How Turkey and China Undermine Their Future Prosperity

Turkey has lost its business dynamism. That is the predictable result of Mr. Erdogan’s systematic effort to root out the last figments of critical thinking in what he very consciously calls “his” country.

One of them is that Erdogan can count on future declines in Turkey’s business rankings, as evidenced by the recent significant decline in the World Bank’s Doing Business survey.

Contrary to what Mr. Erdogan believes, it is not helpful that one Turkish businessmen after another mindlessly professes his great admiration for the big man, preferably on international television.

Undermining the men who shaped economic success

All of this might be considered quite comical, if it weren’t so saddening. Until Mr. Erdogan chose to become ever more imperious, Turkey was on a very positive and, in parts, even admirable path of development.

But now Erdogan is essentially destroying what he initially let others build. He has forced his economic team, once the driving force of that advance, to turn into a team of mere soothsayers. Their only goal now is to placate increasingly worried foreign investors. In the process, the Turkish economy has lost any forward momentum.

To be sure, Erdogan’s own recent pronouncements about family policy – he wants to keep women at home and focused on child-raising – don’t do anything to advance Turkey’s GDP growth potential.

But more than anything else, it is Mr. Erdogan’s current effort to turn himself into a modern-day Sultan that has stifled the prospects for future economic growth in Turkey.

Turning the country into a horde of yes men, as he constantly does, whether by the arrests of top Cumhürriyet opposition newspaper editors or stunning jail sentences proposed for Kurdish opposition leaders, certainly won’t help.

Comparison to China

A comparison to China, another country destined to sit in the middle income trap for the long term, is instructive here.

Like Erdogan, the Chinese leadership certainly has a strong penchant for authoritarianism. Both countries’ leadership are actively dismantling whatever degree of media freedom used to exist previously.

That is a wrong-headed bet. The only way out of the middle-income trap is to bet on the national population’s ability to engage in critical thinking.

An oppressed people is not an indicator for growth, other than perhaps at an early stage of its economic development (witness China 10 years ago or Vietnam today).

Erdogan doesn’t get that. Like any good totalitarian ruler, he believes that, since he has Turkey under ever firmer control, his country will be more “more stable.”

It is not. It is more brittle. In addition, as the Chinese will also learn, a people oppressed and without any freedom of opinion, dumbs itself down. And such a collective dumbing down is not exactly conducive to rising in the global economic league tables.

Most future growth will come from the smartness of a nation’s brains, as Erdogan’s former Prime Minister, Ahmet Davutoglu, had noted back in 2011.

Davutoglu explained that, like Japan’s rise, only developing human talent could propel Turkey to an elite circle dominated by five vast “continental powers” and three legacy Western European powers.

Where Turkey and Erdogan are worse off than China

There are some stark differences between China and Turkey, however, and they do not play to Turkey’s advantage. These differences manifest themselves in two ways:

1. Chinese businessmen will always try hard to maximize their leeway, even by skirting the rules in order to gain the advantages they seek. Not so their Turkish colleagues.




2. In China, there is a broad-based anti-corruption campaign underway. Some have said, with good reason, that this campaign carries elements of a politically motivated witch hunt to clean up of factions that have fallen out of favor.

   However, many ruling party officials all across China have also been put on notice, at a minimum, to restrain their otherwise gargantuan appetite for bribes and shady business deals. That has at least some cooling-off effect.

Regarding corruption, the situation is different in Turkey. There is compelling proof of Erdogan’s immediate family’s involvement in such shady dealings.

The sultan crushes his own dream

To fend off those dangerous charges, the Turkish President’s response has been resolute: He has moved not just to fire, but usually to imprison any police chief, prosecutor or judge who dared speak truth to power.

To further distract from himself and his entourage, Erdogan has chosen to make the accuser (and one-time de facto prosecuting body, the Gülenists, a pariah.

Such a strategy, within the confines of an increasingly closed society, may seem clever to whoever executes that campaign.

What Erdogan does not see is that he, as the man who vindictively arranges for all that intimidation and imprisonment wave, only makes it that much harder on himself and for his country’s future.

After all, Erdogan’s proudest and most meaningful promise to his fellow Turks has been that he will lead them into the circle of top decision-making economies in the world. He wants to make Turkey into one of the ten big economic powers in 2023.

To have even a prayer of getting there, Erdogan would have to let his economic team execute a series of complex reform measures. And he would have to root out crass levels of corruption. The world is boringly predictable that way.

Erdogan’s solution: JBTF – Just blame the foreigners

An economy where corruption is not kept in check, but sanctioned from the top, is a red flag to many outside investors. What they see is a great deal of political risk ahead.

Eventually, Erdogan will realize that his country’s economic dynamics will not develop as advertised. Instead of finding any fault with himself, Erdogan will resort to his usual response – vindictively blaming others.

One can rest assured that he will put all the blame for not reaching his goal onto sinister foreign forces. Those forces, he will say, have but one desire: to keep Turkey down.

Unfortunately, most Turks — happy to have tasted the flavor of dynamic economic advancement — will follow their leader’s assessment.

That blind and deliberately misguided nationalism, reminiscent of Mussolini in the 1930s in Italy, is what makes Turkey into a dangerous country internally (to say nothing of growing warning signs on the foreign policy side).

Sadly, under Erdogan’s full-blown autocratic rule, Turkey is driven more by blind ambition and status-seeking. It has lost the critical connection to any sense of dealing with the real challenges.