[stop-imf] Resenting austerity, Turks want no new IMF deal

[robert weissman]

Press Release: IMF Executive Board Completes Seventh and Final Review
Under the Stand-By Arrangement for Turkey and Approves US$3.65 Billion
Disbursement
http://www.imf.org/external/np/sec/pr/2008/pr08106.htm

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Resenting austerity, Turks want no new IMF deal
Thu May 8, 2008 9:38pm EDT

By Hatice Aydogdu and Selcuk Gokoluk

ANKARA (Reuters) - Consensus is rare in Turkey, but no one seems to like
the IMF.

With the country due to end its loan agreement with the International
Monetary Fund on Saturday, a view is building that after 19 standby
agreements since 1961, it is time Turkey cut the ties and stood on its
own economic feet.

"The IMF forced Turkey to sell its profit-making banks. Soon there will
be nothing to sell. What will we leave to our children?" said Mustafa
Koc, 47, standing in front of dozens of Turkish flags which he sells in
Ankara's central Kizilay area.

Students, trade unionists, civil servants and even businessmen are
asserting that the fund's programmes have never been a real help, and
with inflation in single digits and growth averaging 6.8 percent in the
last five years, they say Turkey no longer needs the IMF's rigors and
disciplines.

"Turkey must go its separate way with the IMF and must certainly say
'no' to a new IMF deal," Ankara Chamber of Commerce Chairman Sinan Aygun
told Reuters.

"Turkey needs to implement a programme which suits its conditions and
serves its own interests. There are no countries which became rich
implementing the IMF's economic programmes. They are all in poverty."

That view may be inaccurate -- the IMF has lent Turkey far more than its
quota and rescued the country from crisis -- but it is growing at a time
when the Fund, like some other post-war global institutions, faces broad
challenges.

The institution which has handed out billions of dollars to rescue
developing nations from economic peril has long grappled with its
changing role, as financial crises have declined and fewer countries
have turned to it.

New powers including China, India and the Gulf states offer money
without belt-tightening "Conditionalities", an alternative to years of
austerity. And now Turks feel wealthier, they associate the IMF with
problems more readily than solutions.

THE PINCH

Working-class people in Turkey blame the IMF for high unemployment and
depressed purchasing power, while businessmen complain about its tight
monetary policies that they say led to the lira being overvalued and
hurt their competitiveness.

"The IMF has damaged Turkey more than it benefited it in the last two
years. Its policies hurt our competitiveness and forced us to pay high
interest," said Omer Bolat, a senior member of business forum MUSIAD,
which has close links with the government.

Even some who accept the Fund helped Turkey in improving its public
finances during a 2001 financial crisis say the government should now
stop following prescriptions from the IMF, which has lent Turkey $45.8
billion since 2000. The trade unionists agree.

"The IMF has implemented programmes in several countries and it failed
in all of them. Turkey is one of these countries," said Mustafa Kumlu,
the head of the country's biggest labor group Turk-Is.

Even Economy Minister Mehmet Simsek said in March Turkey no longer
needed IMF borrowing and would opt for either a precautionary standby
with access to IMF cash, or a weaker post-programme monitoring deal with
no lending facility.

If Turks seem ungrateful, their thinking is to some extent in line with
traditional IMF client countries such as Latin American and Asian
economies, which borrowed heavily from the IMF in the past and now have
strong public finances.

Brazil, for example, achieved an investment-grade credit rating at the
beginning of this month after pursuing IMF policies first and then its
own economic programme later.

SPECIAL CASE

But some economists argue that Turkey is in a different position, and
still needs the IMF's help.

Where others have cash surpluses which make a domestic balance of
payments crisis less likely, Turkey has a large and growing external
deficit. It is also less stable politically -- its ruling, pro-business
AK Party is fighting a threat of closure -- and its ties with the
European Union, which Ankara hopes to join, are weaker than a few years ago.

Add to this the prospect of a weaker global economy -- Turkey's economic
growth last year dipped to 4.5 percent -- and tighter real terms for
credit all round, and Turkey may yet need the extra support the fund
offers, those economists say.

"The IMF is still relevant, especially in a world where the credit
crunch is back and some emerging markets such as Turkey may no longer
benefit from excessive liquidity," said Omer Taspinar, a Turkey expert
at the Washington-based Brookings Institute.

Kizilay -- the district in the heart of Ankara where flag-seller Koc was
lamenting the sale of Turkish assets -- is in its way emblematic of
sustained hardships that the IMF's inflation-beating approach has failed
to rectify.

A district with just luxury stores a few years ago, it is now filled
with discount stores or cheap pastry shops where customers grab a
filling bite to eat.

The upper classes have largely migrated to new out-of-town shopping malls.

"It takes more and more time to convince people to buy cosmetics," said
Asuman Karaarslan, 28, a sales clerk. "People are reluctant to spend
money as they pay housing or car installments."

As for the Fund itself, an official declined comment -- beyond saying it
is not the IMF's job to please everyone.

(Editing by Sara Ledwith)