Geo-Economic Challenges Faced by Türkiye – İnan Rüma

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The Turkish Ministry of Foreign Affairs has
self-confidently and proudly announced under the impressive title “Türkiye’s
Enterprising And Humanitarian Foreign Policy” that “Turkish Foreign Policy aims
to protect Türkiye’s interests in a volatile regional and global environment
while also shaping conditions for sustainable peace and development in our
neighborhood and beyond”. A critical analysis of what Türkiye’s interests have
been and could be is worthy, particularly on global political economy.   

The World Economic Forum listed ten points to know
about the global economy on 13 October 2022, with reference to geo-economics.
Among others, they revealed that they would prefer more globalization. The
first on the list was to hopefully protect the most vulnerable in the new
economic reality, with the striking title “cost of living bites”. The rest was;
rising global interest rates, recession, foreign currency reserves, central
bank digital currencies, gig economy, measures of growth other than bad old
GDP, debt default, yield curve, and bearish market. Each of them can be
analyzed as a geo-economic challenge indeed.  

In the same manner, a group of writers, including the
Managing Director of the IMF Kristalina Georgieva, published in the IMF blog a
concern and roadmap to “Resist Geoeconomic Fragmentation”, with a clear and
robust argument: “Only international cooperation can address urgent global
issues such as fixing shortages of food and other products, eliminating
barriers to growth, and saving our climate.” Each of these is also a
geo-economic challenge.  

It seems productive to outline some definitions of
geo-economy through the elements to guide this analysis on challenges and
policies. As early as 1990, it was noted that geo-economics has always been an
essential aspect of international life, and its importance relative to
geopolitics was discussed. A mainstream understanding poses it “as the
interplay of international economics, geopolitics, and strategy”. Similarly, it
is said to be about the geostrategic use of economic power, such as the
economic instruments of foreign policy. There is an implicit or explicit
tendency in the mainstream to regard geo-economy as a state-centric or economic
nationalist alternative to the liberal economy. An example has been thereby
presented as the Belt and Road Initiative as an “ambitious Chinese geo-economic
strategy” combining economic factors with geopolitical ambitions. Accordingly,
the Chinese (single-party regime) elite has been motivated by geopolitical and
geo-security concerns to use the geo-economics approach. Within this rather
state-centric (and still self-condemning to geopolitical) approaches, a
suggestion in the example of Germany is to maintain the international
production chain necessary to the German export economy and the security of the
supply of raw materials as a defense strategy of a geo-economic
power.  

A critical perspective, preferably rather global than
the state-centric mainstream, defined geo-economics through “economic remaking
of territory, and to the market imperatives and cross-border geographical
imaginations of contemporary globalization in particular”. Within this
framework, some elements apt to a critical understanding can also be cited in
the mainstream approaches, such as the correlation between economic development
and security objectives and the argument that geo-economics is to provide the
best possible employment for the most significant proportion of the population.
We can now discuss Turkish foreign policy within this framework.  

The peace and development that Turkish foreign policy
has officially aspired to shape in its neighborhood and beyond are bound to
geo-economy. The salient question is what the Turkish approach is. One can
observe it, for instance, through the Turkish Ministry of Trade’s presentation
of the economic outlook as of 10 October 2022: Increasing exports in terms of
volume, markets, and value-added. Türkiye’s average export distance remains
below the world average since about two-thirds of Türkiye’s exports are to
geographically closer countries; leading export partners in the top 5 are
Germany, USA, Britain, Italy, and Iraq in 2021 (Russia was added in 2022, most
probably due to sanctions it was imposed); insistent invitation to high
value-added innovation and technology-focused investments; all these are
manifest to balance the current account deficit that the country has
desperately suffered from. All in all, the elephant in the room is clear to
many; increasing deficiencies of Turkish state capacity prevents effective
policy-making from institutionalizing the developmental mentality, such as in
the research and development sector that is so ardently desired. After all, it
is concluded that there can be no successful geo-economic action without
determined industrialists and effective bureaucracy.  

Turkish capital has been on the same page: They want
to increase exports through diversification, particularly by increasing the
volume with Asia, in addition to and for decreasing the dependence on the
European market. That is also to reduce the capital deficit and provide its
in-flow. For example, the Regional Comprehensive Economic Partnership countries
of Asia-Pacific constitute 18% of Turkish imports and only 4 % of its exports.
Moreover, Turkish capital conceives that problems/dynamics of the global
economy can be constructive for the Turkish economy to become a hub of
production due to proximity to Europe, geopolitical position, better industry
than counterparts around, robust banking system, etc. They indeed underline the
critical reforms of the glorious and happy liberal days in the 2000s with the
clear data that the Turkish economy has risen from 0,6% of the world economy in
2002 to %1,2 in 2013 while retreating to 0,8% recently. One geo-economic
challenge to be noted here, which has been underestimated, is that the Chinese
Belt and Road Initiative is likely to threaten Turkish exports in the European
markets by decreasing the advantage of proximity and continuity.  

Considering labor’s position to Turkish political
economy and geo-economy, it was observed that some have consistently and
insistently defended the nation-state for a welfare regime against the
neo-liberal political economy and that -controversially enough- the European
Union seemed plausible in this respect. Turkish capital wants profit
maximization through increasing the volume and diversity of exports, while
Turkish labor wants social security at home, similar to European
standards.  

To observe thus the overall approaches in society, a
study earlier to the recent wave of nationalism has exposed that the Turkish
public has generally been optimistic about the gradual opening of the Turkish
economy on the grounds of the growing availability of foreign products,
including culture and travel opportunities, certainly depending on education
and income levels, gender, and economic self-interest. Turkish society has not
been any less fragmented than many others, and political-economic standpoint
and thus approach towards geo-economy succumbs to social class, identity, and
personal preferences. Considering that the Turkish mainstream and middle class
have been seriously eroded, the question remains as to whom the foreign policy
has become more burning.  

Ümit Boyner has put forward the crux of the matter,
the then chairperson of the Turkish Industry and Business Association at the
beginning of 2010s: how shall Türkiye continue its reform process and take
place in global economic architecture; become like a bigger Finland with more
investments to education, innovation, and research and development [and
palpably, social security in the democratic rule of law], or like a more
diminutive -centralist and authoritarian- China with a political economy of
lower living standards, particularly on human capital, product diversification,
and regional development? Recent years could not deliver well on these. The
result has been an oscillation of Turkish foreign policy between the West (read
USA and EU since the world is round) and Russia-China, which ended up with the
worst of two worlds. 

All this posed some observations and suggestions that
can be simply cited. First, the Turkish economic and political elite wants to
continue export-led economic growth and decrease the exhausting current account
balance problem that was only aggravated by this economic growth in the recent
decade. This continuation requires the diversification of both exports and
markets. Therefore, a domestic environment conducive to the improvement of
human resources and the (foreign) investment in high technology is
indispensable. Both certainly require a democratic rule of law. In the
international environment, regionalism in Turkish foreign policy must be
substantiated. This seems more plausible with a peaceful discourse than
ostensibly aggressive ones: cooperation, not conflict, in the international
mainstream words. To respond to the challenges mentioned regarding World
Economic Forum above, improvement of human resources and investment in high
technology within the democratic rule of law and peaceful regionalism seem
crucial.  

Second, principles are needed instead of transactions,
no matter international or regional cooperation. Transactional foreign policy
may seem impressive as short-term gains, particularly for politicians
self-fascinated by them, yet fail to deliver structural improvements such as
diversifying exports and markets and decreasing the current account deficit.
Investment is needed rather than profiteering. Foreign policy, as well as life
itself, is a matter of principles, not transactional gains. This means
multilateralism instead of controversial combinations of bilateralism. There is
no realistic alternative to the high continuous and precious European market in
the Turkish export destination structure. Hence, Türkiye must always have a
fruitful place in European cooperation and even integration, whatever the form
is for this contentious latter. One can say that Europe has no better
candidates for Turkish exports in its market.  

Third, the “cost of living bites” as even the World
Economic Forum elite is compelled to state, and Turkish labor seems not any
different than others in succumbing to nation-state for the search of social
security. Suppose nationalism is an obstacle to international cooperation. In
that case, as the IMF elite desired to stress, even threatening the very elite
instrumentalizing it, social security must also be a priority of world
political and foreign policy. In other words, the well-being of the laboring masses
must be aimed at instead of mere economic growth, as the International Labor
Organization clearly and firmly put forward a century ago: “universal and
lasting peace can be accomplished only if it is based on social
justice.”  

Ecological problems ranging from food shortages to
climate can be added as a fourth related observation, encouraging the
suggestion of investment in sustainability such as renewable energy and clean
agriculture and industry, also to provide “sustainable peace and development in
our neighborhood and beyond” in foreign policy. Moreover, the European Green
Deal to diminish the ecological problems has become a challenge to Turkish
exports because the industry has not been ecologically improved. However, some
parts of the Turkish capital have started.  

inally, the Turkish political elite’s much beloved
national interest seems like the maintenance of the nationalist state. It would
seem better to maintain the well-being of Turkish society coupled with a
peaceful and multilateral foreign policy. If “Enterprising Foreign Policy” is
for export markets, “Humanitarian Foreign Policy” should start at home. “Peace
at home, peace abroad”, which has been the official motto of Turkish foreign
policy since it was put forward by the founding President of the Republic,
Mustafa Kemal Atatürk, in the Interwar Years, and which is gradually but
increasingly restored following the oscillations of 2010s, is urgently needed
both at home and abroad. This time in more substantial and thus credible ways.  

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To cite this work: Inan Rüma, ” Geo-Economic Challenges Faced by Türkiye”, Panorama, Online, 20 December 2022, https://www.uikpanorama.com/blog/2022/12/20/ir/

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