Egypt and Turkey

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Last updated: April 3, 2019

This paper will undertake a developmental study of two Arab countries, both historically abundant in political and economic turmoil and major upheavals in economic development strategies. Egypt’s and Turkey’s developmental experience was chosen to be compared in this paper as the histories of these two countries exhibit a remarkable coincidence of their major turning points. Namely they both gained independence in 1923, their present political systems were initiated around 1950s after fundamental political changes. Moreover, they have historically been of similar policies and comparative levels of development.

They both suffered from political turmoil, Islamist resistance, war, military regime, and external manipulation. They both swung changing fronts from pro Arab cooperation to externally, pre western or eastern, oriented policies. This study in order to identify developmental changes will disaggregate the society rather than analyse it as a whole. Moreover, development will be analysed from many angles.

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Namely, apart from the study of GDP growth in different political periods, distribution of wealth, exports, health and literacy rates will be traced.Other phenomena accompanying development like land reform, enclosure, urbanization, resistance will be observed. The analysis of similarities and differences of Egypt and Turkey’s developmental experience will be explained with special reference to the main theories of development- modernization, structuralism and dependency. The study will analyse Egypt and Turkey’s development in the light of two major contesting developmental periods- Import Substitution Industrialization strategies and following them export promoting, liberalising policies.Therefore the period under examination begins in the 60’s.

In May 1960 a military coup brought a new regime in Turkey, which would last for the next two decades. It advocated democratic institutions, reforms for universities, freedom to organize political and other associations. The regime was statist, namely the state managed the economy and the state’s main function was the redistribution of wealth. The main idea of the new regime was the centrally planned economy – ISI program.

The growth record was impressive under the first two five-year plans (1963-1967 and 1968-1972). During this period industry’s share in GDP rose from 16. 2% to 22. 6%. Public investment and public consumption grew rapidly. The emphasis on heavy, capital-intensive industry increased.

1This growth was in part a consequence of Turkey’s associate membership of the European Economic Community, which allowed Turkish workers to immigrate to Western Europe, where they were welcomed at the bottom level of the workforce.The remittances of these workers became important to the Turkish balance of trade. Turkey moved in its dependence from Washington to Bonn. 2 As a result of ISI and Turkey’s entering an association with EEC, although it made the richer and bigger enterprise better off, Western goods have swamped Turkish market causing immense distress to small producers, artisans and businessmen. The marginalization and disappearance of small owners and producers, who became the victims of large-scale, and in some cases trans-national capital, was apparent. The Turkish lira was devalued by 66% in 1970 but without any stabilisation programme. 4 In 1970 and 1971 political and social unrest amplified and erupted in violence. The military intervened on 12 March 1971, forcing Prime Minister Demirel to resign.

The casualties of the 1960’s GDP growth, namely victims of development, were often recruits to the Islamic resistance organisations. From the late 1960’s struggles between the militant and secular left and the increasing powerful Islamist right produced spiralling urban violence.Moreover, the 1960s witnessed the renaissance of Kurdish nationalism, which was to remain an undiminished problem for the rest of the century. State terror was used systematically. Resisting groups found now their base in the right wing and Islamist National Salvation Party, they overthrew Demirel accusing him of selling out Turkey.

They attempted to offer protection against large foreign capital, through state-financed projects and weakening of relations with the EEC. 5The new Prime Minister Bulent Ecevit took Turkey back into the Middle East by increasing co- operation with regional regimes. Turkey recognised the Palestine Liberation army and sided with the Arabs in the 1973 Arab Israeli war. Ecevit’s ordering of Turkish troops into northern Cyprus in 1974, ostensibly to protect the Turkish minority there from chauvinist elements within the Greek- Cypriot majority, made EEC boycott Turkey. Turkey’s unemployment rose (by 5. 4% per year between 1973 and 1977, and by 10. 3% during the period 1977-1980).

. GDP growth rate declined to 0. % per annum in the same period.

Inflation was accelerating bringing a dramatic increase in income inequality 6 Endemic Violence organized by the right wing Islamist National Action Party and guerrilla launched by Kurdish separatists scared away investors and allies.Turkey became unable to borrow money except from private institutions in the short term and at inflated interest rates. During the same time period U. S government was reducing aid to its foreign allies, private borrowing became the only answer. The Turkish external dept increased from $ 3.

5 until $16. 25 billion. 7 In the same time period, in Egypt Nasser introducing ISI policies and faced similar problems as Turkey. Socialism in Egypt was strengthened with Soviet economic aid from 1957 and the ‘Socialist Decrees’ of 1961, by which the Egyptian state took over most large scale industry, all banking, insurance, and foreign trade, all utilities, marine transport, and airlines and many hotels and department stores. 8 In the core of this socialist developmentalism was the high dam at Aswan, part of a five year plan launched in 1957.This five-year plan embodied a straightforward ISI strategy, as in Turkey in the 1960s, combining aspects of easy (sugar, textiles, automobile assembly, fertilizers) phases and hard (heavy industry, engineering, steel, chemicals and fertilizers) phases. It generated one million new jobs and growth rates of 6 per cent per annum.

9 Nasserite program involved land reform that through the building of the damn increased the cultivable area and broke the properties of Egypt’s wealthy agrarian proprietors.The government limited land ownership, cut peasant mortages, extended the time of payment for redistributed land, while at the same time encouraging co-operatives and promising irrigation and access to fertilizers and pesticides. The effects of those reforms were significant: average life expectancy rose as changes in income distribution and public health and education spread.

The state sector expanded. With the bureaucracy growing from 350000 employees in 1952 to 1. 2 million in 1970. Exporting bureaucrats to Damascus was a thus a solution to problem of oversupply in Cairo. ) Within another decade the bureaucracy would almost double. 10 Nasser’s influence on Egypt’s social and economic development was significant. In 1952 the Egyptian economy was primarily agricultural, relying mainly on the export of raw cotton.

Industry was in infancy. While agriculture produced 40 per cent of GDP, industry contributed only 15 per cent. By 1970, after implementation of the ISI policies, the contribution of industry had risen by 23 per cent.However, others disagree with this optimism, for example John Waterbury points out that at Nasserite Egypt “The economy was stagnant, the bureaucracy expanding, and vested public sector interests had control over resources and the flow of communications.

“11 Moreover, what slowed development as well was the Israeli attack on June 5, 1967 Egyptian air force was destroyed, several thousand Egyptian soldiers sent to Sinai were killed and finally Egypt lost its oil rich Sinai territory. To reconstruct the military Nasser had to devote even larger share of national budget to arms and tighten his connections with the Soviet Union.Moreover, war caused fall of tourism. Egypt entered a period of deep depression. Another problem was that population had grown from 20 million to 35 million during Nasser- and would reach 50 million by 1986. 12 Following the period ISI policies, to rescue economies with loans from IMF, the Structural Adjustment economic stabilization plan was introduced in both Egypt and Turkey.

In return for the loan, as elsewhere, currencies were to be devalued, exchange rates made flexible, state dismantled, and ultimately, the national market neglected in favour of export promotion.The head of the ruling Motherland Party president of Turkey’s State Planning Commission Turgut Ozal, having worked with World Bank, introduced the programme of economic restructuring designed by the World Bank. This resulted in an export success (from 2. 3$ billion in 1979 to 13. 6 billion in 1991), GDP growth, but was closely tied to lowering of wages by almost 50 per cent and suspension of bargaining rights. These came with destruction of trade unions and the rise of unemployment.

Raising public deficits increased inflation. 13More loans were needed (external debt increased from 25. $ billion in 1985 to $49 billion in 1990). If discounting the growing debt, the social cost and lack of democracy and human rights, strictly economic gains were remarkable. Rich got richer but even part of the middle class got poorer. 14Now, more of Turkey’s products began to find markets in other Middle Eastern states, while economic ties with EEC decreased.

Greater economic integration with the region was accompanied by increased political involvement, and the ruling party began attempting to reconcile Islamist values with the Western practices. 15Negative effects of liberalization were intensified by its autocratic, violent, and military implementation. The military junta that took power on 12 September dissolved the Parliament, exiled or arrested the party leaders and forbade all civilian political activity. 16 Economic performance later on, in 1991 was influenced by three major events: the Gulf war, the mid-year change in Government and the October parliamentary elections. These events increased uncertainty, depressed economic activity and created instability in the foreign exchange and financial markets.Up to now Turkey has failed to achieve a stable multiparty system, and chronically suffers from a series of coalition governments whose component interests are so diverse that no coherent economic policy can be implemented in a sustainable way. The capacity of ruling groups to impose their conception of national interest on everyone else has been weak.

In Turkey, as in most developing countries, class consciousness has for a long time been amorphous and therefore class alignments have been fluid.Governments have possessed substantial decision-making autonomy, but have lacked the effective power to implement them. This imbalance is one of the key elements of Turkey’s political economy.

As a result of the instability of political coalitions, the time horizon of policy decisions has become increasingly short. This, in turn, amplifies the instability, deepens the crisis and prepares the field for new attempts of radical solutions, such as military takeovers or fundamentalist reactions. Moreover, the Kurdish question, antagonistic relations with Greece and Syria remain unstable and costly.

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