they divided their otherwise invaluable land and sold these patches for squatterhousing. During the DP and AP periods mayors were non-elected government
bureaucrats. The governor of the province was both the governor and the mayor.
Thus, the DP and later AP governments could easily supply transportation, water,
electricity, canalization to squatter-housing districts. It should be underlined here that
the squatter houses built were generally not shanties or slums. Most have by now
developed into busy, well-to-do districts.
But with the 1971 Military Memorandum the question of unplanned city
growth was taken up by the SPO. The SPO justifiably pointed that city growth should
not be haphazard; it should be planned; areas for social housing should be allotted
and infra-structure brought in first. The law no. 775 on the Prevention of Squatter
Housing became effective beginning of 1966.
In fact, however, the AP government did not quite implement the law no.775
(just as in the case of family planning law). Thus, squatter house districts continued
to expand and grow and their dwellers continued to get better off. In the longer run,
amnesties were issued for squatter houses and their titles were given. This was
another boost to the wealth of the squatter-house owner, in addition to the rent
obtained when municipality services were introduced to the district. The majority of
squatter-house owners voted for AP, and not CHP which contemplated proper city
planning, social housing, and bringing in infra-structure to social-housing districts in
advance.
5.4.4. Agriculture and the 1973 Land and Agricultural
Reform Law
Agriculture was another major field AP differed from left and left-of-center.
Following DP, AP was also consistently against land reform and instead preferred to
implement agricultural reform. And again like DP, AP was also effective in
improving the lot of the farmers in general through agricultural reform measures such
as subsidies, low priced agricultural inputs produced by SEEs, low interest rates on
agricultural credits and high support premiums on exports. Thus, agricultural sector
enjoyed significant growth during the AP period despite infrequent good climate and
harvest years. In contrast to AP and previously DP, CHP stressed land reform,
expropriations - beyond a certain limit - of big private lands and distributing them to
the landless and farmers with insufficient land. As mentioned in the preceding section
and the chapter on DP period, however, small farmers and even the much less
populous landless had benefited substantially from agricultural reform since they
could rent land for cultivation. Different regions showed different traits. Renting was
common practice in the Mediterranean, the Aegean and Marmara regions. The Black
Sea region was comprised only of small farms but they all benefited greatly from
high support prices on tobacco, tea, hazelnuts. The Eastern and South-eastern regions
on the other hand, showed closer tribal relations. Thus, although CHP stressed land
reform in the elections, the rural population as a whole voted overwhelmingly in
favor of AP as they had done for DP. But there was a big difference compared to the
56
DP period. The 1962 Constitution had explicitly stipulated land reform. Therefore,
this time the left-of-center CHP and left-leaning intellectuals stressed the point that
by neglecting to implement land reform AP was breaching the Constitution. After the
12 March 1971 Military Memorandum, therefore, the reform governments had
passed a Land and Agricultural Reform Law and pilot implementation had been
started in Urfa.
In Urfa 1.61 million decares of irrigated land belonging to 1.613 families with
large lands were expropriated; of this, 231 thousand decares were distributed. The
number of farmers who registered for getting land was about 75 thousand, of which
only 10.507 could be investigated and 5.404 were deemed eligible to get land.
Agricultural production in Urfa fell sharply; Urfa experiment was far from
satisfactory and far from successful.
Since the law had been voted in the parliament with insufficient time allotted
to discussions, the law was brought to the Constitutional Court by AP with this
formal charge in May 1976. The Constitutional Court was careful; it gave the
parliament one full-year in which to prepare a new land reform law, after which whether a new land reform law was accepted in the parliament or not the old law
would be annulled due to its formal constitutional defect. At the time the term
expired Ecevit, outspokenly pro land reform was Prime Minister and CHP was in
power but a new was not prepared. So, an important topic like land reform was
reduced to much ado about nothing.
5.4.5. Closed Economy, Import-Substitute industrialization
Strategy and 10 August 1970 Devaluation
The AP governments led by Demirel throughout 1965-70 and the reform
governments following the 1971 Military Memorandum throughout 1971-73
continued to follow closed economy, import-substitute industrialization strategy. This
strategy had been followed, in fact, since the foundation of the Republic. Domestic
industries that were established and that addressed mainly the domestic market were
protected by means of high customs taxes, quantitative import restrictions or
prohibitions. In addition to protectionism, domestic industry as well as the
agricultural sector and farmers were encouraged by price, interest and credit
subsidies. Since fixed exchange rate regime was implemented throughout, exports
were encouraged by export subsidies, tax rebates, premiums, etc. Whenever balance
of payments deficits rose to critical levels and IMF and WB support were needed, a
high rate of devaluation was effected along with a stabilization program to prevent
budget deficits and inflation. It was hoped that devaluation and stabilization efforts
(e.g. elimination of price subsidies on inputs produced by SEEs) would give rise to a
once-and-for-all cost inflation immediately after the devaluation; but subsequently
budget deficits and demand inflation would be reduced for good or for quite some
time.
There were, however, still radical differences of economic regime between
different periods. For instance, during the nn period, 1939-1950 it was the public
sector and SEEs which were protected while the private sector subsidies and
1962-1973
57
encouragement measures were canceled and private firms and traders were strictly
controlled against speculation and black marketing. In the case of DP 1950-60,
encouragement by protectionism and interventionism was directed in major part to
the private sector, including firms with FPC participation. Most of the importsubstitute industries had been basic industrial and agricultural materials and inputs
while durable consumer goods (the automotive, electronics, electrical house
appliances, etc.) were newly established, mostly at the assembly stage.
In fact, in the first years of DP period, 1950-53 Turkey had lapsed from closed
economy and protectionism but only for a brief period, during which trade was
liberalized in conformity with GATT requirements. This was at time when Turkey
enjoyed favorable terms of trade due to the Korean War. Once the favorable terms of
trade ended and a bad climate and harvest year followed, Turkey faced serious
balance of payments problems. Thereupon, the DP government changed back to
protectionism, and import-substitute industrialization from 1954 on.
During the AP period protectionism and subsidies were again directed mainly
to the private sector, including firms with FPC participation. But the consumer
durables, or the assembly-line industries in general, of which some also manufactured
investment goods (e.g.: tractors, telephone exchanges etc.) were given a serious
boost. As their capacity were expanded so did their domestic production content,
implying that many input or component parts industries also began to be established.
So much so, that such durable consumer goods as the refrigerator, the electrical oven
and next, the washing machines received widespread use, low-income rural
households included. Next on the line came washing machines, elevators and cars.
Encouragement of agriculture and increased income of farmers, the proliferation of
apartment houses and apartments with independent titles, squatter-housing districts
all aided to this trend.
The AP also expanded public investments in basic industrial and agricultural
materials and intermediate inputs as well as productive infra-structure, including
dams and highways.
The growth rate during the AP period was not outstanding but satisfactory and
yearly price rises and inflation rate very mild. But since the price rises were higher
than those rises in the developed world Turkey traded with, the fixed exchange rates
started making the lira grossly over-valued (the US dollar under-valued). The
expansion of import-substitute industries, the consequent rise in the demand for
imports of inputs and component parts - despite the increase in domestic input
production and increase in the domestic-production-content of assembly line
industries - also contributed to the balance of payments crisis. IMF advised a
devaluation and implementation of a single exchange rate instead of multiple
exchange rates. The business community in general preferred the low exchange rate
for imports and raising of subsidies on exports. The radical left, on the other hand,
argued that the best strategy to avoid balance of payments crisis in future would be to
establish heavy industries and thus obviate the need for imports of basic industrial
and agricultural materials and intermediate goods. Obviously they were influenced by
the industrialization strategy followed by Stalin in USSR. The AP government, in
58
turn, resisted the devaluation for a long time and instead allowed higher tax rebates
and premiums for exports while increasing the cost of imports by raising customs
taxes. But since the crisis persisted, finally it had to seek the assistance of the IMF
and the WB. Hence, on August 10, 1970 it implemented a large-scale devaluation,
raising the value of the US dollar from 9 TL to 15 TL (66.7%). The actual or the
effective devaluation rate, however, was lower, about 40% since in imports some
taxes and fees were canceled while exports subsidies and tax rebates were also
reduced. Following the devaluation and implementation of a stabilization program
involving reducing subsidies and hence the budget deficit, there was a marked
improvement in Turkeys balance of payments; the current account deficit was
reduced. In view of the fact that only shortly after the devaluation we had the 12
March 1971 Military Memorandum and reform governments, we should conclude
that the Military Memorandum had not given rise to uncertainties; on the contrary, it
most likely decreased uncertainties because anarchy, that is, terrorist activities and
demonstrations ended. Thus, the growth rate for 1971-73, the years of reform
governments, was also high.
It would be interesting to compare shortly the August 10, 1970 devaluation
with the devaluation implemented by the DP government in 1958-60. In the latter
devaluation the (naked) rate of US dollar had been raised from 2.80 TL to 9.00, on
the surface, a 222% increase. But again since along with the devaluation previous
abnormally high rates of customs taxes and export subsidies were lowered
substantially, the effective rate of devaluation was about 71.5%, which is still
considerable. The 1958-60 devaluation, however, did not improve the balance of
payments and the economy much. The likely reason is that, again following the said
devaluation, on May 27, 1960 we had a military intervention. The military
intervention at the time raised, not alleviated uncertainties; private investments and
consumption wavered while public expenditures also staggered.
5.4.6. Family Planning, Its Implementation and
Implications
After the War of Independence, due to human loss during the successive wars
and the low level of population (13.5 million according to the first census made in
1927), births were encouraged. Accordingly, use of birth control methods and pills
were prohibited. But after the end of the World War II the population growth rate
increased rapidly to 21.7 for 1946-50, 27.8 for 1951-55, 28.5 for 1956-60
and 25.2% for 1961-65. This was caused mainly by the widespread implementation
of health measures which led to a rapid decline in crude death rates while the crude
birth rates remained at the old, high level. Increased income and knowledge of lowincome groups may also have played a role. Thus, the level of population reached
20.8 million in 1950, 23.9 million in 1955, 27.5 million in 1960 and 31.2 million in
1965. This rapid increase in population was parallel to developments in other
developing countries and had given rise to fears of population explosion or
population bomb. Hence, international organizations directed aid to voluntary
family planning programs in these countries. Concurrently, the Turkish government
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59
too passed a law in April 1965 that encouraged voluntary family planning, citing
rightly that high population growth rates and high levels of population decreased the
income growth rate, per capita income growth rate and increased unemployment.
The law let the use of birth control pills and methods free while abortion was allowed
only for health reasons. The Ministry of Health was given the responsibility to spread
knowledge medical expertise plus pills, etc. to those families which wanted to limit
the number of their children; NGOs to work on this problem were also encouraged.
But the actual implementation of the law was far from efficient. This was
partly due to the fact that the government lacked proper finances and organization
despite international aid received for this purpose. But another important reason was
that a large segment of religious circles did not believe in birth control (they believed
the religious motto was every one is born with his/her means of sustenance; which
probably was right millenniums ago). High birth rates, relatively high death rates and
high population growth rates were witnessed particularly in the poorer rural areas.
The low-income groups that had migrated to the cities, on the other hand, were
forced to limit their children because of obvious economic reasons. In contrast, in the
villages raising children was less costly and rural low-income groups believed that a
higher number of children increased their future economic potential. The AP
government most likely did not wish to arouse the antagonism of religious circles,
nor act against the instincts of low-income rural population. And this could be
another factor why it did not enforce family planning in an effective manner.
Birth, death and population growth rates differed according to low vs. high
income groups and education level, rural vs. urban population, and hence also
according to regions. Also generally women even among low income, rural
population preferred family planning but men did not and it was the decision of the
latter mattered. Radical nationalists, on the other hand, approached the question from
a different angle. They observed that high population growth rates persisted
particularly among the Kurdish population. Hence, they advised high birth rates to
counter-balance this tendency. Likewise, many Kurdish separatists also advised that
the Kurdish population should keep their high birth rates in order to increase their
voice and strength. Of course, the Kurdish population lived mostly in the poorest
rural areas and this was the major reason why they had high birth rates. Those
Kurdish population who migrated to the cities, however, decreased their birth rates
immediately.
The birth rates and the population growth rate began to decrease in Turkey not
due to the implementation of the family planning law but as urban population,
literacy rate and incomes increased over time. For the period 1960 to 1990 the
decrease was gradual but after that the fall in the population growth rate was more
pronounced though still higher compared to the zero or near zero rates in the
developed countries.
60
5.5. TURKEY-EEC RELATIONS: ENTRY INTO

THE TRANSITION PERIOD AND THE
ANNEXED PROTOCOL
Another serious difference of opinion and vision between AP vs. CHP and the
left arose on Turkeys relations with the EEC. Ankara Treaty that had become
operative since 1964 recognized a five-year preparatory period that could be
extended six more years, to be followed by the transition period. Unlike the Athens
Treaty of 1962 which had made Greeces full membership automatic at the expiration
of the transition period, the Ankara Treaty underlined that Turkeys membership by
the end of the transition period would be optional, depending on the decision of the
two parties. This was understandable in view of the fact that Greece had a much
smaller population and a higher per capita income compared to Turkey. The Ankara
Treaty devised by the DP government had been accepted in the Turkish parliament at
a time when nn as chairman of CHP was Prime Minister. The preparatory period
stipulated unilateral aid to Turkey, EIB credit as well as import quotas to Turkeys
major export items such as tobacco, dried grapes, dried figs, and nuts, extended later
to cover a number of fresh food items, wines, etc. (witness the breakdown of
Turkeys exports at present). Customs union was to be achieved gradually in the
transition period, hence in the transition period the burdens were reciprocal and
Turkey was to bring down customs taxes on EEC imports to zero, waive quantitative
restrictions on EEC imports and comply with the EECs Common Customs Tariff to
third parties.
The 5 years for the preparatory period ended in 1969 and the AP government
in power at the time had to decide whether Turkey should go into the transition
period and assume customs obligations or to extend it for another six years as
allowed in the Ankara Treaty. It was a hard choice not only because of political and
doctrinaire smog that covered the subject but also because the Turkish economy was
passing through hard times with respect to its balance of payments. In fact, the same
balance of payments difficulties would force the AP government to implement a
large-scale devaluation and put in effect a stabilization program in August 10, 1970.
Despite the prevailing balance of payments difficulties AP decided not to prolong the
preparatory period for another 6 years but enter the transition period immediately. In
the September 1968 meeting of the Mixed Parliamentary Council in Ankara, a
consensus of EEC and Turkish MPs was formed to advise immediate entry to the
transition period. Consequently, the Membership Council that convened in Brussels
in Nov. 1969 decided in favor of an immediate entry. Thereupon an Annexed
Protocol was prepared which set out in detail the terms and conditions of the
transition period. In the final version of the Annexed Protocol the EEC was to bring
down customs taxes on Turkish industrial exports down to zero immediately, the
quotas on Turkish textiles to be set at comfortable limits. The EEC would continue to
give a limited amount of developmental aid. It also made the social insurance
1962-1973
61
payments to Turkish workers working in the EEC transferable to Turkey. In turn,

Turkey had to bring down its customs taxes on EEC exports within a large span of
time. For 20% of Turkeys exports in 1967 of basic materials and investment goods
not manufactured in Turkey the term was 8 years; for 35% comprised of consumption
goods the term was 12 years; and for the rest comprising of 45% it was 22 years.
Quantitative restrictions on EEC exports was to be removed and trade liberalized also
within 12 and 22 years. Similarly, Turkey had to comply with the Common Customs
Tariff to third party countries again within 12 and 22 years.
Since the drawing of the Annexed Protocol took time, the preparatory period
had to be extended one more year. The Annexed Protocol was signed on November
23, 1970 again when the AP government was in power. It became operative starting
January 1, 1973 at the time of reform governments. Since in 1973 the 6 had became 9
with the membership of UK, Ireland and Denmark, an Additional Protocol had to be
drawn to include the new members in the customs union program.
The decision of the AP government to enter the transition period was also
shared by the Turkish business, big and small. In contrast, both the center-left CHP
and radical left - as well as the religious right - were firmly opposed. They pointed
out that extending the preparatory period another six years would be beneficial
because Turkey would get unilateral aid and thus strengthen her industry. Otherwise,
they argued, the Turkish industry would collapse under competition from the EEC.
The radical left was more outspoken; they considered that EEC would be a means of
exploiting the Turkish economy. They did not, of course, intend to protect the private
industry from EEC competition but a future Turkish industry that consisted only of
public sector. Since even at the present Turkey is still far away from fullmembership, the uninitiated may reason in retrospect that extending the preparatory
period could have been the better option. But this is not so; at that time Turkeys
membership did not meet the strong resistance it faced in the later years. Spain,
Portugal were under military dictatorship; Switzerland and Scandinavian countries
distanced themselves from application; Eastern European Countries were all under
Russian domination. And Turkey was a willing European Country in democracy. The
EEC at the time targeted a customs union and had not proceeded towards a political
union also with emphasis on human rights. Moreover, the Annexed Protocol had
allowed a long period for Turkeys transition. And full membership according to
Ankara Treaty was not automatic by the end of the transition period. This gave the
Turkish economy an extra option.
62

DURING 1962-1973
5.6.1. Growth Performance of the Economy, 1962-64
The yearly price increases (implicit GNP index), GNP, population and per
capita GNP growth rates during nn and CHP-led governments, 1962-64 are
submitted below in table form:
GNP
Population
Per capita GNP
Years Price increases growth rate
growth rate
growth rate
1962
9.5%
6.2%
2.7%
3.5%
1963
5.7
9.7
2.6%
7.1
1964
2.6
4.1
2.5
1.6
Source: SIS, ibid.. p.405-6.
The figures indicate that return to democracy had a favorable effect on the
economy. It also implies that the public (economic actors) as a whole trusted both the
military and the CHP and that a political disaster would not be in the works. That the
overwhelming majority would not have wanted a permanent military takeover, or that
they favored the DP and its would-be inheritor over CHP is another matter.
The average yearly GNP growth rate for 1962-64 (3 years) was 6.6%, average
yearly population growth rate was about 2.6%, hence average yearly per capita GNP
growth rate 4.0%, and average yearly price increases 5.9%.
The average population growth rate for the years in question was 2.6% having
registered a slight decline from 2.8% for 1955-60. Thus, although the population
growth rate was still high, per capita GNP growth rate was still quite satisfactory.
In 1961 population level was 28.536 thousand (mid year). By 1964 population
level was 30.724 thousand (mid year); rural population was about 65%, urban 35%.
The total level of employment was 12.874 thousand, of which 12.269 thousand was
civilian, 530 thousand military and 75 thousand worked abroad. Workers had begun
to work abroad, firstly in Germany since 1961. Excess labor was 1.134 thousand or
8.6% of total labor supply of 13.228 thousand. Of this excess labor, 780 thousand
was agricultural, 35 thousand non-agricultural. (SPO yearly programs). In 1964
agricultural sector comprised 33.9% of GDP (in current prices); industry 19.2% of
which manufacturing was 16.5%; services 46.9% of which construction was only
5.3%. As can be followed from above, the major bulk of industry was manufacturing
while mining, and electricity, gas and water comprised a very small percentage. In
terms of employment, however, the agricultural sector was dominant, with about
76%; this figure included the excess labor or disguised unemployment in agriculture.
Turkey retained its closed economy character with very small levels of imports
and exports.
63
1962-1973

Yearly increases in the price level (implicit GNP index), GNP, population, and
per capita GNP growth rates for 1965-70, AP government period is submitted below
in table form.
GNP
Population
Per capita GNP
growth rate
growth rate
1965
4.3%
3.1%
2.5%
0.6%
1966
6.4
12.0
2.5
9.5
1967
6.5
4.2
2.5
1.7
1968
3.9
6.7
2.5
4.2
1969
7.8
4.5
2.5
2.0
1970
8.6
4.8
2.5
2.3
Source: SIS, ibid., p.406-7.
The average yearly GNP growth rate for 1965-70 (6 years) was 5.8%, with a
population growth rate of 2.5% the yearly per capita growth rate was 3.3% and
yearly average price increases 6.2%. There was a slight rise in price increases in the
last two years, but even they were only mildly inflationary. The yearly GNP growth
rate was not remarkable, yet not unsatisfactory. The slight fall in the later years is
partly affected by balance of payments problems and failure to execute a timely
devaluation. But political unrest must have also affected the growth rate negatively
by sustaining uncertainties.
By 1970, the share of agriculture in GDP was 35.7% (in current prices),
industry was 17.7% and services 48.5% of which construction was 6.0%. Again the
major bulk of industry, 15.8% was manufacturing.
The increase in the share of agriculture and the decline in the share of industry
stemmed from relative rise of agricultural prices over the industrial during the period
in question. In 1987 prices, for instance, the share of agriculture in GDP in 1964 was
32.4%; in 1970 it was 30%, The share of industry in 1964 was 18.4% and in 1970 it
was 20.3%. These ratios in constant prices showed a gradual decrease in the share of
agriculture and a gradual increase in the share of industry during 1964-70.
By 1970 total population was 35.321 thousand (mid year), of which 38.3%
was urban and 61.7% rural.
The yearly price increases (implicit GNP index), GNP, population and per
capita GNP growth rates during the reform governments period, 1971-73 are
submitted below in table form:
Years Price increases

1971
11.7%
1972
11.0
1973
20.0
Source: SIS, ibid., p.407-8.
GNP
growth rate
7.3%
9.6
5.1
Population
growth rate
2.5%
25
2.5
Per capita GNP

growth rate
4.8%
7.1
2.6
64
The average yearly GNP growth rate for 1971-3 (3 years) is 7.3%, with a
population growth rate of 2.5%, the average yearly per capita growth rate is 4.8%
and yearly price rises 14.7% These magnitudes indicate that the Military
Memorandum and the ushering in of reform governments did not cause economic
stagnation. On the contrary, political unrest and uncertainties caused by
demonstrations and terrorism activities had subsided. Another factor that affected the
growth rate positively was the 10 August devaluation and amelioration of the balance
of payments problems. Both the devaluation and the decreasing of subsidies and
raising the prices of SEE produced inputs played a predominant role also in the high
yearly price rises during this period.
If, therefore, we combine the performance of the economy for the entire period
1965-73 (9 years), then the yearly averages becomes 6.3% for GNP growth rate,
3.8% for per capita GNP growth rate and 9.4% for yearly price increases.
By 1973 the share of agriculture in GDP (in current prices) had declined
further to 30.8%; industry had risen to 19.0% of which manufacturing was 17.1%;
services sector was 50.2%, of which construction constituted 5.4%.
Total population by 1973 was 38.386 thousand (mid year) of which about
40.5% was urban, 59.5% rural.
By 1973, the cumulative number of workers sent abroad by the labor
Placement Office reached 790.3 thousand, workers who went abroad with tourist
visas, or by other means excluded.
In 1962 total civilian employment was 11.951 thousand, of which, 2.735
thousand (22.9%) was non-agricultural, 9.216 thousand (77.1%) agricultural. Nonagricultural surplus labor was 235, agricultural surplus 750 and total labor surplus
985 thousand; the latter was 8.2% of total civilian employment. By 1973 total civilian
employment was 13.810 thousand, non-agricultural employment 5.050 thousand
(36.6%), agricultural employment 8.760 thousand (63.4%). Non-agricultural surplus
labor was 724, agricultural surplus labor 840, total labor surplus 1.564 thousand; the
latter 11.3% of total civilian employment. There had been a gradual decline in
absolute terms in agricultural employment although it still comprised the major bulk
of employment, and a gradual increase in non-agricultural employment. Productivity
in non-agricultural employment in 1973 was about 5.67 times that in agricultural
employment. This denotes a slight decrease compared to 1962, that is, a small change
in favor of agricultural. But, it was still far less productive compared to the nonagricultural sectors.
Chapter 6
UNSTABLE GOVERNMENTS
AND TERRORISM:
1974-1980
6.1. RESULTS OF ELECTIONS, COALITION

AND MINORITY GOVERNMENTS FORMED
6.1.1. Ecevits CHP-MSP Coalition
The major reforms having been completed by the reform governments, new
general elections were held on October 14, 1973. The results of the elections were as
follows: participation ratio was low: 66.8%. CHP led by Ecevit obtained 33.3% of
the votes and 185 seats out of 450 in the parliament under the proportional system of
counting implemented. AP led by Demirel obtained 29.8% of the votes and 149 seats;
MSP led by Erbakan (radical religious right) obtained 11.8% of the votes and 48
seats; Dik.P led by Bozbeyli (splinter from AP, center-right) obtained 11.9% of the
votes and 45 seats. CGP led by Feyziolu (splinter from CHP, center) obtained 5.3%
of the votes and 13 seats; MHP led by Trke (radical nationalist right) 3.4% of the
votes and 3 seats; TBP had obtained 1.1% of the votes and 1 seat; MP 0.6% of the
votes and no seats. The latter two parties had also participated in the 1969 general
elections. Independents received 2.8% of the votes and 6 seats. Socialist TP (Turkey
Workers Party) and center-right YTP (New Turkey Party) were out. MPS was newly
established as a follow-up of the former MNP, again led by Erbakan.
66
Concurrently 1/3 senate renewal elections were held and similar results were
obtained. CHP received 33.6% of the votes and 25 seats out of a total of 52, AP
received 31% of the votes and 22 seats; MSP 12.3% of the votes and 3 seats; CGP
5.9% of the votes and 1 seat; Dik.P received 10.5% of votes, MHP 2.7% and TBP
2.1% but none of the last three parties could obtain a seat in the senate.
Since no party had obtained the absolute majority in the parliament, a coalition
government had to be formed. The president, Fahri Korutrk gave the job first to
Ecevit who failed, then to Demirel who also failed because Dik.P, splinter from AP,
was not sympathetic to Demirels prime ministry. The job of forming a government
was then given to Naim Talu, formerly PM of the last reform government, who also
failed. Meanwhile, in the local elections held on December 9, 1973 CHP scored
another victory. By that time it had become evident to CHP that MSP could be the
key to a coalition. They reasoned that MSP shared many of the views of CHP, except
that they were using Islamic motives. So CHP and MSP came to an agreement to
form a coalition mid-January 1974 with CHP filling 18 ministerial posts, including
Ecevit as PM and MSP filling 7, including Erbakan who would become state minister
and aide to PM On February 2, 1974 CHP-MSP coalition government obtained vote
of confidence in the parliament. But soon deep differences between the two parties
surfaced. It remained in power, however, because the Cyprus question had erupted
and the Turkish government intervened Cyprus militarily, acting under the London
Agreement. Following the military operation, which was considered successful by
the overwhelming majority of Turkish public opinion, Ecevit resigned and forced the
breaking up of the CHP-MSP coalition. He evidently intended not only to get rid of a
burdensome coalition partner but also to induce early general elections and cash on
his growing popularity. But MPs and the parliament resisted against early elections
and continued, so the CHP-MSP coalition also had to continue for some more time.
Sadi Irmak was asked to form a coalition government and failed; so did Ecevit, then
Demirel, followed by Sadi Irmak again who formed a government including
ministers from outside. Though his government also lost vote of confidence it
remained in power for about 3.5 months.
6.1.2. Demirels 1st Nationalist Front Coalition
Meanwhile Demirel was finally able to forge a coalition, called later the 1 st
Nationalist Front (Milliyeti Cephe). The coalition comprised of AP, MSP, CGP and
MHP. But, during the cooperation and coalition negotiations, 9 MPs led by Saadettin
Bilgi resigned from the Dik.P which resisted entering the coalition with Demirel as
PM The resigned declared that under the prevailing conditions and threat of
communism, they would support a non-left coalition government as independent
MPs. Thus, the absolute majority of the Demirel coalition was ensured and the 1st
Nationalist Front government obtained vote of confidence on April 2, 1975. The
coalition government comprised of 16 ministers (including PM) from AP, 8 from
MSP, 4 from CGP and 2 (out of 3 MPs) from MHP. It remained in power till June 5,
1977 general elections. During the 1st National Front government period anarchy,
demonstrations and terrorism steadily escalated.
UNSTABLE GOVERNMENTS AND TERRORISM:
1974-1980
67
In the early general elections held on June 5, 1977 CHP again came out first by
a wide margin, slightly short of capturing the absolute majority in the parliament. The
participation ratio was 72.4% and again proportional system of counting was
implemented. CHP received 41.3% of the votes and 213 seats out of 450. AP had
also increased its votes to 36.8% but still it was the second largest party in the
parliament with 189 seats. MSP votes had gone down to 8.5%, seats obtained was 24;
CGP was also down to 1.9% of the votes and 3 seats. MHP votes had increased to
6.4% and they had obtained 16 seats. Dik.P votes had gone down to 1.9% and they
had obtained only 1 seat; independents had obtained 4 seats. TBP had obtained only
0.4% of the votes and TP only 0.2% of the votes and no seats.
In the concomitant 1/3 senate replacement elections similar results were
obtained. CHP received 42.3% of the votes and 28 seats out of 50; AP 38.3% of the
votes and 21 seats; MSP 8.4% and 1 seat, MHP with 22%, Dik.P with 2.2%, CGP
with 1.9% and independents with 0.1% of the votes had obtained no seats.
6.1.3. Demirels 2nd Nationalist Front Coalition
Following the 1977 general elections and the resignation of Demirel, Korutrk
asked Ecevit to form a government but his proposed government of CHP and
independents failed to obtain vote of confidence. In August 1, Demirel was able to
forge yet another coalition called the 2nd Nationalist Front coalition of AP (17
ministerial posts), MSP (8 ministerial posts) and MHP (5 ministerial posts) and
obtained vote of confidence. CGP this time had refrained from entering the coalition
on grounds its participation in the former 1.NF coalition had caused a shrinking of its
votes.
During the time the 2nd NF government was in power, terrorism again
continued to increase, so much so that few resignations of MPs from AP began. The
strong showing of Ecevit and CHP in the municipality elections held on December
11, 1977 increased such resignations which totaled 11 by December 20 and the
coalition was left with only 218 MPs in the parliament, quite below the absolute
majority. Therefore, CHP submitted a ministerial inquiry and the non-confidence
votes ended Demirels 2nd Nationalist Front government.
6.1.4. Ecevits Government of CHP + 11 MPs
This prompted Ecevit to try forming a CHP government by transferring MPs.
Those who resigned from AP promised to lend support to CHP. 9 out of the 11 MPs
who had resigned from AP plus another independent were nominated ministers in
Ecevits new cabinet; thus it received vote of confidence in the parliament on January
17, 1978. But it had a very thin majority of 229 vs. 218. Along the way difficulties
arose, some ministers had to resign. But worse, the economic difficulties were
accentuated while terrorism continued. Worsening economic difficulties led Ecevit to
suspend Turkeys customs union obligations to EEC unilaterally at a time when
Greece had applied for full membership. Ecevit at the time was fond of using slogans
that meant the EEC would exploit Turkeys economy. The worsening economic
conditions and commodity shortages, and continued terrorism must have caused a
68
change in public opinion. For, in the November 14, 1979 senate partial replacement
elections, this time AP scored a definitive victory over CHP. The participation ratio
in the said election was 70.5%. AP received 46.8% of the votes and 33 seats in the
senate out of a total renewal seats of 50. CHP received 29.2% of the votes and 12
seats; MPs 9.7% of the votes and 4 seats; MHP 6.6% of the votes and 1 seat.
Moreover, in the MP replacement elections AP received 54.1% of the votes and all
the 5 vacant seats in the parliament.
6.1.5. Demirels AP Minority Government
In view of the results of the elections Ecevit immediately resigned and
Korutrk gave the task of forming a new government to Demirel. Demirel this time
managed to form a minority government of AP, supported from outside by MSP,
MHP and Dik.P; it received vote of confidence in the parliament by 229 vs. 208 on
November 25, 1978. Demirels minority government had to implement a large-scale
devaluation and a stability program on January 24, 1980. He appointed Turgut zal
as under-secretary to PM and with ministerial powers to oversee the economic
operations of the devaluation and the stability program. Meanwhile, terrorism and
anarchy continued to mount. When Korutrks term as president expired, the
parliament could not agree on a candidate to elect a new president. Instead, AP let
hsan Sabri alayangil, a senior AP member and Chairman of TBMM to carry out
the duties of the presidency as deputy. Neither could the two parties, AP in power
and CHP as main opposition could cooperate to enact legislation and act effectively
to prevent terrorism. When Kenan Evren, joint-chief-of-general-staff at the time
asked for such a legislation CHP faulted the radical rightists exclusively for
terrorism, and AP the radical leftists. Both blamed the other party and movement as
the sole culprit. Therefore, the military felt compelled to intervene yet again on 12
September 1980. This ended Demirels minority government.
6.2. MAJOR POLITICAL PARTIES AND THEIR

STANDS
A brief survey will be offered in this section about major political parties and
their stands during the period 1974-80 in order to accentuate the political framework
of the economy at the expense, however, of becoming at times repetitive. Political
fragmentation, rising radical doctrines of both left and right, one-sided and
uncompromising attitudes of political parties, unstable government coalitions,
mounting anarchy and terror, support of radical leftist terror by the supposed centerleft and support of radical rightist terror by the supposed center-right form the basis
from which grave political problems have arisen, paving the way unavoidably to the
12 September 1980 Military Intervention.
1974-1980
69
6.2.1. CHP
Even by 1972 there had occurred in CHP a difference between the views of
nn and those of Ecevit, hence an internal struggle. nns views were a mix of
tatism, Kemalism and a less radical interpretation of left-of-center. Ecevits
interpretation leaned more towards radical left. In the May 1972 party congress
nns candidate for general secretary lost to Ecevit upon which nn resigned
from party chairmanship. This was a big event considering nn was an historic
figure. Soon after, nn died, aged 89, on December 25, 1973.
nns resignation gave Ecevit a free reign to carry the interpretation of leftof-center further towards radical left as party doctrine. He also was influential in
inducing the acceptance of this interpretation among already receptive intellectuals,
bureaucrats and university students as well as a minority part of workers. Ecevit
excused demonstrations and terrorism by radical leftist students on grounds it sprang
from the economic and social plight of the country brought about by rightist policies.
In fact, however, behind the scenes ethnic separatists who claimed Marxism were a
strong force triggering these demonstrations, terrorism and anarchy.
Ecevits popularity and the votes of CHP increased throughout this period up
until 1979. In the Oct. 1973 general elections, CHP, campaigning with the slogan that
they would change the social order obtained 33.3% of the votes, capturing 185
seats in the parliament out of a total of 450. In the Oct. 1969 general elections, for
instance, CHP under nn had obtained only 27.4% of the votes and 143 seats. In
the June 1977 general elections CHP under Ecevit obtained this time 41.4% of the
votes and 213 seats, slightly short of absolute majority. But in the 1979 senate
elections CHP obtained only 29.1% of the votes and 12 senate seats out of 50 as
opposed to APs 46.8% and 32 seats. A similar setback was registered in the Oct.
1979 intermediary (replacement) parliamentary elections in which AP obtained 5
seats against zero for CHP.
One reason for Ecevits increasing popularity throughout the 70s up to 79
was his oratory skills. The second reason was left-of-center, interpreted as
somewhat towards radical left was on the rise among intellectuals, bureaucrats,
university students and urban population, including a small part of workers. This
comprised a more educated section of voters compared to that of AP which was
mainly rural. The third reason was, Ecevits and CHPs main rival, Demirel, AP and
votes at the right of political spectrum splintered even more. Coalition governments
formed by center-right AP and radical rightist parties were not promising either, if
not even less promising. The fourth reason was that Ecevits 1974 Cyprus operation
was considered successful and approved by the Turkish population. The Cyprus issue
has not been not solved since, up until the date this book is written, but this was not
foreseen at the time. Still another reason why CHP votes increased was some voters,
wary of military interventions taking place always when a center-right party was in
power (DP or AP), or more correctly when CHP, the party founded by Atatrk was
not in power, may have preferred to vote for CHP in order to avoid such
interventions.
70
The party slogan left-of-center was later changed to democratic left. The
latter terminology was first taken up in the 1970 party youth convention and accepted
as official party slogan in the Dec. 1974 general congress. Whatever the slogan,
Ecevits and CHPs stance leaned towards radical left; at least he sympathized with
and defended the radical leftist demonstrations. His ideology visualized an economic
development strategy based on the public sector as opposed to encouragement of the
private sector and FPC flow. For instance, the principle for FPC was encouragement
but control. In fact, however, controls that CHP devised meant effective
discouragement. Intensive interventionism, protectionism and a closed economy
model was maintained. APs strategy of establishing assembly industries,
assembling mostly imported inputs and component parts, was severely criticized.
Instead, CHP proposed that heavy industries, including the motor industry should be
established first, by means of the public sector. The assembly industries, including
the automotive should then follow, with inputs procured from domestic firms. This
strategy is palpably influenced from that implemented in the USSR since Stalin, and
deemed, at the time, highly successful.
Ecevit was also concerned about spreading capitalism to the grass roots, and
wanted to encourage corporations open to public, that is, companies in which no
single person or family owns more than 10% of total shares. This, however, was a
relatively old story. To induce workers abroad to return home, prodded on
particularly by W. Germany, Turkey had encouraged the establishment of the so
called workers-firms. But most such firms failed because of bad management. So
Ecevit was adhering to a strategy that had already failed economically.
In agriculture, Ecevit advocated land reform, or land reform first before
agricultural reform. He devised the slogan the land belongs to whoever works it, the
water to whoever uses it. But following an unsuccessful implementation of land
reform in Urfa province in accordance with the 1973 land and agricultural reform, the
said law was canceled by the Constitutional Court in May 1977 because not adequate
time was allowed for a parliamentary discussion before it was accepted. The
Constitutional Court had given one year to the parliament to prepare and issue a new
law concerning land reform. By May 1978, when the term set by the Constitution
Court expired, Ecevit did not prepare a new law and thus he dropped land reform off
his and Turkeys agenda.
Ecevits other pet project in agriculture was village-cities which meant
establishing a city-center that provides public services to several nearby villages that
would be tied to the village-center for these services. It was not implemented.
In sum, under Ecevits leadership CHP had transformed definitively to a party
of left and in its general meeting on 29 November 1976 decided to become a member
of socialist international.
In Turkish EEC relations, Ecevit was against speeding up economic relations
and carrying through Turkeys obligations. His skepticism, however, must have run
deeper at the time. For instance, from the term common market (ortak pazar) he
coined the slogan, They are partners (ortak) and we are the market (pazar). He was
also skeptical of the USA and NATO.
1974-1980
71
Though Ecevit did not pronounce it openly, this ideology was consistent only
with the anti-imperialistic, nationalistic (mis-)interpretation of Kemalism offered by
radical leftist intellectuals from evket Sreyya Aydemir of Kadro movement on to
Doan Avcolu of the 60s. It was not, therefore, quite consistent with an objective
interpretation of Atatrk. We should note even at this point, however, that the years
90 and since saw Ecevit with a different ideology. He had shed his more radical
economic policies and visions of the 60s and 70s and had adopted a comparatively
moderate democratic-left stand that was not this time antagonistic toward the
private sector, FPC, the EEC (EU), USA and NATO, albeit tinged with some
nationalism.
During the 70s, the years studied in this section, Ecevits and CHPs prospects
rose throughout the initial years, confirming the slogan used at the time: Ecevit, our
hope. But it fell precipitously towards the end, and Ecevit and CHP fared very badly
in the 1979 elections. There were mainly two reasons why CHP scored badly in the
1979 elections and AP got the upper hand. One reason was economic. People got
simply fed up with acute shortages, rationing, black markets, declining growth, hence
employment during Ecevit period 1978-9. The second reason was political. The
public had also become more aware that a great deal of the blame for terrorism lied
with radical left; certainly not only with the radical right. Furthermore, they no longer
believed the argument by Ecevit that (radical) leftist demonstrations and anarchy
arose because of wrong, rightist policies and once these policies are corrected they
would subside. Firstly, the belief in Marxism lied much deeper as a conviction while
many left-of-center people at the time blurred the division between left-of-center and
Marxism. Secondly, there was a further deeper movement behind terrorism, Kurdish
separatism in the disguise of demands for (socialist) reforms. This became more
palpable to the eye of the common man in the later years.
6.2.2. AP
During the period 1974-80, AP, under Sleyman Demirels leadership lost
ground to Ecevit and CHP up until 1979. It lost votes to the right-of-center splinter
party Dik.P as well as to the two radical rightist parties MSP and MHP. Nonetheless,
Demirel managed to form two coalition governments and a minority government
supported by non-leftist parties, from radical right to center-right to center. Thus,
though AP commanded less votes during this period compared to CHP, while Ecevit
formed the government twice, Demirel managed to form the government three times.
AP, labeled as rightist which, in fact, should mean right-of-center was an
economic liberal as inheritor of DP of the 50s with respect to economic regime
and development strategies. Liberal at the time meant to be in favor of encouraging
private enterprise, FPC flow and a pro Turkish-EEC, pro USA and pro NATO stance.
It also continued, however, to allow a closed-economy inward-looking, importsubstitution industrialization model. Though it had declared industry as the leading
sector in economic development it continued to encourage the agricultural sector
rigorously as well by means of agricultural reform policy tools similar to those
implemented by the former DP. In the industrial sector, the AP encouraged the
72
establishment of the so-called assembly industries by means of FPC participation,

patents and know-how agreements but set targets to increase their domestic
production content, a strategy which worked but, nonetheless, was severely criticized
by CHP and also by MSP, not because it meant a neglect of export-oriented
industries which would have been correct, but, because they argued Turkey should
start establishing the heavy industries first, which was wrong.
Throughout the 70s AP lost not only the intellectuals, bureaucrats and
students but also a part of workers, hence the majority of urban population to CHP.
AP had always kept a distance from Atatrk on the mistaken strategy not to alienate
religious votes and this was another important reason why AP continued to lose the
intellectuals, bureaucrats and the military. Thus, the major constituency of AP
remained as the overwhelming majority of farmers, excepting Eastern provinces. big
businessmen as well as small industrialists and traders; a large part of workers were
also pro AP. The farmers were not only content with APs conservative views but
also with its agricultural reform policies which had brought to them concrete material
benefits since the times of former DP. Though Ecevit and CHP had come up with
strong promises of land reform, the farmers were obviously skeptical about land
reform. They were also skeptical of the left-of-center stance of CHP because,
whether moderate or radical, left was anathema to conservative farmers since they
associated it with the then communist Russia. Still another reason for the farmers
distance from CHP was the fact that they interpreted CHP as anti religious. CHP at
the time had not quite satisfactorily explained to them that laicism did not mean to be
anti religious and to refute religion. But Turkish farmers are not attracted to religious
fundamentalism. And Turkish rural women, although they wear head scarves, their
main purpose is to protect themselves against the heat or alternatively cold, or to keep
the kitchen clean, and they leave part of their hair open. This contrasts with the
religious fundamentalist movement and the wearing of turban in the more recent
years which covers all of the hair tightly. In fact, fundamentalism spreads more easily
in the towns and the periphery of big cities. Nonetheless, the farmers prefer to see
their political leaders to expressly believe in their religion. This has caused further
ambivalence because as DP and later AP leaders expressed their adherence to Islam
by going to mosques for prayer, etc., CHP leaders mostly abstained.
Another interesting case was the Alevis. The Alevis are not Sunnite and are a
minority religious sect, but they should not to be bulked with the Shiite Iranians. In
fact, they have common roots with the old pre-Islam Turks and pre-Islam Turkish
customs. Because they were down-trodden during the Ottoman Empire, the rural
Alevi population are strong believers and supporters of Atatrk and laicism which
allowed them to gain equal status in the new Republic. Therefore, they generally
tended to vote in favor of CHP as they deemed it was a follow-up of Atatrk.
6.2.3. Opposing Philosophies of CHP vs. AP
Thus we find that while AP was less mistaken, in principle, concerning its
economic philosophy and economic policies; it was much less careful about laicism
when distancing itself from Atatrk. CHP, on the other hand, tended to interpret
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73
tatism too rigidly in contrast to Atatrk and to the prevailing economic conditions in
the country and over the world. But it was a much more reliable defender of laicism.
It later acquired left-of-center stance and particularly a radical interpretation of leftof-center which must have alienated many laymen with conservative outlook.
Consequently, a mistaken but widespread interpretation of Atatrk emerged as
center-left and also as disrespectful of Islam.
The stand of the two parties concerning Turkeys international relations,
including NATO, USA and EEC (later EC and EU) were also opposite. The centerright AP was an economic liberal and also pro USA, NATO and the EEC. CHP, in
contrast, was doctrinaire intensive tatist and against private enterprise and FPC, and
at the same time very skeptical of, if not anti USA, NATO and the EEC as if being
left-of-center ipso facto meant to be against these. So, whenever CHP was in power
we had intensive tatism as well as isolationist tendencies in international relations,
independence as the defenders of this strategy would like to call it. Instead, when
AP was in power we had not only a liberal economic regime but also better
relations with the USA, NATO and EEC during the years studied in this chapter. It
was also the case with ANAP in the 80s and 90s. But, at the same time, whenever
center-right governments came to power, religious movement gained strength which
was a long-term menace to laicism. It should be interpreted also as a long-run menace
to Turkeys relations with the USA and Europe, because the more radical religious
movement was definitely anti-West. This was already witnessed with MSP. Radical
nationalist movement, as evidenced with MHP, also tended to be highly
interventionist and protectionist in economic regime and skeptical with regard to
Turkeys international relations, both with the west as well as the USSR. But, during
the coalitions with AP they were more flexible compared to MSP.
One can look at this picture from another angle and deduce that economic
regime, implemented by the center-right parties, be it DP, AP or ANAP should, per
force, make them look favorably towards Turkeys relations with the western world
and western economies. Better international relations with the West also incidentally
strengthened their hand in supporting and, in turn, getting the support of religious
circles. In sum, the actual differences and, implications between center-left CHP
and center-right parties were much more acute than is suggested by the terms
center-left and center-right because CHP at the time leaned towards a more radical
form of Leftism while AP supported and obtained the support of radical religious and
the radical nationalistic movements and parties.
6.2.4. Dik.P
The above sections already contain much of the information on the Splinter
Dik.P. It was established by the more conservative group within AP led by Saadettin
Bilgi. This group had refrained from giving confidence vote to the AP in Feb. 1970.
41 MPs some of whom resigned and some thrown out of AP, established in Dec.
1970 the Dik.P. More prominent founding members were Ferruh Bozbeyli, Saadettin
Bilgi, Faruk Skan, Mehmet Turgut, Adnan Menderes sons Yksel Menderes and
Mutlu Menderes, Samet Aaolus (a prominent DP members) wife Neriman
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Aaolu, and Celal Bayars daughter, Nilfer Grsoy. Dik.P claimed closer
connections with the former DP and pressed for the political amnesty of DP members
as its mission. Bozbeyli was elected its chairman by mutual consent. In the October
1973 general elections Dik.P obtained a sizable 11.9% of the votes and 45 seats. It
refrained from forming a coalition government with AP and Demirel upon which
CHP-MSP coalition was forged. After Ecevit resigned in September 1973 and
pressed for early elections the majority of Dik.P members and Bozbeyli still refused
to enter the coalition to be led by AP and Demirel. But 9 MPs from Dik.P, led by
Bilgi thought otherwise, resigned from Dik.P and pledged to support a non-leftist
coalition government. Two other independent MPs joined them. This had enabled
Demirel to form his 1st Nationalist Front government. The negative attitude of Dik.P
and Bozbeyli against a center-right coalition must not have gone too well with their
voters, for in the June 1977 general elections Dik.P obtained only 1.9% of the votes
and just one seat, by Faruk Skan. Election results notwithstanding, Dik.P still
continued its antagonistic stand against Demirel and did not again participate in the 2
NF government forged by Demirel in August 1977. When 2 nd NF dissolved Dik.P
and Skan, the sole Dik.P. MP joined the government of CHP formed by Ecevit as
minister and vice PM Since the party showed no signs of recovery, however, it
dissolved itself in May 1980, months before the 12 September Military intervention.
6.2.5. CGP
As for the splinters from CHP, back in 1967, a few years after the student
uprisings that erupted in 1964, nn had supported Ecevit in accepting left-ofcenter as party slogan against opposing Turhan Feyziolu et. al. Therefore,
Feyziolu had resigned from the party taking with him 47 MPs and senators,
including Ferit Melen. They had formed a new party Gven Partisi (Reliance Party)
which entered 1969 elections, obtaining 6.6% of the votes and sending 15 MPs to the
Parliament. Ferit Melen served as Minister of Defense in Nihat Erims reform
governments formed after the 1971 Military Memorandum. When Erim resigned,
Melen had become PM in May 1972.
Again in May 1972, when Ecevit won the position of general secretary against
nns candidate and nn resigned from party leadership, many of the remaining
party stalwarts, a total of 58 MPs and senators, led by Kemal Satr resigned from
CHP and formed a party of their own. Cumhuriyeti Parti (the Republican Party). In
March 1973 the two splinter parties merged to become the Republican Reliance Party
(Cumhuriyeti Gven Partisi: CGP) led by Feyziolu. CGP was centrist, tatist and
Kemalist, certainly it disclaimed left-of-center and abhorred its radical
interpretation by Ecevit. CGP gave 6 ministers to the outside government formed by
Naim Talu on April 1973.
CGP mustered 5.3% of the votes in the October 1973 general elections sending
13 MPs to the Parliament. In March 1975 CGP participated in the so-called 1st
National Front government under AP and Sleyman Demirel. But its votes eroded in
the early general elections held in June 1977, getting 1.9% of total votes and sending
only 3 MPs to the Parliament. On Jan. 1978 CGP joined the coalition under Ecevits
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75
leadership with only 2 MPs in the parliament. In November 1979 CGP, this time
supported Demirels minority government from outside.
After the Sept. 12, 1980 Military Intervention all political parties, including
CGP were closed down. But while all other political parties established new parties
as their disguised continuations, CGP party members refrained, thus this political
movement died.
Though CGP had participated largely in both the reform and coalition
governments during the 70s, its centrist, Kemalist and tatist stance and the
leadership of CGP were obviously not enough to attract votes from the deeply
entrenched and historical CHP, and neither from the right-of-center AP. Although
objectively analyzed, a centrist interpretation of Atatrk may fit as much or even
more compared to a left-of-center interpretation, particularly compared to a left-ofcenter leaning towards radical left, historical ties of Atatrk with CHP were too much
for CGP to overcome.
6.2.6. MHP
Nationalist Action Party (Milliyeti Hareket Partisi: MHP) had been
established by ex-colonel Alparslan Trke, a former member of the 1960-61
Military junta. Long before, he was known for his nationalist stance. He had resisted
against returning power back to civilians and was therefore retired from the army by
MGK and sent abroad with a token bureaucratic mission. He had returned in 1963
and became a member of a small party CKMP (Cumhuriyeti Kyl Millet Partisi:
Republican Peasants Nation Party), was elected its chairman in 1965, and modified
the party program along radical nationalist line, after the Nine Lights, his book of
ideals. He was elected MP in the same year and changed the name of the party to
MHP. The ideology of nationalism brings with it in the economic field a more
intensive role for the government both in terms of public investments,
interventionism, protectionism and controls. MHP was, therefore, in favor of the
mixed economic regime, implying its more tatist version. Similarly in the political
field.
In addition to its formal party youth organization, MHP also organized a
militant youth organization of its own, the idealists (lkcler). It was first
organized as Idealists Hearth organization, but upon closure by Ankara Criminal
Court for ties with a political party it was changed to Idealists Association. Militant
idealists fought with radical leftist demonstrators and terrorists and were also
engaged in the murders of several radical leftist terrorists. They became particularly
active since 1976 and thus created terrorism and murders in their own, in addition to
those carried on by radical leftist terrorists.
MHP had entered the 1969 general elections capturing only 3% of the votes
and 1 seat in the Parliament. During the 70s however, its votes increased. In the
October 1973 general elections it obtained 3.4% of the votes and 3 seats and
participated in the 1 NF government in March 1975. In the June 1977 general
elections its votes increased further to 6.4%, capturing 16 seats. It then participated in
the 2 NF government formed by Demirel in July 1977. Trke was made Minister
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and vice PM in both cases. In 1979 MHP supported AP minority government from
outside. Though with a more intensely tatist agenda, during the NF coalitions MHP
chose the more moderate line, acting as a counter-balance against the more rigid
MSP of Erbakan.
After the 12 September 1980 Military Intervention, like all other political
parties, MHP was closed. Many of its members, including Trke were brought to
court for having engaged in or supported terrorist activities. It was continued later.
6.2.7. MSP
In the 60s, Necmettin Erbakan, a former professor in Istanbul Technical
University and member of AP, was made general secretary to the influential Union of
Chambers (TOBB) in Ankara, supported by AP and Demirel. In the Union Erbakan
lent support to Anatolian industrialists as opposed to the big business in Istanbul.
Erbakan, playing with religious themes rejected the big business in Istanbul because
of doctrinaire reasons, that they had close ties with the outside (Western and US)
world by means of FPC participations, license, patent and know-how agreements. In
1969 he was elected chairman of TOBB but the elections were canceled and he was
removed from the office by Demirels AP government. He thereby entered the 1969
general elections from the conservative Konya province as an independent and
became an MP. In 1970 he founded the National Order Party (Milli Nizam Partisi:
MNP) becoming its chairman. But in 1971 the Constitutional Court found the
program of MNP against laicism and closed it. In 1972 he founded the National
Salvation Party (Milli Selamet Partisi: MSP) with his old comrades. MSP too was
radical religious right. As such, it accepted a mixed economy with a greater role
assigned to the state; its development strategy was interventionist and protectionist,
and it continued to support the small industrialists in Anatolia over the big
international business in Istanbul. It favored establishing heavy industries first and
then move on towards the assembly industries. This was not much different than the
strategy of industrialization advocated by radical left as well as center-left CHP.
A crucial difference in this respect is that while the radical left and center-left
CHP at the time wanted to rely on public sector and SEEs exclusively, the MSP in
addition to the public sector, also relied on Anatolian industrialists as well. Again
MSP was openly anti EEC, USA and NATO. So was CHP. But MSP was fervently in
favor of increasing political and economic relations with Islamic countries, and even
dreamed about an Islamic Common Market while this was out of question for the
CHP. While CHP was militantly secular, MSP was militantly religious and antisecular. And therein lied the fundamental difference between MSP and CHP.
Therefore, the CHP-MSP coalition of 1974 was obviously built on flimsy common
views and deep rooted differences.
MSP entered the 1973 general elections obtaining a sizable 11.8% of the votes
and 48 seats. In Feb. 1974 MSP entered a coalition with Ecevit and CHP, Erbakan
becoming a minister and vice PM It is no wonder from the above that after the
Cyprus operation Ecevit broke the coalition with MSP by resigning from Prime
Ministry and called for early elections. But thereupon MSP entered in March 1975 to
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77
the 1 NF coalition led by Demirel; Erbakan again becoming a Minister and vice PM
In the June 1977 general elections MSP obtained 8.6% of the votes and 24 seats.
Again it participated in the 2 NF government formed in Aug. 1977 and after the 2 NF
government collapsed it supported the AP minority government formed in November
1979. When Hayrettin Erkmen, Minister of Foreign Affairs in the AP minority
government started preparations for applying to the EEC for full-membership,
however, MSP immediately let it be known that it would cooperate on this issue with
CHP and give a negative vote for the decision. Demirel sacked Erkmen and withdrew
from preparations for full-membership application to the EEC.
After the 12 September 1980 military intervention MSP, like all other parties
was closed down; many of its members, including Erbakan were brought to court for
acting against laicism, but released in 1981. They, like MHP, however, continued
later.
6.3. MAJOR POLITICAL AND ECONOMIC

DEVELOPMENTS
A brief survey is presented in this chapter on the major political and economic
events and developments during 1974-78, followed by the growth performance of the
economy during the same period.
6.3.1. Military Intervention to Cyprus
When EOKA militant Nicos Sampson ousted Makarios and declared the
Cyprus Hellenic State, the Turkish government (CHP-MSP coalition government)
started the military operation, which Ecevit, PM labeled peace operation. The
Constitution of the Republic of Cyprus accepted in August 1960, based on Zrich
and London Conferences gave the right of military intervention to the guarantor
states. Since no party was pleased with the Constitution of Cyprus (for one, Greece
criticized it on grounds it gave too much authority to Turkey), differences and clashes
were continuing when Sampson enacted a coup dtat on July 15, 1974 against
Makarios who had resisted ENOSIS, i.e. annexation of Cyprus to Greece. Makarios
had to flee the island. The coup was a big step towards ENOSIS. Depending on
article 4 of the Guarantee Agreement, the Turkish government first sought joint
intervention with the UK. UK refrained and advised the matter be solved in UN and
NATO. The USA demanded that Greek soldiers and Sampson leave Cyprus but to no
avail. Having exhausted all the peaceful means, Ecevit decided to take the military
option acting singly, on July 20, 1974. The military operation ended by 22 July. The
Greek government resigned, Sampson was replaced by Klerides and Turkey, Greece
and UK came together, acting under the auspices of the Security Council and signed
the Geneva declaration. It decreed a return to the 1960 Constitution and no more
military occupations. In the next conference in Geneva held with the inclusion of the
Greek and Turkish Cypriot leaders, no agreement was reached on the status of the
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island. The Turkish army started another round of operations for military strategic
reasons, which ended by August 16. While the first military operation was seen as
unavoidable in world public opinion, the second was interpreted as occupation, and
after the second the whole operation was interpreted as occupation. Russia claimed
they too should be a part in the negotiations for a solution. Denkta and Makarios,
who had returned to the island agreed on a solution, but again events and
developments prevented a peaceful solution.
In February 1975 the USA placed an embargo on arms shipment to Turkey,
upon which Turkey established the Cyprus Turkish Federated State, led by Rauf
Denkta as its president. Turkey also canceled the agreement with the USA on the
use of military bases by the USA, excepting ncirlik, and formed another army, the
Aegean army as a military power not assigned to NATO. The USA embargo was
removed in July 1978 when J. Carter was president. Turkey opened her military bases
to the USA in October, 1978.
Throughout the 70s ASALA terror also began to take the lives of Turkish
diplomats in Europe, allegedly to remind world opinion of Armenian Genocide in
1915. It fell to many sympathetic ears in Europe and many European Parliaments
eventually passed laws with no objective historical basis or research that such a
genocide was actually committed. Thus Turkey had another headache in her
relations with the EEC (EC and still later EU) and the USA, in addition to Cyprus.
There was still another big headache, the Kurdish question. Surely in the Cyprus
question mistakes were committed not only by Turkey but also by Greece, Cypriot
Greeks as well as the EEC countries. If not ENOSIS, Greece and Cypriot Greeks
always hoped for a Greek Cypriot State with Turks as minority. And most European
countries were too happy to oblige Greece and Greek Cypriots with little effort at
objectivity. Similarly, there was always under the cover or overt support available to
ASALA terror as well as to Kurdish separatism and terror coming from not only
Europe but also from many other neighboring countries at the time.
6.3.2. Economic Developments Up Until 24 January 1980
The oil price rises in 1973 as a political weapon following the 6 October 1973
Arab-Israel war gave rise to worldwide balance of payments problems for oilconsuming countries, falling GNP growth rates and cost inflation, shortly called
stagflation, as a combination of stagnation and inflation. Its adverse effects on
Turkeys volume of imports and current account deficit was manifest starting end of
1973, throughout 1974 and on. But whereas the world in general felt stagflation
during 1974 and 1975 Turkey could meet her increased current account deficits by
means of foreign exchange reserves already accumulated by the help of workers
remittances, same remittances throughout the years since 1974 and, in addition, by
recourse to what was called Deposits Transferable to Foreign Exchange (Dvize
evrilebilir Mevduat: DM), as well as increases in business relations with the oilproducing Arab countries. Hence, Turkey had relatively high GNP growth rates
during the years 1975, 1976. But DMs were discontinued due to their precarious
nature and, at any rate, the adverse effects began to show their impact much more
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heavily since 1977. By that time, the inflation due to oil price rises and domestic
reasons had reached to considerable levels and the Turkish Lira had become overvalued, or foreign exchange under-valued with foreign exchange rates having been
kept fixed. The USA arms embargo following the Cyprus military intervention also
had negative effects on Turkeys balance of payments, hence its growth rate. In 1978
Ecevits government was tightly squeezed; shortages, black market, price rises
became widespread. The governments generally refrained from devaluation and
when forced to devalue, pressured by the IMF, it was generally too little and too late.
Instead, they frequently raised the prices of inputs produced by SEEs in order to
reduce their budgetary burden, to no avail Thus, for instance, Demirels 1 NF
government implemented a small-scale devaluation on March 1, 1977; another one
on August 4 and still another one when 2 NF came to power. The devaluations were
supplemented with exchange rate premiums to encourage remittances of workers. In
addition to these small-scale devaluations forced by IMF, Demirels government also
raised the prices of many SEE inputs and government services.
Although Ecevit protested to the price rises during NF governments, when he
came to power, he too was even more tightly squeezed by shortages and black
markets. Therefore, again forced by IMF, Ecevit too had to implement a devaluation
in March 1978 and further promised to keep the foreign exchange rate at realistic
levels. Against such a promise it was to obtain credit amounting to 450 million US
dollars from the IMF. But again, the devaluation was insufficient and was not
followed up. The second round of oil price increases in 1979 made the situation even
worse. Hence, balance of payments problems, foreign exchange and commodity
shortages and black markets persisted and became much more acute. This very poor
economic performance by Ecevits government was one of the two major reasons
why CHP and Ecevit failed decisively in the 1979 elections; the second major reason
was political and was concerned with the interpretation of the causes of the rise in
terrorism.
Thus, immediately after Demirels minority government came to power on
November 25, 1979 it faced a serious and an immediate economic problem. Turkey
could not simply pay its external debts and interest and had nowhere to go but the
IMF. It acted in a decisive manner with the 24 January 1980 large-scale devaluation,
discarding the fixed exchange rate regime and accepting daily adjustments of the
exchange rate by the Central Bank instead; and put into effect a comprehensive
stabilization program.
6.3.3. January 24, 1980 Devaluation and Economic program
24 January 1980 devaluation and the concomitant policy package aimed at
much more than reducing Turkeys trade balance and current account problems. It
was, in fact, the first comprehensive step forward in changing the development
strategy Turkey pursued up until that date. Inward-looking, closed economy, importsubstitute industrialization would be discontinued; outward and export orientation of
the economy and world market prices would be operative instead of widespread and
intensive interventions on prices and government fiat. Private investments and FPC
80
flow (DPIs) would be allowed to take on the task of growth and technological
progress while to balance the budget public investments would be reduced.
The technicality of the devaluation and the economic package was simple; it
should be stressed here that the measures actually implemented were effective in both
increasing Turkeys exports and reducing her current account deficit, and also in
registering the first fundamental step towards the market economy without yet
mentioning this term.
Up until Jan 24, 1980 Turkey had implemented fixed exchange rate regime
which made the Turkish Lira over-valued over the years as domestic inflation
outpaced the price rises in the countries Turkey traded with. Import-substitute
industries to be established or expanded were protected by means of import
prohibitions, quantitative restrictions and high import taxes. Exports and other
foreign exchange earnings, including remittances of workers were encouraged by
premiums and tax rebates which were never adequate in the face of the acutely overvalued currency (under-valued foreign exchange). All this led to excess importsubstitution industrialization and neglect of export industries. Protectionism also
discouraged efforts to raise productivity. Agriculture and industry were encouraged
by means of low interest rates, and low prices on inputs and primary materials
produced by SEEs. The budgetary deficits caused by this practice was financed by
borrowing from Central Bank - which was not an independent institution and hence
printing of money and inflation. Very high support prices above world market prices
were fixed by government for most agricultural produce, the exports of which
required, in turn, high export premiums for traders and deficit financing for the case
of SEEs, governmental agricultural under-secretaries and semi-official agricultural
cooperatives that exported the agricultural produce bought at high prices from the
farmers. Whenever current account deficits and payment of foreign debt and interest
gave rise to serious problems Turkey, like many other developing countries applied
to IMF, was forced to devalue and implement a stabilization program. But in the past
cases this did not bring about a radical change in the development strategy Turkey or
other developing countries followed. Over time, domestic money again became overvalued, another balance of payments crisis erupted, and another devaluation plus
stabilization package had to be implemented under the surveillance of IMF and WB.
But during the years 70s interesting changes in views and attitudes emerged
all round. Firstly, in the early post World War II years, most development economists
had pointed out that market prices worked imperfectly in the developing countries,
external economies also existed, both necessitating interventions to prices, production
and investments, in addition to the need for protectionism, flexible if not absolute.
The alleged success of the USSR with central soviet planning, the power that
interventions gave to politicians all added up and thus we had excessive role of the
state in the economy, excessive protectionism and excessive interventionism. Many
development economists during the 70s became aware of these excesses,
mismanagement of the economy, disadvantages of excessive protectionism and
interventionism and advised that, in sum, free exchange rate regime and market
economy principles should be implemented in developing economies as well. IMF
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and WB also agreed that the developed countries should move towards free exchange
rate system and towards market economy, discarding excessive interventionism and
protectionism. What is even more important, however, is that public opinion in many
developing countries and new industrializing countries, including Latin American
countries and India, had also become aware that excessive interventions led to
negative and not to positive results; that they had low growth rates due to frequent
balance of payments crises while high inflation worsened their income distribution.
So, there was an overall effort in the developing countries leaving aside the poorest
in Africa to move towards the market economy and outward orientation. IMF and
WB advices in this direction were listened to much more receptively. This realization
came relatively late to Turkey, in January 24, 1980.
To wit, since the oil price rises in 1973, Turkey had resorted only to stopgap
measures to ease her balance of payments problems and to raising the prices of SEE
products - at inadequate rates - in order to reduce their deficit financing requirements.
The devaluations resorted to since 1977, forced by the IMF, on the other hand, were
always too little and too late. In contrast, 24 January 1980 devaluation and economic
program aimed at a comprehensive overhaul of the economy.
First, the devaluation itself was large-scale that intended to take account of the
cost-inflation effects of devaluation in reaching an equilibrium or realistic exchange
rate. Thus, the official exchange rate of the dollar was raised from 47 TL to 70 TL, an
increase of 49% in the official rate; black market rate much higher than 47 TL must
have prevailed before the devaluation. But what is more important than this high
devaluation rate, the fixed exchange rate regime was discarded and instead the
Central Bank was empowered to adjust the rate daily. This was called flexible
exchange rate regime as opposed to the fixed. It enabled the Central Bank to
implement gradual or mini devaluations on top of the initial devaluation. Thus, the
rate of the dollar had gone up to around 90 TL by the end of 1980. In addition to the
devaluation, the interest rates were also raised. To reduce the budget deficit, prices of
SEE produced inputs were raised this time considerably, while for agricultural
products the target was set to conform with world market prices which had become
easy at the going foreign exchange rate. All this operation on the foreign exchange
rate, interest rates, prices of SEE products, and agricultural support prices, also
including restrictions on wage rises meant, in effect, less interventions on prices and
more reliance on markets, market and world market prices. To reduce the budget
deficit public investments were to be reduced also, and instead private investments
and FPC flow was to be relied upon for the growth of the economy. This aimed at
strengthening another major ingredient of the market economy, the private enterprise.
The performance of the economy in 1980 looks bleak: a very high rate of
inflation and a negative rate of growth. But the inflation was in fact a once-and-forall cost inflation on account of the rise in the foreign exchange rate, interest rates and
prices of inputs produced by SEEs. Inflation went down gradually in the following
years. The growth rate for 1980 was negative because of large- scale strikes as well
as the lag in reaping the benefits of the devaluation. When we follow Turkeys
balance of payments figures over the years, on the other hand, we witness that
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Turkeys exports started from a very low level and began to rise fast due to the
devaluation and the implementation of flexible exchange rate regime. To wit,
Turkeys exports (fob) in 1979 was 2.261 million dollars, imports (cif) 5.069 million
dollars. In 1980 exports (fob) rose to 2.910 million dollars, in 1981 to 4.703 million
dollars and in 1982 to 5.746 million dollars, a considerable of increase.
Corresponding import figures (cif) for the years 1980-82 were: 7.909; 8.933; 8843
million dollars. There was a slight staggering of exports in 1983, when it fell slightly
to 5.728 million dollars and imports rose to 9.235 million dollars. In 1984 it bounced
back, exports were 7.133 million dollars and imports 10.757 million dollars.
Tourism income had also increased somewhat following the devaluation but it
had a very low base; in 1979 tourism income was 281 million dollars and by 1982 it
had become 420 million dollars.
There are two interesting political aspects of the 24 January 1980 economic
measures. Firstly, it was implemented successfully but by a minority government
backed from outside, including some political parties that were not dependable.
Nonetheless, there occurred no deviation from the course set.
Secondly, Demirel had appointed Turgut zal as under-secretary to PM with
special ministerial powers to oversee the economic operations and daily
implementations. After the 12 September 1980 military intervention, Blent Ulusus
government pledged to continue with its implementation and appointed zal as
Minister in charge of the economy for this purpose. Though zal was sacked in 1982
due to a crisis in financial institutions, his name had become household. This
encouraged zal to establish his own party, ANAP and came to power in the 1983
elections following the return to democracy. It was a development Demirel likely
regretted.
6.3.4. Negative Turning Points in Turkish-EEC Relations
Turkish-EEC relations stalled shortly after entry into the transition period. The
negative effects of 1973 petroleum price rises and worldwide stagflation on Turkeys
balance of payments, difficulties of paying foreign debts, and meeting import needs,
delays in making a decisive devaluation instead of stopgap measures certainly played
a role in Turkeys failure to meet the targets of the Annexed Protocol. To wit,
reduction of customs taxes for imports from EEC countries was first postponed by
Demirel in 1976 to apply to Turkeys obligations in 1977 and 1978. Compliance with
the Common Tariffs to third countries had not been yet attempted. While Turkey
bothered about fulfilling her customs taxes obligations, the EEC, particularly
Germany was, in turn, intent on changing the terms set about free circulation of
(Turkish) workers.
But when Ecevit came to power he went further. In November 1978 he
demanded from EEC a 5-year freeze (suspension) on Turkeys obligations, a change
of the 12, 22 year lists, removal of quantitative restrictions on Turkeys industrial
(textiles) and agricultural exports, inclusion of Turkey to the General Preferences
granted to Mediterranean countries, and increase of credit and aid to Turkey as well.
The EEC agreed only on the 5-year freeze but refused the demands for all other
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concessions. Thus, by common agreement the 5-year freeze was applied on Turkeys
custom obligations. Ecevits application in November 1978 and the 5-year freeze
agreed upon in May 1979 came at a critical time. Greece, following the collapse of
the military dictatorship (thanks to the failure of the Greek military administrations
Cyprus adventure, and return to democracy, had applied to the EEC for full
membership in 1978. Her application had been received favorably. In contrast, Ecevit
had taken a radical opposite direction. He had argued that the customs obligations
was working to Turkeys disadvantage, and citing the acute balance of payments
difficulties Turkey was facing had asked for a radical revision plus a five-year freeze.
Surely, in retrospect, applying for full-membership would not have worked
because soon after, in 1980 we had a military intervention. But, such a probability
could not have been relevant in Ecevits decision to suspend Turkeys obligations
instead of applying for full-membership. The latter course of action would have
opened the opportunity of equal treatment of Turkey and Greece again, the second
time after 1959. But Ecevit presumably was much too immersed in designing left-ofcenter doctrine than pursuing real-politic requirements Turkey was facing. Economic
difficulties had indeed become especially severe during Ecevits period due to the
failure of Ecevit government and of previous governments to implement a timely
devaluation. But the decision to suspend customs taxes for such a long period,
coming from Ecevit likely had political undertones as well. Ecevit at the time had
never been positive about TurkishEEC relations. When Demirel had decided to
enter the transition period rather than prolonging the preparatory period, CHP had
favored the latter alternative. Later Ecevit had coined his famous slogan on the
common market They are the partners (common) and we are the market. He
was also skeptical of private enterprise, FPC flow (DPIs), USA and NATO. To
decide to suspend customs obligations was certainly an option allowed in the
Annexed Protocol in case of serious economic problems. But to use it at a time when
Greece applied for full-membership was a grave political mistake, that is, for anyone
who saw long-run benefits of EEC membership for Turkey. As for the real burden
of continuing with customs tax obligations, that is, the gradual and minimal
reductions of customs taxes towards EEC countries and of gradual compliance with
the Common Customs Tariff on Turkey trade balance, if calculated or estimated
objectively, it would certainly have come out as a negligible factor compared to other
causes, including foremost, mismanagement of the economy.
In the Parliament Hayrettin Erkmen, Minister of Foreign Affairs of AP
minority government declared in February 6, 1980 that Turkey would apply for full
membership to the EEC towards the end of the year. His aim was to avoid a possible
veto from Greece which was scheduled to be a full-member on January 1, 1981.
Negotiations in June 1980 in the Membership Council between Turkey and the EEC
went well. But the decision had raised an outcry from MSP which was one of the
supporters of Demirels minority government from outside. MSP let it be known that
they would vote down such an application in the parliament by cooperating with CHP
which had also looked at full-membership application negatively. Thus, on July 29,
1980 MSP submitted a general questioning in the parliament about Erkmen. The
84
reason MSP cited was Erkmen had not shown reaction enough against Israels
declaration of Jerusalem as capital city. CHP also voted negatively along with MSP
that Erkmen had not shown reaction enough against Israels declaration of Jerusalem
as capital city. More tellingly the point was stressed that this vote was not against the
government, only against the Minister of Foreign affairs. The AP MPs were also
absent in the parliament during the voting day for Erkmen; it implied that Demirel,
hence AP had withdrawn their support to Erkmen in order to be able to go an as
minority government supported by MSP from outside. Thereupon, AP government
discontinued preparations about application for full-membership to the EEC. At any
rate, the 12 September 1980 military intervention froze Turkeys political relations
with the EEC.
6.3.5. Mounting Terrorism, Killings, Demonstrations From
Both Sides Leading to September 12, 1980 Military
Intervention
Since 1973 return to parliamentary governments following the 1971 Military
Memorandum, terrorism, killings and demonstrations escalated over the years, finally
leading to the 12 September 1980 Military Intervention. In the previous years
terrorism, demonstrations, killings were overwhelmingly the work of radical left.
University boycotts and demonstrations were organized by the radical leftist FKF
(Fikir Kulpleri Federasyonu: Federation of Idea Clubs) which was established in
1965. It was supported by DSK (Devrimci i Sendikalar Konfederasyonu:
Revolutionary Confederation of Workers Unions) and TP (Trkiye i Partisi:
Turkey Workers Party). 15-16 June 1970 workers demonstrations had been
organized by DSK. TS (Trkiye retmenler Sendikas: Turkish Teachers Union)
and LK-SEN (lkokul retmenler Sendikas: Primary Schools Teachers Union)
had also organized boycotts in December 1969 with the aim of a better social and
educational order, by the end of which many teachers had been sacked. FKF had
been transformed in 1970 into Dev-Gen (Devrimci Genlik Federasyonu:
Revolutionary Youth Federation) and Dev-Gen, in turn, had been inspired by the
MDD (Milli Demokratik Devrim: National Democratic Revolution) movement.
MDD believed that Turkey was in a semi-feudal stage (plus a number of compradors)
not having yet entered capitalism. Therefore, the stage was ready at first only for an
anti-imperialist nationalistic revolution; socialist revolution would come about later.
Reaction to radical leftist demonstrations came at the time mostly from radical
nationalist groups, not much from organizationally weak religiously rightist groups.
Formation of unions by government employees had been prohibited with the
1971 change of the Constitution. Hence, instead of TS (Trkiye retmenler
Sendikas: Turkey Teachers, Union) of 1971 was transformed to TB-DER (All
Teachers Unity and Solidarity Association), with the name changed in 1972. It
continued with similar activities since 1974 on supporting leftist demonstrations
organized by other organizations like DSK.
So, during the years since 1973 all of the above radical leftist organizations
were present and active. But this time radical nationalist right was also organized
1974-1980
85
much stronger than in the past and was increasingly engaged in counter-terrorism and
killings. The organization in question was the lk Ocaklar Dernei (Idealists
Hearth Association) established, in fact, in 1969 as parallel to the youth organization
of MHP of Alparslan Trke. But it gained strength and became effective in
countering demonstrations of radical leftist youth since 1973. They believed they
were doing a patriotic duty in trying to stave off Turkey from falling prey to
communism. So much so that while one MSP senior called them Dr. Frankensteins
monster, Trke maintained that lkcler (Idealists) were effectively helping
government security forces. During the period in question clashes in the
demonstrations began to take lives by tens and by hundreds. At the same time many
left or left-of-center personalities were murdered, no less if not more than nationalist
personalities were murdered. The Idealists Hearth Association was closed down in
November 1978 by the Ankara Criminal Court on grounds it was closely associated
with a political party, MHP since no association should. Nonetheless, the idealists
established, in turn, the Idealists Association (lkcler Dernei) to take over the
functions of the closed association.
Some of the more important demonstrations and activities as well as murders
of important personalities of left and right are listed following. In September 1976
DSK organized a mass demonstration against DGMs (Devlet Gvenlik
Mahkemeleri: State Security Courts). DGMs had been established in 1973 but the
law was canceled by the Constitutional Court on matters of form in October 1975
with the condition a new law to be passed within one year. DSK protested that
DGMs were de facto martial law and was supported in the protest demonstrations by
CHP, TB-DER, and many other unions. It proved effective with the work of CHP
in the parliament; a new law was not passed and, therefore, DGMs were abolished.
Thus, this demonstration proved to be democratic and not a terrorist or anarchist
activity. But apart from this event, terrorism began a steep rise in 1979 and in that
year alone, 109 persons died in the terrorist events that took place in such cities as
Istanbul, Ankara, Elaz, zmir and Diyarbakr.
By 1977 the situation became worse. Clashes that took place in the May 1
1977 celebrations alone took 37 lives. For the entire year 1977 the number of terrorist
activities were 248, total death toll was 319. In addition to terrorist activities, Assoc.
Prof. Orhan Yavuz (leftist) from Atatrk University, Erzurum was murdered; Prof.
Yaln Sanalan (leftist) from Hacettepe Univ. Ankara was wounded.
In 1978 the worst event took place in Istanbul University on March 16 in
which 7 students died and more than a hundred injured or wounded. The events that
took place in Kahramanmara were even more serious and took 105 lives and 176
were wounded. The latter was a clash between radical right and radical left, also
involving Sunnite vs. Alevi overtones. Similar events with similar overtones also
took place in Sivas which left 9 deaths and more than one hundred wounded or
injured. In the same year Prof. Bedri Karafakiolu from Istanbul Technical
University, a renowned scientist was murdered; Prof. Servet Tanilli (leftist) of
Istanbul University was wounded; Malatya Mayor Hamit Fendolu (former AP and
rightist) was murdered.
86
In 1979 terrorism became still more widespread. The number who died in that
year was above 1500. Killings of important personalities had also increased. Abdi
peki, famous center-left journalist was murdered. His murderer Mehmet Ali Aca,
rightist terrorist was imprisoned but later escaped and attempted to murder the
previous Pope. Other important personalities murdered in 1979 included Prof. Cavit
Orhan Ttengil (leftist) of Istanbul University; Prof. mit Doanay (center-left) of
Istanbul University; Prof. Fikret nsal, acting rector of ukurova Univ. Adana;
Adana chief police officer Cevat Yurdakul; Tunceli public prosecutor Mustafa Gl,
journalist and former MP lhan Darendeliolu (MHP member).
In 1980 we had still a much greater death toll, surpassing 2000. The events
also included clashes between Sunnites and Alevis as well, as it also had happened in
1979. The number of terrorist activities surpassed 10.000. Another major event in
1980 was widespread strikes by workers unions. To wit, while 426.127 workdays had
been lost in the strikes that took place in 1978, in 1979 the number of workdays lost
had risen to 1.124.721 and in 1980 it was 1.303.253. Most of the unions that went on
strike belonged to DISK (220 strikes) only a minor part (5 strikes) to (center-right)
TRK-. These strikes must have also played a crucial role in the low growth
performance during the said years. In 1980 the murders of important personalities
also continued. To wit, Nihat Erim (former CHP Minister, former PM) was
murdered; so were Kemal Trkler, (left) unionist from DSK; Gn Sazak (nationalist
right) vice chairman of MHP; mit Kaftanolu, journalist (leftist) and Abdurrahman
Kksalolu (CHP MP).
The death tolls and ever increasing terrorist activities and murders indicate that
by 1980 nobody in any part of Turkey had any security of life left. Therefore, the
military intervention in 12 September 1980 was a revelation for the common man
both in the cities and in rural areas. The goodwill of the people in general lied with
the military intervention. In fact, after the military intervention there was also a very
sharp drop in terrorist activities and killings. That in later years there began
misgivings about the engineering back to democracy and the problems that arose
therefore, is another matter. Prior to the intervention, most of the terrorist activities,
had been associated with radical left. To wit, of the terrorist activities that took place
after martial law was instituted in 1978 up to the beginning of 1983, 14.929 terrorist
events could be definitively tied to radical leftist organizations and 2.089 to radical
rightist organizations.

DURING 1974-1980
Growth performance of the economy in this section will include the year 1980
as well, thus encompassing the period 1974-79, 1974-80. There are many reasons for
including 1980, although it is a clear-cut different period politically. Firstly, the
Military Intervention took place late in September while a large-scale devaluation
1974-1980
87
and stabilization program was implemented as early as January 24, to show its effects
not only throughout 1980 but also in the following years. Moreover, the military
government brought in Turgut zal as minister in charge of economic affairs with the
explicit purpose of following through all the implications of the 24 January 1980
economic package.
The yearly growth rates of GNP, population and per capita GNP and the
inflation rate (implicit GNP price deflator) are submitted below in tabular form.
GNP
1974
33.2%
3.7
1975
18.9
6.3
1976
15.0
9.3
1977
25.5
3.0
1978
47.4
1.4
1979
71.2
-0.7
1980
94.9
-2.3
* Source: SIS ibid, pp.5, 408-9.
Population
growth rate
2.5%
2.5
2.4
2.3
2.2
2.2
2.1
Per capita GNP

growth rate
1.2%
3.8
6.9
0.7
-0.8
-2.9
-4.4
The averages for the period 1972-80 (7 years) are lackluster; average yearly
GNP growth rate is 2.9%; with an average yearly population growth of 2.3%, yearly
average per capita GNP growth rate is only 0.6%. But it is such a period that the
overall averages are not very meaningful and for a better evaluation, yearly
developments and performances should be looked into. This is attempted below
albeit briefly.
1974, the year during most of which Ecevits CHP-MSP coalition was in
power shows a poor growth performance and a high inflation rate because of two
important reasons. Firstly, the oil price rises by OPEC in 1973 and the worldwide
stagflation it triggered had shown its negative effects both in the low GNP growth
rate and the high inflation rate. Though statistics are not given here, it also showed its
negative effects on Turkeys trade balance. The second reason was the Cyprus
military operation with its effects, direct and indirect.
During the years 1975, 1976, when Demirels 1st NF government was in
power, we witness a conspicuous rise in GNP growth rate and a comparative
slowdown in inflation. This growth is remarkable because during the years in
question low growth rates still prevailed in most of the petroleum-consuming
developing countries. The relatively high growth rate in Turkey was achieved by
means of using foreign exchange reserves accumulated from workers remittances
plus the yearly flow of remittances and recourse to a stopgap measure of Deposits
Transferable to Foreign Exchange, as had been noted before. These enabled Turkey
to continue with investments, production and imports despite widening trade balance
deficit. The year 1977, again with Demirels 1st NF government, general elections
and Demirels short-lived 2 NF government, delayed negative effects of oil price
rises on Turkeys balance of payments began to press hard. Devaluations were
resorted to three times and prices of many SEE produced inputs and goods were
88
raised. Thus, we witness a conspicuous slowdown in the GNP growth rate coupled
with a conspicuous rise in inflation. The devaluations, however, had been too late and
too little.
During the years 1978 and 1979 Ecevits government was in power. He
refrained from devaluations but had to have frequent recourse to raises in the prices
of SEE products and inputs. Acute balance of payments problems gave rise to rapidly
declining GNP growth and rapidly rising inflation. Shortages, rationing and black
markets became widespread. This also meant that the actual rate of inflation must
have been much higher. Similarly, the black market value of foreign exchange was
also much higher than the official. Black markets were, of course, present in previous
years as well but it became more acute and more widespread during 1978, 1979. This
explains the economic factors which led to the AP victory over CHP in the 1979
elections. The political reason was mentioned in the preceding sections.
During the year 1980, Demirels minority government was in power when it
finally yielded to the economic difficulties and the demands from IMF to implement
a large-scale devaluation plus a stabilization program which involved raising the
domestic prices of petroleum, SEE produced inputs, and to discontinue high support
prices on agricultural products. The fixed exchange rate regime was also
discontinued and instead, the Central Bank adjusted the rates every day. This was a
first step towards flexible exchange rate regime. The large-scale devaluation and the
steep rises in the prices of all inputs imported as well as those produced domestically
caused a steep rise in the rate of inflation while the growth rate was negative. But
most part of the rise in inflation was really once-and-for-all cost inflation while the
budget deficit for 1980 and the following years was reduced. The 24 January 1980
devaluation showed its positive effects in the following years; the trade balance
improved, exports began to rise, growth resumed and inflation began to go down.
The low GNP growth throughout the years 1979 to 1980 was also in part
caused by the widespread strikes by unions during these years which caused
substantial workdays lost, as mentioned in the section on mounting terrorism and
demonstrations.
There was a gradual change in the structure of the economy during this period.
In 1973 the share of agriculture in GDP (in current prices) was 30.8%, of industry
19.0% (manufacturing 17.1%), services 50.2% (construction 5.4%). By 1980
agriculture was down to 24.2% industry up to 21.2% of which manufacturing was
19.5%, services 54.6%, of which construction was 5.6% (SIS, ibid p.408).
The population increased from 38.386 thousand in 1973 to 44.737 thousand in
1980 (both mid-year). In 1973 40.5% of the population was urban, 59.5% rural. By
1980, 43.9% was urban, 56.1% rural.
According to the statistics by SPO, in 1972 8,770 thousand (65%) were
employed in agriculture, 1,859 thousand (11.3%) in industry, 3,070 thousand (22.7%)
in services, with 130 thousand (1%) unknown. By 1980 9,520 thousand (62.5%) were
employed in agriculture, 1,770.8 thousand (11.6%) in industry, and 3,667.5 thousand
(24.1%) in services with 273 thousand (1.8%) unknown.
1974-1980
89
Total unemployment in 1972 was 1,995 thousand or 13.3% of the total work
force of 15.013 thousand. Of this, 1,096 thousand (7.3%) was in non-agricultural
sectors and about 900 thousand (6.0%) disguised unemployment in agriculture. By
1980 total unemployment had risen to 2,651.3 thousand or 15.4% of the total labor
force of 17,182.6 thousand. Of this, 1,951.3 thousand (11.3%) was in nonagricultural sectors and about 700 thousand was disguised unemployment agriculture.
These figures broadly indicate that because the GNP growth rate was low on the
average during 1974-80 while population growth rate, though decreased compared to
previous years was still rather high, unemployment increased over time. Furthermore,
disguised unemployment in agriculture decreased and unemployment in nonagricultural sectors increased at a more rapid rate. This implies that many more
migrants from rural areas to urban could not find jobs.
90
Chapter 7
PERIOD: 1980-1983
7.1. OVERVIEW OF MILITARY INTERVENTION

7.1.1. Historical Overview
Early on December 27, 1979 Kenan Evren joint-chief-of-general-staff,
representing the TSK (Trk Silahl Kuvvetleri: Turkish Armed Forces) as a whole,
had sent a letter of warning through Korutrk, the President to the parliament, urging
the political parties to cooperate and issue the necessary laws within the framework
of Atatrks principles and those in the Constitution in order to prevent terrorism,
anarchy and separatism. When Korutrk let it be known on January 2, 1980 both AP
and CHP declared that the warning was not addressed to them, implying the blame
lied on the other side. Neither did the two major parties come to an agreement to elect
a new president when Korutrks term expired in April 1980. Instead, Sabri hsan
alayangil, a senior AP hand who had been the chairman of the parliament
continued as acting president. But the daily death toll due to terrorism had increased
to 15 to 20 per day and had become unbearable. Therefore, on September 12, 1980
joint chief-of-general-staff and chiefs-off-staff felt obliged to intervene in the name
of TSK to safeguard the country. And great majority of the people (civilians) must
have approved and acknowledged that it was inevitable. Terrorism activities and
killings fell down precipitously the next day. Unlike the 1960 military intervention
which had been worked out by a group of officers who acted independently of the top
commanders, the 12 September 1980 military intervention belonged to the whole
body of TSK with the top commanders in charge. The top commanders, joint chief-
92
of-general-staff Kenan Evren as chairman, chief-of-staff of the army Nurettin Ersin,

chief-of-staff of the air force Tahsin ahinkaya, chief-of-staff of the navy Nejat
Tmer and chief-of-staff of gendarmes Sedat Celasun formed the Milli Gvenlik
Konseyi (MGK: National Security Council) to take on the powers of government;
General Haydar Saltk was appointed secretary to MGK. The activities of the
parliament and of all political parties were stopped; immunity of all parliamentarians
removed and countrywide martial law instituted. Similarly, activities of all NGOs
excepting Trk Hava Kurumu (Turkish Air force Institution) and ocuk Esirgeme
Kurumu (Childrens Aid Institution), were also stopped since during the 70s many
newly established NGOs had been engaged in the covert or overt action of supporting
radical movements and terrorist activities. Some parliamentarians and managers of
DSK were detained. Former chief-of-staff of the Navy, Blent Ulusu was appointed
PM, his cabinet and program which was in line with the declared principles of MGK
was accepted by MGK on 21 September. Most of all government positions, including
governors of provinces and mayors were replaced by former military hands. To
safeguard their lives, Demirel, chairman of AP and Ecevit, chairman of CHP were
taken to the military recreational establishment in Gelibolu; they were later allowed
to go back to Ankara. Erbakan, chairman of MSP and Trke, chairman of MHP,
along with some of the administrators of the two parties in question, on the other
hand, were detained and sent to court. They received two-month jail sentences.
A law passed by MGK on 27 October to function as a temporary Constitution
gave the powers of the parliament to the MGK and those of the president to Evren,
chairman of MGK. A New Constitution was to be prepared by the Kurucu Meclis
(KM: Founding Assembly) comprised of MGK and a Danma Meclisi (DM:
Advisory Assembly). But MGK was the superior organ and DM was only advisory,
as its name implied. Of the 160 members of DM, 40 were appointed by MGK
directly and 120 were selected by MGK from lists prepared by governors of
provinces. None of the members of DK were politicians or administrators in the
former parties during the last parliamentary period. Sadi Irmak was appointed
chairman of DM; he was a former senator in 1973 from the Presidents quota, and
had been asked to form a government in 1974 but had received a no-confidence vote.
In addition, a 15-member Constitution Commission was established, chaired by Prof.
Orhan Aldkat of Istanbul University, to help draft the new Constitution and submit
it to the KM. To prevent any influence in the preparation of the new constitution a
law was passed on October 16,1981 that closed this time all political parties for good;
political activities, declarations of all former politicians and party chairmen were
prohibited. The constitution, when prepared was to be submitted to public
referendum and if accepted the military intervention would end. Later developments
showed that MGK preferred that Turkey should re-enter democracy with new
political parties and new political figures. And this was another important reason why
the old parties were closed for good.
The 12 September 1980 military intervention was in one other aspect different
from the 27 May 1960 military intervention and the 12 March 1971 Military
Memorandum. The latter two were experienced during the period nn was
93
chairman of CHP and in both cases the views of the military were quite parallel to
those of nn and CHP while opposing to those of DP of Menderes and later, AP of
Demirel. Before 1971 nn had declared that CHP was left-of-center but his
personal clear-cut line had not blurred the line of center-left with radical left. In
contrast to the previous interventions, the 12 September 1980 military intervention
placed a distance to Ecevit and CHP as much as it did to Demirel and AP. And it
blamed terror and murders coming from both radical left and radical right. Perhaps
because of this, or of his temperament, Ecevit immediately resigned from the
chairmanship of CHP but broke the law prohibiting political declarations by
politicians and party leaders several times. Therefore, he was brought to court; once
he received a four-month jail sentence on December 3, 1981 and jailed again on July
8, 1982 for nearly three months, but was acquitted later. Obviously Demirel of AP
had greater experience with military interventions and memoranda and did not
challenge the military rules and laws.
7.1.2. Martial Court Round-ups and Court Sentences
As the new constitution was being prepared, terrorist organizations, those that
supported terrorism and radical doctrines, persons, militants, terrorists involved were
all rounded up and brought to martial court on a massive scale. And it involved both
radical left and radical right. The numbers suggest that radical left, including
separatism had a much larger body of militants and supporters. In the first round,
chairmen of political parties who had supported radical movements, like Trke of
MHP, Erbakan of MSP, along with a number of MPs and administrators of both
parties were brought to martial courts and sentenced to short periods of jail. Ecevit
was also jailed for having breached the new law that prohibited political activities
and declarations of political leaders. He had emotionally declared that the
intervention was directed at him. Some former MPs of CHP were also jailed for
support of separatism or terrorism. Hilmi gzar and Tuncay Matarac who had
joined Ecevits 1978 government from outside as ministers were, on the other hand,
sentenced to prison on account of corruption; similarly Selahattin Kl, a minister in
Demirels 1979 government. erafettin Eli, was brought to court on charges of
supporting separatism, he was acquitted on that score but jailed for misusing his
duties. Behice Boran, chairperson of TP, who had fled outside was judged in default
and sentenced to 8 years and 9 months prison for having engaged in communist
propaganda. Dou Perinek, chairman of TKP (Turkish Workers and Peasants
Party) was also sentenced to 8 years in prison in 1983 and served 4 years in jail. Prof.
Sadun Aren, another well-known Marxist-socialist who was an administrator in TP
was brought to court and this time, along with DSK managers and advisers also
received jail sentence. Many renowned artists with radical leftist views who had fled
outside were called back home. They were warned that if they did not, their Turkish
citizenship would be taken away according to the new law that had just been
accepted by the MGK on February 3, 1981. Those who had stayed in Turkey were
brought to court and acquitted, like Selda Bacan and Tark Akan. Others who did
not return to Turkey were deprived of Turkish citizenship. The list included Cem
94
Karaca and Ylmaz Gney; the latter was sentenced not only for his radical leftist
views but also for a murder case. The law applied also to those who had committed
fraud. Yahya Demirel, Sleyman Demirels nephew who had been charged with
fraud but had fled the country had his citizenship taken away in September 1981.
Similarly about 50 persons were also charged with fraud.
Collective trials against organizations, parties, associations, legal or illegal,
against their chairmen, managers and members started since 1981. Some of the more
important included TP, TSB, TKP, the legal leftist political parties, radical
religious MSP and radical nationalist MHP. Other organizations of radical left
included DEV-YOL, PKK, TKP, Dev-Sol, Bar Dernei (Peace Association). TBDER (association of teachers) was closed down for having degenerated into a
Marxist-Leninist activity organization. Of the radical right organizations, GD, IGD
and Aknclar (raiders) were among the more prominent which were closed down.
Information given by the office of joint chief-of-general-staff on July 2, 1982
noted that since the declaration of country-wide martial law a total of 22.783 persons
were taken to court of which 10.540 were tried under arrest. A book published again
by the said office on May 7, 1982 noted that from December 1980 till May 7, 1982
the number of persons taken to court totaled 17.374 of which 14.086 persons
belonged to radical left, 2.941 to separatist organizations and 347 belonged to radical
right.
The Association of Human Rights inventory for the 12 September 1980
military intervention registers that 650 thousand people were taken under
observation, 230 thousand were sent to jail, records of 1.683 thousand people began
to be kept; 71 thousand were brought to court on account of articles 141, 142 and 163
of the Turkish Penal Code and 98.404 were brought to court as members of illegal
organizations.
About 14 thousand who were convicted but had fled the country were denied
their Turkish citizenship. 23.667 associations were closed down because of
involvement with radical movements and terrorism. The prosecutors had demanded
the death penalty to about 7 thousand, of which 517 received capital punishment, the
Military Supreme Court had ratified only 124, of these 50 were executed, including
18 radical leftist terrorists, 8 radical rightist terrorists, 23 non-political capital crimes
and 1 ASALA terrorist caught in action in Ankara, the other ASALA terrorist having
died in action fighting against the police in the Esenboa airport in Ankara. These
executions continued till 1984. The death penalty of those not ratified by the
Parliament, however, was to be changed to lifelong imprisonment according to a law
enacted by the Advisory Council (DM) on 21 December 1982.
The trials, lengthy and on a massive scale, necessitated the extension of the
detention period although it meant a burden for those who were to be acquitted.
There also had been complaints about torture during the detention or in jail, and this
prompted Ulusu government to investigate torture cases and penalize the torturers
when proven. Out of 68 torture claims 40 were (deemed serious enough to be)
brought to court, some of these ended with jail sentences to the torturers. The
government came to the conclusion that torture, though existed, was not systematic.
95
There were also quite a large number of suspect deaths or suicides amounting
to 229. One such incident was radical leftist publisher, lhan Erdost who was claimed
to have committed suicide but it was argued that he had died of police torture. In all,
43 had reportedly committed suicide; and a small number had died of hunger strikes.
According to allegations, 171 had died of torture; the above number also included
those killed in skirmishes with the police or gendarmes.
In addition, 148 university teachers, 3.854 teachers of high schools and
primary schools, 47 judges, about 30 thousand government officials and workers in
all were thrown out. Newspapers were closed down for a definite period whenever
their publications trespassed the laws; about 400 journalists received jail sentences.
Many books, publications of radical left, separatism and radical right were destroyed.
Following the 12 March 1971 Military Memorandum a change in the 1961
Constitution enacted in June 1973 had introduced Devlet Gvenlik Mahkemeleri
(DGM: State Security Courts) to look after cases involving the security of the
country. But it was canceled in October 1976 by the Constitutional Court which
claimed the DGMs were unconstitutional. The 1982 Constitution prepared by the
MGK of the 1980 military intervention, however, had included an article that allowed
DGMs to be established again. Accordingly, a law was passed on June 16, 1983 that
laid down the regulations for DGM and they started to work on April 1, 1984, just
about when Turkey re-entered democracy.
Many radicals of both left and right as well as human right organizations
abroad pointed out to the excesses of the military rule in rounding up terrorists and
separatists. No doubt there had been excesses, many deliberate, some non-systematic
and some accustomed. But at least, the measures and actions were effective in the
strict sense that during the period of military rule terrorism and anarchy was
decreased precipitously. And it should also be stressed here that given the conditions
at the time, human right formulations of such countries like Sweden or Denmark
could never have achieved any effectiveness; it was entirely a different milieu. The
red line distinguishing the excesses versus the necessary should be drawn with a
better knowledge and experience of what really went under the surface concerning
large masses of terrorist movements in Turkey at the time. There was too much
condemnation by human rights groups in Europe about the breach of human rights
of terrorists, but insufficient acceptance that the radicals were committing criminal
actions, and were leading Turkey to a black future.
7.1.3. Reorganization of Universities and YK
It may seem odd to place reorganization of universities, labeled university
reform by MGK immediately following measures for fighting terrorism but
obviously this was what had been in Evrens mind and that of the military. Because a
great deal of demonstrations, skirmishes, armed clashes with the police force or
between rival radical groups were initiated by university students (many, actually
were not university students proper) and because these actions took place within
university premises, and also because many university professors and teaching staff
with radical leftist tendencies encouraged and sided with radical left while a small
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minority of university staff with radical nationalist tendencies encouraged and sided
with the idealist youth activists, Evren and other members of MGK must have
reached the opinion that an important measure to stop radical movements and
terrorist activities would be to control the universities tightly as is the case with
military academies. So, MGK was not content only with throwing out 148 university
teaching staff with radical leftist tendencies but set about the task of reorganizing the
universities. Evren must have consulted some university professors with center-right
or centrist tendencies who must have argued to him that since the MGK had thrown
out so many staff with radical views, it meant that the rest who stayed in their jobs
did not need to be disciplined within a rigidly centralized set-up. hsan Doramac,
however, went along with Evrens views; he assured that the new organization would
be along lines similar to those met in advanced countries. Thus, Yksek retim
Kanunu (YK: Higher Education Law) accepted by MGK became operative since
November 6, 1981. According to the law a Yksek retim Kurulu (YK: Higher
Education Committee was established of 25 members; 8 to be appointed directly by
the president, preferably from those who had been rectors (university presidents), 6 to
be appointed by the Cabinet from high-rank government officials, 1 by the military
joint-of-staff, 2 by the Ministry of Education, and 8 to be elected by inter-university
committee among professors that are not members of the said committee. The
Presidents approval was necessary for the appointment of all the latter, not appointed
directly by the President.
YK had the final authority in promoting professorship, on decisions
concerning students, and acting as the echelon immediately below the president in
selection of university rectors and teaching programs. All other bodies, such as interuniversity committee, student election and placement center, University Supervisory
Committee were tied to YK. The chairman of YK was to be selected by the
President. As a reward, hsan Doramac, the ex-rector of Hacettepe University was
appointed the chairman of YK. He was also allowed to establish a foundation
university, Bilkent in Ankara, the only one allowed at the time. Bilkent eventually
became one of the best universities in Turkey. Cemi Demirolu, rector of Istanbul
University at the time was a close supporter of hsan Doramac. In January 1983,
Istanbul University awarded honorary professorship and honorary doctorate title
(in law) to Kenan Evren. Some time later Demirolu was able to establish Florence
Nightingale, a full-fledged hospital, which also became one of the best hospitals in
Turkey. YK and hsan Doramacs defenses of YK was met with disapproval
and protest declarations from other university professors. But these protests were
unheeded, partly because they came from mostly those with leftist tendencies, and
mainly because Evren et. al. were true believers that this new set up would work.
Contrary to Doramacs arguments, this new set up had no parallel whatsoever in
Europe or the USA, but that too did not matter. YK (Higher Education Committee)
was incorporated into the 1982 Constitution. Thus it became very difficult to abolish
or change it. But this was not the only reason. All the parties of both center-right and
center-left promised in their general election campaigns and programs to reform
YK; some argued it would be transformed into a coordinating or planning body
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only. But when in power mostly as a coalition, none of the parties attempted even to
change the law and thus soften some of the implementations under YK.
In retrospect, the aims for establishing YK did not materialize. The main aim
was to prevent radical movements of left or right and to prevent demonstrations and
terrorist activities. Student demonstrations did indeed decrease but because over time
university students, on the whole, became disenchanted with radical political
movements and to some extent with politics. Radical leftist and separatist movement,
however, gained incomparable strength with PKK. After Evrens term as president
expired, he was succeeded by Turgut zal and then by Sleyman Demirel. And
during their period, open or disguised religious movement gained strength
particularly in some universities established in Anatolian provinces. The two
civilian presidents mostly appointed moderately or radically rightist rectors; this
was easier particularly for state universities in smaller Anatolian provinces. Only
after Ahmet Necdet Sezer became president that this picture changed and YK took
a strong stand again against radical religious and nationalist right.
The second argument was that quality of teaching, research and publications
increased with YK. This is also hardly the case. To be fair, YK was not the only
reason for the demise in the quality of Turkish universities relative to US or the
British, There were other very important reasons. One was the opening up of too
many universities, both foundation (private) universities and also state universities.
The state universities in many Anatolian provinces were, in fact, opened with little
background preparations for teaching staff. Foundation universities in big cities like
Istanbul and Ankara, on the other hand, took away many teaching staff from state
universities in the same provinces by giving them higher salaries. Thus, competent
staff in all universities was spread thin. The foundation (private) universities acted
more like commercial and profit institutions while government universities were
crippled with lack of funds. Low salaries of professors in state universities was a
crucial factor not many bright graduates wanted to pursue the academic career. The
centralized power of the rectors over deans and over professors under YK made
things even worse.
The education system in Turkey from high schools to universities and lyceums
of technical professions are all in need of complete overhaul. But that was attempted
neither after the 1960 military intervention nor after the 1980. Granted some
improvements in teaching over time did take place in the Turkish universities, but at
a much slower pace by international standards, hence the margin between Turkish
universities and good universities in the USA or in UK increased because of YK
plus meager finances.
One interesting development concerning education other than YK was the
introduction of religion lessons to primary, medium and lyceum level schools in
September 1982, depending on an article that had already been inserted to the new
constitution in preparation. The aim was to give the youth correct knowledge under
state control about religion. It gave rise, however, to the differences between Sunnite
and Alevi sects and how to treat these differences in the education of religion.
98
A second interesting development was forced and relatively highly paid work
for doctors of medicine in the Eastern region where there existed an acute shortage of
doctors, 2 years before the doctorate, as practitioner, and 2 years later as specialist,
per law issued in 1981. Evren must have reasoned that just as the military had a
specific period of service in the poorer Eastern provinces, so the doctors should, in
order to alleviate the shortage of doctors in these provinces. It did not work.
7.1.4. Highlights of International Relations During the
Intervention Years
Defense Cooperation Agreement with the USA that had been signed on March
29, 1980 continued during the MGK period, and the agreement plus annexed
agreements were approved on February 1, 1981. A most notable development with
regard to Turkish-USA relations was Greeces re-entry to the military wing of
NATO. After Turkeys military intervention to Cyprus in 1974 Greece had
withdrawn from the military wing of NATO and this had left the USA in a difficult
position because of US military bases there. Greeces application to NATO in 1977
was blocked by Turkey. In February 1978 Greeces proposition about air control
limits and establishment of a separate NATO headquarters under Greek command,
that was looked favorably by NATO had been turned down by Demirel government
and in 1979 Demirels government had vetoed Greeces re-entry to NATOs military
wing. NATOs commander General Rogers had thereupon changed the plan to
incorporate Turkish views about air space and offered a compromise. This plan too
had been rejected by the Demirel government. Kenan Evren, however, accepted the
Rogers plan after the 12 March 1980 military intervention and thus enabled Greece to
re-enter NATOs military wing. Thus, it was clear that both Turkey and MGK
government and the USA spent their best efforts to continue the smooth working of
the defense cooperation agreement between the two countries.
The Cyprus question, however, acquired a new dimension when the Cyprus
Turkish Federated Assembly decided on November 15, 1984 to establish a new state,
North Cyprus Turkish Republic (KKTC: Kuzey Kbrs Trk Cumhuriyeti) with Rauf
Denkta as president. This was just following the general elections held on 6
November for returning to democracy. Turgut zal and ANAP had obtained the
absolute majority in the newly elected parliament. No international organization and
no state but Turkey recognized KKTC, not even those Islamic countries with friendly
ties with Turkey. The US senate, even before the move, in April 1983 had reduced
the military aid to Turkey while increasing that going to Greece. Shortly after the
1983 elections, on December 1, 1983 Turkey froze her relations with Israel.
During the military intervention years Turkeys relations with the EEC and
with the European Council was one of tolerance and wait-and-see. Since democracy
had interrupted Turkeys political relations with the EEC, the meetings of
Membership Council and of Mixed Parliamentary Commission were suspended. But
economic relations continued.
European Council, on the other hand, continued to keep Turkey as member. A
proposition to expel Turkeys membership in January 1982 was turned down and
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time was allowed for observing future developments, that is, for Turkeys return to
democracy. Otherwise, the European Council froze its relations with Turkey and the
Turkish delegation of MPs ceased to participate in the European Council meetings
throughout the military intervention years.
In the meanwhile, ASALA terror and murders of Turkish diplomats by
ASALA terrorists in the European countries continued and even increased.
7.2. MAJOR ECONOMIC DEVELOPMENTS

DURING THE INTERVENTION YEARS
A most notable development about economic management during the military
intervention period with long-run effects was the decision to appoint Turgut zal as
Minister and aide to PM in charge of economic affairs in the Ulusu government.
Turkeys stand-by agreement with the IMF was in force and this move showed the
intentions of the military and MGK to comply with the policies and requirements of
the IMF agreement. Turgut zal had gained the trust of international financial circles
with his management of the 24 January 1980 economic program. zal did continue
to abide by the rules of the stand-by. He did not introduce any radical measure in the
way of opening the economy more to the world markets, however, presumably
because the government and the economy was not ripe for such moves. He was
careful to raise the prices of SEE products to prevent budget deficits, and the Central
Bank kept raising the exchange rate to prevent the current account deficit from
getting out of control. Wage rises and employment in public administrations and
SEEs, on the other hand, were restricted; so were strikes per force of martial law. As
a result of sticking carefully with the 24 January 1980 economic program and IMF
stipulations exports began to rise and inflation began to slow down. So much so that
zal was chosen the economic minister of the year in 1981 by international financial
circles.
At the same time, however, signs of a serious financial problem called the
Banker Crisis began to appear. To be fair, the root of this problem lied with the
previous governments. When the securities market began to get active many single
persons or firms entered the market as bankers. They collected money from savers,
promising them high returns and invested them in securities to profit from the
difference between the actual interests or dividends they received and the returns they
paid to savers. The former governments and ministries of public finance had not
controlled the bankers adequately, neither with regard to their personal history and
competence nor with regard to their capital and their transactions. And many bankers
proved unscrupulous or outright fraudulent. Early in January a banker who
disappeared with 50 million TL. debt to savers was caught and brought to court.
Kaya Erdem, the minister of public finance of the Ulusu government, sensing
the problems ahead, established limits in September 1981 to the interest rates offered
by bankers to the savers. In November 1981 he prohibited the sales of deposit
100
certificates by bankers and in December 1981 he warned the public and savers openly
not to throw their money to danger (by dealing with the bankers) and regulations
were also introduced to the operations of bankers. Obviously all this was of little
avail. By December 1981 two banker brothers had escaped abroad with 2 million TL.
in debt to savers they did not pay; another with 50 million TL. in debt committed
suicide. By June 1982 one of the bigger bankers, Cevher zden (Banker Kastelli)
escaped abroad with billions of TL. in debt to savers. Meanwhile another big banker
firm, MEBAN also defaulted, claimed bankruptcy and its debts were re-arranged,
much less than promised by MEBAN to be paid to savers. The savers who suffered
from the bankers formed an association and demanded the resignation of zal and
Erdem. Indeed, on June 14, zal, Erdem and erif Tten, minister of public works
resigned. Adnan Baar Kafaolu was elected minister of public finance to overlook
the economy, Kastelli was later caught in Tunis in September 1982 and brought to
court. He was, however, to be acquitted much later, in 1984. By January 1983 the
number of savers who suffered from the bankers crisis amounted to 149 thousand,
and savings lost to bankers amounted to 54 billion TL. against 37 billion TL. worth
of bankers capital.
In March 1983 still another small crisis occurred; two small banks, Hisarbank
and Istanbul Bank went bankrupt. zer iller, Tansu illers husband was a manager
in the Istanbul Bank. Another economic event worth mentioning here concerns GAP
(Gney Anadolu Projesi: South-Anatolian Project). On November 3, 1983 just before
the general elections, Kenan Evren laid the foundation of Atatrk dam and hydroelectrical energy installation within the GAP. It was to become the biggest dam,
electrical energy and irrigation project for Turkey and the 5. in the world. GAP was
first designed and planned for Turkey by Demirel. An immense complex of 15 dams,
18 hydroelectric energy installations and irrigation systems over the rivers Euphrates
and Tigris, the total cost was huge. Therefore, it is still incomplete; work over the
complex continues whenever financing in possible. Atatrk dam, for instance, was
completed in 1990, 7 years after it was started. Energy installations were to take
longer.

DURING 1981-1983
Growth performance of the economy is summarized in tabular form below:
Yearly GNP
Years Yearly price rises
growth
1981
42.4%
5.3%
1982
28.2
3.7
1983
26.2
4.6
* Source: SIS ibid, pp.16, 409-10.
Population
growth rate
2.2%
2.2
2.3
Per capita GNP

growth rate
3.1%
1.5
2.3
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For the three years 1981-83 yearly average GNP growth was 4.4%, yearly
average price increase (implicit GNP price index) was 32.6% and yearly average per
capita GNP growth was 2.2% with 2.2% yearly population growth rate. The figures
show that following 1980 growth was not remarkable but not entirely unsatisfactory
despite radical political upheavals. Following the 24 January 1980 devaluation and
stabilization package, inflation had began to decrease appreciably despite continual
price rises of SEE products and raising of the exchange rates by the Central Bank.
By the end of 1983 the value of the dollar, as the yearly average had risen to
230 TL. Turkeys trade balance, however, experienced a slight setback in 1983. By
1982 Turkeys exports had risen to 4.746 thousand dollars and imports were 8.843
thousand dollars. In 1983 Turkeys exports fell slightly to 5.728 but imports rose to
9.235 thousand dollars.
By 1983 total population was 47.864 thousand (mid-year) urban population
49.4%, rural 50.6%. (SIS, ibid, p.22). Agriculture comprised 19.7 of GDP in current
prices, industry 23.1% of which manufacturing was 20.3%, slightly higher than
agriculture; services comprised 57.2% of which construction was 5.6% (SIS, ibid,
p.410).
In 1983 total civilian labor supply was 18.492 thousand, total employment
15.682 thousand, total excess labor supply 3.475 thousand of which 667 thousand
was disguised unemployment in agriculture and 2.810 thousand excess nonagricultural labor supply. Total excess labor supply was 18.8% of total labor supply.
Thus, there had been an increase in unemployment since 1980. Excess nonagricultural supply in 1980 was 1.951 thousand, disguised unemployment in
agriculture 700 thousand, total excess labor supply 2.651 thousand, or 15.4% of total
labor supply (SPO, annual programs).
7.4. THE NEW CONSTITUTION AND GENERAL

ELECTIONS
7.4.1. The New Constitution 1982
The new Constitution prepared by the MGK was submitted to referendum on
November 7, 1982 and accepted with 91.3% yes votes. Compared to the 1962
Constitution, the new Constitution, expanded the authority of the executive branch
(over the legislative and the judiciary) and of the President, restricting, however, the
rights of individuals. It also increased the weight of the military in the government as
opposed to the civilian, that is, the government and the parliament. Many of the
stipulations and restrictions obviously were intended as precautions against terrorism
and separatism. The major differences in the 1982 Constitution from the previous can
be summarized as follows:
The legislative branch (the parliament) can grant the executive (the government)
the right to issue decisions in the force of law (Kanun Hkmnde Kararname:
KHK; art. 91 of the 1982 Constitution). Thus, in those areas the government
102
needs to act swiftly it can do so without having to go to the Parliament to pass a

law.
The president is to be elected only for once but for 7 years; he has to be neutral
and resign from his political party if previously a member. He can be nominated
from outside of the parliament with 1/5 of MP votes.
He can veto and send any law back to the parliament for reconsideration and
change. He will have to okay it, however, if it comes back from the parliament
unchanged. But, he has the right to send laws and KHKs to the Constitutional
Court for annulment.
He has the right to renew general elections.
He will act as chairman of MGK and chair the cabinet any time he deems
necessary.
He is empowered to elect the chairman of YK, to approve of YK members.
Similarly, he will elect 1/4 members of the Council of State (Dantay), the chief
attorney general and his aide of the Supreme Court of Appeals (Yargtay),
members of the Military Supreme Court and members of the Higher Committee
of Judges and Attorney Generals (Hakimler ve Savclar Yksek Kurulu).
The 1982 Constitution abolished the Senate that was established by the 1961
Constitution.
In the MGK (National Security Committee) that had been instituted by the 1961
Constitution, the weight was tilted to the military. The number of military
members in the MGK now exceeded the civilian (that is, the members of the
Government including the PM). Moreover, while the 1961 Constitution
considered MGK as an advisory body, the 1982 Constitution specified that the
government had to give priority to the advices made by the MGK. The areas to
be taken up by the MGK were also widened.
Military commanders of the martial law were made responsible to the joint-chiefof-general-staff instead of the Prime Minister.
The 12 September 1980 military administration was to be immune from any
control by the judiciary; in simple terms, this meant no one could sue them for
their decisions after return to democracy.
On paper, the right to enter or establish labor unions and associations was
granted. But the applications would have to be allowed by the responsible branch
of the executive; similarly the right to organize demonstrations, and issue mass
declarations.
In specified cases individual rights was left to the option of security forces, and
not to the judiciary.
YK in outline was incorporated into the Constitution.
Similarly, the State Security Courts (DGMs).
A transitory article stated that the present chairman of MGK, Kenan Evren would
be (considered) elected as new president for 7 years if the Constitution is
accepted in the referendum.
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The high approval rate of 91.3% in the referendum, on the other hand, should
not be interpreted that the public had overwhelmingly agreed with all the points and
details in the 1982 Constitution. A minor factor in the high rate was that the light
brown envelopes used in the referendum were so thin that the person in charge at the
polls could see whether the voter had put in a red (no) or a blue (yes) paper in it. Of
course, the more serious and important factor was the awareness on the part of the
voters that if the constitution were rejected, it would usher in uncertainties and more
time would be needed for the preparation of another, acceptable constitution, hence
delays in returning to democracy. Besides, many voters must have also felt that the
military was quite objective in its treatment of radical left vs. radical right terror,
witnessed neither in Ecevit nor in Demirel.
The high yes votes of the 1982 Constitution contrasts sharply with the 61.5%
yes votes the 1961 Constitution had received. In the 1961 case, though some part of
the voters may have replied in the affirmative just to get over with the military rule, a
large part of the voters must have felt that the treatment of the military of the political
parties was not quite objective. They had the opportunity to show their dissent
because the envelopes used in the 1961 referendum were thick enough.
7.4.2. New Political Parties
The new Constitution having been approved, MGK passed a new law on 25
April 1983 which aimed that Turkey should re-enter democracy with new parties and
new names and the new parties would have no ties with the old ones. Hence, entry
into the general elections of the new parties was tightly controlled by the MGK.
The new law prohibited entry into new parties of persons who had been
founding members, chairmen, administrators and disciplinary committee members of
old parties that had been closed down. No new party would be allowed as a
continuation of an old party. As such any new party in which the majority of the
members were from old parties, would not be allowed.
According to the new law new parties could be established provided they
would have 30 founding members. Given the above constraint on members and the
minimum number of founding members, a new party had to apply to the Ministry of
Interior (an ex-General) of the Ulusu government to get the approval for each
individual founding member. The veto used in actual implementation on each
member was general and not confined to the stipulation concerning being a member
of an old party mentioned above; a person not a member of an old party could also be
vetoed for other reasons. This authority enabled the MGK to manipulate the entry of
new parties to the coming general elections. Originally MGK had intended to permit
only two parties. A center-right party, Milliyeti Demokrasi Partisi (MDP:
Nationalist Democracy Party) which was allowed to be established and chaired by an
ex-General, Turgut Sunalp. The other party to be allowed would be center-left and
chaired by Necdet Calp, a former general secretary of smet nn. But there were
other efforts to establish new parties. One such effort came from Sleyman Demirel
and AP in the background; Byk Trkiye Partisi (BTP: Great Turkey Party) was
allowed, chaired by a former general as the faade. Turgut zal also established his
104
own party, Anavatan Partisi (ANAP: Motherland Party). Since Ecevit had refused to
take part, a center-left Sosyal Demokrasi Partisi (SODEP: Social Democracy Party)
was established, chaired by Erdal nn, smet nns son and former rector of
ODT (Middle East Technical University) in Ankara. They all applied to the
Ministry of Interior for approval. Polling was out of question and it does not lead to
accurate results even in relatively normal times. But, the feeling at the time was that
if allowed, BTP could well come out as the first party. But, the majority of its
members were from the old AP. The next day after its application to the Ministry of
Interior, alayangil and 143 former AP members also entered. Therefore, BTP was
closed down by the Ministry because of its ties with an old party. They immediately
applied this time as Doru Yol Partisi (True Path Party) to be chaired by Yldrm
Avc. But both DYP and SODEP founding members were vetoed and thus they were
unable to enter the coming general elections scheduled on November 6, 1983.
Similarly with a number of radical party attempts. The case of ANAP was interesting
because the original aim of MGK was to allow only two parties, one center-right and
one center-left only. But there was a lot of pressure coming from outside, the
financial and business as well as political circles. According to the argument of these
circles, such strict controls on parties would mean it will not be a true return to
democracy. The argument was only half correct, because it ran as if allowance of
ANAP alone would enable the return to a full-fledged democracy. It was thought at
the time that ANAP would, at any rate, not get much votes. Hence, it too was allowed
to be established and thus three political parties were entitled to enter the 6
November general elections. Some insiders point out that zal had asked Demirel
personally to merge since they had common programs, but Demirel had replied that
only zal could join and all other ANAP members should be shed. But eventually
Demirels party BTP was closed, and DYPs entry was blocked while zals party
was allowed and went ahead to win the 1983 elections. Another interesting fate was
zals MP candidacy for MSP, the radically religious party back in 1979. Had he
won the elections in 1979 and become an MP he would have been denied to be a
founding member and the chairman of any new party; for that matter he would not
have been called by Demirel to supervise the 24 January 1980 economic program and
would certainly not have been chosen as Minister and PM aide to Ulusu government.
Meanwhile, MGK continued to keep tight screws on political activities. To
wit, according to a decision of MGK on June 2, 1983 fifteen old, renowned political
hands were sent to Zincirbozan, Martial Law Commanders installations, for forced
residence. Of these 7 were from AP, including Sleyman Demirel, hsan Sabri
alayangil (who had joined later after he returned from abroad), Ekrem Ceyhun,
Saadettin Bilgi, Hsamettin Cindoruk, Mehmet Glhan, Ali Naili Erdem, and Nahit
Mentee Those from CHP included Deniz Baykal, Srr Atalay, Celal Doan,
Sleyman Gen (much later he joined DYP) and Yksel akmur. They all were
released by September 30, 1983.
Pressure on the press increased (TV at the time had only state-owned stations).
Many newspapers were closed and journalists jailed. Just coinciding with the general
elections, a still more repressive law concerning the press was first passed in the
105
Advisory Assembly, then in the MGK and was put in force on November 10, 1983.
The Law on State Security Courts (DGMs) had also been passed on June 16, 1983;
they were organized and to started work on April 1, 1984. Thus Turkey re-entered
democracy with November 6, 1983 general elections with controlled parties and
under controlled conditions. The good intention was to prevent terrorism as well as
government and coalition crises and failures in the future.
One other negative trait of the new law on political parties that should be
mentioned at this point was the expanded powers and authority it gave to the
chairman of the party, or the leader. The chairman of the party could, for instance,
block and cancel any provincial party administration and ask for the renewal of the
election of provincial administrators. This gave the leader, once elected, the
opportunity to wipe out the opposing groups and cliques and consolidate his hold on
the party. In addition, he could always use his influence in deciding upon MP
candidates for a new election. These powers, aptly labeled leaders sovereignty
(lider sultas) were used later by most of the chairmen or chairwomen of political
parties to wipe out personal rivals, competitors, opposing groups, or those who
disobeyed the chairperson. It consequently led to lower and lower quality of MPs to
cluster around the leader. The leader ended up getting around him or her
mediocre party administrators or ministers when in power and thus the votes of the
parties deteriorated over time.
7.4.3. The New Election Law and Nov. 6, 1983 General
Elections
On June 10, 1983 the MGK put in force a new law concerning elections. The
law was obviously prepared with the good intention of preventing in future
government crises, too many parties in the parliament unable to form a coalition. But
it severely impaired the equitable representation of different political movements and
in retrospect, could not avoid unlikely coalitions, let alone coalitions, either. Since in
the 1983 elections the political parties allowed were restricted by means of vetoes on
founding members, these disadvantages were to appear in the subsequent elections
was well.
The June 10, 1983 election law accepted proportional representation in
principle but introduced two tiers of barrages. The first was the general minimum
limit of 10% of total country-wide votes cast for any party in order to be able to send
MPs to the parliament. This limit was set at a high figure of 10% in order to prevent
too many small parties entering the parliament. The second barrage was at the level
of each election region (later, big provinces were divided into smaller election
regions). If a party, though having surpassed the 10% general limit did not obtain
enough votes in a particular election region, equal to the average figure for a single
MP candidate, then that party could not have MPs from that region. A numerical
example would be helpful to show clearly how this second limit disrupted
proportional representation. Supposing, we have an election region of 3 MPs and
total votes cast and valid in that region were 90 thousand. Supposing that only 3
parties entered the elections, party A obtained 32 thousand votes in that region,
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parties B and C each obtained 29 thousand. Under these circumstances, Party A

captured all the 3 MP seats, parties B and C could obtain none. Therefore, starting
with 1983 elections, true proportionality or representation began to diverge
significantly in favor of big parties and to the disadvantage of the smaller parties. The
later criticisms and suggestions centered mainly on two propositions. One was to
lower the general country-wide limit from 10% down at least to 7%, or preferably
5%. The other, and a better alternative suggested was single MP regions with
possibly two tiers of elections in case none of the candidates of political parties
obtained over 50% of total votes cast in the first round. But the political parties in
power, thinking the old system would work to their advantage, never wanted to
modify and reform the election law. Thus we came to the 2002 general elections in
which one single party (AKP) obtained only about 1/3 of total votes cast but nearly
2/3 of seats, the limit required to change the Constitution, because in that election
only one other party (CHP) had obtained about 19% of votes and all other parties
remained below 10%. Therefore, all the advantage of obtaining MP seats went to
AKP (as well as some to CHP); a blatant divergence from the principle of
proportional representation.
With this new (unrepresentative) election law, and under strict controls
imposed on the press, the three parties were allowed to enter the November 6, 1980
general elections. ANAP under Turgut zals leadership obtained the absolute
majority in the parliament with 45.1% of the votes and 211 seats (52.9%) out 400, or
399 with one vacancy; HP under Necdet Calps leadership obtained 30.5% of the
votes and 117 seats (29.3%) and MDP under ex-general Turgut Sunalp 23.3% of the
votes and 71 seats (17.8%), with 1.1% of votes having gone to independents who
obtained no seats.
Since the original intention was two parties and since center-right generally
commanded a much greater percentage of votes compared to center-left, the expected
result in the beginning was that MDP would come to power and HP would be the
(sole) opposition. Therefore, the outcome needs some explanation.
There were several important reasons why MDP which started out as destined
to govern became destined to extinction. To start with, Turgut Sunalp, though
perfectly gentlemanly otherwise, was not approved by the public as a political leader.
For instance, at times he was harsh in dealing with the journalists. Had Blent Ulusu
accepted the chairmanship of MDP, its fate could have been different because Ulusu,
though not fiery and charismatic, had impressed the public as very careful and
responsible in governing the state. But instead, Ulusu and a number of his more
important colleagues chose to run as independents within the MDP list. They won the
elections and stayed in the parliament as independents, as if in reserve. The harsh
treatment of the press, newspaper closures, jail sentences initiated by the military
government or MGK all worked against MDP because it was considered the
continuation of the present - and a repressive - military government. While the
former radical religious voters, most of all the radical nationalist voters refrained
from voting for MDP, it was apparent that Demirel must also have instructed his
close entourage not to vote for MDP on the premise it would be hard to overthrow a
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political party preferred by the military but relatively easier to overthrow a civilian,
say ANAP. Hence a certain part of the center-right votes went away from MDP to
ANAP. Besides, on the TV panel of party leaders and generally, zal gained points
as knowledgeable about the economy in all its details and full of novel ideas while
Sunalp preferred to read the scripts prepared by his close advisers. As ANAP was
gaining strength, the top echelons of MDP convinced Sunalp this time that Kenan
Evren should intervene and stop this trend. Evren readily complied with the request
and just before the election day declared that he believed the voters should vote for
the right party that would continue the operations of MGK and not any other,
implying to vote for MDP, not for ANAP. This must have been the last straw and
MDP that was destined to govern could not muster votes even to enter a coalition and
instead was doomed to extinction.
There were also several further reasons why Turgut zal and ANAP came out
first and won the absolute majority in the parliament. One reason was Turgut zal
was already well-known among the business community both in Turkey and abroad.
Another reason was, in his own words, he had combined the four different
movements all in ANAP. One movement was not quite to be labeled a movement,
but nonetheless a number of left-leaning persons who turned reformist had joined
ANAP for its reformist stance. But this could not and did not bring zal votes from
center-left and radical left. On the other hand, and overwhelming majority of former
voters of the radical religious party MSP, and those of radical nationalist MHP went
to ANAP; these two movements not being represented by any independent party. A
great deal of the former center-right AP also voted for ANAP.
And as a final major reason, Evrens final statement, as mentioned above, had
backfired and worked in favor of ANAP. But most of former AP members in ANAP
had sour or soured relations with Demirel. Whatever the starting point, zal as PM
and Evren as President worked in perfect rapport later.
As for the center-left HP, a vote around 30% seems relatively on the low side
but not by much. It should not be forgotten that Leftism was not a grass-roots
movement in Turkey; majority of workers, farmers, small traders, etc. were all
center-right. Hence, CHP or any center-left party could command normally around
30 to 35%. The 42% acquired by Ecevit in the second half of 70s was very
exceptional when hopes about left rode very high, so did hopes about Ecevit. But this
wave had died by 1979.
7.4.4. A Comparison of the 1980 Military Intervention with
1960 Military Intervention and an Evaluation in
Retrospect
An attempt will be made in this section, firstly to compare the 1980 military
intervention and the 1982 Constitution with the 1960 military intervention and 1961
Constitution, and secondly to evaluate the 1980 intervention and 1982 Constitution in
retrospect to determine whether it has succeeded in attaining the goals aimed at
initially.
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Both military interventions were inevitable in the sense that they had to be
undertaken to redress a very critical situation prevailing at the time of the
intervention which could not be avoided within the democratic process. One may,
therefore, call both military interventions as reactions to a prevailing problem and
aimed at solving that problem. But, in so doing, both interventions and constitutions,
opened the way to different set of serious questions in the aftermath.
As for the major differences between the two interventions and constitutions,
the 1960 intervention was initiated by a closely-knit group outside of the top brass,
the endorsement of the entire military including the top brass was subsequent though
very soon. In contrast, the 1980 military intervention was hierarchical and it involved
the whole of the military from top brass down to lowest echelons.
Following the 1960 military intervention some military groups or individuals
attempted to institute a permanent military rule. This was never the case for 1980 and
after 1980 we did not experience any military group or individual attempting a coup
dtat for a permanent military rule.
The 1960 intervention and the 1961 Constitution aimed at restricting the
powers of the executive branch and the legislative, that is, the powers of DP
(Democrat Party) or its successor even if they obtained the absolute majority in the
future parliaments. DP had made a grave mistake of trying to destroy the opposition,
that is, close down CHP through the legislative branch. The 1980 intervention and
1982 Constitution, in turn, aimed at preventing terrorism both of radical right and of
radical left and separatism, as well as preventing government crises and ensuring
stability of governments.
The 1960 Constitution, in order to curb the misuse of power of absolute
majority in the parliament and of the government, restricted the powers of the
executive and the legislative and expanded the authority of judiciary and the rights
and freedoms of the individuals as much as possible. The proportional system in the
elections, the senate on top of the parliament, the Constitutional Court were all
designed to serve the same purpose.
The 1980 intervention and 1982 Constitution, in turn, expanded the powers of
the executive and of the president and restricted those of the legislative and the
judiciary. It also restricted individual rights and freedoms, all in order to enable the
government to deal more effectively with terrorism and with those in bureaucracy
who supported terrorism.
The National Unity Council of 1960 arranged for special trials of the leaders of
DP. Bayar, Menderes, Zorlu and Polatkan received death sentences, the latter three
were executed while Bayar was saved because of old age. Incidentally Menderes
execution eliminated any possibility for the follower of former DP to come back with
a vengeance. Many other former DP MPs and members were also jailed. The 1980
intervention, jailed or detained former leaders of center right and center left only for
brief periods and primarily with the purpose of preventing them to engage in political
activities or declarations. Leaders of radical movements and parties received a
harsher treatment. Hundreds of thousands of terrorists, both radical right and left and
separatists were rounded up, many received capital punishment, thousands were sent
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to jail. But the military and the military courts were objective with regard to radical
right vs. radical left terrorists and supporters.
In the 1961 Constitution the role of the military was limited to the newly
created MGK which was to act only as an advisory body. But de facto the presidents
elected were all from the military and the military kept close control as was manifest
in the 1971 Military Memorandum. In the 1982 Constitution the member of the
military in the MGK was increased to surpass the civilian and it was stipulated that
the government should give priority to the advices made by the MGK. Kenan Evren
was elected as president but after him the three succeeding presidents, zal, Demirel
and Sezer were all civilian.
The 1960 Constitution was not directly concerned with the stability of
governments, it was not an issue in the past; the problem was DP or its inheritor
would go on obtaining absolute majority and how to curb its (dictatorial or
undemocratic) powers. The 1980 intervention and 1982 Constitution was concerned
with government stability as well, and devised measures to prevent it. Double tier
limits to political parties for entering the parliament in the 1983 law on elections
were instituted for that purpose. The MGK was also determined not to let old
politicians enter politics again and no new parties were to be continuation of old
parties active before the intervention. Political bans on old politicians were
introduced and new parties and MP candidates were tightly controlled and vetoed, a
new party with ties to an old party was closed down.
The economic regime was another important issue, though less critical
compared to the political problems at hand. The 1961 Constitution was a reaction to
the liberal economic regime implemented by DP, arguing that it led to inflation,
unproductive investments and unequal distribution of income. Therefore, it stated
that Turkey would have mixed economy and planned development, involving SEEs,
interventions and protectionism. The center-left interpreted the mixed economy as
one with a greater role assigned to the state, SEEs, and intensive controls,
interventions and protectionism. And many reforms were brought to the political
agenda. center-right interpreted the mixed economy, however, still with accent on the
encouragement private enterprise and FPC flow (DPIs).
In contrast, the 1980 military intervention was made when Turkey had a standby agreement with IMF and was moving away from closed economy, importsubstitution industrialization model to export orientation, opening to world markets
and decreasing government interventions on prices. So the MGK kept faithful to the
IMF agreement and brought zal in charge of the economy to continue with these
policies.
The 1960 intervention was mainly addressed against the DP, hence many DP
voters must have felt that the intervention and the 1961 Constitution penalized the DP
and favored CHP. Hence, the 1961 Constitution received a relatively low, 61.5%
affirmative votes. This implied that only a small part of former DP voters voted yes
for the Constitution with the intention of ending the military intervention. The 1980
military intervention, however, was initially approved by a great majority of people
and received a strong ratio of 91.4% affirmative votes. Part of these voters in 1982,
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however, voted with the aim of ending the military rule rather than truly approving
the contents of the Constitution.
Did the interventions and new constitutions prevent the serious political
problems prevailing at the time? Evidently, 1960 intervention failed because in 1965,
AP, a follow-up of former DP came to power. In the 70s and after the 1971 Military
Memorandum the picture was changed only because left movement had gained
strength particularly in the urban regions, the youth, and the more educated, up until
1979. The radical religious right and radical nationalist right on the other hand, had
impeded the vote-getting powers of center-right, by taking away votes from it. But
more importantly the restraints on the executive branch in the 1961 Constitution and
inability of the governments to throw out radically inclined bureaucrats all went
together to create a mess of terrorism particularly during the 70s. Therefore, in the
1980 military intervention, concern this time with preventing terrorism as well as
government crises came to the forefront. Hence, the opposite direction of the 1982
Constitution which restricted individual rights and freedoms and increased the
powers of the executive as opposed to the legislative and the judiciary.
Did the 1980 military intervention and the 1982 Constitution achieve the good
intentions of preventing terrorism as well as unstable governments and did it prevent
old politicians from re-entering politics? The answer, unfortunately, is that it
achieved none of these. Moreover, it also created many other serious problems
without having solved the problems it set out to solve.
Firstly, it did not prevent terrorism and separatism. Despite tight controls on
the university by means of YK, tight controls on labor unions and on NGOs,
increased powers of the executive, terrorism and separatism still blew into practically
an all-out armed struggle between the military and the PKK. Many observers may
deny it, but behind the terrorism and demonstrations of radical left there was always a
strong faction of radical leftist separatists. The university youth since the 80s
eventually disassociated itself from Marxism-Leninism-Maoism and Che, but
separatists retained their radical leftist doctrine. YK, however, though not much
relevant concerning PKK terror was instrumental in lowering the relative quality of
the universities. The powers given to the executive by means of KHK (decrees in the
force of law) de facto took away all the force of the legislative, that is, the parliament
during zal period. The powers of the executive on bureaucrats was not used to bring
those with radical tendencies to passive positions but to kick-out the experienced
bureaucrats and fill the positions with much less qualified partisans. The excessive
powers bestowed upon the chairmen of political parties impaired intra-party
democracy, created leaders sovereignty and lowered the quality of political cadres.
The power of the President on YK chairman and members was misused during
civilian presidents, zal and Demirel to appoint the religiously inclined to university
rector positions particularly in state universities in Anatolian provinces. This was
reversed only after another civilian, Ahmet Necdet Sezer was elected president.
Restrictions on individual rights and freedoms, and the increased say of the military
via MGK eventually ran counter with Turkeys desire to become a candidate member
to EU and later to obtain a definite day to start entry negotiations. Therefore, they had
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to be changed, individual freedoms and rights were gradually improved. But this time
separatist terrorism began to gather momentum again, taking advantage of both
increased freedoms and also the conditions of the post-invasion of Iraq era.
Unstable governments were not prevented either. Despite two-tier limits for
entry into the parliament, many political parties could enter the parliament.
Therefore, no single party could get the absolute majority from the end of zal and
ANAP era up to the 2002 elections in which AKP obtained an overwhelming
majority. But the election tiers blatantly impaired the true representation of the
parties in the parliament comparable to their votes. To wit, in the 2002 election AKP
had obtained about 2/3 of the seats in the parliament with slightly more than 1/3 of
the seats. In the interim period between zal and AKP, on the other hand, parties
with entirely different doctrines had to form coalitions.
Neither could the 1982 Constitution prevent old politicians from returning to
active politics and establishing parties as continuation of the old. The referendum
called on by zal in September 1987 waived the ban on old politicians and Demirel,
Ecevit, Erbakan, Trke, Deniz Baykal all entered politics de jure; they became
chairmen of their parties, Demirel became president; Demirel, Ecevit, Erbakan
became prime ministers, Trke a minister. What should also be noted here is that,
though these old names had obvious deficiencies, as evidenced from their past, the
new faces that appeared after the 1982 Constitution and elevated to responsible
positions in the 90s were no better qualified, in fact, worse.
Perhaps the most important problem was the rising strength of the religious
movement and fundamentalist Islam. Therefore, the religious threat or danger was
eventually added to the threat of separatism, to become twin serious political threats
for Turkey; and more recently it became the no.1 threat.
In retrospect, and in the face of the above summarized developments many
objective observers should conclude that the 1980 military intervention, though
inescapable and though it had met with overwhelming approval initially, must have
engineered the return to democracy poorly so that, as a result, things got even worse.
One interesting trait of Turkish political parties with regard to their stand
concerning USA was that center-right political parties, DP of 50s, later AP of 60s
and 70s, and still more recently ANAP of 80s and 90s were generally in favor of
close political relations with the USA. But they generally distanced themselves from
Atatrk, supported and, in turn, sought the support of radical nationalist and radical
religious movements. Both radical religious right and the radical nationalist right
were basically anti-American. In contrast, CHP which became left-of-center in mid
60s, and most of the other left-of-center political parties formed in the 90s, were all
secular and pro-Atatrk, but they interpreted Atatrk as intensely tatist which was a
wrong interpretation. Moreover, they were generally anti-American as well as antiEEC and anti-FPC (DPIs) during the 50s throughout 60s and 70s. Though they
became formally pro-EU in the more recent years since the 90s, they still were
reluctant towards the USA. Thus, Turkey never had a proper mix of economic regime
and international relations.
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Chapter 8
ANAP AND ZAL PERIOD:
1983-1991
8.1. POLITICAL DEVELOPMENTS AND

RESULTS OF ELECTIONS HELD
Soon after general elections were held on November 6, 1983 and zals
government received vote of confidence on December 24, 1983 from ANAP
dominated parliament, municipality elections were held on March 25, 1984. Parties
not allowed to enter the general parliamentary elections by means of vetoes by MGK
exercised on their founding members were this time allowed to take part in the
municipality elections. Therefore, SODEP (Sosyal Demokrat Parti: Social Democrat
Party) center-left and led by Erdal nn (smet nns son and former rector of
Middle East Technical University, Ankara); DYP (Doru Yol Partisi: True Path
Party) center-right and led at the time by Yldrm Avc with Sleyman Demirel
behind the scenes; and RP (Refah Partisi: Welfare Party) representing radical
religious right with Necmettin Erbakan behind the scenes, all participated in the
municipality elections alongside ANAP, HP and MDP. Although mayor ship of 54
provinces out of a total of 67 went to ANAP, the percentage of votes obtained for
membership in the municipality council gave a different picture. ANAP had come out
still as the first party but with 41.5% of the votes; SODEP had obtained 23.4% of the
votes; DYP 13.2%; HP %8.8; MDP %7.1; RP 4.4% and independents 1.6%. Since
municipalities were much dependent on the government for finances and
investments, there is always a tendency for voters to vote in favor of the party in
power in the local elections. Though ANAP had obtained slightly less votes than in
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the 1983 general elections, when compared to the votes DYP obtained, obviously
ANAP had the leadership of center-right while MDP was doomed to extinction. The
leadership of center-left, on the other hand, had been taken over by SODEP while HP
had fallen down precipitously, also signaling extinction. The votes obtained by RP
was misleading and should not be interpreted as a fall in the votes going to religious
right. Such chairmen as Ahmet Trkmen, followed by Ahmet Trkdal were, of
course, too weak to attract votes but lackluster leaders was not very consequential.
The main reason why RP received such a small share of votes was because ANAP
had a strong group of members from radical religious movement in its cadres. In fact,
zal had brought many such persons to important positions both in the government
and in party administration. Hence, 4.4% did not mean a decrease in such votes, it
simply meant that a significant part of these votes had gone to ANAP.
The poor performance of HP in the 1984 municipality elections prompted
Necdet Calp to talk with Erdal nn for a merger of SODEP and HP. In the
meanwhile, however, Aydn Gven Grkan obtained the chairmanship of HP, beating
Necdet Calp in the June 29, 1985 congress of the party. Shortly after, DSP
(Demokratik Sol Parti: Democratic Left Party) de facto led behind the scenes by
Blent Ecevit and seconded by his wife Rahan Ecevit, was finally established on
November 14, 1984. Grkan sent word for merger to both SODEP and Ecevit in
course of establishing DSP but Ecevit refused. Therefore, Grkan went ahead to
merge with SODEP. Thus SHP (Sosyal Demokrat Halk Parti: Social Democrat
Peoples Party) was established on November 3, 1985. Grkan became interim
chairman of SHP by mutual consent and in May 1986 Erdal nn was the sole
candidate and became chairman. As a result, we had two rival and competing
political parties in the center-left, SHP and DSP while in center-right rivalry between
ANAP and DYP also continued. In the 14 May 1985 congress of DYP, Hsamettin
Cindoruk an old DP and AP hand, was elected chairman of DYP. Cindoruk had
declared at the outset that he would only be a custodian, and leave the post when
Demirels political ban expires.
In May 1986 MDP, once thought to be doomed to govern but turned out to be
doomed to extinction, dissolved itself; some members joined ANAP, some joined
DYP and some joined a new party HDP (Hr Demokrat Parti: Free Democrat Party)
chaired by Mehmet Yazar. Before the decision to dissolve, Sunalp had lost the
chairmanship in the July 1985 party congress and the new chairman had dissolved the
party with the declared reason to join HDP. But only a handful of MPs entered HDP
and soon in December 1986, HDP also dissolved itself and joined ANAP. On the
other hand, Vural Arkan, a well-known Minister of Finance under zals first
government had resigned from ANAP, formed a party of his own, and then joined
DYP. In general, joining a party as a MP candidate or in MP transfers between
parties, consistency of outlook and vision of the person in question had begun to
deteriorate. Instead, personal rivalries, personal grudges as well as opportunism had
began to become the major motivation.
Replacement elections for 11 MP seats held on September 28, 1986 showed
some interesting trends. ANAP had obtained 32.1% of the votes and 6 seats; DYP
ANAP AND ZAL PERIOD: 1983-1991
115
23.5% of the votes and 4 seats and SHP 22.7% of the votes and 1 seat; votes of
ANAP were falling while those of DYP were rising. And this had taken place in 1986
when economic indicators and the growth performance of the economy under ANAP
and zal government were quite satisfactory.
Since the political ban on former politicians and leaders Demirel, Ecevit,
Erbakan, Trke was de facto breached, there were two options for zal, either to
remove the ban by taking the decision in the parliament to change the relevant article
in the Constitution or to call for a public referendum. zal chose the second option; a
referendum was held on 6 September 1987, zal and ANAP campaigned intensively
for no votes. This move was condemned by former leaders as very undemocratic. In
the referendum the yes votes came out with a very slight majority: 50.2%. Not to give
too much time to Sleyman Demirel to reorganize DYP and regain popularity and
strength, and aware too well that Demirel was capable to do so, zal this time
decided on an unexpectedly early general elections to be held on November 1, 1987.
Since the ban was removed just before the general elections were held, Ecevit was
elected chairman to his party DSP, Demirel to DYP, Erbakan to RP and Trke to
MP (Milliyeti alma Partisi: Nationalist Work Party). The case of Demirel,
however, was interesting. Cindoruk had promised to leave his post when Demirels
ban is lifted, he did so immediately and thus Demirel was elected chairman, as he
also had cherished before. But, too early early elections had made it impossible for
Demirel to organize the party, to campaign effectively and obtain a satisfactory
amount of votes. Under these special circumstances it is doubtful whether Demirel
continued to prefer to be elected chairman immediately; it would have been better for
him to let the present chairman, that is, Hsamettin Cindoruk to enter the elections
and obtain the unsatisfactory result first, and then to be elected chairman after.
Furthermore, Cindoruk also had insisted on the rejuvenation of DYP cadres while
Demirel preferred to be unhindered of any pressure on this matter when making his
own decision. So a disguised rift occurred between Demirel and Cindoruk, which
became manifest later.
Too early elections also meant an undemocratic selection of MP candidates.
But the Constitutional Court had prevented the nomination of MP candidates without
first an election at the local levels of party administrations. Therefore, the parliament
was forced to convene and change the election date to November 29 to allow for MP
candidate elections at the local administration levels.
zal had also made some changes in the election law which in 1986 and 1987
worked to the advantage of ANAP. Firstly, he had increased the number of seats in
the parliament from 400 to 450. This would enable incumbent (ANAP) MPs to retain
their posts even if the votes of ANAP declined slightly. Secondly, he retained both
the 10% overall minimum limit for parties to be represented in the parliament and
also the limits for the election regions. But this latter limit was to be calculated 1 MP
less for 6-seat election regions, that is, it was to be 20% instead of 16.6%. In addition,
parties were to name a quota MP candidate for 4,5 and 6 MP election regions. This
quota MP candidate of the party which had obtained the highest percentage of
votes in the election region would be directly elected. The remaining seats would be
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divided according to the percentage of votes received by the parties, with both the
overall and the regional limits working. All these changes would benefit the party
which would obtain the highest votes even if by a small margin compared to other
parties, which was exactly the case of ANAP.
With these new rules or manipulations in the election of MPs, the following
results were obtained in the 29 November, 1987 general elections: ANAP obtained
36.3% of the votes and 292 seats (64.9% of total seats); SHP 24.8% of the votes and
99 seats (22%); DYP 19.1% of the votes and 59 seats (13.1%). All the other parties
obtained less than 10% of country wide votes and could not be represented in the
parliament. DSP (Ecevits party) had obtained 8.5% of the votes, RP (Erbakans
party) 7.2%, MP (Trke Party) 2.9% and IDP 0.8%, with 0.4% of votes going to
independents. Obviously the first party, ANAP was grossly over-represented and
smaller parties grossly under-represented. Yldrm Akbulut was elected as chairman
of the parliament instead of Necmettin Karaduman and zals new government
received vote of confidence on December 2,1 1987 with the help of ANAP votes.
In 1987 Trkiye Birleik Komnist Partisi (TBKP: Turkeys United
Communist Party) was founded in exile. Behice Boran, chairperson of TP which
was closed down after the 12 September 1980 military intervention was elected
chairperson again and Haydar Kutlu (real name: Yaar Nabi), general secretary. TKP
(Turkeys Communist Party) which had also been closed down agreed to unite in
their meeting held in Brussels in November 1987. Since Behice Boran died of heart
failure soon after the decision, Nihat Sargn was elected in Brussels as chairman of
the new TBKP, and Haydar Kutlu became the general secretary. When the two came
back to Turkey to start official formalities to found the party, however, they were
both jailed. They founded the party in June 1990 after they ended their prison period.
But the Constitutional Court decided for its closure in July 1991, the decision to
become effective by January 1992.
Three interesting and somewhat odd events took place in 1988. One was the
resignation of Ecevit from the chairmanship of DSP in the March congress of the
party; instead a person, Necdet Karababa, who had the support of Ecevit behind, him
won. Ecevits decision was probably a response both to criticisms of failed attempts
at unification of center-left and the poor showing of DSP in the elections. He was,
however, retained as the natural leader of the party. On account of criticisms,
however, this time Karababa was forced to resign in December and Ecevit was reelected as chairman in the January congress of the party.
Another interesting and odd event was an attempt in the ANAP congress held
in June 1988 to kill zal by an ex-radical-nationalist and fugitive from prison. zal
was saved with a slight wound in the hand and continued with the congress. He won
1.127 votes out of 1.128 for the chairmanship of ANAP. In the congress, immediately
following the incident, the radical Islamism and radical nationalist alliance ended its
activities to submit to the congress an alternative list of party central administration
candidates in opposition to the liberal group within ANAP. The culprit who was
caught, sentenced and jailed insisted all throughout that he was simply alone in his
attempt to murder zal and not tied to any organized group. Thus, the event
117
remained a mystery since. But, though with no hard core evidence available, many in
ANAP must have believed the above mentioned alliance within the party was
responsible directly or indirectly. And probably this was why the alliance chose to
end its above noted activities.
Still another odd event was the insistence of zal to hold a public referendum
to change the relevant article (art. 127) in the Constitution in order to be able hold
early municipality elections in November 1988. The referendum was held in
September; zals proposal of early local elections was turned down by 65% votes to
35%. Though zal had stated in the campaign that he would reconsider continuing as
PM depending on the result of the referendum, afterwards he contended that he had
obtained about the same votes that ANAP obtained in the previous elections and
decided to continue to work as PM
Municipality elections were held on March 26, 1989 and the results were for
the first time disastrous for ANAP. SHP came out first with 28.7% votes, DYP
second with 25.1%, and ANAP came out third with 21.8%. The votes of RP showed
small increase with 9.8%, DSP showed only slight increase with 9.0%, MP had
only 4.1%, DP had 1%. Thus, SHP won 650 mayor ships, ANAP 565, DYP 552, RP
74, DSP 38 MP 24, IDP 6, independents 63. Metropolitan municipalities in the
three biggest provinces, Istanbul, Ankara and zmir were, however, all won by SHP.
Nurettin Szen of SHP became mayor of Istanbul, and Murat Karayaln mayor of
Ankara.
Following the defeat in the municipality elections, zal made a cabinet shuffle
but declared they would stay on up until the 5-year period for the parliament expires
and hence elect the new president. In the meanwhile, SHP was accepted as member
to the Socialist International in June 1989.
After Evrens 7-year term as elected president expired on 9 November 1989,
zal decided to become a candidate. Since ANAP had the absolute majority in the
parliament he was elected president on October 31, 1989 in the third round of voting
which required only absolute majority and took over the presidency on the 9th of
November. In the third round of voting only ANAP MPs were present in the
parliament; MPs of other parties had vacated the floor. Having become President,
zal asked Yldrm Akbulut to be PM Akbulut submitted his cabinet to zal
immediately the next day and received vote of confidence on November 15.
Obviously, all had been pre-arranged by zal, and he had picked Akbulut so that he
could both command the party and also take care of the Presidency. Thus zal had
(disguisedly) breached the Constitution because the Constitution requires that the
president, once elected should distance himself from all political parties. Apparently
the contrary was exactly what zal had intended; and he had picked up Akbulut
because he figured Akbulut would pay heed to him in party and government affairs.
In fact, zal had convinced ANAP MPs that he should be elected president by
arguing that in this way ANAP would be in control both in the parliament and as
government and also in the position of presidency all at the same time. On the
November 17, ANAP congress, convened to elect the new chairman of ANAP.
Akbulut won handily against Hasan Celal Gzel. Gzel later resigned from ANAP
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just before the 1991 congress and established his own party which was unsuccessful.
In the 1989 congress Akbulut, who should be categorized as liberal since he did not
have ties with radical religious right or radical nationalist right had obtained about
twice as many votes as Gzel who had religious ties. But this ratio does show the
strength of the liberals including center-right and former center-left members as
opposed to the religious and the nationalist groups because many members, whatever
their philosophy or tendencies, voted to conform with zal. Soon after Akbulut was
elected PM and chairman of ANAP the country was full of anecdotes about lack of
his intellect. But, zal was able to hold all the initiatives in his hands during the time
Akbulut was PM and chairman of ANAP.
ANAP congress held on June 14, 1991 changed this picture. Before the 1991
congress zal contemplated returning to the party for chairmanship; alternately he
suggested Aydn Menderes, Adnan Menderes son should be elected chairman; he
also suggested party chairmanship and PM position should be separated. All these
intrusions not being effective, he declared he would be neutral between the two major
contenders, Mesut Ylmaz and Yldrm Akbulut. But zals wife and followers
placed their support behind Ylmaz who won the election. Akbulut resigned, blaming
zal for having intruded in the elections. Mesut Ylmaz and his cabinet received vote
of confidence on July 5, 1991. Unlike Akbulut, however, Mesut Ylmaz did not let
zal intervene the party and the government affairs. But he stayed in office only for a
brief period since general elections were scheduled to be held early, on October 20,
1991 instead of the 5-year period ending in November 1992.
The 20 October 1992 elections ended the absolute majority rule of ANAP and
of zal. The 10% overall limit and the quota system introduced in the 1987 were all
retained and worked again to the advantage of the first party, this time DYP instead
of ANAP.
SHP entered the elections cooperating with a marginal party HEP (Halkn
Emek Partisi: Peoples Work Party) which accentuated Kurdish rights. It was a
courageous act on the part of Erdal nn to try to introduce the movement into the
democratic process, but later events showed HEP did not take good advantage of the
opportunity and it did not work. More significantly MP and IDP entered under the
umbrella of RP. Bedrettin Dalan, Istanbul mayor from ANAP in the initial years, on
the other hand, had joined DYP.
The participation ratio of the 1992 general elections was quite high, 83.9%.
DYP came out first with 27.0% of the votes and 178 seats; ANAP came out second
with 24.0% of the votes and 115 seats; SHP 20.8% of the votes and 88 seats. RP
alliance obtained 16.9% of the votes and 92 seats; DSP just managed to pass the
minimum limit with 10.8% of the votes and 7 seats. Socialist Party obtained 0.4%
and independents 0.1% of the votes. Obviously, this time DYP had benefited from
the counting system by getting 40% of the seats with only 27% of the votes.
zal offered the job of forming the government to Demirel who had the
greatest number of seats. Demirel forged a coalition with Erdal nn who chaired
SHP. 20 ministries and the prime ministry went to DYP; 12 ministries to SHP. The
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government received vote of confidence in the parliament on November 30, 1991,

thus ending ANAPs absolute majority rule since 1983.
One word of caution concerning RP alliance is in order. The high votes the
alliance obtained in 1991 should not be interpreted as a sudden burst of votes of the
religious right in 1991. Truly, even when due allowance is made for the share of
MP, the radical nationalist right in the total votes obtained by the alliance, on
surface RP votes still show a significant increase in October 1991. But this was due
to the fact that mostly the religiously-oriented votes which went before 1991 to
ANAP under zal were disenchanted with the lesser caliber and liberal ANAP
leaders after zal, and hence shifted to RP. In other words, these religious voters
were there and had already increased before 1991, except that they had been voting
for ANAP, a center-right party (with ample religious credentials) and not to the
party of radical religious right.
8.2. ECONOMIC POLICIES PURSUED BY ZAL

zals professed aim was market economy and he took several courageous
steps in this direction. Market economy was the natural follow up of 24 January 1980
economic policies for which the accent was on outward-orientation of the economy,
development of export industries and foreign-exchange-earning sectors as opposed to
import-substitute industrialization; and encouragement of private investments and
FPC flow. zal had successfully implemented these policies during Demirels and
Ulusus governments. With ANAP in power since Nov. 1983 elections, this time he
successfully introduced many important traits of the market economy but failed to
implement some very important aspects which would have ensured the effective
working of the market economy. Below is a summary of policies and measures zal
undertook for transformation into market economy.
8.2.1. Liberalization of Trade, Convertibility of the TL, Free
Flow of Financial Funds, Encouragement of DPIs
i) Liberalization of Trade
Starting in 1984 import quotas and quantitative restrictions on imports were
removed and imports liberalized. Liberalization included imports of consumer goods
and consumer durables such as electrical house appliances, automobiles, etc. as well
as foreign cigarettes and alcoholic drinks all of which were up until then used to be
sold in the black market. At the same time, customs tariffs were cut down drastically
compared to the previous prohibitively high rates, though they still remained
significantly high compared to developed countries. Again, in the beginning of 1984,
the Law for the Protection of the Turkish Lira that consisted of hundreds of pages
of rules and procedures was canceled at one stroke. Thus, foreign trade transactions
were, to a large extent, deregulated. Although deregulation was a breath of relief for
all, including businessmen, many feared that reducing of protectionist measures
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would this time harm Turkeys manufacturing industry and the latter would not be
able to compete with superior imports. In fact, however, reorientation of the economy
away from unproductive but protected import-substitute sectors to productive export
and productive import-substitute sectors necessitated liberalization of imports in
addition to applying realistic (flexible) exchange rates and a movement towards a
single exchange rate instead of multiple exchange rates, that is, applying de facto
different exchange rates for different imports through differentiated customs tariffs
and for different exports through differential premiums and export tax rebates. This
bold decision to liberalize trade and to implement a realistic exchange rate policy
bore its fruits in the long-run. Firstly, Turkeys current account deficit not increased
as feared, but decreased over time. Secondly, not only export industries and foreign
exchange earning sectors expanded but, in general, the productivity of the
manufacturing sectors and the quality of goods produced improved. Another notable
beneficiary of these polices was tourism which began to flourish and contributed
significantly to the improvement of Turkeys current account. Much later, in the
more recent years, tourism income surpassed US$ 10 billion, not imaginable in 1983;
in 2005 it was around US$ 18 billion.
Within the context of above policies, only tax rebates for encouraging exports
were unnecessarily kept for some more time. But soon it became evident that tax
rebates gave rise to fictitious exports. Hence, they were eliminated totally in as late as
1989. At the same time, however, encouragement of exports were continued this time
with the extension of export credits by the newly established Eximbank.
ii) Convertibility of the Turkish Lira and Free Flow of Short-Term
Financial Funds
Still another bold attempt by zal in transforming the Turkish economy was to
make the Turkish Lira (TL.) convertible in 1987. At the same time foreigners were
allowed to buy securities in the Turkish stock market, that is, flow of financial funds
were allowed. It thereby became possible for Turkish citizens to open deposit
accounts in foreign exchange in the banks in Turkey. Banks were allowed to deal in
foreign exchange and bureaus specializing in purchases and sales of foreign exchange
were allowed to operate. Holding foreign exchange became free. Before 1983
holding foreign exchange was a punishable crime by law; Turkish tourists going
abroad were allowed to buy only a restricted amount (they bought the rest from the
black market). Similarly, for instance, if the documents of an exporter showed one
dollar deficit, exports earned but not transferred, it too was a punishable crime. The
convertibility of the TL and allowing of short-term foreign financial flows aimed at
globalizing the Turkish economy, that is, tying it to the world markets. And it too
was a bold decision in the right direction.
iii) Encouragement of FPC Flow (DPIs)
Encouragement of FPC flow (DPIs) was also taken up with a much greater
broad-mindedness. Firstly, bureaucratic formalities were reduced. Secondly, FPC
was allowed not only in manufacturing but in all sectors, banking, tourism, services,
agriculture included. Thirdly, FPC firms with 100% capital also began to be allowed.
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Since encouragement was a consistently implemented policy, FPC flow (DPIs)

increased significantly during zal and ANAP period.
8.2.2. Privatization, Encouragement of Private Enterprise,
Private vs. Public Investments, Impaired Competition
i) Privatization
Privatization was one of the pillars of (moving to) market economy started by
zal. The Law allowing sales of public institutions was passed in the parliament on
February 29, 1984 with 186 votes in favor, 146 against. A new institution, KO
(Kamu Ortakl daresi: Public Partnership Administration) was created to take on
the job of privatization. Following its organization and preparations throughout 1984
and 1985, actual sales or privatizations were started since 1986. It involved sales of
SEEs and public institutions either totally or their majority shares to private
entrepreneurs, including sales to foreign firms. First, the list of SEEs, including
public banks, public institutions, installations of agricultural sales cooperatives to be
privatized was prepared and these were then transferred to the management of KO.
They were then evaluated and their sales prices set by independent (foreign) financial
institutions. Finally, they were offered for sales either through the stock exchange or
by awarding the ownership to the highest bidder in an officially organized auction
(called contracting out). All these stages required administrative and financial
technicalities and hence were also costly.
Some of the crucial questions in privatization were: i) to prevent formation of
monopolies, ii) to ensure that the installations be used to continue with production,
not, say, for land speculation, iii) to continue with production meant employment
would also continue But the last problem was most critical because over-employment
was widespread in all SEEs due to populist policies pursued by all past governments
and the present. Hence, not all employment could be retained; there could occur some
contraction. Reducing the number of employment, changing many of the personnel in
the management level would involve costs, foremost social security payments that
the prospective owner had to estimate and take into account when making an offer.
Hence, also in many cases of SEEs with a large employment level, the workers
and personnel resisted and demonstrated against privatization for fear of losing their
jobs. Such resistances and demonstrations were met mostly after the zal and ANAP
period. To avoid such risks, later governments introduced several measures such as
re-training programs, early retirement, etc. From the macro point, the most effective
means of avoiding unemployment problem arising from privatization was to carry
privatization at a period of steady growth and creation of new employment
opportunities by new investments or enlargements.
From the side of the government, since initial costs of privatization were high
in the first years, total costs exceeded total revenues received from privatization, but
it changed soon after privatization gathered momentum in the later years of zal and
ANAP period.
ii) Encouragement of Private Enterprise, Public vs. Private Sector
Investments
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It goes without saying that in principle private enterprise and private

investments were encouraged thoroughly during zal and ANAP period. Public fixed
investments were explicitly limited to productive and social infra-structure. Planned
channeling of private investments lost vigor Nonetheless, some policies and
developments must have affected private fixed investments negatively.
Firstly, increased public investments and increased share of public sector gave
rise to a very high and persistent inflation. The financing of the public sector deficit
was covered only partly by foreign debt (when financing some public investment
projects), and mostly by both Central Bank credits leading to increase in money
supply, and partly by internal borrowing. The latter raised the nominal bank credit
interest rate well above the inflation rate. Therefore, the very high real interest rate
must have reduced the potential of private fixed investments. Some figures could
easily demonstrate the point at hand. Money in circulation had increased by more
than 5.5 times from the end of 1983 to end of 1988, and by 6.7 times by the end of
March 1989. The nominal interest rate on short-term bank credits - which is one of
the main financing sources of the private sector - was about 120%, including costs.
By 1989 it went up to 150% Even when assuming 70% inflation rate, the real interest
rate was a prohibitive 50% for the 120% nominal rate. Nominal interest on
government bonds was raised to 95-100% in 1989. Interest on one-year bank deposits
was raised from 65% in 1988 to 85% in 1989. All banks were busy financing
government deficit and debt and little scope was left to lend to the private firms. All
savers too were busy putting their money (savings) either in government bonds or in
time-deposits in banks; 31 day time deposits were common.
When reviewing the government budget taking account only of the
consolidated budget is highly misleading. In 1983 the ratio of the consolidated budget
over GNP was 22.6%; with the inclusion of other funds and expenditures outside the
consolidated budget the ratio of total public sector expenditures over GNP rose up to
32.7%. By 1988 the ratio of consolidated budget was still 22.7% but the ratio of total
public sector expenditures had shot up to 41.5%. That means during the zal period
nearly the same volume of public expenditures was not included in the consolidated
budget. It not only meant a fast enlarging public sector, but from the perspective of
public finance, a big chunk of public expenditures were not subject to proper
parliamentary control.
iii) Inflation Impairing Prices as Investment Indicators
The above affected the volume of private investments and hence impaired to
some degree the principle of encouragement of private enterprise. There are,
however, two other factors that impaired the sound working of the market economy.
One such factor is inflation itself. In the market economy government interventions
on prices and channeling of investments is decreased to minimum level required,
given market and price imperfections in a developing or newly industrializing
economy. Therefore, optimal dose of interventions may be higher compared to a
developed economy, but certainly much below the widespread and blatant
government interventions on prices and channeling of investments prevailing at the
time. But, to be taken as relatively healthy indicators, prices have to be relatively
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stable, that is, inflation should be prevented by sound public finance and economic
policies. Although price stability is a must for the sound working of the market
economy, many initiated, observing the high rate of inflation during zal period
thought that inflation was the unavoidable result of market economy.
iv) Partisanship and Corruption Impairing the Principle of Competition
Another important factor that impaired the sound working of the market
economy was partisanship and corruption observed in channeling of some
government or municipality investments, in public auctions for such investments, in
directing several expenditures and even in privatizations. The principle of the market
economy is that the private firm which will take on the job should be the most
efficient, hence should bid lowest for public auctions and highest for privatizations.
When partisanship and corruption prevents the above, and also when various credit,
tax and other incentives for private industry go to those firms and owners of firms
with whom there is some close personal or party relations, then the principle of
competition and fruits of competition in the form of lower prices and higher quality is
impaired. The relations may take on several forms. The firm in question may have
contributed to election campaign finances (there are no reliable records and limits
observed in such contributions); they may have relatives of party people in the firm;
or it may result simply from an ad hoc arrangement of bribery. In such cases we
should cease to talk about market economy but talk about crony capitalism.
Though crony capitalism in Turkey had not reached the proportions prevalent in
the South-eastern Asian countries in the pre-1997 global financial crisis, it began to
take roots after 1983 and became much more prevalent compared to previous periods.
An interesting related event was the case of smail zdalar, a minister in
zals cabinet who was caught red-handed taking money as bribe. A young ANAP
talent, Adnan Kahveci who died very early later was instrumental in getting
zdalar caught in late 1984. In 1986 the Parliamentary High Court found zdalar
guilty and penalized him for two years in jail. But apparently, it was not taken as an
example in the right direction. In 1984 also, Yahya Demirel, Sleyman Demirels
cousin who had fled abroad after being convicted of falsifying official documents
(for fictitious exports and export rebates), had escaped to Switzerland and had his
citizenship canceled, returned to Turkey and surrendered to the authorities.
8.2.3. Public Finance and Tax Policies
zals first attempt was to restructure the Ministry of Public Finance to his
liking. In 1983 he established the Under-Secretary of Treasury and Foreign Trade
(HDTM: Hazine ve D Ticaret Mstearl) tied directly to the PM The HDTM was
to implement foreign trade policy, control the treasury, monetary transactions,
domestic and foreign debt movements, to prepare investment and financing programs
of SEEs, and to carry on the work of bilateral and multilateral trade agreements. At
the same time, zal abolished the separate Ministry of Customs and Monopolies and
transferred the functions of the said ministry to the Ministry of Public Finance.
His second important step was to institute the Value Added Tax (KDV: Katma
Deer Vergisi); the law was passed in 1984 and the tax became operative starting
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1985. KDV replaced the former Expenditure Taxes (Gider Vergisi) which had
become inelastic to GNP rises and the revenue from which had dropped significantly
in 1984. There were several reasons for establishing the KDV (VAT). To comply
with the European tax system, to increase tax revenue and its elasticity to increases in
GNP, to encompass trade, services and agriculture more in the tax system, to aid
exports by tax rebates without jeopardizing GATT stipulations were among the main
reasons. Initially, the standard KDV rate was 10%, and there were exemptions (that
is, 0% rate) for necessity items. In 1987 the standard rate was raised to 12%; zero
rate was waived and several rates ranging from 1 to 5% were established. This range
was widened further in 1988, but the standard rate was reduced back to 10% in
November 1988. In December 1988 the determination of the rates was given by law
to the government, and the rates have been raised further since. In 1985 the KDV
(VAT) formed 28% of total tax revenue; while the abolished Expenditure Tax (Gider
Vergisi) would have formed only 20.6%. In the following years the share of KDV in
total tax revenue increased steadily.
The KDV established in Turkey was de facto a consumption tax, though it
started out as an income tax. To ensure its control, tax rebates of standard 5% were
allowed for all wage and income earners on their consumption expenditures
(excepting some luxury items and alcoholic drinks). But since the KDV tax rate was
high, the rebate rate was low and tax return was lagged, many consumers and traders
avoided it completely. Thus, there occurred a tax evasion in tax revenue, and
unregistered income for the retailer. No doubt this would have been larger had KDV
not existed.
The tax system, on the whole, became more inequitable during zal and
ANAP period. To wit, firstly the ratio of tax revenue to total government revenue
decreased over time when public revenue outside of the consolidated budget is also
taken into consideration. For instance, in 1989 tax revenue within the consolidated
budget comprised about 86% of total revenue; but it was only slightly over 50%
when revenues outside of the budget were included. Secondly, the ratio of indirect
taxes including KDV (VAT) within the tax revenue increased while that of income
taxes (Income Tax and Corporation Tax) decreased. Before zal and ANAP the
respective ratios were about 60% income taxes, and 40% indirect taxes. By the end of
zal and ANAP period the ratios were reversed.
There was little scope for the Ministry of Public Finance tax controllers to
control all income and close all tax gaps. There is always a gap in all countries, but
tax evasion, particularly income tax evasion was and still is very widespread in
Turkey excepting big corporate firms which, in turn, sought favors from the
government, including credit from public banks, investment incentives, informal
preferences in public auctions, etc.
There were two other important changes introduced by zal in the field of
taxation and public finance. One was the establishment of special funds that were not
included in the budget, and hence were outside the regular control by the Public
Finance Ministry, but subject (only) to administrative financial control. Only two
major funds will be mentioned briefly at the end of this section.
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The second change was increasing the direct tax revenue of municipalities by
appropriating taxes on real estate to them. This allowed municipalities to increase
investments in municipality infra-structure. There was, of course, waste and
corruption at the same time, as is met in all government operations. But at the same
time the look of municipalities changed over time to the better. Metropolitan
municipalities also received foreign credit for major infra-structural projects under
the guarantee of the Ministry of Public Finance.
zals major failure or negative point was, on the other hand, increased public
infra-structural investments which raised the ratio of public sector to GNP and caused
persistent and increasing budget deficits. As mentioned in the above sections, the
ratio of consolidated budget to GNP remained nearly the same at around 21-23%. But
when the total public sector, outside of the consolidated budget as well as the funds
were taken into consideration the rate increased to above 40%. The increased budget
deficit, in turn, was financed by either Central Bank credits and printing of money or
else both internal and external debt. The result was persistent and increasing
inflation; while the ratio of both internal and external debt to GNP started to rise.
This increased the risks of the economy in future years in case of mismanagement.
And mismanagement did occur in the future years after zal and ANAP period,
leading to a balance of payments crisis, IMF aid and stand-by agreement.
One of the novelties of zal in public finance was to establish funds with
special revenues and for specific functions, outside of the regular budget, hence
regular budget control. One such fund was Collective Housing Fund (Toplu Konut
Fonu) and the Collective Housing Administration created in 1984 to administer it,
tied to the Prime Ministry. Initially the administration created also looked after the
privatization of SEEs but in 1990 Collective Housing Administration was separated.
The revenues included some deductions from import taxes, sales taxes of petroleum
and petroleum products, tobacco, alcoholic and non-alcoholic drinks, etc. All these
taxes added up to significant amounts in the hands of the administration which not
only lent direct credit to purchasers of social apartments and houses, but also to
constructors of social houses. The fund did give rise to some increase in social
housing projects and the construction sector. But by 1988 the Administration started
facing finance problems to meet the credit demand for housing. This resulted not
only from the increase in credit demand for collective housing but also because
transfers had to be made from the fund to the budget in order to reduce the budget
deficits. channeling of government finance for the completion of the GAP (SouthEastern Anatolian Protect) further restricted the finances of the administration.
Another important problem was that though originally intended to address to the
housing needs of the low-income groups, the fund went more to the demand for mid
and higher income groups.
Another interesting fund that was established in 1986 was the Social Solidarity
and Help Fund: Sosyal Dayanma ve Yardmlama Fonu, known better among the
people as the fund for the poor and the needy (Fak-Fuk Fon: Fakir Fukara Fonu))
This fund was established tied to the Central Bank and all other funds were required
to apportion 10% of their appropriations to this fund. In addition, deductions from
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TV advertisements, appropriations from the budget etc. also went to this fund. It was
no more than a stopgap measure to alleviate poverty and the deterioration in income
distribution, and its usefulness was limited.
8.2.4. Inflation: Real Causes and Reasons Given
zal had promised in his 1983 election campaign in 1983 to reduce inflation
down to 10%, but all throughout zal and ANAP period inflation had shot up and
stayed high persistently. The causes in economic terms were obvious and already
mentioned. One of the causes was the rise in public expenditures, including public
fixed investments as well as funds outside of the budget, and expenditures by
municipalities. All these expenditures gave rise to budget deficits which were
financed partly by Central Bank credits giving rise to increases in money supply and
internal debt giving rise to high interest rates which, in turn, caused a burden on the
budget. Some big fixed infra-structural investments projects carried on by the
government or metropolitan municipalities were financed by outside credit, including
that from the WB. In addition to demand inflation caused by increases in public
expenditures and budget deficits there were continual elements of once-and-for-all
cost inflation caused by price rises of SEE products, including petroleum, and
increases in indirect taxes. Foreign exchange rates were also raised continuously and
this also gave rise to cost-inflation effects. The rises in SEE prices and foreign
exchange rates were indiscernible because otherwise SEEs would have given rise to
increased budget deficits and continuous demand inflation. Had foreign exchange
rates not been raised parallel to inflation, on the other hand, it would have given rise
to increased trade and current account deficits, hence to an economic crisis.
Similarly, increases in indirect taxes also reduced budget deficits, hence decreased
recurring demand inflation. With this perspective we may conclude that during the
zal era the basic cause of inflation was increased public expenditures and budget
deficits.
Two reasons had been given by zal for the persistent and high inflation. On
the one hand, he had argued that a high rate of growth is (unavoidably) accompanied
by a high rate of inflation. On the other hand, he had argued that he had to increase
public investments in infra-structure in order to transform the economy.
Obviously the price rises encountered had no relation with the rise in marginal
costs, hence prices as employment and production (income) is increased, as
envisioned in the Phillips Curve. Firstly, the growth rate during 1983-91 was not
remarkably high. Secondly, prices rises involved in the Phillips curve analysis as
applied to Turkey would never imply inflation rates going up to 40%, 60%; they
would be only marginal increases. Therefore, in simple terms, public investments
were increased and since the increase in tax revenues was not enough to finance the
increase in public investments both money supply and public debt was increased. Did
the public investments undertaken transform the economy? There is no doubt that
both the economic policies pursued in the direction of outward-orientation and
market economy coupled with the productive infra-structural investments undertaken
during this period brought about a gradual transformation of the economy. This
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means, in effect, that zal, unable to raise taxes further, instead of choosing the
option of a longer period of transformation under price stability, preferred a shorter
period with rampant inflation. And rampant inflation upset some significant part of
positive effects of moving towards a market economy. To the above argument we
should also add that both public investments and current expenditures were quite
blown up due to increasing corruption and partisanship.
8.2.5. Wages, Employment and Social Goals
Though zal had promised in the election campaigns that he would improve
the lot of the middle class and of lower-income groups, income distribution became
more unequal during the years 1983-1992. Statistics on income distribution in Turkey
are usually not very precise. One reliable research however, prepared by Merih
Celasun (1986) showed that the poorest 20% of population obtained only 2.63% of
total income and the highest 20% obtained 55.93%.
There are strong indications that income distribution got worse. Firstly, rises in
wages, salaries of government employees and of retirees generally lagged behind
price rises and were lower than the rate of inflation. Thus, in real terms these incomes
decreased over time. To illustrate the point, SEKA, a SEE manufacturing and selling
paper with plants and sales offices in numerous provinces and with a total
employment of 10.200 at the time (decreased over the years) went on strike in 1988
demanding that their money wages be raised so that their real wages become equal to
what they earned back in 1981. The strike lasted for four months before a
compromise was reached.
The strike that started on November 30, 1990 in TTK (Trkiye Takmr
Kurumu: Turkey Coal Mining Institution) in Zonguldak, employing 48 thousand
workers was even more critical. It aimed not only at raising the wage level but also to
become a protest move against privatization. Zonguldak was the province from
which Ecevit is elected as MP and many political parties supported the TKK strike.
Turgut zal who was elected president at the time became the main target as
architect of the privatization program. Many other workers in other SEEs joined with
sympathy strikes. Thousands of workers decided to go to Ankara by bus but were
prevented by the barricades of a determined police force. The strike had become a
showdown between the two parties and the workers decided to go to Ankara on foot.
They were again prevented by a massive police force. Finally the workers gave up
the long march and sat down to the bargaining table with the government. The
government postponed the strike for 60 days because of the Gulf crisis, i.e. the Iraq
war. Finally wages were raised but the raise did not exceed the level previously
offered by the government and refused by the union. SEKA followed by TKK strikes
proved how difficult it would be to privatize large SEEs because of strikes,
demonstrations and support from opposing political parties. And in many cases they
were mostly in need of privatization, and carried large numbers of over-employment.
Since money held idle was fast losing its value due to inflation, many salaryearning government officials, retirees and others rushed to banks to place their money
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in special funds bearing interest but which they could withdraw at any time, or to
time deposits of short duration.
zal had two interesting projects for low-income groups. In March 1984 the
parliament had passed a law that established a Collective Housing Fund (Toplu
Konut) as mentioned in the section on public finance. The administration of the fund
was to lend individual long-term housing credits to low-income families. The other,
Fak-Fuk-Fon had also been mentioned on the above section on funds.
8.3. PKK TERRORISM

Before the 12 September 1980 military intervention there were mainly two
antagonist terrorist organizations, the radical left which, though overlooked or
misinterpreted and under-estimated, included Kurdish separatist, socialist
organizations; and the radical nationalist right, the idealists belonging to the MHP.
The former were by far the larger group. Following the military intervention,
institution of martial law, and collective trials at the State Security Courts there was a
significant drop in terrorist activities and demonstrations. But most of it was illusory.
Most of the Kurdish separatist terrorists who also had endorsed socialism had taken
refuge first in Palestine, Syria and Lebanon and later concentrated in Iraq for further
training in terrorism. Non-Kurdish radical leftist demonstrators, terrorists were
thrown out and PKK (Partiye Karkaren Kurdistan: Kurdistan Workers Party) came
into being under the leadership of Abdullah calan, known as Apo, to start terrorist
activities in 1984, soon after Turkey returned to democracy. Mesut Barzani, the
leader of PDK in Iraq actively supported PKK at the time.
PKK and Apo used the most ruthless, savage tactics, keeping terrorists under
force, killing innocent civilians, including babies and children. It seemed lamentable
that a great number of European governments at the time kicked their heels hard to
accept PKK as a terrorist organization. Their criticisms were one-sided, and it was
addressed to the Turkish government to prevent torture, to abolish the State Security
Courts, to change the penal code, better treatment of detainees, etc. All were valid
points except two voids. First, they failed, most of them for a long time, to accuse
PKK of this ruthless terror despite the improvements in human rights registered by
Turkey, however limited they may be. Secondly, they were to set a long period for
Turkeys full membership to the EEC, anyway. In fact, many big and small states,
EEC members and non-members, covertly or openly supported PKK terrorism. The
list of supportive countries included many of Turkeys neighbors. Some wanted to
destabilize Turkey; some were naive about the depths and details of the problem and
thought that improvement of human rights or minority rights, as they called it, would
solve it, period. Some governments may have thought, so long as they stayed
peaceful in their country, they could close their eyes to PKK terror in Turkey. The
USA had a much more realistic assessment and attitude towards the problem. Kenan
Evren and the advisers he selected, on the other hand, were proven mistaken, because
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regimenting the universities had done nothing to contain radical doctrines and
terrorism.
The first terrorist operation by PKK took place in August 1984 in Eruh, in Siirt
province, and emdinli in Hakkari province. The PKK took full control of the two
towns albeit for a short period. Similar PKK operations began to proliferate in small
settlements in Eastern and South-eastern provinces. PKK terrorized and tried to force
into submission to their cause the majority of Kurdish citizens who would have
wanted to live peacefully and prosper economically. The martial law which had been
instituted in 1979 had to be prolonged each time its duration ended, up until 1987 in
which year it was discontinued. But, PKK terrorist activities continued since 1979
and even increased. For instance, in January 1987 PKK had attacked a wedding
party, again killing civilians and children of Kurdish origin. In July 9, 1987 zal as
PM had made a plea to PKK terrorists to surrender with special amnesty conditions.
In retaliation, PKK made another attack in two places of settlement in Mardin, again
killing 31 persons of which 15 were children and again all were Kurdish citizens. It
could have been a good lesson for those European intellectuals who still continued
to interpret PKK and Apo as freedom fighters or as fighters for human - or
minority rights, never thinking about drawing some parallels of the deeds of Apo
with Stalin or Saddam Hseyin. The Turkish government immediately passed a KHK
(decree in the force of law) from the parliament allowing the establishment of OHAL
(special governorship). President Kenan Evren immediately ratified it, becoming
operative in July 19, 1987 immediately following the discontinuation of martial law.
The special governor (Olaanst Hal: OHAL valisi: governor of special
circumstances) was empowered to command the security forces in the region,
including the military, gendarmes, the police, special teams, and civilian guards
volunteered by civilians and armed to resist oppression from PKK. He was to be in
touch with the Turkish intelligence office, MIT; he could sack or displace anyone
excepting judges, state attorneys, gendarmes; and his expenditures were not subject
to regular control by the State Audit Department (Saytay). OHAL initially covered
such provinces as Bingl, Diyarbakr, Elaz, Hakkari, Mardin, Siirt, Tunceli and
Van. The opposition parties at the time, SHP and DYP labeled it as civilian martial
law which, in fact, it was to a limited degree, except that it was not unnecessary.
Both the provinces and the authority of OHAL governor were expanded later.
Terrorist activities escalated mostly concentrated in small towns and places of
settlements in Eastern and South-eastern provinces. Demonstrations were organized
in the funerals of members of PKK who had been killed by security forces. By 1989,
1990 terrorist activities began to enter city centers and metropolitan areas throughout
the country. Demonstrations were organized in big cities by PKK; shops were closed
mostly in towns; European tourists were held captive temporarily, were given PKK
propaganda and released. And they went on killing civilians and children of Kurdish
origin presumably to force them into submission.
All throughout, however, as the number of terrorist activities escalated, the
Turkish army and security forces also gained expertise in fighting terrorists. But PKK
terrorists mostly ran away and took refuge within the borders of Northern Iraq;
130
sometimes fighting Kurdish organizations there, and sometimes seeking

accommodation. A special target chosen by PKK was the Kirkuk - Yumurtalk
petroleum pipeline carrying petroleum from Iraq to Turkey. Obviously the aim was
not only to inflict economic loss on Turkey but also to keep Eastern and Southeastern regions undeveloped and under oppression in order to force them into
submission. It was like a disguised or low-intensity internal war and over thirty
thousand died, including PKK terrorists, the military including officers and soldiers,
the police, special guards armed against PKK, and civilians, including about 2.500
babies and children killed by PKK. The number of PKK terrorists who died exceeded
twenty thousand.
On the economic side, military operations no doubt increased the military
expenditures, contributing to the budget deficits and inflation. But more important, it
also delayed economic development of the Eastern and South-eastern regions,
presumably a goal of PKK terror and tactics. Starting in 1994, after zal and ANAP
period, the number of terrorist activities conducted by PKK began to decrease;
because evidently the security forces had the upper hand. Though there were a
minority of civilian Kurdish separatists sympathizing and cooperating with PKK, the
silent majority of Kurdish citizens preferred peace and economic betterment. By
1997 the National Security Council had declared that the number one threat for the
Turkish Republic was not PKK terror but religious reactionary movement.
As events unfolded since 1984 and PKK and Apo terror began to lose altitude,
they began to lower their aims. They first started with calls for an independent
Kurdish state covering most of all Eastern and South-eastern provinces, imagining
Diyarbakr would be the capital. Next it was not an independent Kurdish state but a
federation; and finally it was greater human rights within the Turkish unitary state.
But, all this was mostly rhetoric and propaganda.
Many analysts of the problem were also divided in their diagnosis. Some
believed the sole or the basic reason was under-development of the Eastern and
South-eastern regions; once these regions were developed and GAP (South-eastern
Anatolian Project) implemented, terrorism would evaporate. This was the economic
solution to the problem. No doubt this argument was right, but it was a long-run
solution and could not be implemented solely. Besides, terrorists activities, in fact,
jeopardized and were aimed to jeopardize the efforts for economic development. The
second, line of reasoning was the security solution. Some analysts saw the problem as
a mere security problem; it was generated by a minority within the Kurdish citizens
and was supported morally, financially and with arms and supplies from outside
forces. Once outside support is prevented and security forces pervaded over PKK
terrorists, the problem would cease to exist. No doubt, security measures had to be
undertaken, otherwise to reach a solution would be impossible; but again, security
measures alone could not solve the problem for good. The third line of observers
stressed improvements in human rights. And there were subdivisions in this line of
reasoning. A smaller group of observers believed that the long-run solution should
include acceptance of ethnic differences. This, however, was not the preferred
official analysis. There was the rightful fear and suspicion that such an acceptance
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would not subdue the problem, on the contrary, it would lead to further and further
demands. Another line of observers was to view the problem as a need for
improvement of human rights. This was the political solution referred to by
many EC observers as well. But many European observers preferred to take up the
matter within the context of minority rights and not human rights and stressed
the need for political solution, that is, granting of minority rights, with less stress
on the military. The official Turkish view, however, was slightly different, based on
the Lausanne Treaty which stipulated that the minorities in Turkey were Greek,
Armenian and Jewish; Kurds were recognized as Turkish citizens, or citizens of the
Turkish state. Hence, the approach would be not minority but human rights in
general. Military option was also considered as important. Whatever the differences,
semantic or fundamental, it pointed nearly towards similar solutions, with some
differences in weights and emphasis. zal must have been fully aware of all these
differences of approach. Once he contemplated establishing larger province with
semi-autonomy on top of the present 70 odd provinces (starting from 67, provinces
were increased over time as some towns grew large enough; politics was also
involved). zals idea was criticized by adherents of the official line for fear it would
give semi-autonomy to a region with a majority of Kurdish population. Therefore, he
was quick to abandon it. He once remarked in a conciliatory gesture, that probably
his grandmother was also of Kurdish origin. In January 1991 the law that prohibited
publication in other languages was canceled, thus opening the way for speaking and
singing in the Kurdish language.
Even before that, in January 1988 Turkey signed the UN agreement against
torture. The signatory on behalf of the Turkish government was lter Trkmen,
representative on the UN at the time. The signing of the agreement necessitated
changing the various articles in the Procedural Law for Penal Courts. Such a
modification law was introduced in November 1992, when DYP-SHP coalition
government was in power and zal was president. Interestingly, zal had first vetoed
the bill but the government had gone ahead, insisting on its passage.
At the same time, on April 12, 1991 the Law on Combating Terrorism was
accepted. As the articles 140, 141, 142 and 163 of the Penal Code were canceled, the
new law compensated for this vacuum by giving a broad definition to terrorism and
those who supported them, and to those terrorists and supporters to be brought before
the State Security Courts. The EU was insistent on the cancellation of the said articles
in the Penal Code for a more just or less harsh treatment of terrorist suspects to
be brought to court. The Turkish government, in turn, believed that any softening
would only aggregate terrorism, and not reduce it as many Europeans believed and
hoped. But this time the broad definition of terror of the new law came under severe
criticism from both outside and inside and it had to be narrowed in 1995.
As the fight against PKK and Apo terror continued, on March 4, 1992 when
zal was president and DYP-SHP government was in power, the Jewish Community
in Turkey commemorated the 500. anniversary of their salvation from the Spanish
inquisition when the Ottoman government at the time opened them its gates. But it is
doubtful whether the European intellectuals, observers and politicians took as much
132
notice as the American. Instead, the former were insistent on sympathizing with
ASALA, with little interest in studying objective history. Agopyan, the leader of
ASALA was, on the other hand, killed in Athens in April 1988. Some blamed it on
rival Armenian organizations, others on Turkish secret agents.
It is also interesting that in April 1992, again when zal was president and
DYP-SHP coalition was in power, Nelson Mandela refused to accept the
International Atatrk Peace Award because of human rights breaches in Turkey. The
apartheid and what black South Africans suffered, however, had basically no
resemblance to the terrorism initiated by PKK and Apo, and the fight of Turkish
government and security forces against PKK.
In 1990 Turkey came face to face this time with a new form and source of
terror. Such renowned leftist intellectuals as Prof. Muammer Aksoy, Bahriye ok,
journalists etin Eme and Turan Dursun were killed, and the killers were
unidentified. According to many journalists and observers, murders were executed
this time possibly by fanatical terrorist religious underground organizations.
8.4. INTERNATIONAL RELATIONS DURING

ZAL and ANAP PERIOD
Three basic principles emerge in international relations followed by zal.
Firstly, he gave priority to strengthening Turkeys ties with the USA. He considered
USA more as a political and military ally and less, it should go without saying, as an
economic partner. USA, in turn, was insistent on Turkeys accession to the EEC as a
full-member. Turkeys rapprochement with Israel, her cooperation in the 1980 Gulf
war against Iraq initiated by George Bush should be viewed in this light. TurkishUSA relations were, however, strained because of serious problems that arose in
Turkish-Greek relations. Nonetheless, the alliance persevered.
zals second principle was economic pragmatism or the importance he
gave to economic relations in carrying on political and diplomatic relations. In many
occasions, for instance, he took along with him quite a number of interested and
selected businessmen when he visited a particular country. This act was later copied
by almost all his successors.
The third principle zal pursued was the multilateral approach to Turkeys
international economic and political relations. It is true that the USA was the major
axis in Turkeys political, military and strategic relations; and in his later years as PM
accession to the EEC as full-member became his predominant goal for the future.
But, in addition, zal sought to continue to strengthen or otherwise develop political
and especially economic relations with many other parts of the world. Included were
the Islamic countries in the Middle East and North Africa, Turkic States in Caucasia
and Central Asia, Black Sea countries with Greece included in the latter. He also
ventured farther.
133
zal has certainly displayed a compromising, accommodating and

synthesizing attitude in the field of international relations. He was able to ride
through the extremely negative atmosphere in Turkish-Greek relations, the Bulgarian
attempt at turning the Turkish minority Slavic and later the large scale emigration
from Bulgaria to Turkey, plus the Gulf war and Kurdish emigration from Iraq.
8.4.1. Turkeys Relations with the EEC, Application for
Membership in 1987
Turkeys political relations with the EEC had been frozen since September 12,
1980. Although Turkey claimed that they should be reopened after return to
democracy in 1983, the EEC countries declined, arguing that Turkeys democracy
and human rights was not yet up to EEC standards. Turkish parliamentarians (the
EEC commission) contacted MEPs (Members of the European Parliament) only at
unofficial basis. Opponents of revitalizing political relations at the time were
socialists and social democrats, the liberal group, communists, plus Greeks in all the
groups. Conservatives and Christian Democrats were in favor at the time of
revitalizing political relations within the framework of Ankara Treaty and associate
membership. The role of the military, limitations on democracy, torture, minority
rights, capital punishment were the major points of criticism coming from the center
(liberals) and center-left (German Social Democrats, French Socialists, British labor).
The Balfe Report accepted in the EP on October 23, 1985 criticized Turkey on the
above points and advised that political relations should be kept suspended. In the
meanwhile, with the accession of Spain and Portugal, the number of full-members of
the EEC had increased to twelve, starting 1986.
In 1986 Turkey managed to gather Membership Council as one indication of
movement toward normalization. The long denial led zal to try a second course in
addition to efforts to normalize political ties within the framework of Ankara Treaty.
On April 14, 1987 Turkey applied for full membership within the context of Rome
Treaty, as a European state. In the April 27, 1987 meeting in Brussels of EEC
ministers of foreign affairs, Turkeys application was taken in and sent to the
commission for investigation by a narrow margin of votes. The commission (led by
Matutes) underlined that firstly the EEC was in no position to consider new
membership till 1992 since single market target was to be realized in 1993. Secondly,
it pointed to the relatively low per capita income of Turkey, protectionism and
macroeconomic imbalances. Although zal had reduced customs taxes considerably,
they were still much higher compared to the EEC, while inflation was considered a
threat to macroeconomic balance. Thus Turkeys 1987 application for membership
was turned down in 1989; but the report advised that Turkeys relations be continued
within the framework of Ankara Treaty and associate membership. So at last, the
political relations with the EEC within the framework of Ankara Treaty were
normalized. Starting in 1988 Turkey had already began to reduce customs taxes to
the EEC countries that had been delayed for a long time, since Ecevit period. But
because customs taxes had already been reduced in 1984, these reductions remained
on paper for some time.
134
Turkeys application for membership in 1987 under Rome Treaty forms

another landmark in Turkish EEC relations. Although it was refused, associate
membership relations under Ankara Treaty had been normalized. As zal had noted,
following the verse from a famous Anatolian minstrel, in Turkish-EEC relations we
were on a long, thin path.
8.4.2. Normalization of Relations with European Council
Normalization of Turkeys relations with European Council (EC) was more
straightforward. On January 5, 1984 Turkish government declared that if Turkish
parliamentarians are not accepted to the Assembly Turkey would withdraw her
membership. The EC, in turn, immediately withdrew a draft criticizing Turkey. After
a few visits to Turkey, including the chairman of the Assembly, Turkish
parliamentarians were allowed to the EC Assembly on May 8, 1994. The EC refused,
however, to accept Northern Cyprus Turkish Republic (KKTC) as a independent
state and member on March 22, 1984. KKTC had been established on November 15,
1983 and had met with immediate disapproval of United Nations, Security Council
on November 18, 1983. The EC refused also, Turkeys chairmanship in April 1985
when her turn came up. Turkish government under zal declared that Turkey would
soon be lifting martial law, declare amnesty and let EC surveyors come. This
softened the atmosphere; the 5 European states withdrew their application to the
European Human Rights Commission against Turkey, and Turkey took on the
chairmanship in April 1986 when her turn came up.
8.4.3. Economic Relations with Islamic Countries and
Others
During zal period Turkey tried to expand trade with all countries and country
groups. Since the founding of the Republic this was the explicit political and
economic goal of Turkey. But during World War II, and the cold war in its aftermath
world conditions did not allow for much multi-literalism while these conditions had
begun to change since the second half of 70s. Nonetheless, two country groups stand
out with respect to their weight; the EEC and Islamic countries.
During the initial years of zal period trade with Islamic countries were
expanding while that with EEC was decreasing in relative terms. Turkey was already
a member of the organization of Islamic Conference established in 1971. In late 1984
an Economic and Commercial Cooperation Permanent Committee (SEDAK:
Ekonomik ve Ticari birlii Daimi Komitesi) was established; the secretariat and
coordinating function to be carried by the Turkish State Planning organization. Its
first meeting was held in Istanbul in November 1984; so were the successive
meetings.
Imports from Islamic countries comprised mostly of petroleum and petroleum
products and exports were mainly agricultural and agriculture-based products. There
were also contracting activities particularly in Libya at the time. Relations with
Islamic countries, however, were no viable and realistic substitute for Turkeys
relations with the EEC; rather they were complementary and partly interdependent.
135
As trade and economic relations with the EEC regained momentum, zal had applied
to the EEC in 1987 for full-membership, and eventually succeeded in normalizing
political relations within the framework of Ankara Treaty and associate membership.
Later, Refah Partisi (Welfare Party of Erbakan) envisioned a common market with
Islamic countries as the preferred goal but it could not work. ECO (Economic
Cooperation organization, formerly RCD) between Turkey, Iran and Pakistan did not
work much either.
During zal period, economic as well as political and military relations with
USA also expanded. But again, it was to be considered by both sides as
complementary, both sides favoring Turkeys eventual full-membership with the
EEC. Trade and economic relations with Japan also increased; so did trade relations
with USSR and Eastern European countries. Economic relations with this latter group
were to increase markedly particularly after the collapse of communist regime.
8.4.4. Turkish Greek Relations
The uncompromising and demanding attitudes of the Greek government
during this period, the tensions in Turkish-Greek relations also strained Turkish-USA
relations and, in addition, worked to Turkeys disadvantage in Turkish-EEC relations.
Major disagreements involved the Aegean air space, the continental shelf and the
arming of Aegean islands by Greeks.
Airspace had been closed by Turkey with the 1974 Cyprus operations but it
was opened to civilian flights after 1980. Greece, however, unilaterally declared that
she raised air space to 10 miles. In addition, she had armed several Aegean islands,
violating the Lausanne Treaty. She had also applied to the USA for help in case
Turkey acted to prevent both moves. When Papandreou had come to power in 1981
he had renounced the 1976 Bern Treaty on the Aegean Continental shelf and started
oil explorations. The disagreements between Turkey and Greece had been subsided
with a 1982 moratorium. But Greece had avoided to sit at the negotiation table for
solving the question of continental shelf. The USA in 1983 had decided to continue
with the 10/7 ratio in appropriating military aid to Turkey and Greece. Turkey felt
USA sided in favor of Greece all throughout. Thus, when zal and ANAP came to
power, Greek relations had already become critical and USA relations strained. In
1985 Turkish government turned down the installation of US Pershing and cruise
missiles on Turkeys soil. In turn, the USA in 1986 reduced the military aid to
Turkey by a minor ratio. Denkta (KKTC) and Kipriyanu (Cyprus Greek
Administration) meeting in 1985 brought a stalemate; Papandreou still insisted on
dismissing the Bern treaty on continental shelf. zals meeting in Davos with
Papandreou in January 1986 also had brought no concrete improvements. zal went
to the UK in February 1986; the US secretary of state, George Schultz visited Ankara
in March 1986, again with no solutions in sight. In April 1986, this time, under Greek
initiative NATO included Limni, a Greek Island near Anatolia within its war plan,
thus to be armed. But it had to give up the implementation of the decision upon
Turkeys serious protests. This time, Greece opened another disputed air corridor,
raising the tension still further.
136
In July 1986, zal visited KKTC and declared that Turkey would make no
concessions on Cyprus. In 1987 Greece went ahead giving oil exploration rights to
foreign companies within the contested boundaries of continental shelf. In turn,
Turkish government authorized TPAO (Turkish Public Petroleum Company) to start
oil explorations in Saroz bay and near Midilli, a Greek island in the Aegean very near
to zmir, again within the disputed boundaries. Turkey and Greece seemed to be
dragging towards the brink of war. Papandreou declared Greece could leave NATO
and open war to Turkey; Greece was about 10 million, Turkey 70 million people.
By 1988, after a meeting of the leaders involved in Davos in January and
zals visit to Athens in June, Turkish-Greek relations finally softened, even if the
problems still remained unsolved.
Obviously the serious problems and tensions between Turkey and Greece were
not of zals doing. On the contrary, zal and the Turkish Ministry of Foreign
Affairs tried hard not to yield to all the demands coming from Greece but still avoid
the worst alternative, outbreak of a Turkish-Greek war. Greece, on the other hand,
may have likely anticipated that she could get full support from the west for all her
demands. Luckily, some years later, the Greek governments realized that antagonism
between Turkey and Greece could bring disadvantages to both parties. Thus, a
friendly yet careful attitude began to emerge, somewhat deteriorating in the more
recent years. Though problems are still unsolved, at least it is a more conducive
atmosphere for eventually solving the problems.
8.4.5. Pressures Exerted on the Turkish Minority in
Bulgaria and Forced Migration to Turkey
Relations with Bulgaria also went sour, and again it was initiated by Bulgaria,
not Turkey. The Bulgarian Constitution accepted in 1971 denied the presence of
minorities in Bulgaria. Based on this constitution, starting in 1985. Bulgarian
President Jivkov forced the Turkish minorities in Bulgaria to change their names to
Slavic, restricted their education in Turkish and their religious practices. Those who
resisted found themselves deprived of jobs and social security. Resistances to the
repression by Turkish minorities also met armed pressures from Bulgarian security
forces, leading to many deaths. Turkish government warned Bulgaria several times to
solve the problem bilaterally and allow immigration to Turkey under an immigration
agreement. Bulgarian government, in turn, insisted these were Bulgarian people (or
citizens) and Turkey had no right to interfere in Bulgarias domestic affairs. Turgut
zal discussed the matter in Washington before proceeding with the battle of
diplomatic notes. By 1987 Bulgarian government softened the repression of the
Turkish minorities, but it did not live long. In May 1989 hundreds of Turks were
thrown out of Bulgaria with forced Bulgarian passports. They sought asylum in the
embassies of other countries and finally reached Turkey. Jivkov raised the level
further, resorted to forced emigration with Bulgarian passports and demanded Turkey
open her borders, to which zal replied Turkeys borders were always open. Many
emigrants from Bulgaria walked all through the buffer zones to reach Turkey. As this
kind of immigration under no agreement surged, the Turkish government rapidly
137
established migrant camps at two sites in the border and designated temporary
settlement sites in 16 provinces. In the meanwhile, Bulgaria speeded up giving forced
Bulgarian passports. zal again demanded an immigration agreement which Jivkov
again refused insisting these were Bulgarian citizens who could return to Bulgaria
any time. Gorbachev also sent a note to Turkish president Evren through Russian
Ambassador that Bulgaria was not ready to draw an immigration agreement. The
number of immigrants eventually surpassed one hundred thousand before it came to
an end.
Much later, after the collapse of communism, the Bulgarian government
apologized for the wrongdoings of the communist government on the question of
Turkish minorities in Bulgaria.
8.4.6. Masses of Kurdish Refugees Fleeing From Iraq
In February 1988 Saddam Hseyin waged an all out attack on Kurdish
insurgents in Northern Iraq, killing thousands with chemical weapons of mass
destruction he employed against them. Masses of Kurds gathered at the Turkish
border for refuge. Iraq had agreed on a ceasefire with Iran as a result of which Iran
had closed her borders, leaving Turkey as the only alternative. In August 29, 1988
Turkey felt obliged to open her borders to accommodate Kurdish refugees out of
human considerations. The number surpassed one hundred thousand within about a
month. A similar incident took place in April 1991 following the invasion of Kuwait
by Iraq. This time the number of refugees to Turkey surpassed one million and an
international military operation had to be started to protect Kurds from Saddam. But
following the Gulf operation and the creation of a federated Kurdish region most of
them returned to northern Iraq. One interesting observation about Turkeys
willingness to intake Kurdish refugees despite PKK and Apo terror is that most
European intellectuals and politicians who were ready to criticize Turkey with regard
to Turkeys breach of human rights to Kurdish population and PKK terrorists were
not quite willing to accommodate even small numbers of refugees, and not quite
willing to express any appreciation to Turkey for having accommodated Kurdish
immigrants.
8.4.7. The 1990 Gulf War and Turkeys Cooperation with the
USA
Turkeys role in the Gulf War to save Kuwait started on August 2, 1990 when
zal was president and Akbulut PM is important because of several angles. It caused
the unprecedented resignation of the joint-chief-of-general-staff. The opposition
parties were all categorically against Turkeys participation. zal showed the
pragmatism and wisdom of keeping strong ties and cooperation with the USA. He
pressed his point saying Turkey would win by participating in the war. But the war,
in fact, brought an added burden to the budget and Turkey lost further because oil
pipeline between Iraq and Turkey was closed while exports to Iraq dwindled. The
event, incidentally, also showed that the reins were, in fact, entirely in the hands of
zal, and not in the hands of Akbulut, the PM
138
It is impossible to know whether zal contemplated moving as far as Kirkuk

and Mosul if conditions allowed or was merely mentioning such a possibility to win
points in favor of aiding the USA in the war. However, given the actual course of
events and the restraint of the Turkish army, such a scenario was simply out of
question. Since Necip Torumtay, the joint-chief-of-general-staff at the time did not
agree with the decision to enter the Gulf War, he had resigned. He later stated in a
TV interview that he was particularly concerned about a Kirkuk and Mosul adventure
and considered such an adventure, in effect, a Pandoras box. In place of Torumtay,
Doan Gre was nominated. Gre later joined DYP then under Tansu iller and
belittled himself somewhat, according to this author, by declaring Tansu as a direct
follow-up of Atatrk.
When zal called the leaders of opposition parties to discuss Turkeys entry to
the Gulf war on August 10, they all declined in protest. In contrast, Erdal nn,
chairman of SHP went to Iraq to talk to Saddam Hseyin. It is worth noting here that
a segment of religious circles were also against siding with the USA (and the West,
the unbelievers against Muslim Saddam) while all the opposition, including
Demirel at the time, declared zal was throwing Turkey into an adventure. The
parliament dominated by ANAP, however, went ahead and decided on September 5
that the government could send the army to Iraq if and when need arises. At the same
time, the government began taking all the precautions for defense in case of an Iraq
chemical or rocket attack.
The Gulf War and the aftermath affected the Turkish economy adversely. The
added budgetary burden of military preparations had to be met with rises in the prices
of many basic and intermediate materials, including petroleum. Thus, it increased
both the cost and demand inflation tendencies prevalent at the time. The closing
down of the Kirkuk-Yumurtalk petroleum pipeline between Iraq and Turkey further
brought a loss of revenue and foreign exchange. Boundary trade and exports to Iraq
by means of TIRs also stopped. All these were important additional factors causing
the low performance of the economy in 1990 and on.

DURING 1984-1992
8.5.1. Growth of GNP, Per Capita GNP, Population and
Inflation
zal was PM during the years 1984-90. He was elected president in October
31, 1989 and Yldrm Akbulut as PM had obtained vote of confidence from the
parliament on November 15, 1989. zal had kept his influence over the party and the
government during Akbuluts prime ministry which had ended in July 5, 1991 when
Mesut Ylmaz had become chairman of ANAP and PM After the October 20, 1991
elections Sleyman Demirel had formed a coalition of DYP and SHP in November
30, 1991 ending Ylmazs ANAP government. Thus, Ylmazs government was
139
short-lived. Though Ylmaz tried to keep off zals influence, for all practical
purposes, the entire period 1984-1991 should best be evaluated as ANAP and zal
period.
Growth performance of the economy during ANAP and zal period 1984-91
is given below in tabular form:
Implicit GNP
GNP
Population
Per capita GNP
Years
price index
growth rate
growth rate
growth rate
1984
48.5%
7.1%
2.4%
4.7%
1985
52.9
4.3
2.5
1.8
1986
35.6
6.8
2.2
4.6
1987
33.5
9.8
2.2
7.6
1988
69.7
1.5
2.2
-0.7
1989
75.5
1.6
2.2
-0.6
1990
57.5
9.4
2.2
7.2
1991
59.2
0.4
2.2
-1.8
Source: SPO, 1995 Transitory program, p.26 (Note new GNP series of SIS, SPO have
been used).
The average yearly GNP growth rate for 1984-91 (8 years) was 5.1%, with an
average population growth rate of nearly 2.3%, average yearly per capita GNP
growth rate was 2.8%. The average rate of inflation (implicit GNP deflator) during
the ANAP and zal period 1984-91, on the other hand, was very high, 50.4% per
year.
The above yearly figures indicate that in the initial years 1984-87 (4 years)
growth performance was better, with an average yearly rate of nearly 7% and a
slightly lower average rate of inflation of about 42.3%. In the following years the
average rate of growth had declined conspicuously despite a relatively high
performance in 1990, while the rate of inflation had increased.
Both the average growth rate and, in particular, the inflation rate compares
poorly with, for instance, the DP period 1950-59 and the AP period 1965-71. But
during the zal period there were several external factors that affected on the
performance of the economy negatively and that had little to do with economic
management or mismanagement. One such factor was the large-scale military
operations against PKK terrorists and their burden on the budget. According to
estimates by official sources, 38% of the budget went to military expenditures.
Although much depends on exactly how we define and calculate the additional
military expenditures caused by the fight against terrorism, there is no doubt that it
must be a significant amount. And no doubt, this burden not only increased the rate
of inflation but also adversely affected the growth rate during zal and ANAP
period.
Still another external factor was the costs and attention involved in the
handling of refugees or immigrants from Iraq in 1988 and 1991, and those from
Bulgaria in 1989, both referred to in the previous, relevant sections.
And the third external factor was the Gulf operation against Saddam Hseyin
and Iraq in 1990 to save Kuwait. The embargo that followed had meant closing down
140
the Iraq petroleum line from Kirkuk to Yumurtalk. According to the estimates by
official sources, the total loss of revenue and foreign exchange for Turkey in 1990
was around US$ 4.5 billion dollars. In addition, there occurred a reduction of exports
to Iraq in the post-Gulf operation years, including boundary trade and export by
means of TIRs. Thus, the embargo after the Gulf war affected Turkeys balance of
payments negatively, contributing to the rise in balance of payments deficits starting
with the said year. Indirectly, it must also have negatively affected the growth rate of
the economy, as well as the inflation rate.
Therefore, these serious external factors must be taken fully into consideration
when evaluating the performance of the economy during zal period. As noted
above, they had nothing to do with economic management or mismanagement. But a
quantification of the above factors is very difficult if not impossible.
Structural changes and developments continued during zal period. The share
of agriculture in GDP (Gross Domestic Product) in current prices declined from
19.7% in 1983 to 15.2 in 1991; industry rose from 23.1% in 1983 to 25.9% in 1991;
and the share of services was 57.2% in 1983 and 58.8% in 1991. Manufacturing
comprised the main bulk of industry (SPO, 1995 program, p.2 and SIS, Statistical
Indicators 1923-1992, p.410).
Total population rose from 47.864 thousand in 1983 to 57.326 thousand in
1991; (both mid-year) the rate of growth of population having fallen from 2.4% for
1984 and 2.5% in 1985 down to an average 2.2% 1986 from to 1991. In 1983 the
ratio of urban population was 49.4%, rural 50.6%; by 1990 the respective ratios were
59% and 41%.
Per capita income in US dollars (at the current mid-year exchange rate) rose
from $1.299 in 1983 to $2.654 in 1991 (SPO, ibid, p.28). Per capita GNP in dollar
terms, however, should be taken only as a very crude indicator for international
comparisons. The Purchasing Power Parity corrects only one aspect, the current
exchange rate while other serious problems that blur international comparisons
remain for both methods. Firstly, there is always the textbook problem of a lot of
work being done by households without getting registered in the market, including
the production and value added of unpaid workers in farms as household members.
This is only partly taken into account when estimating total agricultural produce. But
estimating agricultural produce, however, is not very precise. In addition, many
women doing paid household work are never registered and their work never go into
SIS figures. Moreover, many men and boys are employed in small service or
manufacturing firms without being registered for social insurance. The volume of
production and value added of these firms too, cannot be estimated accurately. All
the personal income documents submitted to public and tax authorities always lead to
under-estimation. This implies that - in addition to taxes - not only GNP but
employment figures are also under-estimates. Unregistered sales, production, and
income is impossible to capture by the State Institute of Statistics and it impairs both
the current exchange rate and also the PPP per capita income in dollar terms; but to
what extent it is hard to determine. It should be underlined that although this problem
is mentioned at this point for the zal and ANAP period, it was present in the past
141
and also later up to this day. Definitely, the ratio of unregistered income to official
statistics in Turkey should be much higher not only compared to developed countries,
but also to small mid-income countries in Europe. This goes for Greece as well.
8.5.2. Employment and Unemployment
It should be noted at the outset that SPO changed its method of calculating
total civilian labor supply, employment and excess labor supply including
unemployment since the year 1982, starting with the 1985 yearly program.
Thus, according to the old method of calculation, (SPO, 1984 program, p.267)
in 1983 total civilian labor supply was 18,492.6 thousand, total labor demand
(employment) was 15,682.3 thousand, non-agricultural excess labor (unemployment)
was 2,810.3 thousand (15.2%), disguised unemployment in agriculture was 665
thousand and total excess labor, as the sum of the latter two categories, was 3,475.3
thousand or 18.8% of total labor supply. This rate compared poorly with previous
years, say 1980 in which total excess labor (including disguised unemployment in
agriculture) was 2,651.3 thousand and the rate was 15.4% (SPO, 1986 program,
p.284). According to the revised figures for 1983, total civilian labor supply was
17,773 thousand, employment 15,577 thousand, non-agricultural excess labor
(unemployment) was 2,196 thousand (12,4%), disguised unemployment in
agriculture 665 thousand, total excess labor supply was 2,861 thousand or 16,1%.
By 1987, using the new method of calculation, total labor supply had become
18,804; employment 16,548.1; non-agricultural excess labor supply (unemployment)
2,250 (12.0%), agricultural disguised unemployment 600, total excess labor supply
2,855.9 thousand or 15.2%.
The above is significant because it shows that during 1983-87, years of
relatively high growth rate, unemployment ratio calculated both with the same and
the revised method, was not decreased appreciably. In fact, it might have slightly
increased.
The figures for 1991 are again calculated with a different methodology, hence
comparability with 1983 is impaired. In particular, total civilian work force (labor
supply) figures were again reduced. Thus, (in the SPO, 1994 program, p.171, 172)
the official figure for total labor supply in 1991 was 19,967 thousand, total
employment was 18,421 thousand; hence total unemployment 1,547 thousand or
7.8% of total work force (labor supply). Under- employment was 1,373 thousand or
6.9%; hence, total unemployment plus under-employment was 2,920 thousand or
14.7%. Therefore, despite continuous changes of estimation, all lowering the total
unemployment plus under-employment ratio to total labor supply, the figures still
show an increase over the years. The actual situation and unemployment figures must
have been worse.
According to the revised employment figures for 1983 (SPO, 1986 program,
p.285), of total employment 15,576.7 thousand, 9,450.8 thousand (60.7%) was in
agriculture, 1,910.7 thousand (12.3%) in industry and 4,215.2 thousand (27.%) in
services. By 1991, according to official figures, out of 18,421 thousand total
employment (SPO, 1994 program) 8,714 thousand (47.3%) was in agriculture, 2,837
142
thousand (15.4%) in industry and 6,870 thousand (37.3%) in services (SPO, ibid,
p.171). Whatever the changes in methodology, the share of agriculture in total
employment must have declined, and that of industry, in particular, must have
increased significantly.
The above sectoral employment figures, when compared with sectoral value
added figures or the shares of respective sectors in GDP will show the relatively low
productivity in agriculture compared to industry or services, again a perennial
problem.
8.5.3. The Share of Public Sector in Total Fixed Investments
A significant aspect of zals development strategy was to undertake public
productive infra-structural investments. Electrification of villages, village roads,
telephone system and village telephones, widespread use of computers in government
offices were among top priorities.
Firstly, there had been a significant increase in the ratio of total fixed
investments to GNP. For 1970-74 the ratio stood at around 17.3%, for 1975-79 at
around 21.3%, for 1980-1983 at around 19.1%. 1984 was also low at 18.2%. but it
rose to 20% in 1985, up to 24.9% in 1987, remaining over 24% for 1988, 1989 and
falling somewhat to around 22.5% for 1990, 1991 (SPO, yearly programs). The
increase in this ratio emanated both from the increase in public sector and also
private sector investments, but the rise in public sector investments was higher. The
ratio of the public sector in total fixed investments in 1983 was particularly high at
60.3% due to meager private sector investments. It became 55.0% in 1984, rose to
around 58.1% in 1985 and 1986, then began falling gradually and was 45.9% in 1991
(SPO, yearly programs).
This high ratio of public sector in total fixed investments should not be
considered inconsistent with the move towards market economy. Similar trends were
also seen during the DP and the AP periods though both implemented liberal
economic regime. During both the DP and the AP periods, public investments were
channeled not only to social infra-structure and productive infra-structure but also to
super-structure provided it was not competing with private investments. During zal
period public investments were channeled explicitly to social and productive infrastructure. Hence, they were strictly complementary to the private sector. Private
investment in these fields were also allowed. But the financing of public sector
investments, coupled with other factors caused budget deficits and inflation.
Moreover, the financing of budget deficits by means of internal debt caused the real
interest rate on bank credits to rise to very high levels. This, in turn, must have
reduced the potential of private investments, thereby adversely affecting the principle
of encouragement of private sector in the market economy. This had not occurred
during the DP (Menderes) and AP (Demirel) period because in the past most of the
budget and public sector deficit was financed by Central Bank credits and printing of
money, and not by much recourse to internal debt.
143
8.5.4. Privatization
Since privatization is one of the pillars of moving to market economy, some
basic statistics concerning the privatization program started by zal is in order at this
point. Following organizational preparations in 1985, privatization started since
1986. It involved sales of SEEs totally or their majority shares to private
entrepreneurs, including sales to foreign firms. The program necessitated first,
selection of SEEs to be privatized and their evaluation for sales by independent
(foreign) financial institutions. SEEs were sold either through the stock exchange or
by awarding the ownership to the highest bidder in an officially organized auction
(contracting out), all involving administrative and financial technicalities. Some of
the crucial questions were: i) to prevent formation of monopolies, ii) To ensure that
the installations be used to continue with production and not, say for land
speculation, iii) employment problem was most critical because over-employment in
all SEEs was widespread due to populist policies by all governments. Reducing the
number of employment by the new owner involved social costs.
The SEEs, public banks, public institutions tied to SEEs, installations of
agricultural sales cooperatives to be privatized were first to be transferred to KO
(Kamu Ortakl daresi: Public Ownership Administration) established in 1984
along with Mass Housing Fund (Toplu Konut Fonu). KO would then make the
relevant technical preparations for the sales of the public institutions to be privatized.
For 1986-1992, according to sources published by KO, total privatization
income was US$ 991 million, of which US$ 542 million were bloc sales (involving
sales of 100% ownership of 50 public institutions); US$ 327 million sales to public
(involving 15 public institutions) and US$ 122 million combination bloc sales and
sales to public (involving 8 public institutions). In addition, 16 incomplete public
institutions were sold for US$ 24 million; US$ 294 million was obtained from sales
of shares; and dividend income of US$ 554 was obtained from SEEs handed over to
KO for privatization. This brought total income up to US$ 1.863 million. This figure
however is gross and excludes costs incurred due to privatization. The number of
SEEs or public institutions handed over to KO for privatization was a greater
number. During 1986-1991 a total of 106 and by 1992, 122 institutions had been
included in the privatization list and brought under the custody of KO, of which 73
were sold as detailed above.
8.5.5. FPC Flow (DPIs)
The flow of FPC (DPIs) increased significantly during the ANAP and zal
period, starting from a low level in 1983. The yearly flows are presented in tabular
form below:
144
(all figures in US$ million)

Years
Yearly entries1
Net entry
Profit transfers
1984
87
87
23
1985
158
158
52
1986
170
170
40
1987
239
171
47
1988
488
406
42
1989
855
738
112
1990
1.005
789
102
1991
1.041
910
119
Includes profits retained and added to capital.
Source: HDTM Under-Secretariat of Public Treasury and Foreign Trade and SPO,
yearly programs.
The figures above indicate that on account of consistent encouragement of

FPC flow by zal, and liberal laws and regulations, entries began to increase in the
second half, and earnings were also retained and added to capital, while the ratio of
yearly profit transfers to yearly entries decreased.
Although the major bulk of FPC flow went into manufacturing sector in the
first half of zal period, FPC flowing to services also increased considerably in the
second half. For instance, in 1983 86.4% of FPC entries allowed was in
manufacturing; in 1991 only 55.2% went to manufacturing, 41.7% to services, and
the remaining to agriculture and mining. So, by 1992 (September) of the total capital
of FPC firms in Turkey 53.2% was in manufacturing, 41.9% in services 3.4% in
agriculture and 1.5% in mining.
To give still a clearer idea of the increase in FPC flow, even in 1973 the year
FPC began to be encouraged rigorously, the total number of FPC firms that entered
numbered 92 and their total capital was 3.895,7 million TL. (in nominal terms). By
1992 September total number of firms had reached 2.232, total capital had reached
19.959 billion TL. (again in nominal terms). The average share of FPC in total capital
had reached 51% (HDTM and SPO, ibid)
8.5.6. Selected Foreign Trade and Current Account Items
Since outward orientation and implementation of market economy were major
goals of the zal period, selected statistics on foreign trade and current account will
be submitted here which shows conclusively that these goals were realized
satisfactorily. Total imports, exports, trade deficit and current account balance for the
years 1983, 1984-1992 are submitted in tabular form below (Source: SPO, yearly
programs).
145
(In US$ million)

Current
Trade deficit account balance
-3.507
-2.123
-2.942
-1.439
-2.975
-1.013
-3.081
-1.465
-3.229
-806
-1.777
+1.596
-4.219
+961
-9.555
-2.625
-7.455
+257
Years Imports1 (cif) Exports (Fob)

1983
9.235
5.728
1984
10.757
7.134
1985
11.344
7.958
1986
11.105
7.456
1987
14.157
10.190
1988
14.335
11.662
1989
15.792
11.625
1990
22.302
12.960
1991
21.047
13.593
1) Excludes imports of gold. For instance, in 1992 imports of gold was US$ 1.430,
bringing total imports including gold to US$ 24.302 million.
The above figures indicate that outward orientation of the economy had indeed
started with ANAP and zal; or more precisely with the 20 January 1980 economic
program implemented by zal during Demirels AP minority government period,
intensified since 1983. During 1984-1992, exports rose by 137.3% and imports by
127.9%. Increase in imports is obviously financed in major part by increases in
exports as well as increases in current account items. Thus, foreign trade began to
acquire a much greater weight in the economy. What is more important, current
account deficit was kept in check; it remained within manageable limits and even
turned positive in 1988 and 1989. This is significant and shows that despite the
relatively high rate of inflation, foreign exchange rate was not allowed to lag behind
and the money to become over-valued (foreign-exchange to become under-valued).
For 1990 and the following years, on the other hand, the negative effects of the
Gulf War, the embargo, closing down of the Iraq pipeline, decline in exports to Iraq
must have played a significant role in the deterioration of Turkeys balance of
payments.
Two further words of caution should be given here in evaluating the above
foreign trade figures. Firstly, tax rebates on exports caused a great deal of fictitious
exports (the volume not determinable) and were discontinued starting 1989.
Secondly, although Turkeys current account improved in general over the years
1984-89 and on, payment of interest and installments on increased foreign debt added
a new burden on Turkeys balance of payments not shown in the figures above.
One of the foreign-exchange-earning sectors encouraged by means of various
measures was tourism. Figures indicate decisively that tourism did gain a new
impetus during zal period. In 1983 net tourism income was only US$ 284 million
when remittances of workers were US$ 1.554 million. By 1991 tourism income was
US$ 2.654 million, tourism expenditures US$ 592 million, hence net tourism income
was US$ 2.062 million. Remittances of workers in 1991 were US$ 2.819 million.
With the continuation of encouragement of tourism, the tourism income rose to much
higher levels later.
146
In the breakdown of imports, we can observe a modest rise in imports of

consumer goods because of trade liberalization policies, but the increase did not turn
out to be of any magnitude to collapse Turkeys balance of payments as the
protectionists at the time feared. To wit, in 1983 imports of investment goods
comprised 26.2% of total imports, raw materials 71.6% and consumer goods 2.2%
By 1991, the respective shares were 27.3%, 54.4% and 13.1%; gold imports in 1991
accounted for 5.2% of total US$ 22.208 dollars (SPO, 1993 program, p.52; note
slight discrepancies in figures in different SPO yearly programs). Foreign exchange
earnings through tourism and general increase in exports had already covered the
increase in imports of consumer goods.
A more significant development was perceived in exports; industrial exports
had become predominant. In 1983 agricultural products constituted 32.8% of total
exports, mining and quarrying 3.3% and manufacturing already constituted 63.9% of
which 11.7% was subsectors working with agricultural materials, 52.2% was others
which included textiles as the dominant sub-sector. By 1991 the share of agricultural
products was down to 8.1%; mining and quarrying 2.1% and manufacturing was up,
88.9% of which 18.9% were subsectors working on agricultural materials, and 70%
constituted all other manufacturing subsectors (SPO, 1993 program, p.55, 56).
Interesting developments took place in the composition of trade with country
groups. Of particular importance were the changes in the share of EEC countries
versus the Islamic. The shares of these two country groups in total exports and
imports for selected years in given-below in tabular form (SPO, yearly programs).
1975
1977
1983
1985
1987
1991
47.8%
40.0%
51.8%
41.3%
30.3%
22.1%
20.1%
17.3%
Share of EEC Countries:

Exports
Imports
43.9%
49.0
49.5%
42.6
35.1%
28.1%
39.4%
31.2
Share of Islamic Countries:

Exports
Imports
16.8%
17.8%
13.3%
21.4%
45.9%
40.1%
42.8%
32.9%
As can be followed from the figures above, since oil price rises in 1973
Turkeys trade with EEC, both the share of exports and of imports declined till 1983.
The share of Islamic countries both in exports and imports, in contrast, increased
significantly. After 1983, a gradual reversing began to take place and by 1987 the
share of EEC countries in both exports and imports rose and surpassed that of Islamic
countries. Therefore, it is not coincidental that zal applied for full-membership to
the EEC in 1987. By 1991 the share of EEC in Turkeys trade, both exports and
imports had risen even further and that of Islamic countries continued to decline
significantly.
147
8.6. AN EVALUATION OF ZALS POLICIES

Many consider that zal pioneered or otherwise accelerated several positive
developments and praise him, while as many consider that zal pioneered or
otherwise expanded several negative developments and denounce him. Therefore, a
final summary evaluation is in order at this point. As the first step we should list both
the positive and the negative developments during the zal period.
On the positive side, excepting for those who favor socialist central planning
or are intensely tatist, is zals resolve to more towards market economy, away
from an inward-looking, import-substitute industrialization strategy, intensive
protectionism and interventionism. Within this light, he was right in moving towards
trade liberalization, in following a realistic exchange rate policy, making the TL.
convertible, encouraging private enterprise, expanding incentives for flow of FPC,
starting a privatization program for SEEs, limiting public investments to infrastructure, and encouraging tourism as well as export industries.
He was also right in his attempt to transform the economy technologically,
introducing the computer and computer programming to public organizations, banks,
municipalities, and schools while also expanding roads, electricity, telephone
communication system to many villages.
He also took a step in the right direction by appropriating real estate taxes to
municipalities which, in turn, expanded their investments in municipality roads and
other infra-structural fields.
But expansion of public infra-structural investments and their deficit (Central
Bank printing of money plus debt) financing gave rise to persistently high inflation.
This, in turn, played havoc with income distribution. Although zal avoided a
balance of payments crisis despite high inflation by pursuing a realistic exchange rate
policy, both internal and external debt started to rise, making the future of the
economy more risky depending, of course, on its future management.
There are strong indications as well as research that income distribution
worsened throughout zal period. In addition to the negative effects of inflation,
salaries of government employees and the retired as well as the wages of workers
were tightly controlled and yearly rises were always less than inflation, causing a
decline in real terms for these fixed income earners. Unemployment rate also
increased over time.
Another point which should be stressed here is that although zal made
explicit bold moves towards the market economy, high rates of inflation impeded
private investments from flowing to the most productive fields. Partisan
considerations and corruption in the auction of government and municipality
investments and in privatization prevented these to go to the most productive
entrepreneurs. Corruption also bloated the price of public auctions while lowering the
revenue obtainable from privatizations, thus also contributing to lower growth rate as
well as inflation.
148
In Turkeys international political and economic relations, again excepting for

those who look suspiciously towards the capitalist Western countries, including
USA, zal was on the right track with a pragmatic and multilateral approach,
building a strong political and military alliance with the USA, strengthening
economic and political relations with the EEC and at the same time trying to expand
Turkeys economic relations with Islamic countries and other country groups. The
negative effects of the Gulf War, critical relations with Greece, the problem of
immigration of Bulgarian Turks and of Kurds from Northern Iraq, continuation of
ASALA terror were not of his doing; instead, he persevered throughout.
Many of zals major negative points, on the other hand, concern mainly
domestic politics. The list could include:
Partisanship in appointments, and in the granting of public and municipality
auctions increased rapidly.
So did corruption, bribery, graft at all government and municipality levels, also
presumably encompassing the parliament and the government. When zal said in
connection with low salaries of government employees, My government employee
knows what to do... it was interpreted rightly or misinterpreted as implying
permission for taking bribes! Many ANAP parliamentarians, on the other hand, tried
to defend the increase in bribery, stating that the ratio of bribery to the number of
(government) transactions remained the same, but the number of transactions had
increased because ANAP was doing a lot of work.
zal probably had an instinct to belittle law. On one occasion he mused,
What if we disregard the constitution for just one day!. He relegated the parliament
and his parliamentarians to rubber-stamp status. He would prepare the policies and
laws within a small circuit of close associates and then expect the law to be passed
with the yes votes of ANAP MPs. Criticisms, modification attempts by ANAP MPs
in the parliament were not taken well; they simply had to defend the draft against the
opposition. He would, in many cases take blank and signed letters of resignation from
his cabinet members. All this was in addition to the KHKs (Decrees on the Force of
Law) which already gave the possibility to the government to bypass many decisions
from the parliament.
In the initial years of zal period many MEPs (Members of European
Parliament) criticized Turkey for not having returned to normal or acceptable
democracy. Therefore, political relations with the EEC were suspended on formal
basis until 1987. They believed that these criticisms were justifiable from the
viewpoint of the EEC and their criteria concerning democracy and human rights. But,
zal can hardly be blamed for not moving faster towards more improved democracy
and human rights. Turkey was just out of military intervention at the time with
several measures and court cases still pending, and the threat of terror was still alive.
In the later years, zal could initiate faster improvements despite increased violence
and a de facto internal war with Apo and Kurdish separatists.
zal also played too much with the system of counting votes and with the
setting of election dates. But more importantly he exerted a great deal of influence in
the election, or rather the selection of MP candidates. This, plus using the MPs and
149
the parliament as rubber-stamp, getting rid of opponents within the party, all gave
rise to what has become to be termed sovereignty of party leadership.
Unfortunately, the 1982 law on political parties also allowed a lot of authority to
party leaders. And unfortunately, all other party leaders both right and left went the
same way, following zal.
One of the most important negatives attributed to zal was he strengthened the
religious right both politically and economically. He had a radical religious
background himself and was a MSP candidate in the 1979 elections. As leader of
ANAP he embraced center-right with a reformist stance. He did indeed join four
different movements within ANAP: the religious, the nationalist, the center-right
(liberals, as they referred to call themselves later) and leftists turned zal-type
reformist. He vied votes from all the four movements. But he did not want to give
full reins to the center-right for fear they may later transfer to DYP and Demirel.
Therefore, though he included all the four movements in his cabinet and in the party
administration he gave the largest power to the religious in both. He himself kept his
informal or moral ties with the strongest religious order (tarikat) in Turkey. His
worldly wife seemed at first sight to act as a balance but eventually the wife and most
family members became a burden for public opinion because of their wrong acts and
attitudes.
During ANAP and zal period, the religious movement gained strength
through various means, such as the tarikats (religious orders), religious schools for
raising imams and Koran courses. Economically too, green finance institutions or
Islamic banks that deal with ownership and profit shares rather than with credit and
interest began to proliferate; so did green industrial firms.
It should be stressed here again that the results of the elections should be read
carefully on this point. During all the elections but the last one in 1991 since most of
the religious votes went to ANAP, those that went to the radical religious right
Welfare Party (RP) was never too high. But just before the 1991 elections, zal had
shifted gear and the liberals as they called themselves took charge of ANAP with
zals final blessing behind the scenes when he was president. Therefore, most of the
religious votes deserted ANAP in 1991 and went to RP, as if religious votes had
made strides all of a sudden in 1991. The cooperation of RP with MHP in the 1991
elections was surely another factor, but did not explain all of the increase in the votes
of RP and the cooperating parties. Therefore, we may rightly conclude that zal is
largely responsible for the strengthening of radical religious right in Turkey. Of
course, again it was not the only reason. Another reason was that over time, the
center-right parties, DYP and ANAP had lost credibility in the eyes of the voters
because of their alleged corruption while center-left entered the 2002 elections with
just one leg, the CHP of Baykal who was unpopular. The other leg, DSP had
collapsed with the serious illness of Ecevit.
Some also argue that Kurdish separatism and PKK terror that have increased
and reached the proportions of disguised war had arisen because of zals faults in
the handling of the problem. But there is little or no hard core evidence or proof that
the blame lies with zal personally. Those who blamed zal argued that he did not
150
encounter terrorism with an all-out determination at the start. Another evidence cited
is that zal had once remarked that his grandmother was probably Kurdish, and the
statement was frowned upon by hard-liners.
The question of establishing seven administrative regional provinces
superimposed on the existing 67 plus provinces was taken up during zal period,
discussed and rejected due to objections from hard-liners. After martial law was
lifted, OHAL was immediately established covering those Eastern provinces in which
terrorist activities and incidents took place frequently. In his later years, zal
increased the rights enjoyed by the Kurdish citizens. For instance, in January 1991 he
passed a law lifting the ban on speaking and singing in Kurdish. These moves were,
in fact, in compliance with the requirements of EEC improvements in human rights or minority rights as some MEPs preferred to refer to. But again, it was criticized by
hard-liners and nationalists. The latter groups believed that making any such
concessions to the Kurdish issue would be interpreted by Kurdish separatists as
weakness, hence would result in further demands and further increase of terrorist
activities. Therefore, hard-liners were not quite happy with zal government
expanding human rights in compliance with the stipulations of the European
Community. But on all of the points above, hard-liners were more on the wrong side
compared to zal.
Therefore, hard core proof or evidence that the increase of PKK terrorism is
zals fault is lacking and the issue is referred here only because some have argued
otherwise. On the other hand, increased terrorism and military operations against
PKK terror definitely affected the performance of the economy adversely. It also
impeded a fast economic development of Eastern and South-eastern regions and this
was regarded as one of the major long-range solutions to the problem, in addition to
the short-run military and security measures taken against terrorism.
It is obvious, however, all these accusations are highly speculative and are far
from hard and concrete evidences that there was zals fault in the rise of Kurdish
separatist movement and terrorism.
It is now more clear from above positive and negative points both genuine and
concocted, why zal was and still is a controversial figure. Depending on the relative
weights that one attributes to zals positive versus negative points many come out
praising zal for the goods he has done despite some (minor) faults. And as many
come out denouncing him for the faults he has done despite some (minor) goods he
has done.
For a starter, some simple examples may be given. Taking an imaginary
American expert on Turkey; he or she may be give a heavy weight to the
improvement of Turkish-USA relations and to the economic policies in essence
that he has pursued, and he or she may be tempted to praise him highly. At this point
we should, however, stress that market economy was the trend of the day for newly
industrializing countries all over the world and any center-right - and even center-left
- government would have moved towards it, leaving aside the differences and
mistakes in the details of this approach.
151
An imaginary European expert, on the other hand, may blame zal for getting
too close to the USA and not moving fast enough in improving democracy and
human rights. He or she should be aware that political and military cooperation with
the USA is beneficial for both the USA and Turkey while it should not invalidate
Turkeys membership aspirations internal politicking within the EC itself aside.
And again, it was not in the hands of zal and, in fact, perhaps it was in Turkeys
internal and long-term interests not to move too fast towards human rights, in
particular, against Kurdish separatists and terrorists at the time. Many European
experts do not seem to grab fully the nature of terrorism and separatism in Turkey. It
is never to be compared with minor isolated problems in Spain or Italy or even UK
although the latter was more serious compared to the former two. Turkey needed
more time for full membership, but there was no mutual advantage to be gained to
prolong normalization of political ties till 1987 following return to democracy in
1983.
In Turkey, on the other hand, many leftist intellectuals who thought Soviet
central planning was creating miracles as most did during the 60s and 70s or those
who are not Marxist but favored intensive tatism not only belittled zals move
towards market economy but, in fact, objected to the essence of market economy,
private enterprise and FPC. Adding to this, increased foreign and internal debt,
persistent inflation, worsening of income distribution, they came up with a net big
negative for zal. In contrast, however those who give a heavier weight to economic
and technological progress - albeit inflation - and assign less weight to negative
points about democracy, human rights or the strengthening of religious movement,
come out with a big net plus in zals favor.
Nonetheless, corruption, partisanship, leaders sovereignty, growth of religious
movement were much more serious negative points in the longer run. What was
unfortunate was that other center-right parties or leaders when in power also
continued with the same mistakes above as zal fell into rather than correcting
zals negatives. The center-left parties, on the other hand, had their serious
negatives as well as some pluses.
The author would leave the final evaluation of zal to the reader, with his or
her value judgments about the weight of the above enumerated positive and negative
points about him.
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Chapter 9
PERIOD OF COALITIONS:
1992-2002
Starting with October 1991 general elections on to October 2002 general

elections, we witness a long period of various coalition governments, most frequently
by parties with different philosophies. Some of the coalitions endured for a relatively
long time; many others were short-lived. In one case, on 28 February 1997, the MGK
sounded an alarm note on religious reactionary movements and anti-laicism leading
to the resignation of the coalition government involved. In addition, Turkey had to
face two economic crises. The first one occurred in 1994, caused by no external
reasons but simply because of economic mismanagement of the coalition government
in power at the time. The second crisis was deeper; it burst first late in 1999 and
again in February 2001. It called for a long period of IMF stand-by agreement, and
for radical economic reforms. The IMF agreement still continues to this day, end
2006. But persistent implementation of IMF-advised reforms and restructuring, at
long last, brought the Turkish economy out from cold; they reduced the inflation rate
and put the economy on the path of high growth rate. But these results appeared
gradually and after the period of coalitions were over, although their foundations
were laid since 2001. As the economy improved, however, this time increasing oil
prices started to affect Turkeys balance of payments appreciably, increasing
Turkeys trade and current account deficits. Flow of financial funds and DPIs to
Turkey, however, amply countered the increasing current account deficit at relatively
stable foreign exchange rates.
In this chapter we will first survey the formation of succeeding coalitions in
their chronological order, elections and election results, political events and
developments, and the dissolution of respective coalitions. Following, we will take
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up for each coalition period the major economic policies and economic events as well
as major developments and events in international economic and political relations,
and developments and reform steps for improving democracy and human rights to
conform with EU criteria. The economic performance during the entire period 19922002 is summarized with the aid of statistics in the last section of this chapter.
9.1. DYP-SHP (CHP) COALITION, 1992-1995

9.1.1. Political Developments, Elections, Formation and End
of the Coalition
In the October 20, 1991 general elections DYP led by Sleyman Demirel had
come out first with 27% of the votes and 178 seats, ANAP led by Mesut Ylmaz was
second with 24% of the votes and 115 seats, SHP led by Erdal nn was third with
20.8% of the votes and 88 seats. RP alliance had obtained 16.9% of the votes and 62
seats while DSP led by Blent Ecevit had barely surpassed the limit with 10.8% of
the votes and had only 7 seats. DYP and ANAP were both center-right parties with
similar philosophies but the shadow of Turgut zal on ANAP and the rivalry, if not
the feud, between zal and Demirel, and between DYP and ANAP presumably
prevented a harmonious coalition of these two parties. All throughout the 70s, bitter
rivalry between center-left CHP then led by Ecevit and center-right AP then led by
Demirel in spite of mounting terrorism of both radical left and radical right had
finally led to the 12 September 1980 military intervention. But this time, Ecevit and
his DSP had only a very small representation in the parliament and center-left was
represented by SHP led by Erdal nn who was apparently more flexible. Thus, a
unique coalition of center-right DYP and center-left SHP was forged, approved by
zal as president. The coalition obtained vote of confidence from the parliament on
November 20, 1991 with 280 yes and only 164 no votes. Sleyman Demirel was
PM, Erdal nn, minister and aide to PM DYP had obtained 20, SHP 12 ministries.
The year 1992 brought interesting political developments. CHP which had
been closed since the 12 September 1980 military intervention held its first meeting
in September 9, 1992 led by Deniz Baykal, who had been an MP and a heavy-weight
in SHP but had resigned from that party to re-establish the CHP. CHP was allowed to
be re-opened with the same name and emblem as the old party founded by Atatrk;
Baykal was elected chairman. Erdal nn attended the CHP congress as observer;
Ecevit merely sent a message of good-will. Some students of Turkish politics thought
that Baykals ambitions to be the chairman and the impossibility or the difficulty in
achieving this aim in SHP in any short run was instrumental in the above
development. In the same year the total number of MPs who resigned from SHP and
DSP to enter CHP reached 21 and CHP was thus able to form a group of 21 within
the parliament, 17 had resigned from SHP, the rest from DSP. Since direct transfers
from one party to another was prohibited by law, those who resigned first formed an
interim party which later decided to merge into CHP.
PERIOD OF COALITIONS: 1992-2002
155
Another interesting political development in 1992 was the result of

replacement municipality elections for 341 mayor ships on June 7. DYP came out as
first again, SHP was second, and ANAP was third. Another round of replacement
municipality elections for 23 vacancies were held on November 1. This time,
however, the votes of RP had registered an increase, up to 25% from 17%; the votes
of all other parties, including DYP and SHP had registered a decline. It was
interpreted as a serious warning to the DYP-SHP coalition government in power.
The third interesting political development in 1992 took place within ANAP.
Although as president zal was constitutionally supposed to distance himself from
all political parties, he still kept his interest in ANAP and interfered in its internal
affairs. In the November 1992 ANAP congress zal took a stand against incumbent
Mesut Ylmaz who belonged to the liberal group and he supported Mehmet
Keeciler, who had religious roots. But Keeciler lost, and 15 other ANAP MPs
resigned from ANAP. Though Ylmaz was in the liberal group, however, he did
not embrace many very valuable senior liberal heavy-weights who had contributed
much to ANAP before, when zal was PM Instead, Ylmaz soon started to work with
a narrow group of mediocre hands and thus was never able to encompass all former
ANAP constituency, not to mention broadening ANAP to become the major centerright party.
A similar attitude was to be displayed soon after by Tansu iller who
succeeded Sleyman Demirel as chairperson of DYP when Demirel became
president. She too worked with a limited group of mediocre aides, avoided many of
the former AP and DYP heavy-weights and could neither muster the former votes of
AP and DYP nor encompass all the center-right votes. Both Mesut Ylmaz and Tansu
iller were of much less political caliber compared to their predecessors zal and
Demirel. Whatever grave mistakes the predecessors had made, the successors made
even graver. In one matter they were equal to their predecessors, and that was in their
bitter rivalry and competition, which led nowhere. The same clash of personal feuds,
however, went through in the center-left flank as well. Personal feuds divided both
the center-right and the center-left into smaller, less powerful parties. During the
same period, the religious movement was getting stronger; the center-left was
moving from left towards a more genuine center-left; the radical left, in turn, was fast
losing momentum. Instead, Turkey was facing the question of Kurdish separatism
and terrorism, with PKK having a radical-left ideology in the background. This
contrasts starkly with the outlook during the 70s described in the previous chapters.
The year 1993 witnessed further important and interesting political
developments. The first was the death of Turgut zal in April 1993 because of heart
failure following a long, tiring visit to Turkic republics in Central Asia. Demirel
immediately declared that DYP-SHP coalition would not be dissolved, there would
be no early elections and that he was a candidate for presidency. Erdal nn declared
he supported Demirels presidency. On May 13, 1993 Demirel was elected President
by a large margin over his rivals such as Kamran nan, smail Cem, Ltf Doan,
capturing the absolute majority in the third round.
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Demirels candidacy and election had opened the question of electing the new
leader for DYP, hence the new PM The natural instinct of party members was to elect
Hsamettin Cindoruk, an old party stalwart and former chairman of DYP when
Demirel had been banned from political activities. And he could easily have been
elected had Demirel not barred his way. Demirel categorically let it be known
through informal contacts that he would not support Cindoruks candidacy, upon
which Cindoruk refrained from entering the race lest he would divide and hurt DYP.
According to many observers Demirel owed a grudge to Cindoruk in the November
1987 elections, held early by zal immediately after Demirel and other old
politicians received their political rights by a public referendum. Though Cindoruk
had frequently declared he was only a caretaker chairman, Demirel, sensing there
was no way for DYP to obtain a good result in the elections wanted Cindoruk to stay
on till after elections were made. But Cindoruk resigned immediately after the
referendum, Demirel was elected chairman of DYP and suffered a (relative) defeat at
the election polls. At the same time Cindoruk had also urged Demirel openly to
include new names in the higher party echelons instead of working solely (or mostly)
with old hands. Thus, Demirel punished Cindoruk but he was not aware that in so
doing he also punished Turkey. DYP had come out as the third with 19.1% of the
votes, trailing behind ANAP and SHP; he must have fully realized soon after that in
the long run he had punished DYP as well.
With Cindoruk out, and Bedrettin Dalan too recent a transfer from ANAP to
DYP and therefore with no chance of being elected, the arena was left virtually to
Tansu iller, minister in charge of economic affairs. Tansu iller resigned from the
ministry and became a candidate; when she went to Demirel he merely told her that
to be the chairwoman to the party was a very difficult job. So on faade Demirel
seemed to act as a neutral president and could proclaim later that he had not
supported iller. But, in fact, he had opened her way firstly by refusing to endorse
Cindoruk who certainly could have won by a large margin, and secondly by declaring
that smet Sezgin, another old party stalwart from former AP, was his favorite
candidate at too late a time after very many delegates had already endorsed iller to
vote for her in the party congress. There were two rumors both improvable. The first
was that iller was Americas favorite candidate, and this was instrumental in
Demirels disguised support. This argument was denied both by Demirel and also
some minor American authorities. A second argument was that iller had distributed
a lot of money to buy off delegates. Again, distributing money, both paying and
receiving it is illegal; hence the accusation went unproven.
Thus, in the DYP congress held in June 1993 iller was elected by 574 votes,
Sezgins votes remained at 310, and another candidate of his own, Kksal Toptan,
who later had joined AKP, obtained 212 votes. iller became chairwoman of DYP,
and her cabinet obtained vote of confidence in the parliament on July 5. The former
12 ministers from SHP retained their seats, but iller changed most of the 20
ministers from DYP.
Parallel to the process of illers election as PM of the DYP-SHP coalition, an
interesting development took place, this time in the SHP. In the SHP congress held in
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September, Erdal nn declared he would quit as chairman, thus defying the

tradition of life-long party chairmanship (in Turkish politics). nn went on to
confide that politics (in Turkey) has its conditions and traits peculiar to the field; his
disposition (character) was not quite in tune with these, and he found it hard to fulfill
them. He was completely right. nn was a very valuable personality but Turkish
political arena unfortunately required different standards. That is why, in addition to
the leaders sovereignty mentioned in the preceding chapters, many
knowledgeable, would-be-statesmen persons refrain from entering politics in Turkey.
In the SHP congress Murat Karayaln was elected new chairman, declaring that he
aspired to change Turkey. Karayaln obtained 559 votes, followed by Aydn
Gven Grkan who received 403. nn was elected honorary general chairman.
Turkey did change over time, but while SHP dwindled religious parties got stronger.
In the March 27, 1994 municipality elections RP increased its votes even
further to 19.1%, coming out third, following DYP which obtained 21.4% and ANAP
21.0%. SHP obtained only 13.6%, DSP 8.8%, MHP 8.0% and CHP 4.6%. RP
registered this increase in its votes despite the fact that public prosecutor had applied
to the Supreme Court for investigating the charge that RP obtained finance from
Saudi Arabia and Libya. In February 1994, again before municipality elections, iller
had accused RP of retaining in party coffers the money collected for aiding
Saraybosna (Sarajevo). The matter began to be investigated by the State Controllers
working under the Presidency. Following the municipality elections, an exuberant
Erbakan declared, absolutely, one day RP will come to power; 60 million people
will decide whether this transition will be bloody or soft. The General Public
Prosecutor again opened a case against Erbakan for alluding to a bloody transition.
Erbakan felt compelled to soften his words.
DYP-SHP coalition survived till 1995. Before that date, two important
political events are worth mentioning briefly. In June 1993 iller as PM ensured the
passage of the so-called Yetki Yasas: the law that authorizes the government to issue
decrees without recourse to the parliament, concerning several public institutions and
SEEs, social security institutions, the Central Bank, etc. One reason given was to
speed up the process of privatization of SEEs. Since a similar law was demanded by
zal when he was PM and was opposed by DYP and Demirel, Mesut Ylmaz,
chairman of ANAP, asked Demirel to veto it, but in vain. Thus, the Parliament was
by-passed from a large area of activities. The other interesting event concerned
illers wealth. In June 1994 ANAP MPs called for an investigation of illers
family wealth. With the no votes coming not only from DYP but SHP, the coalition
partner, the investigation was narrowly defeated in the parliament and instead it was
generalized to all party leaders, including Mesut Ylmaz and Necmettin Erbakan. The
reason for ANAPs demand stemmed from newspaper information that iller family
owned US$7 million worth of wealth in the USA, not declared in 1993 when she
became a candidate for PM, therefore it must have been amassed during her office in
the government. iller responded that the real estate had been bought by Marsan, a
private family firm, and that was why she had not included these real estates in her
personal income tax declaration. She also explained her wealth stemmed from 437
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thousand TL. (29 thousand US$ at the going exchange rate) inherited from her father
(her father was aide to governor, and had been appointed governor to a small
province just before retirement); they had invested it intelligently and raised it to 22
million US$ by then. illers explanation about her family wealth must have been
convincing to DYP and SHP MPs; so no further investigation was called. Moreover,
at a later date both Mesut Ylmaz and Tansu iller acquitted each other from
parliamentary investigations when Deniz Baykal called for it in the parliament. 5
MPs resigned from DYP, iller tried the minority government formula but could not
receive enough votes. The 5 who had resigned from DYP, 7 MPs from DYP
including Hsamettin Cindoruk and CHP included, all the parties in the parliament
including CHP but excluding DYP gave a no confidence vote. Those DYP MPs who
had given no-confidence vote were thrown out of the party. Baykal and iller had to
meet again and this time Baykal agreed on a DYP-CHP coalition but it was to be a
caretaker and short-lived elections government. It was decided to hold early general
elections on December 24, 1995.
The early general elections held on December 24, 1995 was a success for RP
while the votes of both DYP and CHP declined, the latter compared the percentage of
votes SHP obtained in the previous election. The results of the election were as
follows: RP obtained 21.4% of the votes and 158 seats, ANAP 19.6% of the votes
and 132 seats, DYP 19.2% of the votes and 135 seats, DSP 14.6% of the votes and 76
seats, CHP 10.7% of the votes and 49 seats. MHP fell short of 10% limit for
representation with 8.5%.
The last important political development of this period was the merging of
CHP and SHP, the two center-left parties, under the roof of CHP. It was a long
process; the agreement to merge was decided in November 1994 but problem arose
as to who should be the chairman. Deniz Baykal, chairman of CHP, Murat
Karayaln, chairman of SHP, and in addition Mmtaz Soysal also from SHP all
insisted in nominating themselves. This delayed the merging process. Aydn Gven
Grkan, the old chairman of SHP intervened as mediator; Karayaln and Baykal
agreed on nominating Hikmet etin as chairman. Thereupon SHP dissolved itself and
joined CHP. Aydn Keskin from CHP was elected general secretary. Soon, in the
September 1995 congress Deniz Baykal was elected chairman of CHP. He arranged a
meeting with iller and insisted that Necdet Menzir, Istanbul chief of police be
removed for the coalition to continue. iller refused. Necdet Menzir had been tainted
with neglect of duty in the Gazi incident of Alevi uprisings which will be taken up in
the later sections. Necdet Menzir resigned on his own and thus the caretaker
government of DYP-CHP was formed for the December 1995 elections. Menzir
became an MP from DYP. It was noteworthy that DSP led by Ecevit which had not
entered the unification of center-left efforts had obtained far greater votes compared
to CHP which was a merger of CHP and former SHP. It took a long time for a new
coalition to be forged. Finally in March 1996 a coalition of ANAP-DYP was formed
and obtained vote of confidence in the parliament on March 12, 1996. Thus the DYPSHP (later CHP) coalition period came to an end.
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9.1.2. Economic Crisis, 1994

Turkey was faced with a severe economic crisis in 1994, causing a 6.2% fall in
GNP along with a record inflation rate over 100% and a similar rise in the foreign
exchange rate as well as the interest rate. Since 1992 expansionary policies had been
at work, public investments and government expenditures were kept relatively high
with increasing budget deficits and the need to finance this deficit. To encourage
private investments as well as private consumption expenditures foreign exchange
and interest rates were both repressed. All of these policies were unsound to start
with. But in order to lower the interest cost of deficit financing, iller as PM made
other grave mistakes on top of the previously mentioned. She cast aside the restraints
on foreign borrowing, a principle followed since 1987. Increased budget deficits were
partly financed by increased foreign borrowing. To lower the cost of domestic
borrowing, on the other hand, she chose to expand Central Bank credits to the public
sector and the printing of money. With the authority she obtained from the
Parliament in 1993 she issued a Decree in the Force of Law which doubled the
Central Bank credit limit to the public sector. She thereby hoped to reduce issuing
government bonds and treasury bills and thus reduce the interest costs in the budget.
On account of the negative indications caused by these policies that already
appeared in the market towards the end of 1993 and the beginnings of 1994, and in
view of the rumors about a devaluation, the Governor of the Central Bank at the time,
Blent Gltekin resigned in late January 1994 to serve as a warning to the
government.
All throughout these operations, foreign exchange and interest rates had been
kept repressed. But inevitably these wrong policies heightened the fears of an
imminent devaluation. The savers and speculators abandoned the government banks
and treasury bills market (sold mostly through banks) and turned towards buying
foreign exchange. At the same time due to the increased risks of the economy, the
credit rating of Turkey was lowered by the international financial institutions, and
foreign credits to Turkey virtually stopped. The people stampeded to the banks to ask
for their TL deposits in order to convert them to foreign exchange. Many, not trusting
the banks and the government even demanded their foreign exchange as cash;
preferring to keep them under their pillow. Three small banks, already unhealthy
before the stampede, were allowed to become bankrupt. But since the stampede
endangered the liquidity of even the otherwise healthy (and less unhealthy) banks, the
government felt compelled to guarantee the payment of bank deposits. By April 1994
the rate of US dollars rose from around 15.000 TL (14.487) to around 38.000
(38.495) TL. By the end of 1994 inflation rose by over 100%. Due to the reluctance
of savers and speculators, the interest rate on treasury bills issued, on the other hand,
rose to a staggering 400%.
In April 1994, in addition to guaranteeing the bank deposits, the government
also raised the prices of SEE products by about 50% in order to decrease the budget
deficit. All was of little avail, uncertainties and lack of confidence about the
economic policies of the government caused the crisis to continue. This finally forced
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the government to make a stand-by agreement with IMF in July. Confidence was
restored and the Turkish economy, having lost 1994, recovered in 1995. The 1994
crisis had erupted with no external cause affecting the Turkish economy; it was
caused solely by the gross mismanagement of the economy by PM iller, with
Karayaln watching as a spectator.
It is worthwhile to compare at this point zals handling of the economy.
Though operating with a high budget deficit due mostly to increased productive
infra-structural public investments, hence with a relatively high inflation rate, he also
did raise the interest and the foreign exchange rates in line with inflation and thus
avoided a balance of payments crisis all throughout ANAP period. He did not allow
the dollar and other foreign exchanges to become under-valued, i.e. the Turkish
currency to become over-valued. iller was careless on this point and the economy
faced a crisis in 1994 with no external factor working negatively.
At this point we should also dwell on the question why inflation rose to very
high levels (refer to figures in the next chapter on the performance of the economy)
without causing a serious social crisis. The answer lies in economic and social
factors. Firstly, in general, salaries and wages in the private sector rose alongside the
inflation rate, and in many cases little higher. In contrast, salaries and wages in the
public sector fell behind the inflation rate. But, following zals statement my
government employee knows what to do, taking bribes had become widespread.
This must have more than compensated the lagging salary and wage rises for many.
In addition, for workers and low-salary government employees included, the tradition
of large families and some family solidarity still persists. Say, the father and the son
may both work, both contributing to the family budget and both living in the same
house. In other cases the wife of the worker may also do paid household work (but
unregistered), again contributing to the family budget. Or they may earn income
renting a small patch of land in the village; or the converse may be true, the son or
the daughter working in the city or else doing non-farm work may contribute to the
budget of the family members in the farm. Thus, inflation with repressed wages is not
a catastrophe but just an economic difficulty which can be shouldered for some time;
a social or political collapse would not come about. Moreover, some family members
would cling to one political party, support it, hope it will come to power in the next
elections, then they would ask for spoils, such as finding an employment opportunity
in a public organization, the state or the municipality. Another member of the family
would cling to another political party for the same purpose. Thus, hopes of
improvement would persist although democracy is reduced to a micro-level spoils
system rather than macro social and economic management.
9.1.3. Developments in the GAP (South-eastern Anatolian
Project)
A positive development in the Turkish economy was the progress towards the
completion of GAP devised originally by S. Demirel during AP period and later
continued by zal. In November 1994 Frat (Euphrates) water finally reached Harran
plateau in anlurfa province in South-east Anatolia. Two tunnels, each about 26 km.
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long were completed to bring Frat water to Harran and this opened to irrigation
about 30 thousand hectares of fertile land.
By 1997 (well through the DYP-SHP, short-lived ANAYOL, REFAHYOL,
and during the first six months of ANASOL-D coalitions) nearly 40% of GAP was
completed and land irrigated was raised to 80 thousand hectares. GAP was a huge
complex that involved 13 separate dam and tunnel projects on both Dicle (Tigris) and
Frat (Euphrates) and covered 9 South-eastern provinces. Both Syria and Iraq
expressed discomfort with GAP arguing that Turkey would cut off their water supply
since Tigris and Euphrates, starting from Anatolia flowed through these countries.
They convinced the Arab Union which in 1996 called Turkey to halt the project.
Turkey, on the other hand, tried to soothe these fears on a technical level, trying to
prove that cutting off water supplies of Iraq and Syria was not a possibility even for
the short run. A simplistic argument by Demirel, concerning this issue is in order:
What then shall we do with all the water, to let in flood (and submerge) the entire
South-east? The main motivation for the objections of Syria and Iraq at the time
seemed, in fact, political, aimed at retarding Turkeys economic development. The
real impediment to the project which prolonged its completion for Turkey, however,
was financial, and huge costs involved.
9.1.4. Customs Union with the EU
A milestone was achieved in Turkeys relations with the EU during the DYPSHP (CHP) coalition period; Turkey entered customs union, starting with the year
1996. The decision no.1/95 to complete the customs union was taken in the TurkishEU Membership Council Meeting held on March 1995 and ratified by the European
Parliament on December 13, 1995 despite opposition from Greek MEPs. The
customs union involved free movement of industrial imports from EU and
compliance with the Common Customs Tariffs to third countries. The EU (EEC) had
let the movement of Turkish industrial imports free already back in 1971; the
exceptions were certain textile and petroleum products, four items in all.
Reciprocating on the part of Turkey had to take place gradually, 12 years for slightly
more than half of Turkish industrial imports and 22 years for the rest. In 1976,
however, Ecevit had unilaterally frozen Turkeys obligations to reduce customs taxes
and to comply with the Common Customs Tariff.
After the 1980 military intervention, Turkeys political relations with the EEC
was suspended though economic relations continued. In 1987, however, zal had
made two bold decisions, one was to apply for full membership directly based on the
Rome Treaty which was rejected because of work concerning the single market, but
which, however, opened the way to the dismantling of the political freeze on TurkeyEEC relations in conformity with the Ankara Treaty. His other bold decision had
been to unilaterally lift the suspension on customs tax reductions and apply an
accelerated timetable for these reductions to be brought down to zero by 1995. This
enabled Turkey to bring the question of customs union into discussion since 1991.
With the 1994 economic crisis left behind, and in view of the increases in the share of
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EU countries in Turkeys imports, exports and other economic activities, decision

95/1 was to be eventually taken in March 1995, and ratified in December 1995.
In more precise terms, 95/1 was a decision to enter the final phase of
Customs Union. It involved removal of remaining customs taxes and quantitative
restrictions (starting with 1996) on industrial imports from the EU and compliance
with the Common Customs Tariff to third countries. But it also involved more than a
mere customs union such as Turkeys compliance with EU regulations, laws,
policies, all related to trade, within specified periods ranging from 2 to 7 years. These
included preferential trade the EU had with some countries and country groups,
harmonization of trade polices, application of EU and standard commodity
classification, detailed regulations concerning eventual free movement of Turkeys
textile exports, regulations concerning Turkeys processed agricultural products
(agriculture-based manufacturing products), Turkeys compliance with patent rights,
harmonization of the tax system, compliance with laws and regulations concerning
competition involving removal of government subsidies, abuse of dominant position,
mutual opening of government auctions between Turkey and the EU, etc. It was also
underlined that free movement of agricultural products and compliance with the EU
agricultural policies needed more time.
Since Greece had become a member of EU she had always voted against any
progress in Turkish-EU relations, including the financial protocol and financial aid
from EU to Turkey, as well as the ratification of the 95/1 decision. In 1997 EU
decided to start talks with the Southern Cyprus Greeks for full membership. This
further complicated Turkeys progress with the EU. It also made it more difficult for
the two Cyprus communities to come to a mutual agreement. The Greek part, being
assured of full-membership had no incentive to make any compromise to come to a
mutually acceptable solution. Thus, the Cyprus question still drags on today, with
Greek Cyprus as full member of the EU.
At a later date, the 95/1 decision to enter customs union with the EU was
criticized in Turkey on several counts, some speculative and some political. One such
criticism was custom union brought in or expedited concessions by EU concerning
Cyprus. But this argument was not backed by hardcore evidence. One could by no
means argue, given the tendencies of the EU countries, that had Turkey not entered
customs union the EU would not have appeased the Cypriot Greek side by making
them full member.
The criticisms leveled at the decision on economic grounds carried a heavier
weight and were backed, on the surface, by statistics. Because Turkeys trade deficit
in general and trade deficit with the EU in particular expanded rapidly after 1995,
many observers concluded that customs union had a great negative effect on
Turkeys economy. The direct conclusion from the enlarged trade deficit, however,
was fallacious. Granted that the customs union would have some limited tradecreating and trade-diverting effects, the above argument completely ignored the fact
that Turkeys increasing trade deficits - and naturally that with the EU - were largely
the result of economic and financial mismanagement. In fact, it finally necessitated a
stand-by agreement with the IMF and a complete overhaul of economic policies. The
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argument also ignored the fact that the main bulk of current and capital account
flows, including tourism, workers remittances as well as foreign capital flow came
from EU countries.
In general both the radical left and the radical right movement in Turkey were
antagonistic towards the EU. In mid-nineties the radical left had waned, and the
radical left had moved towards left and left-of-center. Antagonism towards the EU
coming particularly from radical religious right, represented by RP and Erbakan,
however, still remained strong and vociferous. Therefore, after the DYP-SHP (CHP)
coalition collapsed and coalition attempt of ANAP-DYP fizzled, illers decision to
enter a coalition with RP, RP being the major partner of the coalition, raised
questions of consistency and reliability on the part of iller and DYP.
9.1.5. Turkish-Greek Relations and the Kardak Crisis
The strategy of Greece as member of EU had been blunt antagonism
concerning the development of Turkeys relations with the EU. In many cases while
center-left and center-right MEPs had differing views, Greek MEPs belonging to
different groups were all united in voting against Turkey. Greek votes were again
negative on December 13, 1995 concerning the ratification of Turkeys customs
union with the EU. The decision passed the Greek votes notwithstanding but shortly
after, the Greek government blew the Kardak incident out of proportions. Kardak is
an islet, in fact, not even an islet but a small collection of rocks, about 3.8 miles off
Bodrum, a touristic town in Mula province, to the South of the Aegean shores of
Anatolia. When a Turkish boat hit the Kardak rocks on December 27, 1995, the
incident raised the question which government would save the boat, the Turkish or
the Greek. On December 29, Turkey sent a note to the Greek government declaring
Kardak rocks belonged to Turkey. In January 1996 the Greek government replied
Kardak was Greek, turned over to Greece by the Italians according to the Lausanne
Treaty, (presumably, implicitly) along with the 12 Italian islands in the Aegean sea.
One Turkish expedition group sailed and raised the Turkish flag on Kardak; another
expedition group, Greek this time, removed it and hoisted the Greek flag. Both the
Turkish and the Greek warships faced each other waiting for a notice of alarm. The
crisis, and a useless military engagement was avoided with the intermediation of the
US government. The incident accentuated, however, that the Aegean was full of
problems and pitfalls to be solved between Turkey and Greece.
9.1.6. Increased Terrorism, the Fight Against Terrorism and
Reforms During 1992-95
Serious negative developments took place during the DYP-SHP coalition
period 1992-1996 as concerns terrorism, Kurdish separatist, radical leftist and
fundamentalist and reactionary religious. Also the fight against terror was
controversial. On the one side there were some efforts at reform, including changes in
the Constitution. On the other side, we witness a harsh treatment of terrorist suspects
and of DEHAP, a political party tied to Kurdish separatism. So much so that there
was an increase in the warnings directed at the Turkish government by international
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circles and organizations concerned with human rights. Then we had the Susurluk
accident which revealed that some police, government officers and some politicians
were in covert cooperation in the fight against terror with former radical nationalist
militants. The latter formed their illegal smuggling gangs later.
Major events will be briefly noted below according to the dates they occurred.
But first we must underline here the importance of the rules and regulations
concerning the fight against terrorism in the light of Turkeys relations with the EU.
Since the single market accepted in 1987 to be completed by 1992, and particularly
the Maastricht Treaty signed in February 1991 and put in force since November
1993, as well as the Copenhagen criteria of 1993 the EU aimed at a closer economic
integration on top of a mere customs union such as harmonization of economic
policies, a single European currency and the establishment of a European Central
Bank. But the Maastricht and Copenhagen also involved more detailed political
conditions or policies concerned with democracy and human rights. All of this was
certainly not viewed at the time Ankara Treaty was drawn. Hence, it became more
difficult for Turkey to comply not only with economic but particularly with
political conditions for membership at a time she was faced with terrorism and
threats to democracy coming from different directions. So the years 90s and since
witness Turkeys reforms attempts to comply with political criteria as well as lapses
from these criteria in her fight against terrorism. In the case of the period 1992-96
lapses from political criteria were more pronounced.
1992, the first year of DYP-SHP coalition was relatively uneventful. It was
significant that the Jewish community arranged an international program in Istanbul
on March 4, for the 500. anniversary of their freedom from Spanish inquisition when
Ottomans had granted then asylum with full citizens rights. Nelson Mandela, on the
other hand, refused the Atatrk peace award in April, on grounds of Turkeys human
right abuses. His decision was met with approval from the 14 MPs who belonged to
HEP, the party which supported Kurdish separatism and calan. They had entered
the parliament under a cooperation agreement with SHP. Mesut Barzani visited
Ankara in February 1992 to talk with PM Sleyman Demirel about PKK and
Turkeys military pursuit within Northern Iraqi borders. A reform concerning the
procedures of the Penal Code was accepted by the Parliament in December. The
reforms aimed at preventing torture in the course of interrogation of suspects, legal
aid to them and the speeding up of the interrogation period. Kemal Kayacan, a retired
admiral was murdered in June and the killing was claimed by Dev-Sol, a radical
leftist under-ground organization. Public prosecutor of Bursa province was also
murdered, and the killing was again claimed by another radical left organization. A
radical leftist and Kurdish journalist was also murdered, the perpetrator unknown.
9.1.7. Terrorism By Religious Mobs and Underground
organizations
There was a marked increase in terrorism in 1993. Two important events took
place. One was the murder of Uur Mumcu, a renowned left-wing journalist who had
recently documented and published specific cases of corruption. The killing was
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owned by a few radical religious underground organizations but the real perpetrator
could not be found. The other important event was mass murder attempts in Sivas on
July 2, 1993 when Demirel was President and iller had become PM of the DYPSHP coalition. The attempt was made by religious mobs reaching 10 thousand who
set on fire Madmak Hotel which hosted a large number notable leftist writers and
intellectuals. The group included Aziz Nesin, a prominent leftist writer who had
recently made a speech on Islam which was misinterpreted by some religious
journals. As a result of the fire, 37 died and 43 were wounded. The event could be
stopped only after the military came to help the police and the firemen. Ankara State
Security Court chaired by Nusret Demirel gave heavy penalties, including 29 death
sentences. The accused, thinking the judgments were too harsh started religious
sloganeering in the court. The Court had also held Aziz Nesin (provocative and)
responsible for the incident. There was a public outcry from all circles about the
implications for Aziz Nesin. In view of the circumstances, therefore, the Public
Prosecutor saw no reason to start an investigation on Aziz Nesin. Following the
decision of the Supreme Court of Justice on the initial rulings of the Ankara State
Security Court, the latter finalized the number of death penalties at 33. After
retirement, Nusret Demirel entered the radical nationalist MHP.
Terrorism by radical religious underground organizations and mobs had begun
on a large scale.
9.1.8. PKK Terror and Kurdish Separatism
PKK terror also increased, re-starting with 1993. In May, PKK terrorists
ambushed and killed 33 soldiers and 7 civilians. This was shortly after calan had
declared in March 1993, when zal was president, a one-sided cease-fire. He also
had declared that he abandoned the target of an independent Kurdish state dividing
the country. zal, in turn, was in process of declaring amnesty to those PKK
members who had not participated in terrorist activities. On account of the May
incident, the amnesty attempt was later frozen by President Demirel and PM iller.
On the contrary, the DYP-SHP government under iller started an all-out military
confrontation with PKK. The joint chief-of-general-staff at the time, Doan Gre who entered DYP later, after retirement called it a low-intensity warfare. iller
proclaimed PKK will either be destroyed or it will be destroyed. Armed
confrontations and casualties on both sides increased. During the funerals of the
military men who had died in these confrontations, the radical nationalist idealist
organization members, linked to MHP tried to have the upper hand with
demonstrations.
A tough but harsh stand was displayed towards members of political parties
which overtly supported Kurdish separatism and calan. The Turkish Constitution
prevents any party based on ethnic grounds, religion or social class; support of
terrorism is a crime according to the Penal Code. Therefore, many parties harboring
Kurdish separatism were closed down by the Constitutional Court, but another one
was established soon. They all commanded, however, much less than the 10%, in
fact, they were below 5%. The DEP (Democracy Party) was faced with the fate of
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closure by the Constitutional Court in June 1993. Before DEP was formed we had
another party HEP (Halkn Emeki Partisi: Peoples Workers Party). In 1989 7 MPs
of Kurdish origin from SHP had participated in the Kurdish conference held in Paris
and were thrown out of SHP. They had established HEP in June 1990. In the October
1991 general elections HEP MPs had entered the parliament under the umbrella of
SHP. Erdal nn obviously had wanted to give them another opportunity to work
within the framework of democracy and the Constitution. But they blew the
opportunity out; some HEP members, including Leyla Zana and Hatip Dicle made
Kurdish speeches in the Parliament. 18 such MPs left the SHP, many re-entered HEP,
a few returned to SHP. But HEP was closed down by the Constitutional Court; soon
after, DEP was established. Again because of open support of Kurdish separatism
and terrorist activities of PKK, the immunity of two of DEP MPs were waived in
March 1993. On the same day the two were immediately rounded up by the police
the moment the parliamentary session had ended and they had left the parliament
building. Some of HEP MPs escaped abroad, others, including Leyla Zana, were
brought to court and jailed, HEP was closed down by the Constitutional Court in July
1993. Some time later, HADEP (Halkn Demokrasi Partisi: Peoples Democracy
Party) was established in May 1994. HADEP obtained again only 4.2% of the votes
in the December 1995 general elections.
In December 1994 a low-circulation newspaper zgr lke which published
articles and news in favor of Kurdish separatism and encouraged terrorism was
bombed, perpetrators unknown. The incident was linked to a statement by iller who
had declared that all separatist newspapers, specifically mentioning zgr lke,
should be closed down.
The harsh treatment of terrorist suspects, members of political parties with
separatist aspirations and of those encouraging terrorism, on the other hand, gave rise
to increased criticisms leveled at Turkey during this period on account of human
rights abuses and the need for reform. Criticisms came from the EU, international
organizations, and the USA. To wit, in May 1994 the US Congress reduced the
amount of military aid to Turkey by 10%, the part frozen to be released pending the
actions of the Turkish government concerning human rights and the moves towards a
solution in Cyprus. In turn, iller declared in August that the part of military aid
frozen by the US senate would be rejected by Turkey. The DYP-SHP coalition,
nonetheless, had gone ahead and in time had extended the stay of the USA hammer
force in Pirinlik base (in Diyarbakr province) and ncirlik base (in Adana
province) after a lengthy debate in the parliament. The stay was to be extended every
six months. In the parliament ex-Minister of Foreign Affairs, Mmtaz Soysals
proposition to end the stay of US forces was rejected. The opposition parties,
including ANAP spoke against the decision to extend US stay.
Kurdish separatists, in specific terms, PKK and calan took advantage of the
freedoms, tolerance and democracy in many of the European countries, including, in
particular, France, Sweden, Netherlands. For instance, in addition to the Paris
conference, in April 1995 a Kurdish Parliament in Exile was formed and convened
in the Hague. Many DEP members participated in the meeting. Many European
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countries at the time dragged their feet in accepting PKK as a terrorist

organization. Support to PKK also came from many of Turkeys neighbors, including
Iran and Syria. Like Iraq, Syria also had training grounds for PKK terrorist militants.
Syria likely wanted to use PKK as a bargaining power in exchange for the alleged
and imaginary water problem. Iran generally felt Turkey a rival in the Middle East.
Turkish military had to enter Iraqi frontiers for continuation of their military
operations against PKK quite frequently. Greece, at the time used the occasion of
Turkeys struggle with PKK terror one-sided, as a vote against Turkey within the EU
organs for violation of human rights trying to impede any progress in Turkish-EU
relations. The only state which showed any understanding and accepted the terrorism
aspects of the problem fully was the USA. For the Europeans, however, it was of
little consequence that PKK used terror against Kurdish citizens women and children
alike, that they tortured any PKK member who later repented and wanted to leave the
organization, and that the majority of Kurds wished PKK terror away and longed for
economic development and progress.
9.1.9. Reforms Accomplished During 1992-95
In addition to the improvements of the procedures in the Penal Code
accomplished in 1992, two important steps more at reform were undertaken during
the DYP-SHP period. The first concerned changing parts of the 1982 Constitution in
July 1995. Hsamettin Cindoruk, chairman of the Parliament and an old DYP hand
played a crucial role in getting the parties in the parliament together to agree on the
Constitutional changes. One important change concerned the foreword of the 1982
Constitution which mentioned that the Turkish nation had called the TSK (Trk
Silahl Kuvvetleri: Turkish Armed Forces) to the task on account of separatism and
internal war, that thereupon this new Constitution was prepared by the Consultative
Assembly and finalized by MGK (National Security Council). Instead, in the change
it was shortly stated that this new Constitution determined the eternity of the Turkish
nation and the indivisible, unitary character of the Turkish state. Furthermore,
prohibitions of politics imposed on associations and unions in the 1982 Constitution
were waived, similarly with the cooperatives. Prohibition of MP transfers from one
political party to another were also removed, thus obviating the steps taken by
resigned MPs first to form a new party, then have the new party decide to merge with
the party the MPs intended to enter. The closure of political parties was also defined
in more specific terms and narrowed. Previously we had one party closed down by
the Constitutional Court and another one with the same members but under a
different name established immediately. Changes were also made in the working of
the Constitutional Court. In addition, voter age was lowered from 21 to 18; the
number of seats in the parliament raised from 450 to 550.
The parliament finished the voting of these changes by June 14, 1995 working
through the summer, they were published in the official gazette and thereby put in
force in July. ANAP had cooperated positively with DYP and SHP in reaching the
required 2/3 majority for Constitutional changes in the parliament. RP and Erbakan,
on the other hand, filibustered the efforts and voted negatively all throughout. This
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was the first time, the Parliament (civilians) had made important changes in the
Constitution, working within an entirely democratic framework. PM iller praised
the efforts and bitterly criticized RP and Erbakan for trying to prevent these efforts.
Soon after, however, she was to enter a coalition with RP, leaving the reins of the
government to Erbakan.
Another important reform was accomplished on October 27, 1995 when some
important articles of the Law on Combating Terror (Terrle Mcadele Kanunu) were
changed. The law was often subject of criticism both internally and by the EU
because it gave a very wide and vague definition of the support and encouragement
of terrorism. This caused the public prosecutors to take to court very many
journalists, writers and intellectuals, even when they expressed their ideas with no
concrete support of terrorist activities. It also prohibited all demonstrations and
meetings for whatever purpose if not informed in advance to the Ministry of Internal
Affairs and the police. Hence, the EU had set the condition that these had to be
improved before customs union decision can be taken. This prompted the DYP-SHP
coalition to work on the modification of the said law. Demirel as President, however,
stated that he would first ask the military if they approved of the changes. Two jointchiefs-of-staff, in turn, declared that the law should not be changed. But the
parliament went ahead and voted in favor of the change.
9.1.10.The Gazi Incident and Alevi uprising Against Terror
leveled at Them
On 12 March 1995, three coffee houses frequented by Alevis in Gazi, a quarter
in the Gaziosmanpaa district of Istanbul was gunned down by automatic rifles from
a taxi. The perpetrators later cut the throat of the taxi driver, set the taxi on fire and
vanished. Many Alevis, including an Alevi Sheik was shot down. The Alevis were in
an uproar. Many Alevis from all parts of Istanbul came over for protest and
demonstrations against the neglect of the police. The police, in turn, tried to subdue
them by firing at them. The incident blew out of proportions; eventually the military
was called on to stop the demonstrations. But, as a result, a total of 22 persons
(Alevis) had died and 109 were wounded in the Gazi district alone; in addition, 34
police were wounded. The incidents had continued from 12 to 15 March. On 14th of
March demonstrations of Alevis took place in Ankara; 36 demonstrators were
wounded. On 15th of March demonstrations took place again in Istanbul; 4 Alevi
demonstrators died and more than 20 were wounded.
The incident was severely criticized by the opposition in the parliament. The
Minister of Internal Affairs, Nahit Mentee, an old DYP (formerly, AP) hand,
declared in response to criticisms, what else could they do if one police chief did not
do his job well. The opposition demanded the resignation of Istanbul governor, Hayri
Kozakolu, chief police director Mehmet Afar, and Istanbul police chief. Necdet
Menzir. The public prosecutor called the latter two to court for neglect and lack of
control in their duties. A report was also prepared on Governor Kozakolu and sent
to the Ministry of Internal Affairs, Ankara to take action against him. The three
resigned from their offices, entered the 24 December 1995 elections, becoming MPs
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from DYP. Hence they attained immunity and charges against them were
discontinued. The only case that remained was that concerning the small police
officer of Gaziosmanpaa district.
9.2. ANAP-DYP (ANAYOL) COALITION, 1996

Following the dissolution of DYP-SHP (CHP) coalition in September 1995, a
futile attempt for a minority government by iller, a short-lived, planned election
government again by DYP and CHP and early elections on December 24, 1995 (in
which RP had obtained 158, ANAP 132, DYP 135 seats) an ANAP-DYP
(ANAYOL) coalition government was formed on March 12 1996 with Mesut Ylmaz
as PM and Tansu iller as Minister and aide to PM ANAP had obtained 16, DYP 17
ministers, the prime ministry was to go to Mesut Ylmaz first, to be turned to iller
soon. ANAP and DYP MPs voted in favor, RP and CHP against while DSP
abstained. But since the number of yes votes were only 257, below the minimum
number (absolute majority of total MPs) required in the Constitution, RP applied to
the Constitutional Court for annulment. On June 6, 1996 the Constitutional Court
canceled the confidence voting as invalid. At any rate, only 3 months had passed
under ANAYOL coalition and it had already started cracking down. It was still
another evidence that center-right parties had become more bitter rivals between
themselves, and similarly the center-left, compared to rivalry between center-right vs.
center-left parties. It was also another evidence of the characters of the leaders of the
parties involved.
9.3. RP-DYP (REFAHYOL) COALITION, 19961997

9.3.1. Formation of REFAHYOL Coalition
After the cancellation of confidence voting of ANAYOL coalition by the
Constitutional Court on June 6, 1996 the negotiations between party leaders indicated
that of all possibilities a RP and DYP coalition was most plausible and indeed by 28
June, 1996 RP-DYP (REFAHYOL) coalition was formed. Erbakan became PM,
iller Minister of Foreign Affairs and aide to Prime Minister. But prior to the
formation of the coalition both leaders must have swallowed all their former
statements, antagonisms, and even applications to courts for indemnity. In fact, also
prior to the coalition, iller was saved from a parliamentary investigation about her
misuse of Prime-Ministrys discretionary funds with the help of RP votes in the
parliament. The two leaders also agreed not to apply for the investigation of their
wealth by the parliament, nor to accept such a demand if and when made by MPs
belonging to other parties. iller, in turn, withdrew from her wish to be the PM of
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RP-DYP coalition; thus, having agreed on all these high principles, a REFAHYOL
coalition was forged. iller left the reins to Erbakan, obviously even in foreign
affairs. It looked that the main motivation behind illers efforts to form a coalition
with RP was to save herself from parliamentary investigations about her financial
misdeeds. The coalition obtained only a meager vote of confidence in the parliament
on July 18, 1996, with 278 yes and 265 no votes. Some DYP MPs had said no,
some abstained one was absent with a legitimate excuse.
Interesting developments and events took place in Turkeys foreign relations,
many attempts were made aimed at an Islamic common market which all failed.
Erbakans economic program - like his projects and stands in foreign relations were
also unrealistic and trivial. But two important internal political events took place;
Susurluk incident in November 1996 and the 28 February 1997 decision of the MGK
concerning reactionary religious activities which finally led to the dissolution of
REFAHYOL, all of which are dwelt in the following sections.
9.3.2. Economic Agenda of REFAHYOL
The economic agenda of REFAHYOL was plain wrong and unrealistic.
Erbakan, seconded by iller declared that the 1997 budget they prepared was
balanced, based on unrealistically high tax and particularly non-tax income. They
declared they would create three novel sources of funds, all of which proved
unfeasible and futile. The three funds really aimed at new borrowing, a once-and-forall tax amnesty and tax collection, quickening of tax collections, sales of publiclyowned lodgings, renting of energy centers, etc., the sales of lodgings having been
canceled by the Constitutional Court. None of the above represented a permanent tax
or income increase and all income budgeted from these sources was widely
overblown. Hence, the supposed balanced budget of 1997 started to show a wide
deficit. Therefore, when ANASOL-D coalition came to power in July 1997 it had to
prepare a supplementary budget. To keep the promise of 35% rise in salaries
mentioned in the 1997 budget and to reduce the budget deficit, ANASOL-D
government had to raise indirect taxes as well as the prices of SEE products and of
petroleum, not foreseen in the budget.
REFAHYOL also toyed with the idea of a new TL to circulate alongside the
conventional TL., an idea owed to a leftist accounting professor. The new TL.
would be pegged to the dollar and other foreign exchanges with the intention first of
kicking the dollar out of Turkish finance, based on the assumption people would
prefer to buy the new TL. instead of the US dollar. The second intention was to use
this new TL. in the financial transactions among Islamic countries.
REFAHYOL also mused about the existence of Islamic economics and
(religiously) fair order but with no concrete content and attempt. They wished to
wipe out the interest rate as forbidden by religion (in fact, unfairly high usurer
interest rate on consumption credits was, as was common with other religions in
Middle Ages). But, in actual practice they ended up having to raise interest rates
(both on production and consumption). They tried to promote an Islamic Common
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Market as opposed to the European Union and failed, for reasons obvious to any
objective observer.
In the meanwhile, since many backward steps concerning human rights and
political freedoms were taken, Turkeys relations with the EU cooled despite the
working of the customs union. iller seconded many and kept silent on some of the
above steps but still insisted she was the strong bulwark against the religious
reactionary movement.
9.3.3. Erbakans Early Attempts to Forge Relations with
Islamic Countries
Erbakan was a long-time anti-American, anti-EU, anti-Israel and pro Islamic
countries and Palestine. He always contemplated the unrealistic project of an Islamic
common market instead of Turkeys membership to the EU. So, immediately after he
became PM he arranged visits to Iran and Libya both of which were considered as
terrorist states at the time by the USA. With these visits Erbakan also aimed at
regaining his prestige for not being able to prevent the Turkish - Israeli strategic
cooperation agreement and the extension of the US hammer force by the prior
governments. Visit to Iran was not fruitful, and when Erbakan visited Libya, he and
Turkey got open rebukes from Kaddafi. Undaunted, Erbakan then attempted to
organize in January 1997 a meeting of Muslim states, called D-8 in Istanbul on the
subject of economic cooperation and establishing a common market. The participants
called were Iran, Bangladesh, Egypt, Indonesia, Malaysia, Pakistan, Nigeria, and host
Turkey. But excluding MSAD a religiously-oriented business association, no other
Turkish businessmen organizations were interested; nor were the countries invited.
Religious ideologues pointed out as reason for this abstinence that none of the above
countries stood on their feet economically but needed the support of the USA.
With negative results in all of his attempts, Erbakan was forced to make a Uturn. He ended his anti-US rhetoric, sent an RP minister in his cabinet to the USA to
underline that the Turkish government would be faithful to her military and strategic
cooperation with the USA; that he wanted to reinforce this with economic
cooperation as well. Within this context he was also forced to continue to develop
Turkeys relations with Israel.
9.3.4. Turkish-Israeli Relations During the 1990s
Following the failure of his attempts to forge stronger relations with Muslim
countries, and being forced to continue Turkeys relations with Turkish-USA
strategic cooperation as an important axis, Erbakan and REFAHYOL government
also had to take positive steps in the further development of Turkish-Israeli relations.
Turkish-Israel relations had developed rapidly, in fact, since the 90s. One
factor was the support of PKK terror coming from Iran, Syria and Iraq which
necessitated counter balances. Another was the encouragement for increased relations
with Israel which came from Washington. The road to improving Turkish-Israeli
relations was opened with the March 1992 meeting in Istanbul of the Jewish
community on the 500th anniversary of their escape from Spanish inquisition. Israeli
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president Haim Herzog and zal as president both attended the meeting. The
relations continued to develop thenceforth during the DYP-SHP coalition period.
Hikmet etin from SHP had visited Israel in July 1992, the first by a Turkish
Minister of Foreign Affairs. Visits by Ezer Weizman in January 1994 and Simon
Peres in April 1994 followed. iller as PM also paid a visit to Israel accompanied by
200 businessmen in November 1994. On February 3, 1996 an important step was
taken by Mesut Ylmaz of ANAP acting as PM Mesut Ylmaz, and Ezer Weizman
who visited Turkey had agreed upon a strategic cooperation between the two
countries, a move many prior governments had abstained for fear of antagonizing the
Muslim countries. This important step was followed by REFAHYOL government
despite Erbakans anti-Israeli rhetoric, and a military modernization agreement was
signed with Israel in March 1997. The Turkish military must have been instrumental;
iller and DYP were also in favor. In July 1997, this time, free trade agreement was
signed with Israel and Turkey brought her customs taxes on Israeli imports down to
zero.
9.3.5. Relations with the EU
As Turkey moved away from the EU membership prospects during
REFAHYOL coalition, correspondingly views about Turkeys candidacy in the EU
also deteriorated. Christian Democrats and center-right in general developed a strong
negative attitude declaring (in the meeting they held just before the Luxembourg
summit) that Turkey had a different culture and should not be allowed to become a
member. Different culture meant, in some cases non-Christian but, in general, it
meant non-European values. Social democrats and center-left had a different view.
They considered that, in principle, Turkey could become a member if she complied
with Copenhagen criteria. They also stressed that by leaving the option of
membership open to Turkey the EU, in fact, expedited improvements and reform
efforts in Turkey. The Copenhagen Criteria prepared in 1993 when expansion efforts
were started by the EU stipulated that for all candidate countries three basic criteria
would have to be fulfilled:
Democracy, respect for and supremacy of law, human rights, minority rights.
An operational market economy.
Conforming with economic and monetary criteria and an economy that can take
on membership burdens.
In the Agenda 2000 prepared by the European Council on June 16, 1997, 11
countries were accepted as candidate members, with priority to be given to Poland,
Hungary, Czech Republic, Estonia, Slovenia and Cyprus (Southern). The other
candidate members were: Bulgaria, Malta, Romania, Lithuania and Slovakia.
Switzerland was out because it had voted down EU membership in a public
referendum. Luxembourg summit of 12-13 December 1997 confirmed the agenda
2000. Turkey was not listed as a candidate; it was merely mentioned that Turkey
was also qualified and would be evaluated according to the criteria applied to all
candidate countries.
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Thus, REFAHYOL left to the hands of the succeeding governments,

ANASOL-D and later DSP-MHP-ANAP coalition the difficult job of making the
required political as well as economic reforms to become eligible as a EU candidate
member. This placed Turkey in a unique position; she was the only country with a
working customs union with the EU and yet not eligible as a candidate. The role of
iller and DYP in drawing up the CU (Customs Union) decision and also later in
becoming less eligible as candidate member is also striking. Many observers, also
reviewing the enlarged deficit with the EU countries after CU, concluded that a
reasonable bargaining was not made with the EU before accepting the CU decision in
1995. Despite the CU, on the other hand, the 4. Financial Protocol accepted way back
in 1983 amounting to 310 million ECU had not materialized; financial aid being
vetoed down first on account of human rights deficiencies and more recently by
Greece, most of the time because of Turkeys stand concerning Cyprus. Neither
was the financial aid to compensate for the losses due to customs union allowed to
operate. The EU had pledged 2.425 million ECUs for 5 years 1996-2000. The yearly
customs tax loss to the budget was calculated at around 2.500 million ECUs (3 billion
US dollars).
9.3.6. The Susurluk Incident
On November 3, 1996 a truck accidentally hit a car in the Susurluk district,
Balkesir province. The driver of the car was a police officer; a fugitive criminal
named Abdullah atl bearing a counterfeit identification, and a DYP MP, Sedat
Bucak were also in the same car. The former two were killed along with a woman
also in the car; Bucak lived. There were also several weapons in the trunk of the car.
atl was a criminal suspect, a narcotics smuggler, a fugitive in the wanted list of
the police. He had participated in the killings of 7 Marxist youths before 12
September 1980 and had helped Mehmet Ali Aca to escape from prison. Aca had
been jailed because he had killed Abdi peki, a famous journalist and after he
escaped he had tried to kill the Pope. Susurluk incident called into question the
formation of underground guerrilla gangs with the cooperation of state officials,
labeled the deep state. It caused an uproar in the parliament by opposition parties,
CHP and ANAP. Erbakan asked the Prime Ministry Investigation Committee to look
into the matter and based on their report, evket Kazan, Minister of Justice again
from RP, declared that Susurluk was not a case of permanent organized guerrilla
gang but a simple case of misuse of duty on the part of some individual government
officers. According to the Parliamentary Investigation Committee, however, it was an
organized and continuing case. The former Minister of Interior, Mehmet Aar and
others had misused their duties and had not deliberately caught the fugitives in
question, foremost atl. Instead, the fugitives were used in covert operations of
killings against PKK. Many from MT and the police department also confirmed the
existence of this relation in their statements to the Committee. The accused
government officials from MT and the police department declared, in turn, that they
had done everything in the name of the state and for the benefit of the state. The
fugitives, including atl who was formerly a member of the radical nationalist youth
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organization, Idealists (lkcler) used by the deep state to fight ASALA and PKK
terror, on the other hand, had taken advantage of their privileges, including
diplomatic passports to go into narcotics smuggling, and killings or otherwise
kidnappings for the sake of extracting money. Still Erbakan and iller insisted it was
an individual case and iller once declared it was an honor to shoot a bullet or be
killed by a bullet for the State! They also insisted that Mehmet Aars resignation
from the Ministry of Internal Affairs after the Susurluk incident was a pre-arranged
move that had nothing to do with the incident. An army general Veli Kk,
connected with the operations, however, was immediately retired by TSK (Turkish
military forces). After Mesut Ylmaz of ANAP became PM he got prepared another
detailed report by the Prime Ministry Investigations Committee, and again the report
confirmed the covert relations of the fugitives with some government officials in the
police department, in MT and with some MPs and politicians, foremost Sedat Bucak
of DYP. So, when Ylmaz visited Hungary after Germany he got a punch in the nose
by a runaway who could not be caught. Many assumed the perpetrator of the punch
was a gang member of atl and others involved. But no satisfactory conclusion
came from prolonged court cases on the matter.
9.3.7. The Sincan Incident
RPs philosophy was based on religion. It was against the West, the USA, the
EU, NATO and FPC flow (DPIs). It favored expanding relations with Muslim
countries in the Middle East and North Africa. Erbakan had also played with the
unfeasible project of a common market of Muslim countries But his visits to Iran,
Libya and the organization of the D-8 conference had been failures. Parallel to
Erbakans efforts in foreign relations, REFAHYOL or RP period witnessed a
constant stream of incidents that were steps to stress religious fundamentalism and
religious state over laicism. Only some major such steps will be mentioned here. The
list includes the growth of queer religious orders such as Aczimendi whose members
cursed at Atatrk during a mosque meeting; transfer of money collected for Bosnia
which went to RP coffers and the jail sentence received by Sleyman Mercmek for
the affair; certain murders perpetrated by religious organizations, in particular, the
famous pro-Atatrk journalist etin Eme, and religious propaganda by several RP
mayors and jail sentences they received.
RP was boldly involved in many of these reactionary activities. Once Erbakan
called the IHL (mam Hatip Liseleri: Imam and Koran Reciting Lyceums) as
backyard of RP. In January 1997 RP reorganized official working hours during
Ramadan, the fasting month, according to fasting hours, illegally. Although the
decision was canceled by the Supreme Administrative Court for being against the
law, it took time and the fasting hours were implemented that year. Again in January
Erbakan threw open a large dinner in the official Prime Ministrys house to tarikat
(religious orders) sheiks, and hundreds participated in the dinner wearing religious
robes and turbans. When asked by a journalist what they talked about, the sheik of
Nakibendi tarikat replied they had talked about the orders of the God.
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The Sincan affair was the last straw that broke the camels back, that is, the
last event that triggered the 28 February 1997 meeting of the MGK which asked the
government to take steps against growing reactionary religious movement. Sincan, a
town in Ankara was run by a mayor who was a member of RP. He organized on
February 2, 1997 a so-called Jerusalem Day which turned into a propaganda of
Islamic fundamentalism, and support for Hamas and Hizbullah. Irans ambassador,
Muhammad Bagheri who was invited, made a speech which implied a call for change
of regime in Turkey from laicism to the religious state. On February 4, the tanks of
the military, allegedly on the way to the maneuvers, passed through Sincan. In a
private talk, General evik Bir, the second joint-chief-of-staff of the army described
the passing and staying of tanks in Sincan as a small balance adjustment to
democracy. The mayor of Sincan was sacked and sentenced to 4 years and 7 months
jail by DGM (State Security Court). Irans ambassador and Istanbul Consulate had to
leave Turkey immediately. Not only the military but masses of civilians were in an
uproar against the reactionary moves initiated by RP.
9.3.8. The February 28, 1997 Meeting of MGK
The Sincan incident led to the famous February 28, 1997 meeting of MGK
which underlined the threat of religious reactionary movement and advised that the
government should take measures to prevent it. As will be remembered, MGK
(National Security Council) is an advisory body to the government on matters of
external and internal security. The members are the PM, chairman when the president
does not participate in the meeting, ministers involved with the affairs of security
plus top military joints-chief-of-staff. The February 28 meeting of MGK was chaired
by President Demirel and lasted a marathon 8.5 hours.
In the 28 February 1997 meeting of the MGK a general advice was made to the
government to take measures to prevent (read the implicit meaning as: refrain from
actions leading to) rising reactionary movement, anti-laicism, anti-Atatrk principles
of laicism and the Republic. Some specific measures were also mentioned. One such
recommended measure was to raise primary schools and hence compulsory education
from 5 to 8 years; thus adding the intermediate education of 3 years after 5 years of
primary to the primary education stage; to be followed by merely a 3 to 4 year
lyceum education. There were two motives behind this recommendation. The first
was to comply with the educational standards of the EU. Another motive was to
undermine the widespread rush to the mam Hatip Lyceums. These schools had
reached a capacity far greater than the requirements of the imam profession and their
graduates were clamoring to be admitted to regular universities, and thus move on the
responsible positions in the government. Erbakan had commented that they were the
backyard of RP to recruit young people to the religious cause and to RP. MGK also
recommended that all Koran courses be brought under the control of the Directorate
of Religious Affairs tied to the Prime Ministry.
The army had been most careful not to keep in its ranks officers or NCOs
belonging to radical, reactionary religious movement, and once proven expelled them
from the military. Of course, it did not include those who obeyed their religious
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duties but not engaged in fundamentalism. The municipalities governed by RP, in

turn, found means to hire those discharged from the military for religious
fundamentalism with fanfare. The MGK recommended also that no such re-hiring
take place.
Another recommendation was to refrain from substituting the concept
religious community (mmet) to the concept nation and that more care should be
given to safeguard laicism and the republic established by Atatrk; the unchangeable
articles of the Constitution. More care was also to be given to preventing reactionary
religious groups from insulting addressed to Atatrk.
Another recommendation was more strict adherence to the dress in the public
institutions, including municipalities as well as the universities. This implied the
turban worn by ladies, mostly as a religious and political symbol.
Since, armed religious reactionary organizations seemed to spring up, it was
also recommended that a more careful investigation be made by the authorities of the
Ministry of Interior in granting permits for the use of high-caliber weapons; and to
prevent such organizations from being granted the posts of sacrificed animals during
the religious holidays when vast numbers of certain animals are sacrificed and their
meat and the proceeds of their posts supposedly go to feed the poor and the needy.
The displeasure of MGK and military members of MGK with growing
reactionary movement led many MPs, particularly from DYP to falter in their support
of REFAHYOL coalition. Erbakan, in turn, refused to sign the MGK decision and
tried to soften some of the measures advised by the MGK, in particular, the 8-year
compulsory primary education which would have invalidated the popularity of IHLs;
employment of persons thrown out of the military for being involved in religious
reactionary movement by RP controlled municipalities; and controls imposed on
(religiously oriented), foundations, all to no avail. Aydn Menderes, Adnan
Menderes son who had entered the RP (and had no right to be there as a center-right
person) declared Erbakan should either sign the MGK meeting decisions or else
resign.
All major civilian NCOs and organizations were in favor of 28 February MGK
advisory decision. The list included TRK-, the largest and center-right
confederation of labor unions; DISK, the reformist labor confederation; the
confederation of artisans and small tradesmen (center-right disposition) as well as the
overwhelming majority of businessmen. Erbakan was forced to sign the MGK
decisions on March 8 but this time created another crisis by trying to bring the MGK
decisions to be discussed in the parliament instead of these being heeded by the
government as the legal procedure goes. Again Erbakan had to withdraw his move.
REFAHYOL and, in particular, DYP was losing blood with resignations of MPs.
Finally iller and Erbakan hit upon what they must have thought an intelligent
scheme. Erbakan resigned from Prime Ministry on June 18 but when submitting his
resignation he informed Demirel that RP, DYP and BBP a small party had agreed on
a coalition and iller was to become the PM. But Demirel was not impressed, instead
of iller he asked Mesut Ylmaz, chairman of ANAP to form the new government.
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Thus the resignation of Erbakan as PM on June 18 was the end of

REFAHYOL coalition. Mesut Ylmaz, in turn, reached a coalition agreement
between ANAP, DSP led by Ecevit, DTP led by Hsamettin Cindoruk, an old DYP
hand who had first resigned from the chairmanship of the parliament and then from
the DYP to establish the new center-right DTP. The coalition was to be supported
from the outside by CHP led by Deniz Baykal, thus securing the absolute majority.
Many DYP MPs had already resigned from DYP because of the fear of RP-DYP
coalition. Thus, Ylmazs coalition received vote of confidence in the July 12, 1997
meeting of the parliament with 281 yes votes, 134 from ANAP, 67 from DSP, 49
from CHP, 14 from DTP, 1 from MHP, and 16 independent (mostly resigned from
DYP) votes. The no votes amounted to 256, from Erbakan and RP, iller and DYP.
Many observers label the 28 February 1997 process leading to the change of
the coalition government as post-modern coup dtat, or post modern intervention to
the democratic process by the military, or simply stated, another Military
Memorandum. But the format was entirely different. The 1960 and 1980 military
interventions both had forced the governments in power to leave. It was also
different from the 1971 Military Memorandum which directly had asked the
government in power to leave in favor of a reform government to be elected by the
then existing parliament. In contrast, MGK was a constitutional advisory body
composed of both members of the government as well as the military. It was chaired
by the President, and did not ask the government to leave but advised them to take
several measures against growing religious reactionary movements and activities.
iller, on the other hand, angry because Demirel had not asked her to become
the PM and continue with REFAHYOL, called it the ankaya (implying
Presidential) coup detat. The rightful answer to this accusation came from Demirel
himself who declared that there was no article in the Constitution or in the traditions
that forced the President to accept the transfer of PM from one person to another. At
any rate, it was most doubtful whether another try at REFAHYOL this time iller as
PM could have mustered a confidence vote, given large numbers of defections from
DYP, and also some from RP.
Soon after the 28 February 1997 meeting of MGK the joint-chief-of-generalstaff declared that the priority threat to the Turkish State had changed. Up until then
Kurdish separatism (by a minority of Kurdish origin citizens) and PKK terror was
number one threat. But from 1997 on, TSK considered religious reactionary
movement aimed at secular republic and democracy as number one threat and
priority, PKK terror was secondary in importance and weight.
9.4. ANASOL-D (ANAP-DSP-DTP) COALITION,

1997-1999
Coalition government of ANAP, DSP and DTP, supported from outside by
CHP, having received vote of confidence on July 12, 1997 remained in power till the
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next early elections held on April 18, 1999 which changed the composition of the
parliament radically. It led to the formation of another coalition government, this
time by DSP, MHP and ANAP with Blent Ecevit, chairman of DSP as PM
There was, however, a discrepancy even at the beginning of ANASOL-D
government. While the three coalition partners saw it as a government of action,
restoration and repairs, Deniz Baykal, chairman of CHP who supported it from
outside in the parliament considered it as a government leading to early general
elections. He was to take the opportunity to topple it in due time, in April 1999 and
force early elections. As a result of the elections, however, CHP could not pass over
the 10% limit and obtain any seats in the parliament.
The major political and economic events and developments during ANASOLD coalition, July 1997 to May 1999 are reviewed briefly below.
9.4.1. Extending Compulsory Primary Education to 8 Years
The advice of the 28 February 1997 MGK meeting concerning extending
compulsory primary education from five to eight years was immediately taken up by
the ANASOL-D coalition government. A law was passed on July 23, 1997, leading
to important changes in the educational system. As a result, the demand going to
HLs immediately shrank. Many new private elementary to lyceum schools giving
education in foreign languages, mostly English were opened, charging high fees to
cover partly their investment expenditures while the quality of public elementary
schools, lyceums, those public lyceums which carried education in the English
language all continued to fall because of budgetary restraints and low pay to the
teachers. Parents continued to be organized under foundations to help these schools
financially; otherwise they directly donated money to the school administration. One
important problem of education continued unsolved. It was the large demand going to
the normal lyceums to continue with university education rather than to professional
lyceums that trained students as technicians in electronics, electricity, carpentry etc.
These jobs demanded a high pay because intermediate level professionals were in
short supply. Instead, university faculties teaching mostly social sciences, and low
quality universities swelled. Their graduates could hardly find a good job and thus
added up to the large unemployment rate among so-called university graduate youth.
But as university graduates they could serve a shorter term as reserve military
officers instead of a longer term as common soldiers. This was a problem touched
upon back in 1962, 1963 in the first annual program and the First Five-Year
Development program prepared by the State Planning organization. Not much had
been accomplished since.
9.4.2. Closure of RP and Opening of SP
Another important development was the closure of the RP (Refah Partisi:
Prosperity Party) of Erbakan. The chief public prosecutor had applied to the
Constitutional Court for the closure of RP back in May 21, 1997, after 28 February
1997 MGK meeting but before the resignation of Erbakan as PM in June. On January
16, 1998 the Constitutional Court decided that the RP should be closed down when
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Ahmet Necdet Sezer who was elected president by the DSP-MHP-ANAP coalition
later, was the chairman of the Constitutional Court. The Constitutional Court decreed
that RP had acted against laicism, one of the first principles in the Constitution that
cannot be changed. Necmettin Erbakan and 6 other RP members received a 5-year
ban on political activities. Instead of RP, FP (Fazilet Partisi: Virtue Party) was
established even before RP was closed and in anticipation that it would.
In September 1997. iller still angry she was not offered the task of PM by
President Demirel to carry on with the REFAHYOL blurted out in a party meeting
that she was not a dishonorable corporal. It raised a great wrath among the NCOs
of the military and she had to recant, declaring she did not mean to insult the
corporals (but only hint that Mesut Ylmaz, the new PM was merely following the
orders of the high level military). Meanwhile DYP also toyed with the idea of
capturing the religious votes of the closed RP and failed.
9.4.3. Relations With the EU During ANASOL-D Government
ANASOL-D government inherited from REFAHYOL souring relations with
the EU. As already mentioned in the section on REFAHYOL, Agenda 2000 issued
by the EU on June 6, 1997 just before REFAHYOL left had ruled Turkey out as a
candidate member. This was confirmed in the 12-13 December 1997 Luxembourg
summit despite a cordial a priori meeting of Mesut Ylmaz with Helmut Kohl. In
contrast, the EU started negotiations with (Southern) Cyprus for entry as a candidate
member.
Ylmaz showed a strong reaction against the decisions of the Luxembourg
summit concerning Turkey and Cyprus. In response, he unilaterally suspended
political relations with the EU; refused to participate in the March 13, 1998 European
Conference (an inconsequential meeting); stressed the confederation solution to the
Cyprus issue based on London and Zrich agreements, and started preparations for
the economic integration of Northern Turkish Cyprus with Turkey. He also declared
he would take the required steps to improve democracy and human rights issues
pointed out by the EU. Strong reactions by Ylmaz notwithstanding, the mid-1998
Cardiff summit showed only minor improvements over Luxembourg. Though Britain
and France showed a softer attitude, it was not enough to move the stiffer stand of
Germany and Greece. One such slight improvement in the Cardiff summit was that
Turkeys future membership within the terms and conditions of Ankara Protocol
(article 28) was confirmed.
The reforms insisted on by the EU at the time were:
To abolish the death penalty.
To change some articles in the Law on Fighting Terrorism to conform the
procedures with EU human rights criteria.
To wipe out violence and human right abuses during the police interrogations
during and before court procedures.
The first item was obviously connected with calan as well and it so happened
that ANASOL-D government had its hands full with the seizure of calan who had
escaped out of Turkey.
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9.4.4. Fight Against PKK Terror and calans Capture

A very important event in the fight against PKK terror during ANASOL-D
government was calans capture abroad. An effective and large-scale military
action against PKK and calan had been undertaken by TSK (Turkish Armed
Forces) starting mid May, 1997 when REAHYOL government, though invalidated
with the 28 February MGK decision, was still in power. TSK had taken control of
entries of PKK militants to Turkey from Northern Iraq and aimed at PKK camps
within Iraqi soil, a background for training as well as refuge of militants. The
operation of TSK was successful by June although it cost the lives of 2.811 militants
and 113 TSK members. PKK had become intensely active within Northern Iraq since
1991, also forming a political organization there. But these activities were disliked
particularly by PDK and Mesut Barzani, less so by YNK and Celal Talabani. The
military operation of TSK in Northern Iraq had been accomplished despite protests
from the European Parliament and the United Nations, but with the tacit approval - it
may be grudgingly - of Barzani, and also of Talabani.
The military phase having nearly ended when REFAHYOL government was
nearing its end, more interesting developments involving international diplomacy and
not merely military action took place when ANASOL-D coalition government came
to power on July 12, 1997. As a result of continued military operations calan had to
flee Turkey but was caught abroad by diplomatic efforts, brought back to Turkey and
taken to court.
On September 16, 1998 calan had escaped to Syria, another neighboring
country which lent support to PKK and where PKK had large training grounds for its
militants. Syria had historical hostilities due to Hatays annexation to Turkey and
more recently she intended to use the PKK card as a bargaining power against an
imaginary water threat from Turkey, as mentioned in the earlier chapters. This time,
however, political conditions were ripe for Turkey to show a strong response. First
the chief-of-staff of the army, and then President Demirel and finally the joint-chiefgeneral-of-staff warned Syria mid September to November 1998 that all options
would be open to act against Syria if she continued to cooperate with and support
PKK and calan. To mean business, Turkish army swiftly moved to the Syrian
border and remained alert and in waiting.
Syria replied that Turkey, under the influence of Israel was the nonreconciliatory party. Hsn Mbarek of Egypt hastily visited Ankara on October 6 as
mediator, witnessed the determination of the Turkish government and moved to
Damascus immediately to explain the situation. As a result, calan moved out of
Syria and went to Russia. When Kvrkolu, the joint-chief-of general-staff, declared
again that all necessary steps will be taken, Hafz Esat of Syria immediately declared
that calan was not in Syria and he would not be allowed to re-enter. An agreement
was speedily reached between Turkey and Syria in Adana on October 20, 1997 in
which Syria promised to withdraw her support of PKK. The Turkish government then
went on to pressure Russia to give calan up to Turkey, upon which Russia sent
calan away, this time to Italy. He was taken into custody by Italian police when he
181
arrived Rome airport on 12 November but Italy declared she would not send calan
back to Turkey. Italy as an EU country had banned capital punishment whereas
Turkey retained it at the time and calan stood to receive capital punishment if sent
back to Turkey. The Turkish government and public reacted with a boycott on Italian
goods. On November 20, 1998 the Italian government relieved calan from custody
and he left Italy the same day. He finally ended up in Kenya where he was caught by
MT (the intelligent service of Turkey) with the considerable cooperation CIA of
USA and MOSSAD of Israel. When returning home in a special plane and under
custody, calan blurted that he loved his country, Turkey, and his mother was a
Turk. Then he declared that if there were any need for his services (obviously
concerning PKK) he would gladly render it to the Turkish government.
When he arrived Turkey he was jailed and brought to a DGM (State Security
Court). Both the court proceedings and the banning of capital punishment became a
pet issue of the EU. And many, including Mme. Mitterrand must have felt sorry for
calan, a terrorist who had atrociously murdered tens of thousands of Kurdish
children, the aged, and those militants who wanted to leave PKK. The European
intellectuals were over-concerned that Turkey should be respectful of calans
human rights during of court proceedings and in jail. Presumably they considered the
case basically as one of minority rights with only little regard to its terrorism and
crime aspects.
DGM gave calan the death sentence on February 16, 1999. calans case
was followed carefully by the EU. As the case evolved, pressures from the EU
intensified that Turkey waive the death sentence in compliance with the EU
stipulations and criteria. This was accomplished by the DSP-MHP-ANAP
government. Thus, calan was saved from the death sentence which was replaced by
lifelong imprisonment.
9.4.5. Global Financial Crisis 1997-98 and Turkey
1997 was the year during which the global financial crisis took place, starting
with Thailand, followed by Indonesia, Malaysia, the Philippines; jumping to South
Korea, Japan and also hitting Russia severely. Many of the above countries were
saved quickly by means of IMF credit and by following IMF programs. Few carried
their own tight budget programs without recourse to IMF. Japan had the benefit of
very large accumulated foreign exchange reserves to bail out her ailing banks. A
robust economy of the USA and also of EU countries was another factor in
overcoming the crisis by 1998. As a result of the crisis short term flow of financial
funds to emerging markets was reduced while IMF became more insistent on
structural reforms, transparency, preventing corruption and waste, and restructuring
of the banking system. But globalization continued along a new, modified path.
The relevant question here was that Turkey was not thrown off balance with a
severe economic crisis throughout 1997 and 1998 despite the negative effects of the
global financial crisis. One reason why Turkey was not thrown off balance
immediately by 1997 concerns political confidence. The recent change of
government had raised hopes of improvement. At least it attested that a political
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crisis due to reactionary religious movement was avoided. The economic reason was
that not much funds flowed to Turkey anyway. Thus, a reduction in the funds flowing
to Turkey had only a small negative effect in the short run though it deepened in the
longer run. To wit, in 1996 net FPC flow (DPIs) to Turkey was 612 million dollars,
net flow of short-term financial funds only 570 million, and current account deficit
was 2.437 million dollars. In 1997 the respective figures were 554, 1.637 and the
deficit 2.638 million dollars. In 1998 FPC flow was 573 million, short-term financial
flow showed a considerable deficit of 6.386 million, nonetheless current account was
a plus 1.984 million dollars. The respective figures for 1999 were net FPC flow 138
million, short-term financial flow 3.429 million dollars, current account deficit 1.360
million dollars. But by 2000 the flows had dwindled while the current account deficit
had increased considerably. FPC flow was 112 million dollars, flow of short-term
funds 1.022 million dollars and current account deficit 1.819 million (Ministry of
Public Finance, 2001 Economic Report, p.177).
During the global financial crisis 1997, 1998 Turkey had in the Central Bank
over 20 billion dollars of reserves to meet the negative flow of financial funds. But
obviously in the longer run adverse effects of global financial crisis added on to those
caused by the failure to carry out structural reforms and Turkey finally faced an
economic crisis by the end of 1999, going through 2000 and 2001 during the DSPMHP-ANAP coalition period.
9.4.6. Economic Policies of ANASOL-D Government
The immediate economic problem faced by ANASOL-D coalition government
was the large budget deficit that actually developed by June (amounting to about 700
trillion TLs) in the 1997 budget prepared by REFAHYOL and claimed to be balanced
by Erbakan and iller. In order to reduce the budget deficit, ANASOL-D government
felt forced to immediately raise the prices of fuel, alcoholic drinks produced mostly
by the state monopoly, as well as bridge and highway tolls. A supplementary budget
(amounting to about 2.000 trillion TL.) also had to be prepared to meet the previously
promised wage and salary rises of government employees and workers. The
government declared that tax increases and tax reform were to be undertaken in the
next stage. A blunder was made by Gne Taner of ANAP, Minister responsible for
the economy, who declared that the recent price raises would boost the inflation up to
100%. He later had to recant and reduce his inflation rate estimate for 1997 (the
actual inflation rate measured in terms of GNP deflator was 81.2%).
Another political blunder by Gne Taner followed. He declared without prior
consultation to the coalition partners and cabinet members that he thought
establishing a new TL tied to the dollar was a good idea, with the old TL. to be
eliminated immediately. The new TL, Taner contemplated, would be used by the
Turkic states in Caucasia and Central Asia. This project harked back to the new TL
project proposed by the former REFAHYOL government, with some differences.
REFAHYOL had contemplated that the new TL would be used by Islamic countries,
and it would circulate alongside the old TL. Taner suggested that his new TL should
be introduced when the inflation rate was reduced down to 60%. The coalition
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partners, however, disagreed and PM Mesut Ylmaz of ANAP had to declare that a
new TL was not in their program and it was unnecessary; that the goal of ANASOLD was to reduce and finally eliminate inflation and then to cancel some of the zeros
in the present TL. Preventing inflation would be enough, and there would be no need
then to tie TL to the dollar. It is interesting that many years later, in mid July 2006,
Steve Hanke, in an interview with Turkish journalists (newspapers dated July 17,
2006) declared that Turkey should establish a new TL (YTL) tied to Euro and put an
end to the freely floating exchange rate regime. The political blunder made by Taner
still stands. Obviously there are internationally renowned experts to advise tying the
YTL to a strong foreign currency, the dollar, and this time to the Euro. The author of
this book, however, begs to differ from Hanke on the essence of the project.
Still another mistake was the suggestion again made by Taner that in order to
halt inflation, prices should be frozen. He proposed that prices of goods and services
produced by the public sector be frozen, and asked the private sector to do the same.
This proposal too had not been discussed before in the government and by the
coalition partners. It did not materialize. The basic cause of inflation was the large
budgetary deficit and the real remedy lied in establishing financial discipline and
implementing structural reforms as suggested by the IMF; not freezing prices which
would lead to further enlarging budget deficits.
By 1997, 1998 Turkeys balance of payments showed a critical deficit on
account of several reasons. One minor - and not major - reason was the effects of
custom union with the EU and the ensuing trade-creating and trade-diverting effects.
The effects of temporary tax exemptions for imported investment goods had also
boosted the trade deficit with the EU as well as the overall deficit. Again, despite the
promises made, financial aid from the EU for customs union never materialized; the
financial protocol was always vetoed by the efforts of Greece on account of the
Cyprus issue. Fourthly, the negative effects of the global financial crisis 1997, 1998
though again not too grave, were also being felt in the Turkish economy. Finally,
however, wrong economic policies pursued, the slowness in establishing financial
discipline and implementing structural reforms should be cited as the most important
reason.
All this developed during ANASOL-D period and at a time when Turkey had
to make debt payments and when contacts with IMF and WB continued since 1994.
Thus, establishing financial discipline and implementing structural reforms had
become an urgent matter. IMF suggested that privatization should be speeded up;
social security system be overhauled and the huge budget burden of the said system
be reduced; tax system be reformed and tax collections speeded up; the number of
personnel in SEEs, ministries, public institutions as well as wage and salary rises be
taken under control, and very importantly, corruption and waste should be eliminated
and transparency should be introduced. IMF also suggested that if a one-year shock
program is prepared to establish financial discipline and if the above structural
reforms are implemented, it could sign a stand-by agreement and lend credit to
Turkey. This credit could obviously boost the credibility of the Turkish economy.
WB had already promised an aid of 1.5 billion dollars for three years for raising the
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compulsory elementary education to eight years and also stood ready to raise total
credit to 4.5 to 5 billion dollars for specified projects. The stand-by agreement with
IMF and IMF credit could have easily taken the Turkish economy out of a pending
critical situation. The IMF, on the other hand, stood ready to help out countries ailing
from the global financial crisis. ANASOL-D government, however, declined from
entering a stand-by agreement and implementing a one-year shock program. Instead,
it preferred to prepare a three-year softer (or slower) program for financial discipline
and structural reforms. Gne Taner again made another political blunder, declaring
they did not need IMF interference.
Since the decision to avoid a stand-by agreement with IMF and carry out
reforms at a slower pace does not make much economic sense the reason for refusing
a stand-by agreement with IMF must be political. ANASOL-D government must
have feared populist cries from opposition parties which would have argued that
ANASOL-D had made Turkey a captive of IMF. In particular, support of CHP from
outside was also insecure. CHP would most likely have voted against. Politically,
even if a one-year shock program is implemented, the government that implements it
should stay in power much longer in order for the public to start reaping the benefits
of economic and social recovery. ANASOL-D did not have such a chance; CHP was
to withdraw its outside support soon and force early general elections.
In conjunction with the program of the government, Zekeriya Temizel from
DSP, minister of public finance prepared a tax reform by the end of 1997 which
contained several correct measures but did not go far enough. To facilitate the control
of tax payments he introduced a tax number to everyone. Since high inflation had
distorted income tax brackets thereby increasing the tax burden on the low-income
groups, he readjusted the brackets accordingly. He also tried to tax the incomes from
rents and interests; and to improve the tax administration, and introducing
widespread use of computers.
ANASOL-D also started a fight against corruption. Several contractors and
others were accused of wrongdoings in their dealings with government contracts and
brought to court. One such contractor. Korkmaz Yiit, however, implicated in the
court that Mesut Ylmaz was also to be blamed. Deniz Baykal of CHP which
supported ANASOL-D from outside seized on the opportunity and ended the
ANASOL-D coalition by withdrawing his support and asking for a parliamentary
investigation. But the capture of calan, rather than economic performance, had
boosted the standing of ANASOL-D coalition in the eyes of the public.
The project of carrying Hazer petroleum from Baku via Turkey to Ceyhan
port, in addition to the pipeline to pass through Russia to Europe (Blue Flow Project)
began to be taken up during the ANASOL-D government. The project had the
support of the USA. It was, however, to be a long-term project to be completed by
2006.
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9.4.7. Ending of ANASOL-D by CHP and the Results of Early

General Elections, 18 April 1999
ANASOL-D government was forced to a premature end and early elections
were imposed on the coalition parties by Baykal, chairman of CHP who had voted for
ANASOL-D from outside but had stressed that ANAP-DSP-DTP coalition should be
a short-lived elections government. He acted accordingly soon after the success of
ANASOL-D in catching calan and taking him to court.
By mid 1998 Baykal insisted on the signing of a protocol with the coalition
partners that ANASOL-D should resign latest by the end of 1998 and early general
elections be held by around 18-25 April, 1999. Both Ylmaz (ANAP) and Cindoruk
(DTP) resisted but were forced to sign on account of parliamentary arithmetic, the
coalition was to lose the majority in the parliament when CHP withdrew its support
and joined the opposition group of RP and DYP. Since Ylmaz refused to resign
towards the end of 1998 Baykal seized an opportunity to direct a parliamentary
inquiry about Mesut Ylmazs participation in corruption. As mentioned above, the
accusation was based on the declarations of a certain contractor (Korkmaz Yiit) who
stood accused of corruption and had implicated Mesut Ylmaz in his yet
unsubstantiated statements. Baykal based his parliamentary investigation on these yet
unsubstantiated statements. Were Ylmaz and Gne Taner, in fact, truly corrupt, is
another matter. The problem here is that Baykals accusations had little evidence,
while the timing was political. Baykal further demanded that an election government
led by a non-partisan person be elected. President Demirel refused Baykals
proposition since there was no such a clause in the Constitution.
Baykal also stressed that calans capture during ANASOL-D government
should never be made domestic propaganda material by the coalition partners. He
argued this would have become the outcome with any other government in power at
the time. No one did anyway because it was too delicate a matter for election
campaign propaganda.
No correction in the election system for a better representation of the parties in
the parliament according to the votes they mustered was made for the next election
since all parties in the parliament had refused any such change. Political immunity
was also untouched and unrestricted.
Demirel asked Ecevit, chairman of DSP to act as a minority election
government, which was voted in by the parliament and early general elections were
held on April 18, 1999. CHP and Baykal got less than 10% of the votes and could not
enter the parliament. The results were interesting. DSP led by Ecevit came first with
22.2% of votes and 136 seats in the parliament; MHP led by Devlet Baheli had
made a significant gain, obtaining 18.0% of the votes and 129 seats, FP (Fazilet
Partisi: Virtue Party established as a follow-up of the closed RP obtained 15.4% of
the votes and 111 seats. Both ANAP and DYP registered a fall. ANAP obtained
13.2% of the votes and 86 seats, DYP 12.0% of the votes and 85 seats. CHP led by
Baykal had obtained only 8.7% votes, HADEP (the Kurdish dominated party) 4.8%.
DTP votes were minor and it was later dissolved. Ecevit and DSP had obtained the
186
majority of their votes from urban areas while in the rural areas where people usually
vote for parties at the right, MHP was preferred this time over ANAP and DYP. This
implied that while many centrists in the urban areas voted in favor of DSP, many
center right votes which before went to ANAP or DYP went this time to MHP. It was
the first time a parliament was formed with CHP out.
Economic problems were mounting, reforms for EU candidacy were pending,
the threat of religious reactionary movement was not over, significant steps had been
taken only in the fight against PKK terror, the fight against corruption remained yet
on the surface, and at such a critical time a most interesting coalition was formed;
center-left DSP, radical nationalist right MSP and center-right ANAP joined forces to
form a coalition government led by PM Ecevit, chairman of DSP, both Baheli and
Ylmaz becoming ministers and aides to PM FP (religious radical right) and DYP
(center-right), the two parties responsible for the 28 February 1997 MGK advisory
decision, remained in opposition. A temporary setback occurred on the course of the
establishment of the coalition when Rahan Ecevit, Blent Ecevits wife, blurted out
that it was hard to cooperate with MHP which, with MHP-backed idealists
(lkcler) was responsible for the killings of many (radical leftist) youth in the
seventies. The setback was overcome, the coalition was formed and it obtained vote
of confidence in the parliament.
9.5. DSP-MHP-ANAP COALITION: 1999-2002

9.5.1. April 1999 Elections and Forming of DSP-MHP-ANAP
Coalition
DSP-MHP-ANAP coalition started to work with unexpected harmony. It
tackled first a series of economic difficulties, economic crises and economic reforms
in conformity with IMF and WB stipulations. It faced a very serious earthquake
disaster on August 17, 1999 with a grave cost of lives, morale and economic burden.
Despite these drawbacks the coalition government hosted the AGT (Avrupa
Gvenlik ve birlii Tekilat: European Security and Cooperation organization)
conference successfully in Istanbul on November 18-24, 1999. It signed the BakCeyhan pipeline project with Azerbaijan, followed by the Blue-Flow (Mavi Akm)
pipeline project with Russia. It also strived to fulfill Copenhagen criteria, implement
the required political reforms and was accepted as a candidate member to the EU
after long years of denial on the part of EU. Turkey was included in the G-20, again
during the DSP-MHP-ANAP coalition. It was also a genuine bulwark against
demands from religious reactionary movements and fought against illegal and
criminal (the so-avowed) religious organizations. The fight against corruption had
also received a top priority, but it could not go through very deeply because the
Minister of Interior from ANAP who supervised the fight against corruption was
discharged when the question of pipelines (including the Blue Flow) in which ANAP
had played a major hand was taken up for corruption investigation. Mesut Ylmaz,
187
who had worked for the Blue Flow project was instrumental in the ouster of his own
Minister of Interior.
The coalition came to a premature and unwise end and it was forced to call
early elections on November 2002 just when benefits of economic recovery had
barely started to improve the lot of the people who had endured a prolonged period of
economic difficulties and belt-tightening. Problems started when Ecevit became
seriously ill but refused to step down at least temporarily by selecting an interim
successor. He generally stood against an intensive cooperation with USA. Ecevits
insistence on remaining in office despite his illness was apparently an important
cause for the split in DSP led by smail Cem, Hsamettin Grkan and Kemal Dervi.
Of all, Dervi was the first to quote that the economy had become strong enough for
early elections. Ecevit tried to point out that it was unwise to call for early elections
but circumstances had made Devlet Baheli intransigent on this point because Ylmaz
had worked behind doors to oust MHP and include DYP in the coalition. Thus, early
elections was decided upon. Cem and zkan went ahead to establish a new left-ofcenter party, Dervi left the two and entered Baykals CHP. All the coalition
members DSP, ANAP, MHP, the new left-of-center party of Cem and zkan failed,
so did DYP and SP (Saadet Partisi: Felicity Party), follower of RP and FP,
established by those faithful to Erbakan, led by Recai Kutan. AKP (Adalet ve
Kalknma Partisi: Justice and Development Party) led by Tayyip Erdoan, newly
split from Erbakans and Kutans FP (and later SP) won by a wide margin, followed
much behind by CHP.
Since economic crises and economic reforms took precedence over all other
activities of DSP-MHP-ANAP coalition, even including the acceptance of Turkey as
candidate member by the EU most of the following pages will be devoted to the
analysis of economic problems, crises, the stand-by agreement with the IMF and
economic reforms accomplished.
9.5.2. IMF Stand-by and Failure of the Foreign Exchange
Anchor
Because of lagged adverse effects of the 1997-8 global financial crisis superimposed on the negative effects of economic mismanagement and other factors
mentioned in the earlier sections, the previous ANASOL-D coalition government was
faced with difficulties of paying external debts. Therefore, it had drawn a close
follow-up agreement with the IMF in July 1998 which had been, however,
suspended because of April 1999 early general elections. On coming to power, the
first item in the agenda of DSP-MHP-ANAP coalition was again drawing up the
close follow-up agreement with IMF in July 1999 on account of continuing
difficulties of paying external debts. The new coalition government promised to
complete the economic reforms demanded by IMF by the end of the year before
sitting down for a stand-by agreement. The parliament worked through summer to
complete the required reforms.
The reforms covered the following items i) improvements in privatization
procedures and acceptance of international arbitration for foreign capital firms
188
investing in Turkey; ii) limits to public sector employment, and to wage and salary
raises in the public sector; iii) changes in the tax system, to tax the interest income;
iv) decreases in agricultural subsidies; and v) a new Banking Law and bank reform.
Having satisfied the criteria of IMF, a stand-by agreement was drawn in
December 1999 to start with 2000 and to last three years, 2000 to 2002 included.
Concomitantly a stabilization program called The program of Struggle with
Inflation was put into effect. The stand-by and the stabilization program met with
the approval of nearly all the interested parties, including the businessmen.
Before dealing with the basic properties of the stand-by agreement, some
details will be given about the reforms undertaken after the close follow-up
agreement because these reforms were important and continued after the stand-by
also. The promise to accelerate privatization and, in particular, sales of public
enterprises to FPC (foreign private capital i.e. DPIs) was an important feature of the
program because IMF hoped for an increase in the flow of foreign exchange to
Turkey on account of privatizations. The acceptance of international arbitration,
opposed by some narrow-minded nationalistic domestic circles, was intended to
circumvent the prospects of very long delays in the Turkish courts; it would,
therefore, act as an encouragement to DPIs.
Since a tight monetary policy had to be implemented to combat inflation,
several measures or reforms had to be undertaken to reduce the budget deficit. One
such measure undertaken during the close-follow-up period concerned the social
security system. To alleviate the burden of social security system caused by the
populist stance of former governments, particularly Sleyman Demirel, PM of the
former DYP-SHP coalition, DSP-MHP-ANAP government effected some significant
changes with a law that was passed in the parliament on August 25, 1999 and
published in the official gazette on September 8. With this law that amended the
previous law on the social security, a limit was brought to retirement age. For those
who had less than 10 years for retirement, the age limit was raised up to 52 for
women, 56 for men. For those who had more than 10 years for retirement, the age
limit was raised to 58 for women and 60 for men. In addition, the minimum limit for
having paid social security premium was raised from 5000 days to 7000. Although
these changes were significant, there were so many other leakages that the burden of
the social security system on the budget deficit still remained considerable. Parallel to
the above measure retirement insurance by private insurance companies were also
allowed. In addition, unemployment insurance was introduced the first time.
Furthermore, a limit was to be imposed on total employment in the public
sector. The vacancies in any one public institution due to the retirement of a
personnel, if there was an actual need, was to be filled not with new recruitment but
by transfer of personnel from another public institution with surplus personnel. Thus,
a total reduction of 150.000 in public employment was targeted.
Also, limits were imposed on wage and salary raises in the public sector. It
was not made compulsory but was demanded that private sector also comply with the
wage rise limits, which the private sector representatives gladly promised to oblige.
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Limits were also introduced for rises in rents and in the prices of SEE products and
services.
As another burden on the budget, and reason for the Central Bank to print
money, direct agricultural subsidies and the practice of high support pricing was to
end. To compensate the loss in income partly, a direct aid was to be distributed to
farmers based on the area sown; financed - initially - by the WB. There was much
misuse in the implementation of direct agricultural aid in the first years and the area
sown was overblown, but soon it was taken into control by demanding information
about land titles.
As tax reform, the interest income was subjected to income tax deduction at
the source by 4% to 19%. This was imposed despite objections from banks and fears
that it would reduce bank deposits and thus create financial difficulties for banks.
The new Banking Law established a Banking Supervision and Coordination
Committee for a more efficient control of the banks. Banks on the brink of
insolvency and bankruptcy due to misuse or misjudgment of their financial
transactions were transferred to the Central Bank Administration, that is, the TMFS
(Tasarruf Mevduat Sigorta Fonu: Savings Deposits Insurance Fund) of the CB. As
noted before, following the 1994 crisis and rises in foreign exchange and interest
rates, 3 banks had already been transferred to TMSF. After the required corrections
by the fund these banks were to be offered for sale to private enterprise, including
foreign banks and the burden on the C.B. and the economy eventually avoided.
The coalition government refrained from immediately abolishing the
government guarantee on bank deposits, i.e. the promise to pay back the bank
deposits to the depositors even in the case of failure of the bank. The guarantee had
been imposed in the 1994 economic crisis in order to avoid an avalanche of bank
failures when depositors rushed to the banks in panic to withdraw their deposits. It
had, therefore, to be only a temporary measure but had been kept unchanged since. A
promise was made by the DSP-MHP-ANAP coalition, however, that it would be
abolished soon. In the past the savings guarantee was an important factor in the
corrupt management of many banks. Many relatively small banks were bought by
private businessmen and industrialists, some such banks being former public banks
later privatized. Not much scrutiny was made by the government about the business
history and the character of the prospective owner, an indication of cronycapitalism. The owner of the bank generally offered high interest rates on deposits,
and savers, relying on the deposit guarantee, deposited their savings in these small,
otherwise risky banks. The owner of the bank, in turn, transferred most of the money
that flowed to the bank to his business or otherwise his private accounts abroad, in
some cases through offshore branches. Although the former Banking Law had
stipulated a limit for the volume of credits going to the businesses of the owner of the
bank, due to lack of proper and timely financial controls on the banks and the
absence of a specialized institution, this limit was often ignored by the bank
administration; otherwise, it was de jure avoided by means of transfers to the
offshore branch and borrowing from the latter. In many cases, the credit thus lent to
the business of the bank owner was written off as bad debt by the bank. Such banks
190
verged on the limits of insolvency for serving the benefits of the bank owner and
were a potential financial burden on the C.B. and the economy. When a crisis hit the
economy, they were the first to fall victim. With the economic crisis that erupted in
February 2001, an additional 5 small banks were also taken over by the TMSF, thus
bringing the number to 8. A further shadow was cast on these bank operations due to
the fact that many public banks were privatized behind closed doors by the related
cabinet members of past governments with little regard to transparency.
The public banks, on the other hand, were also financially weakened again
because of corruption and partisanship. Many times the ministers of the party in
power pressured these banks to lend risky credit to those businessmen who helped
them financially during the elections or after. Those credits not recovered were
transferred to the financial losses account of the public bank in question and
eventually became a financial burden on the Central Bank. To discontinue this
process, the existing functional losses had to be written off by the coalition
government. The financing was met by issuing internal debt, thus raising the volume
of the latter and also eventually of money supply. The above throws light on why the
Turkish banking system in particular was feeble in the face of any economic crisis. It
also offered an example of blatant spoils system attributes of the practice of
democracy in Turkey.
The new Banking Law introduced by DSP-MHP-ANAP coalition also brought
an end to the privileged position of Islamic financial institutions. These institutions,
allowed during Turgut zal era, were not burdened with keeping legal deposit
reserves with the CB on the premise that they were not receiving bank deposits
proper but only equity participations. The new Banking Law, however, accepted
these as equivalent to bank deposits and required the Islamic Banks to direct part of
the proceeds to the CB as legal deposit reserves.
Also, a new stock exchange law provided a greater control of the Stock
Exchange Administration on financial intermediaries. The past experience had shown
that many crooked intermediaries had evaporated with the money they collected from
the savers.
The basic feature of the December 1999 stand-by agreement was the
implementation of what is called the foreign exchange rate anchor. It involved preset exchange rate increases for each year, taking into account the pre-set inflation
targets. The inflation targets were fixed as 25% (Consumer Price Index) for the year
2000, 12% for 2001 and 7% for 2002. As against a 25% inflation target set for (end)
2000, the limit for the increase in exchange rate for that year was pre-fixed at 15%.
Since privatization was to be accelerated it was estimated that as a result, direct
foreign investments as well as short-term capital funds would increase, and this
would keep the supply and demand for foreign exchange in balance at the pre-fixed
anchor rate. The anchor, that is, yearly limits to exchange rate increases in view of
the inflation target was intended to provide an easier milieu for both foreign and
domestic investors, producers as well as exporters and importers. But the success of
the anchor depended first in actually attaining the target inflation rate and secondly in
attaining the privatization target and the estimated flow of foreign exchange due to
191
privatization. Considering that the actual rate of inflation in 1999 had been around
55%, it was obvious that attaining the 25% inflation rate would be a very difficult
task, demanding very tight monetary policy and radical reforms to cut down the
public budget drastically. In short, it implied virtually a shock treatment by the
coalition government to be implemented after long years of financial mismanagement
and neglect of structural reforms. The privatization targets also failed because some
center-left groups as well as the nationalist radical right were inherently opposed to
privatization and, in particular, sales to foreign customers.
Thus far, the only historical case in which the anchor exchange rate had been
successfully implemented was Israel in 1985-90. It was also implemented in Poland.
Its implementation in Turkey, for 2000-2002 with the inflation and anchor rates as
given above looked at least non-conventional if not an outright gamble even at
the start.
In the initial months of 2000, on the surface, all seemed to go well. With the
start of the economic program the interest rates on bank deposits and bank credits all
fell. The Treasury sold government bonds abroad at relatively low interest rates.
Thus, inflation which had been around 55% in 1999 and would have gone up to 7580% in 2000 had the program not been implemented, fell down towards 40%. This
was a considerable decrease in inflation rate and a relative success. But firstly this
decrease in the inflation rate had been obtained less with substantive financial
discipline and structural reforms and more by freezing the prices of petroleum as well
as of SEE products and services. Thus, it was bound to burst out eventually as these
price freezes increased the losses of SEEs, hence the budget deficit. Another reason
for the fall in the inflation rate was the low limit set on the rise of foreign exchange.
But, the 40% actual inflation rate was too high compared to the 15% foreign
exchange anchor for 2000, and the anchor had become grossly insufficient; the
difference between the inflation rate and the rise in the foreign exchange rate could
not bring the about the balance of demand and supply of foreign exchange at the
anchor exchange rate. The flow of foreign exchange funds was far too insufficient.
This gave rise to over-valued currency (under-valued foreign exchange) raising
imports, slowing down exports and encouraging short-term borrowing of the private
sector and private banks from abroad. And, of course, it also gave rise to the
speculation and expectations that a rise in the value of foreign exchange would soon
become inevitable.
Many at the IMF, foremost Stanley Fischer were already critical about the
implementation of the anchor rate. In view of the clouds gathering up in the horizon
by late 2000, therefore, IMF representatives suggested to the authorities of the
Turkish treasury and the C.B. to raise the foreign exchange rate anchor up from the
pre-set 15%. The Turkish authorities and the coalition government unfortunately
did not comply and kept the anchor at 15% despite the fact that inflation rate was at
the time, about 40%, well above the target rate of 25% and foreign funds were not
flowing in sufficient quantities. This was another mistake superimposed on the
mistake already made of implementing the anchor despite so many uncertainties
about meeting the pre-set targets. By November 2000 an economic mini crisis
192
erupted raising the foreign exchange rate as well as the inflation rate. Thus, by the
end of 2000 the actual inflation performance was also dismal about 50% (GNP
deflator) as opposed to about 55% in 1999. The IMF obliged with a 10 billion dollars
of additional credit. But a short-time later, in February 2001 a foreign exchange rate
crisis of uncontrollable dimensions brewed up, leading to the collapse of the anchor.
As a result, the Turkish government unavoidably had to shift to freely floating
exchange rates. The exchange rate rose steeply to considerable levels while the value
of securities fell down by as much. The experiment in exchange-rate anchor had
ended with a total collapse.
9.5.3. February 2001 Economic Crisis
On the surface, the reason for the eruption of the economic crisis in February
2001 was political. In the 19 February meeting of the MGK (National Security
Council) president Ahmet Necdet Sezer - who had been elected by the votes of the
present coalition - tersely pointed to the Constitution (dropped the book of
Constitution on his desk, but according to Ecevits interpretation, Sezer
metaphorically threw it to Ecevits face) and stated that the government should
respect the Constitution in its actions and decisions. Many observers speculated that
Sezer would have then taken up the question of corruption and the fight against
corruption (involving some members of the cabinet). Prompted by Hsamettin
zkan, Ecevits right-hand man at the time, Ecevit left the meeting. The event
sparkled the collapse of the anchor exchange rate and a very serious economic crisis.
The fact was that due to the widened difference between the inflation and the
exchange rate anchor and balance of payments difficulties the economy was already
ripe for a crisis, just waiting for any trigger and the trigger was political
disharmony between the president and the coalition government in the February 19,
MGK meeting. On February 22 the anchor was cast away and foreign exchange rates
were forced to float. They immediately rose by about 40% (the US dollar rose from
689 thousand TL. to 964 thousand TL.). The stock exchange index fell by 14.7% in
one day, and an additional 18.1% within three days. The interest rates sky-rocketed.
By February 23 the daily interest rate rose to 760% and went further up in the
following days. The two large public banks, Ziraat Bankas (Agricultural Bank) and
the Halk Bank could not meet their debt obligations. This put a severe strain on the
financial system, many firms became bankrupt, creating an unemployment wave. The
coalition government had lost much prestige and credibility to tackle the economic
crisis.
To manage the economy and bring it back to normal, Kemal Dervi, a vice
director in the WB was called to task by Ecevit and on March 1; he was made
minister in full charge of economic policies and measures to combat the crisis and to
restructure the economy. His appointment (or election) in the parliament as Minister
sparkled some hope on the part of the public and he immediately acquired an
important public status. He stated that 15 laws for restructuring had to be passed in
the parliament (within as short as 15 days) as a way out. His program was named
Transition to a strong economy. All of the former measures taken by the coalition
193
government after the November 1999 crisis were followed, even more rigorously.
This included, in particular, the reforming of the banking system and the
strengthening of their capital and liquidity. This led to several bank mergers and takeover. Credit limits of banks to the firms of the owners the banks were strictly
controlled by the TSMF and observed. A law passed on May 5, 2001 gave the
Turkish Central Bank full autonomy and responsibility to pursue monetary policy. A
Monetary Policy Committee was established as advisory. Another law passed on
May 29 dwelt on the acceleration of the collection of credits lent by banks presently
tied to the TMSF On July 3, 2001 Emlak Bankas, a public bank lending real estate
credit was abolished and its possessions transferred to Agricultural Bank, also a
public bank slated, however, for privatization.
A Special Law was enacted for sugar on April 21, regulating its production,
pricing and marketing with a view to prevent government subsidies. Similarly, cotton
prices were also controlled and an ANAP minister who resisted implementing world
prices for tobacco and insisted on subsidies had to resign.
To reduce the public sector deficit many so called funds, some within the
budget and mostly outside (hence not effectively controlled) were liquidated, in all 14
funds within the budget and 71 outside of the budget.
A law passed on April 7 allowed private retirement insurance.
A great deal of attention was directed to accelerate privatization and in
particular, sales to foreign firms. The most important was a law passed on May 23,
concerning the privatization of TELECOM the public telephone company. A 45%
limit was imposed for sale to foreign firms. The privatization of Telecom was
resisted fiercely by the Minister of Communications and Transport at the time who
was from MHP. Presumably he thought he was serving Turkeys national interests
or else defending the politically motivated over-employment in Telecom. But,
eventually he had to resign to give way to the privatization of Telecom. But his
intransigence and a long time lost since 1999 had witnessed a significant fall in the
market value of Telecom.
With the same law the authority to grant licenses for infra-structure was taken
over from Telecom and given to a Telecommunications Committee. Again the said
minister had insisted on political figures as members of the committee but in the end
Dervis view it should be composed of professionals prevailed. Despite signs of
recovery many industrial firms faced serious hardships to meet their credit
obligations to banks in view of higher exchange rates, higher petroleum and higher
and interest rates. Thus a credit restructuring and consolidation had to be undertaken
by banks to alleviate debtor firms.
A law passed on April 24, canceled the approval of the Minister of
Communications and Transport for domestic flights, thus giving vent to free price
competition to private airlines versus the publicly owned THY. THY had also been
slated for privatization but (like the Agricultural Bank) no concrete steps had been
taken in this regard.
The IMF came to help with an obligation to give an additional $19.5 billion
credit in total. The WB promised $6.2 billion for restructuring projects.
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As a general evaluation, the attempts for restructuring and strengthening the

banking system were satisfactory and went with reasonable speed. Obtaining
additional credit from IMF and WB was also remarkably successful. But
privatization efforts were slow due to resistances by politicians with populist
tendencies or with nationalistic doctrines.
Some basic figures will be presented here to give an idea of the magnitude of
the economic crisis faced in February 2001.
1999 had been disappointing with minus 6.1% GNP growth rate, -7.8% per
capita GNP growth rate, and 55.8% inflation rate according to GNP price deflator. In
the year 2000 when inflation rate fell towards 40% in the initial months as opposed to
the 25% targeted inflation rate, the November 2000 crisis, the rises in the exchange
rates raised the GNP price deflator for that year up to 50.9% with a 6.3% GNP
growth rate and a 4.6% per capita GNP growth rate. It hardly compensated the GNP
fall in 1999. The February 2001 crisis had much deeper negative effects. The fall in
GNP in 2001 was 9.5% (a record high) and the fall in GNP per capita was 11%.
Due to rises in foreign exchange and interest rates GNP price deflator for 2001 was
55%. By 2002, however, recovery had began as a result of stricter implementation of
stabilization measures and restructuring efforts. The GNP growth rate was 7.9%, per
capita GNP growth 6.5% and GNP price deflator 44.8%. Developments concerning
balance of payments can be followed from the section on economic performance.
Unemployment understandably remained at seriously low levels during these
first years of recovery, as can be followed from basic figures presented below. Note
that these figures are from Ministry of Finance, yearly reports 2000 to 2003 and they
show slight discrepancy with those from SPO that appear in section 13.3.2).
Years
(1) Employment
(2) Unemployment
(3) Underemployment
(4) (2) + (3)
1998
21.353
1.536
1.409
2.945
1999
21.236
1.689
2.331
4.020
2000
20.579
1.452
1.520
2.972
2001
21.524
1.967
1.405
3.372
2002
21.658
2.689
1.245
3.934
Unemployment was worse in 1999 with the coalition having been formed in
April and started with a close-follow-up agreement with IMF in order to draw a
stand-by in December. The figures show a fall in unemployment and in particular
under-employment in 2000 despite a fall in total civilian employment. This decrease
seems unexplainable. Although recovery had begun following the February 2001
crisis understandably employment had decreased, however slightly, while total
unemployment broadly defined (unemployment plus under-employment) had risen
by about 400 thousand; 2001 had shown a record decrease in GNP growth. Though in
2002 growth had resumed, the yearly rise in employment was only about 130
thousand for the year while total unemployment had risen by about 560 thousand.
The high unemployment rate and the slow rise in employment was to continue for
some more years to come, up until total demand, production, and capacity use in
industry rose enough to justify new investments and employment. The ratio of fixed
195
investments to GNP remained dismal throughout 1998 to 2002. The ratio was 24.0%
in 1998, 21.5% in 1999, 22% in 2000, 18.4% in 2001 and 17.8% in 2002; the
decrease in the ratio was registered both in public and in private fixed investments.
Privatization efforts were also particularly unsatisfactory. It stood at 1.020
thousand US$ in 1999, to go down to 38 US$ in 1999, and up to 2.717 thousand US$
in 2000. But even after the 2001 February crisis and stricter program of restructuring
it stood only at 120 thousand US$ in 2001 and 536 US$ in 2002 (Ministry of
Finance, yearly reports). Time was lost in the restructuring of privatization due to
resistances against it from certain political circles. Restructuring of the banking
system, however, was relatively successful.
All throughout, Turkeys internal and external debt increased appreciably.
External debt stood at 97 billion US$ in 1999, 118.7 billion in 2000, 113,8 billion in
2001 and 131.2 billion US$ in 2002. The figures of internal debt for the years 19982002 (in trillion TL) were respectively 14.5; 25.5; 37.6; and 164.4 in 2001 falling to
141.1 in 2002. These figures are good indicators of the severe burden the February
2001 crisis imposed on the economy. The fault of the crisis, however, lies only partly
with the coalition government, e.g. failure to raise the anchor rate or turn to flexible
exchange rates sooner, and resistances against privatization. Most of the fault, lies, in
fact, his with the previous governments, their lack of financial discipline, failure to
restructure earlier and to discontinue corruption and partisanship.
9.5.4. Turkish-EU Relations; Becoming a Candidate
Member
DSP-MHP-ANAP coalition, DSP a center-left party with some nationalistic
tinge, MHP a radical nationalist party, ANAP a center-right party with a number of
religiously inclined MPs, registered a significant step forward in Turkish-EU
relations and Turkey was made a candidate member in the December 1999 Helsinki
summit. Many substantial political reforms were achieved leading to this stage even
as the coalition government first had to encounter a fatal earthquake, then a serious
economic crisis and had to draw a stand-by agreement with IMF. Economic reforms
undertaken within the terms of the IMF stand-by agreement, however, are completely
compatible with the Copenhagen economic criteria because both aim at a stable and
non-inflationary (operational) market economy. The step forward with the EU is all
the more remarkable when we look back at the Agenda 2000 report of the EU
published in June 16, 1997 and the following December 1997 Luxembourg summit
which had kept Turkey out, as was mentioned earlier, in the sections on REFAHYOL
and ANADOL-D government coalitions.
After the elapse of two years, however, the relations had begun to warm up
particularly starting the summer of 1999. Before, Turkey had played an important
role as a NATO member in the war that broke out in 1998, 1999 in former
Yugoslavia, and the intervention of NATO. Turkish military took their place in the
international NATO forces which entered Kosovo in March 1999; NATOs mission
ended in June 1999. The August 17, 1999 earthquake catastrophe in Turkey, on the
other hand, provided a means for a rapprochement between Turkey and Greece. The
196
center-left government in Greece at the time attempted a change of strategy aimed at

cooperation with Turkey and started a dialog instead of antagonism on all fronts.
They came to the aid of earthquake victims along many other countries and Turkey,
in turn, reciprocated when Greece faced an earthquake. Establishment of friendly
relations was made the more easy because DSP, left-of-center was the major partner
in the coalition. Clinton, then US president, visited Turkey and met the earthquake
victims. Turkish public opinion polls showed at the time that the majority in Turkey
had positive thoughts about the USA, EU prospects, and Greek people. It is also
remarkable that despite the earthquake the Turkish government went on to
successfully organize a meeting in Istanbul of the European Security and Economic
organization on November 18-24, 1999.
All the above positive trends led to the decision to declare Turkey a candidate
member in the EU Helsinki summit in December 1999. Thus the process of writing
progress reports on the part of EU reciprocated by Turkeys National programs was
started, aiming in effect, to start political reforms in Turkey to comply with
Copenhagen political criteria. And, indeed, very definitive and substantial reforms
were undertaken by the coalition government, which should be considered all the
more remarkable in view of the nature of some of the political parties in the coalition,
and the mentality of some of the groups within the parties involved. Some of the
more important reforms are listed below.
Firstly, in compliance with the European Human Rights Court ruling taken in
the spring of 1999, the military member in the State Security Courts (Devlet
Gvenlik Mahkemeleri: DGM) was removed, and thenceforth they all comprised of
civilian members even before Turkey became an EU candidate member.
In October 2001, the coalition government took a significant step to change the
Constitution, about 34 articles in the Constitution were changed to comply with
Copenhagen political criteria and human rights. It was the first attempt to change the
Constitution with this magnitude by entirely civilian initiative. Changes were also
effected in the Turkish Penal Code and the Law on Fighting Terrorism with the same
aim.
On August 3, 2002 the coalition made still a another brave move. It abolished
capital punishment. This had meant that PKK leader Abdullah calan who was being
tried in court would not receive such a sentence; similarly all other terrorists. At the
same time prisons were improved and freed of mafia. In addition, education and
publication in languages other than Turkish was also allowed. This most largely
involved education, publication and broadcasting in Kurdish language. It did not
imply, however, education in Kurdish within the regular educational system and
schools.
A Penitence Law was passed that provided amnesty to those terrorists who
had not killed anyone and who felt penitent and wanted to turn back to normal life.
Many villagers, on the other hand, had fled, deserting their homes in fear of
terrorism. They were encouraged to return. At the same time, private investments
were encouraged by means of incentives to flow to the Eastern and South-Eastern
regions of Turkey.
197
All throughout as Turkey improved relations with the EU and strived to

accomplish reforms to meet Copenhagen political criteria and at the same time to
fight PKK terror, the USA stood by Turkey, supporting Turkeys membership to the
EU. When, on September 11, 2001 the twin towers in New York were hit by El
Kaide (Al Qaeda) bombers, the stance of the Turkish government was fully against
terrorism. In fact, the coalition government had also taken significant steps to fight
Islamic terror at home. It had successfully wiped out Hizbullah organization (a
Muslim terrorist organization but with no relations to its namesake in Lebanon). It
had also strived partly successfully to find out the culprits of the killings of many
left-wing intellectuals including Uur Mumcu, Muammer Aksoy, Bahriye ok who
had been murdered some time ago presumably by religiously motivated organizations
or persons. Another prominent intellectual, Ahmet Taner Klal, had been murdered
on October 11, 1999 when the coalition was in power.
The AKP government which came to power after the 2002 elections also
continued with political reforms and went ahead to obtain a definitive date to start
membership negotiations with the EU. But immediately after, Turkish-EU relations
began to cool critically.
9.5.5. The End of the DSP-MHP-ANAP Coalition
DSP-MHP-ANAP coalition government came to an abrupt end by calling early
general elections on November 1, 2002 instead of the normal 5-year period which
would have ended by April 2004. In the April 18, 1999 elections DSP had come out
as the first party with about 22.2% of the votes, MHP second with 18%, FP (Fazilet
Partisi: Virtue Party of Necmettin Erbakan) 15.4%, ANAP 13.2% and DYP 12%,
with CHP left out for the first time having obtained only 8.7% of the votes. The year
1999 had witnessed a significant setback in GNP, a mini crisis with the anchor
exchange rate in November 2000 followed by a serious economic crisis in February
2001. In 1999 the GNP had fallen by 6.1%, per capita GNP by 7.8%. The rise in
GNP in 2000 of 6.3% and in per capita GNP of 4.6% could not compensate the
losses of 1999. Following, in 2001 GNP had shown a record fall of 9.5% and in per
capita GNP of 11%. 2002 with a GNP growth rate of 7.9 and per capita GNP growth
rate of 6.5% again could not compensate the losses of 2001. Thus, the 2002 per
capita GNP level was far below that of 1998, the year before the coalition came to
power.
In addition, unemployment had risen significantly in 1999 to around 4 million
compared to about 3 million in 1998 and its level stood still at about 4 billion by
2002. This means in simple terms that although the stabilization and restructuring
program under flexible exchange rates implemented since 1999 and 2001 had been
relatively successful and was leading the Turkish economy out of crisis, living levels
were still way down and the masses of people had not yet seen any concrete
improvements in their material well- being. Therefore, the decision of the coalition
government to call early elections was politically most unwise. The blame stands
squarely on all the political actors involved, including Blent Ecevit of DSP, Devlet
Baheli of MHP, Mesut Ylmaz of ANAP, as well as Kemal Dervi, Hsamettin
198
zkan and smail Cem (the latter two from DSP) and also Rahan Ecevit and Tansu
iller as well, as will be referred to later. Whatever political rationalizations each had
to make about his or her decisions and the outcome, none of these rationalizations
can override the simple principle that you cannot win an election if an economic
crisis has erupted during your period of government and the people had not yet
received any concrete results from the stabilization program you have started to
implement. It was a grave political mistake, miscalculation and risk and the
coalition partners - and Turkey - paid dearly for it. They were all wiped off the
parliament in the early elections held in November 2002. The relatively newly
founded Adalet ve Kalknma Partisi (AKP: Justice and Development Party) led by
Tayyip Erdoan, former mayor of Istanbul won by a landslide, obtaining 34.25% of
the votes and 363 seats in the parliament out of 550. The only other party that entered
the parliament was CHP led by Deniz Baykal which obtained 19.4% of the votes and
178 seats (32.4%). The additional 9 seats went to independents with 1.0% of the
votes. DYP with 9.55% of the votes, MHP with 8.34%, ANAP with 5.12% and DSP
with 1.23% were all below the 10% limit, hence could not enter the parliament. Gen
Party (GP: Young Party) led by Cem Uzan, a rich and corrupt businessman's fiery
and outrageously populist son had obtained 7.25% the votes and DEHAP, the
Kurdish party with Kurdish-origin members obtained 6.23%. Since so many parties
had been left out this helped AKP to obtain 65.8% of the seats in the parliament, very
nearly 2/3 of the seats which is enough to change the constitution with only about 1/3
of the votes. Similarly, CHP could obtain about 32.4% of the seats with only 19.4%
of the votes.

DURING 1992-2002
9.6.1. Growth Rates, Inflation and Breakdown of GNP
A recapitulation of the dates and duration of government coalitions would be
helpful in evaluating the performance of the economy during the period 1992 to
2002. As will be recalled, DYP-SHP coalition was formed on November 1991 with
Sleyman Demirel as PM Following zals death Demirel was elected President on
May 16, 1993; Tansu iller was elected chairperson of DYP, hence became PM on
June 14, 1993. DYP coalition with SHP continued but Erdal nn resigned from the
chairmanship of SHP, Murat Karayaln was elected and iller and Karayaln
resumed the DYP-SHP coalition. After CHP and SHP merged under the roof of CHP
and after Deniz Baykal became chairman of CHP DYP-CHP (formerly SHP)
coalition government ended on September 30, 1995. DYP and CHP continued only
briefly as caretaker government for elections, which were held on December 24,
1995. Following the 1995 elections ANAYOL (ANAP-DYP) coalition with Mesut
Ylmaz as PM and iller as aide was short-lived, from March 12, 1995 to June 6,
1995. This was followed by REFAHYOL (RP-DYP) coalition government, on June
199
28, 1995 with Necmettin Erbakan as PM and iller as aide to PM REFAHYOL

coalition ended on June 18, 1997. It was followed by ANASOL-D coalition formed
by ANAP-DSP-DPT backed from outside by CHP, with Mesut Ylmaz as PM
Following the elections held on April 18, 1999, this time a coalition of DSP-MHPANAP was formed with Blent Ecevit as PM, which lasted until early elections held
on November 3, 2002; after which AKP government was formed.
The GNP, population and per capita GNP growth rates along with the inflation
rates (using GNP price deflator) are submitted below in tabular form.
GNP Deflator
GNP
Population Per Capita GNP
Years
(Price Increase) growth rate growth rate
growth rate
1992
63.5%
6.4%
1.9%
4.5%
1993
67.4
8.1
1.9
6.2
1994
107.3
-6.1
1.9
-8.0
1995
87.2
8.0
1.9
6.1
1996
78.0
7.1
1.8
5.3
1997
81.2
8.3
1.8
6.5
1998
75.3
3.9
1.8
2.1
1999
55.8
-6.1
1.7
-7.8
2000
50.9
6.3
1.7
4.6
2001
55.0
-9.5
1.5
-11.0
2002
44.8
7.9
1.4
6.5
The rates are calculated based upon SPO, 1998 Annual program (p.151), 2002 Annual
program p.17, 26) and Ministry of Finance, 2004 Economic Report (p.18).
The figures reveal that the economic performance during the period of
coalitions 1992-2002 was poor, with low growth rate and a very high inflation.
Although in many of the years GNP growth rates seemed high, the period witnessed
three major economic crises and setbacks. The first was in 1994 under DYP-SHP
coalition with iller as PM The second was in 1999 and the third in 2001 both during
DSP-MHP-ANAP coalition with Ecevit as PM
These three setback years bring the average yearly GNP growth rate for 19922002 (11 years) down to 3.0%. With an average population growth rate of 1.8%,
average yearly per capita GNP growth rate is a meager 1.2%. Inflation, on the other
hand, is the highest experienced thus far. With no outstanding negative external
factor, it has sailed up to nearly 70%, hitting an all time high for Turkey of 107.3%
during the 1994 economic crisis, and moving around 75-87% the following years till
1999. It went down to 50-55% since 1999 with signs that it was beginning to be
brought under control in 2002 with around 45%, along with a high growth rate of
7.9%.
The figures above reveal that the 1997-1999 financial crisis that started in
South-Eastern Asian countries did not effect the Turkish economy to any critical
degree. Like the 1994 economic crisis, the 1999 and 2001 crises were in major part
internal, that is, due to economic mismanagement of the budget and the balance of
payments, similar to many Latin American countries.
One may be tempted to separate the years 1992-1998 (7 years) and 1999-2002
(4 years), the latter under DSP-MHP-ANAP coalition. The corresponding yearly
200
averages are: for 1992-1998 yearly GNP growth rate was 4.9% population growth
rate 1.9%, per capita GNP growth rate 3.0%. Inflation ran very high, around an
average of over 70%. For 1999-2002 the yearly GNP growth rate was 0.5%,
population growth rate was 1.5%, per capita GNP growth rate was 2.0%. High
inflation went from 55% in 1999 to 45% by 2002 (a yearly average of little over
50%).
Such a division, however, is not quite justified because, though 1992-1998, in
addition to being lackluster had placed severe economic burdens on 1999-2002.
Therefore, the economic crises encountered during the period 1999-2002 carried the
cumulative effects of economic mismanagement of the earlier years. The economy
was brought under very strict controls and stabilization measures of IMF stand-by
agreement which had reduced the growth rate during the last mentioned period.
Alternately, if we take only the DYP-SHP (CHP) coalition period 1992-1995
(4 years), the average yearly GNP growth rate was 3.8%, population growth rate
1.9%, hence average yearly per capita GNP growth rate was 1.9%, again lackluster
due to the economic crisis; and with highest inflation rates, an average yearly rate of
nearly 82%).
Throughout, per capita GNP moved from $2.657 in 1991 down to $2.619 in
2002 at the current exchange rate for the year. In terms of Purchasing Power Parity
however, it moved from $4.656 in 1991 up to $6.496 in 2002. The GNP and per
capita GNP figures, both in Turkish Liras and converted to US dollars, however, are
under-estimates due to unregistered and undeclared incomes. Hence, they should be
treated as approximations, compared to the more precise GNP estimates in developed
countries.
Although the population growth rate declined steadily along with increased
urbanization and higher incomes, total population rose from a large base of 57.262
thousand in 1991 to 69.388 thousand in 2002 (both mid year). This excludes,
naturally Turks working and living outside, numbering at the time over 3.5 million as
total, of which about 1.2 million were workers. Urban population increased from
59.5% in 1991 to 65.8% in 2002, rural population declining from 40.5% to 34.2% ,
the latter with only a very small increase in the absolute level.
There was only a gradual change in the composition of GNP. In 1991 the share
of agriculture in GDP (in 1987 factor prices) was 16.2%, industry 26.7% and services
57.1%. By 2002 the respective shares were 13.3%, 28.3% and 58.4%.
There was a gradual decrease in the share of agriculture. Although production
level of agriculture and of other sectors are not given here, the absolute level of
agricultural production increased only by 15.7% during the 11 year period. Both
industry and the services sector increased by a limited rate, the former slightly faster
than the latter. In terms of absolute levels, the level of industry increased by 48.9%,
services by 43.8%, both about three times as fast as agriculture. In industry,
manufacturing was predominant compared to mining and quarrying. In services,
high-growth-rate sub-sectors were tourism, transportation and housing (SPO, 2005
Annual program, p.13).
201
9.6.2. Employment and Unemployment

Basic figures concerning employment and unemployment are presented below
in tabular form for the years 1991 and 2002, with 1995 also given as an interim
period.
1991
1995
2002
Total Workforce (WF)
19.967 21.907 23.818
Total Employment (N)
18.421 20.394 21.354
Unemployment (Un-N)
1.547
1.513
2.464
Under-Employment (Under-N)
1.373
1.474
1.297
Un-N Ratio to WF
7.8%
6.9%
10.3%
Under-N Ratio to WF
6.9%
6.7%
5.4%
Total Idle Ratio to WF
14.7% 13.6% 15.7%
The figures, all in thousands, are obtained from SPO, 1994 Annual program (p.171,
172), 1998 Annual program (p.49), 2005 Annual program (p.63).
Total workforce is civilian (male plus female), ages 15 up, total employment is
again civilian. Under-employment covers those who work part- time or at low pay
and seek a higher paid, full-time job. Unemployment and under employment is given
by the SPO not as percent of total employment but as percent of total workforce. In
interpreting the above figures one must be beware, again, of unregistered
employment. Many persons retired are registered as retired and not seeking work but
many, in fact, take work after retirement because retirement age is early; they work
without registration, do not pay social security premiums and get their retirement
salaries as well as remuneration from their unregistered work. Similarly many young
workers in small service sectors, female workers doing various household work in
families are all unregistered. This latter category includes those who come from
Central Asian and Caucasian countries (e.g. Moldavia, Azerbaijan, etc. with tourist
visas but work in households. This should expand total employment (and workforce)
and hence reduce the unemployment rate either as percent of WF or N.
With all these limitations, one can still obtain a general idea of the trends in
employment and unemployment (as one can also obtain a general idea but not
entirely precise figures about national income). The figures show that during the 11
years of coalitions unemployment had risen by about 300 thousand,
underemployment declined by about 100 thousand; total idle workforce (using SPO
definition) increased by about 800 thousand, that is, from 14.7% to 15.7%. No doubt
this was due to the three setback years 1994, 1999 and 2001. Although, employment
figures for these three years are not presented here for the sake of brevity, the
percentage of unemployment and total idle to WF were markedly high in the said
years.
The changes in the sectoral breakdown of employment, again for the years
1991, 1995, 2002 are presented below in tabular form (figures in thousands).
1991
1995
2002
Agriculture
8.714
9.538
7.458
(%)
(47.3%) (46.8%)
(34.9)
202
Industry
2.837
3.111
3.954
(%)
(15.4%) (15.3%) 18.5%)
Services
6.870
7.745
9.942
(%)
(37.3%) (37.9%) (46.6%)
Total
18.421
20.394
21.354
(%)
(100%) (100%) (100%)
The figures show that the share of agriculture in total employment gradually
declined; in absolute numbers there was an increase from 1991 to 1995, but the
absolute figure started to decline with 1996 although figures for 1996 are not shown
here. Percentage wise, it decreased from 47.3% in 1991 to 34.9% in 2002. It still is
very large compared to developed European countries both because of Turkeys stage
of development but also because Turkey has vast cultivable lands. Therefore say,
agricultural employment as 10% of total should not be on the horizon for some
decades. Employment in industry increased, particularly faster in the latter half of the
period, despite two serious crises. Employment in services also increased relatively
faster. Unregistered employment should be present both in industry and, in particular,
in the services sector.
9.6.3. Fixed Investments

Interesting developments took place in the level of fixed investments and the
share of the public versus private sector. Normally after a high level of public fixed
investment going particularly to productive infra-structure during ANAP and zal
period, we would expect the level and the share of public sector in total fixed
investments to decrease. But to this trend was added the negative effects of economic
crises which forced further reductions in the level of public investments and also
negatively affected private sector investments.
The ratio of total fixed investments to GNP (both in current prices) for selected
years that include critical years of economic crises are given in tabular form below,
along with the breakdown of fixed investments into public and private (compiled and
calculated from SPO, annual programs; alternately Ministry of Finance, yearly
economic reports).
Years
1991
1993
1994
1996
1998
1999
2000
2001
2002
(I)
22.6%
25.1
21.0
25.0
24.0
21.5
22.0
18.4
17.8
(II)
46.0%
28.5
23.8
20.4
24.9
26.2
27.0
30.9
29.0
(III)
54%
71.6
76.2
79.6
75.1
73.8
73.0
69.1
71.0
Column (I) shows the ratio of total fixed investments to GNP, Column II the
share of public and Column III the share of private investments in total fixed
203
investments. The ratio of total fixed investments to GNP decreased in 1994, the crisis
year; the decrease was even more pronounced in the latter years of even deeper
economic crisis and austerity measures. The share of public sector investments
decreased markedly during the entire period from around 46% in 1991 down to
around 30%. The share of private investments rose from 54% to around 70%.
The above yearly figures confirm that although part of the decrease in the
share of public investments is explainable as a long term trend, as was noted above,
for most part it was caused by economic crises and austerity measures. The economic
crises must have also depressed the level of private investments as well as the public.
The absolute level of total fixed investments, public and private, indicate the
effects of economic crises more starkly. Taking 1991 as base year (100%) the GNP in
real terms (1998 prices) rose to 137% (37% growth) by 2002 with a setback in 1994
and more pronounced setbacks in 1999 and 2001. Total fixed investments, on the
other hand, rose only to 107.9% (only 7.9% growth) by 2002. Again very pronounced
setbacks were registered in 1994, 1999, 2001 as well as 2002. The absolute level of
public fixed investments showed a precipitous decline as opposed to the 37%
increase in the level of GNP by 2002, the absolute level of public investments in real
terms actually fell down to about 70% (a decrease by 30%). The level of private fixed
investments rose by slightly higher rate than GNP, by 41.6%. There was a setback in
1994 but it was followed by a speedy recovery and the level of private investments
reached 207% (rose by 107% compared to 1991) in 1998. But the economic crises in
the following years caused a significant fall, down to 132.3% in 2001 (an increase of
only 32.3% compared to 1991) and 141.6% in 2002 an (increase of only 41.6%).
These latter figures attest that the crises in the later years had depressed the level of
private investments to much below their potential.
A brief information on the sectoral breakdown of fixed investments is also in
order at this point. In the more recent years of the period studied, the largest share of
fixed investments went to the transportation sector (30% to 25%), followed by
manufacturing (19.4% to 17.6%), housing (16.7% to 18.7%). Agriculture was meager
(4.5% to 4.2%). Both education and health were also meager, education at around
5.2% to 5.5%, health at around 4.2% to 4.7%. The main bulk of public sector
investments went to transportation, around 35% to 27.2% of total public investments;
energy around 15.0% to 16.5%; education 11.8% to 13.9%. Public fixed investments
in manufacturing, tourism, housing and also mining were minuscule; it was the same
case with health. Thus, it was apparent that public fixed investments were
predominantly concentrated on productive infra-structure, such as energy and,
transportation, but those going to health, education and social infra-structure were
very insufficient.
The major bulk of private fixed investments, on the other hand, went to
housing (23.7% to 27.7%), manufacturing (26.7% to 23.3%), and transportation
(26.2% to 21.8%).
In the two of the three largest sectors, the share of private sector is dominant;
in housing it is around 98.5%, in manufacturing around 91.5% to 95.5%. In
transportation, the third largest sector, it is again 63% to 65%. In tourism with a small
204
share of total fixed investments, private sector is again predominant with about
96.5%. In mining, though minuscule, the share of private is again 69 to 59%. In
agriculture, education, health and other (social services), all with relatively a small
share of fixed investments, the share of public sector is more than half, and private
sector less than half. In agriculture the share of private sector was around 41% to
34%, education 30.5% to 26.5% other (social services) 35% to 39%. In health,
however, a trend had begun to set in. The share of private sector rose from 32.4% to
64.4%.
9.6.4. Developments in Turkeys Balance of Payments
Turkeys exports, imports, trade balance and current account balance for the
years 1991 till 2002 are submitted below in tabular form. (from SPO, yearly
programs; Ministry of Finance, yearly economic reports and TK, Statistical
Indicators, 1923-2005).
(in billion US$)
1
Exports
Imports
Trade
Current Account
Years
(fob)
(cif)
Balance
Balance
1991
$13.6
$21.0
-$7.5
+$0.3
1992
14.7
22.9
-8.2
-$1.0
1993
15.3
29.4
-14.1
-6.4
1994
18.1
23.3
-5.2
+2.6
1995
21.6
35.7
-14.1
-2.3
1996
23.2
43.6
-20.4
-2.4
1997
26.3
48.6
-22.3
-2.6
1998
27.0
45.9
-18.9
+2.0
1999
26.6
40.7
-14.1
-1.4
2000
27.8
54.5
-26.7
-9.8
2001
31.3
41.4
-10.1
+3.8
2002
36.1
51.6
-15.5
-1.5
1)
Suitcase exports included since 1996. suitcase exports refer to sales mostly
in foreign currency to so-called tourists from Balkan, Central Asian and other nearby ex-communist countries who come to Turkey concerned chiefly with buying
textiles and other consumer goods from retailers.
The above figures show that exports during the period 1992-2002 rose much
faster than imports. Trade balance was always a relatively large deficit, offset in large
part by net foreign exchange earnings from tourism, remittances of workers abroad,
and others. By 2002 Turkeys tourism income was 8.5 billion, tourism expenditures,
1.9 billion, net tourism income 6.6 billion US dollars. Workers remittances were 1.9
billion dollars.
The fall in imports and in trade balance leading to a positive current account
balance in 1994 is caused by forced restrictions on imports due to balance of
payments crisis. Very similar changes had occurred in 1999 and 2001.
Country distribution of Turkeys foreign trade displayed a very large share of
EU. In 1991 the share of EU in Turkeys exports was about 7 billion US dollars out
of a total of 13.6 billion dollars or 51.5%. Turkeys imports from EU were 8.7 billion
205
dollars out of a total of 21 billion dollars or 41.3%, giving a total trade deficit of 7.4
billion of which 1.7 belonged to the EU. In contrast, the share of Islamic countries
(those in the Middle East, including Iran, and in North Africa) in Turkeys total
exports was 20.1%, in Turkeys total imports it was 17.3%, giving a trade deficit of
about 0.9 billion dollars.
In the year 1999, chosen here because it was the year Turkey was accepted as
candidate member to the EU, in Turkeys total exports of 26.6 billion US dollars the
share of EU was 14.4 billion dollars, or 51.1%. Of this, Germany alone comprised
about 5.5 billion dollars or 20.6% of total exports. In Turkeys total imports of 40.7
billion dollars the share of EU was 28.3 billion dollars, or 52.7%. Of this, Germany
alone comprised 5.9 billion dollars, or 14.5%. Turkeys trade deficit with EU was
13.9 billion dollars, that with Germany was around 0.4 billion dollars because most
of Turkeys exports to the EU went to Germany.
The share of Islamic countries in Turkeys exports was 3.5 billion dollars or
13.3%; in Turkeys imports it was 3.4 billion dollars or 8.3%; giving a minuscule
trade surplus of 0.1 billion dollars.
Over the years Turkeys trade with EU, both imports and exports had
increased as Turkeys overall trade also expanded. The increase in imports was
particularly considerable, creating a large trade deficit with the EU within Turkeys
total trade deficit. This increase should display a certain amount of trade-diverting as
well as some trade-creating effects for imports since Turkey entered into customs
union with the EU since 1996 and started to reduce its customs taxes for EU imports
to zero, within 3-5 or 7 years periods. Turkeys exports to the EU, on the other hand,
already enjoyed zero customs taxes since 1971 and no quotas, the latter except for
such limited number of special cases including machine made carpets, some
petroleum products, and for a limited number of special cases such as textiles. There
were also some institutional factors such as encouragement of investment goods
imports for a limited period which must have raised imports, particularly from the
EU. Many observers, noticing the significant rise in Turkeys imports and trade
deficit with the EU severely criticized Turkeys entry to the customs union with EU
and argued that the customs union was the major culprit in Turkeys expanding trade
deficit with the EU, hence the total deficit. But, as mentioned earlier, the main reason
for Turkeys increasing trade deficit, a faster rise of imports compared to exports lied
with wrong foreign exchange rate policies, and with economic mismanagement in
general. Once these policies led to faster rises in imports compared to exports, it was
only natural that the trade deficit particularly with the EU would swell. The ensuring
economic crisis, stand-by agreement with the IMF, reforms and austerity program
implemented thereafter, and improvements in the economy on all counts following
the implementation of stand-by should be interpreted as palpable truth that the real
fault lied not with customs union but with economic mismanagement, including overvalued currency (under-valued foreign exchange). The argument against the customs
union also overlooked the fact that most of Turkeys current account foreign
exchange flow, including tourism, remittances of workers, and foreign private capital
206
all came from the EU. It further ignored the fact that the ECs dismantling of customs
taxes on Turkeys industrial imports in 1971 had to be reciprocated some time.
There are three main points of interest concerning Turkeys trade with Islamic
countries. The first is that over time it continued to diminish; this trend excludes
those future years during which petroleum prices rose. Secondly, over time Turkeys
exports to Islamic countries, particularly manufacturing goods as well as agricultural,
increased, thus erasing the trade deficit. This again excludes future years of embargo
on Iraq following the Gulf operation and the later invasion of Iraq. The third is that
trade with Germany alone was larger than a total of Islamic countries which were
Turkeys main source of petroleum and natural gas.
Turkeys imports from and exports to Turkic countries were also a minuscule:
0.6 billion dollars of exports and 0.5 billion dollars of imports while those with
Russia and independents (other than Turkic) were much larger, with exports
amounting to 1.5 billion and imports to 3.7 billion dollars, the latter including import
of natural gas.
In the sectoral breakdown of Turkeys exports in 1999, manufacturing was
predominant by far. Agriculture comprised 2.4 billion dollars (9.1%), mining and
quarrying 0.4 billion dollars (1.5%), manufacturing was 23.8 billion dollars (88.1%)
with a minuscule of others. Of manufacturing, about 12 billion dollars (45.1%) was
agriculture-based manufacturing, such as food and beverages, tobacco, textiles,
confectionery, leather and leather wear, wood-made products, paper and paper
products.
In imports, in 1999 the share of agriculture, forestry, fishing was 1.7 billion
dollars (4.1%); mining and quarrying (mostly petroleum and natural gas), was 4.3
billion (10.5%); manufacturing was 34.7 billion dollars (85.2%), and a minuscule of
others.
Again of imports in 1999, 8.7 billion dollars (21.5%) was capital goods, 26.6
billion dollars (65.3%) was intermediary goods and 5.1 billion dollars (12.4%) was
consumer goods, and a minuscule of others. This shows that Turkish economy,
including exports are heavily dependent on imported intermediary goods and
investment goods. A balance of payments crisis would paralyze the entire economy,
including exporting sectors. All the more reason why sound economic management is
of utmost importance, but hardly encountered, and why an immediate recourse to
IMF and a stand-by agreement is unavoidable if an economic crisis erupts, which
erupts at the balance of payments level, with mismanagement in all aspects of the
economy leading to a balance of payments crisis.
REFERENCES
207
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February 1981.
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(An Unconventional Analysis of the Increase in National Income of Turkey),
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1994.
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Sciences Foundation, Istanbul Branch) Avrupa Topluluuyla Gmrk Birlii
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Uyumlama Sorunu (European Single Market and Harmonization of the
Turkish Banking Sector), Ankara University Press, Ankara, 1990.
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Eskiehir, 1994.
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(Public Economic Enterprises and Privatization in Turkey) Esbank, stanbul,
1994.
KAYNAK, Mahir, Gncel Derin Analizler (Deep Analysis of Daily News),

Ekim Yaynlar, 2007.
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Yaynlar, Saim Toraman Matbaas, Ankara, 1984.
KRAMER, Heinz, A Changing Turkey: The Challenge to Europe and the

United States, Brookings Institution Press, Washington D.C., 2000.
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Turkish Trade Reform in the 1980s, International Center for Economic
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of Turkey, 1923 zmir), Ankara, 1968.
PARASIZ, lker, Trkiye Ekonomisi, 1923den Gnmze: ktisat ve

stikrar Politikalar. (Turkish Economy, from 1923 to Present: Economic and
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Growth Within Stability), Banka ve Ekonomik Yorumlar (Banking and
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Openness Work, Overseas Development Council, Washington, D.C., 1999.
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(Turkish Economic Society), Ankara, 1978.
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Economy: Sectoral Analysis), Trkiye Ekonomi Kurumu (Turkish Economic
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Policies, Stiftung Wissenschaft und Politik, Ebenhausen, May, 1989.

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TURKISH

ECONOMY AND POLITICS

Prof. Dr. Mkerrem Hi

Published by Beykent University Press

All rights reserved.

TURKISH ECONOMY AND POLITICS:

My experience in teaching Turkish economy courses at stanbul University,

Turning once more on the sub-divisions which follows different government

1.1. PERIOD OF LIBERAL ECONOMIC

TURKISH ECONOMY AND POLITICS

TURKISH ECONOMY AND POLITICS

1.2. THE GREAT DEPRESSION OF 1929 AND

TURKISH ECONOMY AND POLITICS

1.2.2. Developments in Turkey: Atatrks Choice of tatist

TURKISH ECONOMY AND POLITICS

government in all economic activities, both as public investments and production,

The government would not conduct production activities in the agricultural

1.3. PERFORMANCE OF THE ECONOMY

TURKISH ECONOMY AND POLITICS

2.1. NNS STANCE IN WORLD WAR II

TURKISH ECONOMY AND POLITICS

2.2. NNS ECONOMIC REGIME AND WAR

TURKISH ECONOMY AND POLITICS

2.3. PERFORMANCE OF THE ECONOMY

2.4. ENTRY INTO MULTI-PARTY SYSTEM OF

TURKISH ECONOMY AND POLITICS

TURKISH ECONOMY AND POLITICS

3.1. ECONOMIC REGIME AND DEVELOPMENT

TURKISH ECONOMY AND POLITICS

DEMOCRAT PARTY PERIOD: 1950-1960

TURKISH ECONOMY AND POLITICS

countries. Therefore, public investments were channeled only to social and

DEMOCRAT PARTY PERIOD: 1950-1960

TURKISH ECONOMY AND POLITICS

DEMOCRAT PARTY PERIOD: 1950-1960

3.2. MAJOR INTERNATIONAL POLITICAL

TURKISH ECONOMY AND POLITICS

3.3. PERFORMANCE OF THE ECONOMY

Per capita GNP

DEMOCRAT PARTY PERIOD: 1950-1960

TURKISH ECONOMY AND POLITICS

3.4. A SOCIO-POLITICAL EVALUATION OF

DEMOCRAT PARTY PERIOD: 1950-1960

TURKISH ECONOMY AND POLITICS

DEMOCRAT PARTY PERIOD: 1950-1960

TURKISH ECONOMY AND POLITICS

4.1. POLITICAL REPRESSION OF THE DP

TURKISH ECONOMY AND POLITICS

It is interesting that political repressions started especially after DP won a

MILITARY INTERVENTION PERIOD: 1960-1961

TURKISH ECONOMY AND POLITICS

4.2. THE NEW CONSTITUTION, POLITICAL

MILITARY INTERVENTION PERIOD: 1960-1961

TURKISH ECONOMY AND POLITICS

MILITARY INTERVENTION PERIOD: 1960-1961

4.2.2. Changes in the Economic Regime: Mixed Economy

TURKISH ECONOMY AND POLITICS

4.3. PERFORMANCE OF THE ECONOMY

5.1. COALITIONS, MINORITY GOVERNMENT

TURKISH ECONOMY AND POLITICS

AFTER THE MILITARY INTERVENTION:

TURKISH ECONOMY AND POLITICS

In international political relations two important developments took place. One

5.2. POLITICAL DEVELOPMENTS DURING