NY Times, February 27, 2001

Turkey's Precarious Success

By ROBERT D. KAPLAN

STOCKBRIDGE, Mass. — Late last week in Turkey, the stock market declined by 18 percent and the lira lost a third of its value. Interest rates have soared to several thousand percent, and inflation is around 30 percent. What reportedly scared away investors was a publicized argument between President Ahmet Necdet Sezer and Prime Minister Bulent Ecevit, whom the president had accused of being too lenient toward corrupt politicians. But that was merely the beginning of the crisis, not its underlying cause.

The cause was the very fragility of Turkey's recent economic reforms and the boomlet they had created, sending market indexes up from 5,000 to nearly 20,000 points in 1999 and early 2000. Turkey is building modern democratic and financial institutions that provide stability, but building such institutions can be destabilizing in its own right. Turkey's problems are those of success, but that does not make its problems any less dangerous to American interests.

Turkey, along with Brazil, perhaps, is now the world's foremost example of a state whose institutions are struggling to keep up with modernization. The government bureaucracy remains mired in Ottoman lethargy. Some banks, burdened by foreign-currency debts and murky dealings, are close to collapse. Tax revenues are insufficiently distributed to the provinces where they are needed.

Meanwhile, the dramatic liberalization of the Turkish economy begun in 1983 by Turgut Ozal, the late prime minister, has created a vast new population of urban middle-class Turks, who are pressing for better public services.

Stability has so far been maintained by the National Security Council, a mixed regime of military officers and civilian ministers. For decades, this council has prevented Turkey from slipping into the anarchy of new democracies like Indonesia or the stifling autocracy of many nearby Arab states. Nevertheless, that stability has come at an increasing cost, especially as Turkey's society and class structure have become more complex.

The problem is this, simply put: No one in the system is accountable. Turkey's needs for responsive, transparent banking and taxation systems have grown. But who would establish them?

The military has no logical role, and anyway, avoids political responsibility for many problems.

But the politicians also avoid responsibility. They know that in a crisis the military will bail them out through subtle interventions that Turks have come to call "soft, post-modern coups." Such ultimate reliance on the military is what keeps Turkish politics immature, as evinced by the kind of temper tantrums thrown by the president and prime minister last week.

Another reason that both violence and political breakdown have been avoided in Turkey is the very corruption that is partly responsible for the current crisis in the first place. As Samuel P. Huntington explains in his 1968 classic, "Political Order in Changing Societies," high levels of corruption are endemic to societies undergoing the stress of rapid modernization. Corruption greases the wheels of creaky, unresponsive bureaucracies, creates informal networks of power so that things get done when they otherwise wouldn't, and allows people to purchase power in third world systems that they would otherwise violently revolt against.

Turkey, however, is at the point where such corruption has outlived its usefulness and threatens an Asian- style financial meltdown. Any meltdown in Turkey, however, would be far more serious than an economic meltdown in, say, Indonesia. That's because a Turkish economic disaster would have geopolitical consequences for the United States far more severe than the various economic crises that have affected East Asia in recent years.

Turkey is the political organizing principle of the greater Middle East. It controls the headwaters of the Tigris and Euphrates Rivers that supply Syria and Iraq, and it is the economic lifeline for new democracies in the Caucasus. Any weakening of Turkey's borders would open up the entire nest of questions — dormant since the end of World War I — regarding the real frontiers of Syria, Iraq and other countries, all of which were artificially created in postwar peace agreements.

Indeed, the Turkish military has been a fundamental element in the Middle East balance of power. For instance, a new Turkish-Israeli military alliance helped pressure Syria into peace negotiations with Israel in the late 1990's.

A strong, stable Turkish government would be even more needed if Saddam Hussein were to fall. Without Mr. Hussein, Iraq would have few ways to damp down divisive tribal and sectarian conflict, and the country could fall into civil strife. In that event, a stable Turkey would be necessary to safeguard Iraq's northern border with the Kurds.

Turkey, in other words, is not a country like Thailand, where an economic crisis has only financial repercussions for the United States. Turkey is more in the category of an Israel or Mexico: a place whose strategic importance is too great to allow the White House to trust the International Monetary Fund and other international bodies with the cleanup operation.

The Reagan administration did not leave Israel, when it was ridden with inflation, to its own devices; the United States intervened to restructure the Israeli economy. The Clinton administration took aggressive action, at significant political cost, to bail out Mexico.

Both policies were successes. The Bush administration has stated its reluctance to prop up countries in economic turmoil. But in the case of Turkey, it may find it has no choice but to directly chaperone the Turkish political system toward further modernization, so that the current financial crisis does not expand into a geopolitical one. In short, the Bush administration should see the Turkish financial crisis less as a financial crisis than as a political and strategic one.

Robert D. Kaplan, a senior fellow at the New America Foundation, is author of "Eastward to Tartary: Travels in the Balkans, the Middle East, and the Caucasus."