National Sections of the L5I:

Turkey’s economy on the brink

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In 2021, Turkish workers had first-hand experience of how worthless their pay packets were in comparison to the profits of factory owners and the ill-gotten gains of the élite of President Recep Tayyip Erdogan’s regime. According to the country’s Statistical Office, the inflation rate was 36%. Independent experts estimate that the real fall of the currency was as much as 80%.

Yet the worst is probably still to come. The Turkish economy does not seem to be recovering, as it briefly appeared to be around Christmas. On 26 January, the exchange rate of the Lira was 15.23 TL for one Euro – an annualised inflation rate of 48%. The petty bourgeoisie and the middle strata are increasingly anxious about the economic situation. But above all it is workers who are bearing the brunt of the crisis. Millions get up each morning unsure how they will feed their families or where they can find work for a pittance to keep their heads above water.

In 2021, it was mainly food prices that rose even faster than general inflation, but now energy prices, and the lack of gas supplies, are hitting the masses. Within the working class, the young people are suffering hard, from the pandemic as well as the economy, because for them there is hardly any prospect of work. Many with qualifications want to emigrate and find jobs elsewhere. As a "response", "their" president insults them as "ungrateful and rootless".

How has the economy crashed so quickly?

Undoubtedly, Erdoğan, and the entrepreneurs and civil servants he represents, are contributing to the worsening of the situation, but to understand the depth and causes of the current crisis, we need to look at the global situation. Turkey is trying to become a regional geostrategic power, over the last decade it has strengthened its positions in Syria, Iraq, Azerbaijan, and Libya. But this has not changed the fact that within the imperialist world order it is still a semi-colony. Its place is ultimately determined by the great economic and military powers, and global capital flows demonstrate this.

Like many other states, Turkey is dependent on external financing. The share of annual foreign exchange requirements within national income has risen steadily over the years, currently reaching 30 %. In 2021, external finance amounted to around US$220 billion. Yet the country is finding it increasingly difficult to attract capital. Erdoğan's increasingly aggressive policies certainly foster political instability but, more importantly, the crisis policies of the USA and the EU are drawing capital investment towards the imperialist metropolises. This means it is flowing out of the semi-colonies, especially the emerging markets. This also affects economies like Argentina or South Africa, which are facing a massive financial crisis, collapse of their national currencies, and massive inflation (with the looming threat of hyperinflation).

Investors and politicians from the USA or Germany are looking at this development with alarm, and pretending that it is all caused by incompetent politicians like Erdoğan who refuse to implement the measures prescribed by the IMF and other big investment institutions of Europe and the USA. This simply ignores the systemic causes of the crisis, rooted in imperialist capitalism, not just the "incompetence" of the Turkish government!

German capital of course has no fundamental desire withdraw its major investments from the country. But it does want gigantic profits to continue to flow, indeed, it wants investment conditions to be further improved. Big investors are attracted by the low wages and lax regulations and German companies have been to the fore on this but now instability and the currency crisis have led some, such as Volkswagen, to shelve plans for more factories.

Erdoğan's monetary policy of keeping the key interest rate low is a response to the weakening of capital inflows. Its aim is to boost exports, credit and thus growth before elections, which are due in 2023 but may be brought forward. This policy accepts inflation, but in the longer term, according to “strongman” Erdoğan’s promise, it is intended to boost the economy. This may fill the pockets of some exporters and speculators but will probably drive the country even further towards bankruptcy.

This is why Erdoğan prevented any increase in the Central Bank's key interest rate. On the contrary, it was lowered four times last year, making imports more expensive because they must be paid for in dollars or euros.

Inflation and the Lira's Slide

For a year, the lira has experienced repeated downward slides. On 20 December, it hit an all-time low but then "recovered" because Erdoğan announced that deposits in lira would be protected against losses from exchange rate fluctuations. If the losses were greater than the interest promised by banks on the respective deposits, they would be compensated.

In addition, at the beginning of January, the government passed a law according to which companies based in Turkey must sell 25 per cent of their export earnings in euros, US dollars or pounds to a private bank and receive Turkish lira in return at the daily exchange rate. This measure provoked the imperialist countries into threatening to stop investment and further capital repatriation.

In addition, people are encouraged to invest their money in lira or even to change their existing US dollar and Euro reserves into lira. This completely utopian project is intended to stop "dollarisation", that is, the flight into the US dollar as a substitute for the national currency. In 2013, the dollar accounted for 25 % of all transactions between companies. In 2021, that rose to 69%!

The only beneficial measure for the working class was a 50% increase of the monthly minimum wage to 4250 lira (about 275.51 Euros). But, with inflation still rampant, it will only be a matter of time before this is eaten up by price increases. The stabilisation after these measures proved to be just a flash in the pan. Now, due to gas supply bottlenecks, lack of energy reserves and payment difficulties, entire industries in Turkey had to stop production in the last days of January.

When the economy is down - how can the working class rise up?

In the current situation, workers are threatened by several dangers. Two in particular are imminent. First, is the threat of hyperinflation, which would in effect mean that the lira could no longer function as a means of payment and make bank deposits literally worthless (while private debts would continue to devalue). Second, a wave of closures and layoffs due to over-indebtedness, defaults, bankruptcies and a recession in sectors like construction that have long sustained the economy.

An encouraging sign is that in recent weeks there have also been important struggles by the working class to achieve real wage increases in line with price rises. For example, workers at Trendyol Express, Turkey's largest online shopping company, went on strike. The company initially offered an inflation adjustment of 11%, although even the official rate was at 36%. On 24 January, hundreds of drivers went on strike, holding mass meetings and demanding a 50% wage increase. After three days, the owners agreed to a 38% increase. This example was followed by courier workers at HepsiJET, Aras Kargo and Sürat Kargo.

Perhaps even more important are the struggles in the car industry. There, the unions Türk Metal, Birleik Metal and Özçelik had negotiated a wage increase for 2021 that remained below the real price increase. However, this was not accepted by the workers of the Çimsata plants in Mersin. Criticising the sell-out by the bureaucracy, they continued the industrial action, occupied the factory, but were then violently evicted by the police on 13 January. While the union leaders remain silent, this example, like that of the car couriers, shows that the crisis is forcing the working class to fight.

In the face of acute income losses and the threat of mass poverty, a programme of struggle against inflation and the threat of closures is needed around demands such as:
- An automatic increase of wages and incomes in line with price rises - as calculated by workplace strike and action committees in the neighbourhoods.
- The introduction of a minimum wage, pensions and unemployment benefits at levels to seriously combat poverty.
- Price control committees to ensure that prices of food, housing, electricity and heating are not artificially inflated because of scarcity. Direct linkage with committees of peasant farmers and farm workers to secure supplies for the people and control prices.
- Nationalisation without compensation and under workers' control of all enterprises whose owners try to close them down or threaten to lay off workers.

- Expropriation without compensation of all enterprises central to the basic supply needs of the population and formulation of an emergency plan to supply these under workers' control.

These and other economic and social demands can only be achieved through mass actions; demonstrations, strikes and occupations of workplaces culminating in a mass political strike of workers across different sectors. This requires the formation of action committees in the workplaces and communities and the struggle for the renewal and unification of the trade unions on a democratic, anti-bureaucratic and class-struggle basis. Because of the certainty of attacks by police and right-wing gangs, the organisation of self-defence forces and committees are a vital part of this struggle. To counter racist and nationalist divisions, such a strike movement must at the same time seek solidarity with all the oppressed, especially the refugees and the Kurdish people.

In order to carry such a perspective into the movement obviously a political force is also needed - a new, revolutionary workers' party!