Turkey's Odd-Couple Coalition

...Few analysts, however, think that returns from these activities will add up to much in 1996...

...On July 8, by a vote of 278-265, Turkey's Parliament whisked the odd couple into power—with 69-year-old RP chief Nec-mettin Erbakan as the country's first Islamist prime minister...

...Defense, Education, and In-tenor portfolios...

...the second would balloon a deficit already expected to account for 7.5 per cent of Turkey's GNP for '96—up from 6.5 percent in '95...

...The move drew criticism from financial circles, which have been advocating austerity measures to rein in an 83 per cent annual rate of inflation and to lower Turkey's public and trade deficits...

...They include curbing inflation, establishing a "just taxation order' (by reducing taxes on low-income groups and production-based companies), jump-starting the stalled privatization process, boosting investment in infrastructure, and passing legislation to activate Turkey's customs union pact with the European Union (EU...

...These should provide it with plenty of opportunities to dispense jobs and money, and to build its political base...

...For one thing, Ciller, an outspoken secularist who is at present the Deputy Prime Minister and Foreign Minister, will rotate annually with Erbakan as the Prime Minister...

...In addition, its backers head most of the key economic institutions, including the Treasury, Privatization Administration, Capital Markets Board, State Planning Organization, Customs, Foreign Trade Undersecretariat, and some big state banks...

...Bu-lent Ecevit, leader of the Democratic Left Party, has a different view: "A [Welfare]-True Path government amounts to a money-laundering operation...

...On July 8 the Istanbul stock exchange had risen 1.4 per cent and closed at a record 73,531.30, investors having apparently decided that an Islamist-led government was better than no government...

...And it was approval of the probe by the Motherland Party (ANAP) that led to the collapse of the three-month-old ANAP-DYP government in June...

...On the political front the coalition faces a perhaps more serious challenge that threatens its survival, not to mention its policy goals requiring Parliament's approval...

...Before the vote, Erbakan was careful to address the concerns of the country's secularist majority—and in particular the Army, guardian of the Kemalist legacy...

...On July 10 the index fell 1.6 per cent...

...Even if the government falls, as senior political columnist Hasan Cemal of the daily Sabah notes, "a kind of taboo has been broken...

...Less than 24 hours later the Prime Minister issued his first decree: Monthly payments to over 7 million civil servants and pensioners will be raised by an average of 50 per cent...

...For the same reason, overtures to Muslim countries are envisaged...

...True Path holds the Foreign Affairs...

...Erbakan's foreign policy rhetoric has softened markedly as well...

...And following last December's inconclusive general election, DYP leader Tansu Ciller had declared her guiding principle was "No coalition with the fundamentalists...

...But 10 DYP deputies who voted against the government's formation have said they will quit the party, and four who abstained may resign too...

...Aimed primarily at pleasing the RP's rural and working-class constituencies, they involve prison reform that will relax the harsh measures inmates are now subjected to, and letting former residents resettle in southeastern villages Turkish security forces have evacuated during the past few years...

...AN AMBIGUOUS PRECEDENT Turkey's Odd-Couple Coalition BY JOHN DOXEY ISTANBUL AS RECENTLY as early June, speculation that the pro-Islamic Welfare Party (RP) couldjoin forces with the Center-Right True Path Party (DYP) and form a government was dismissed here as absurd...

...The state will continue its 12-year-old battle against the Kurdistan Workers' Party in the southeast, but emergency rule there will be lifted "after necessary measures are taken...

...per cent in the first quarter of 1996, to $26.6 billion...

...Similarly absent are Welfare Party pledges to restructure the banking system on a profit-sharing basis, privatize state assets through public offerings rather than block sales, and impose a fixed exchange rate...

...There is no mention of outlawing interest charges, scrapping the EU pact, entering into the same arrangement with Muslim countries, or replacing the Turkish lira with an "Islamic dinar...

...Immediately following his confirmation, somewhat more characteristically, he vowed to "work day and night with the spirit of worship" to solve the country's huge economic and political problems...

...Unless new revenue sources are found quickly, the 1996 budget deficit will exceed by about $1.5 billion the $10.5 billion previously anticipated (itself up from $3.8 billion in 1995...

...Although it did in fact receive "yes" votes from the Great Unity Party's seven MPs on July 8, this support is unreliable because their leader, Muhsin Yazicioglu, is on poor terms with Erbakan...

...The Prime Minister has not moderated his tone toward fellow nato member Greece, though...

...The coalition would then need the backing of another party...

...Ironically, it was the Welfare Party— then in opposition—that launched the probe into Cillers finances...

...Toward this end, the Prime Minister has asked Parliament to consider raising taxes on income earned from interest-based investments...

...it is hardly likely to provide the money needed...

...Ciller answers critics of her new alliance by saying: "We have chosen the difficult but correct path...

...The Prime Minister also hinted he will write off interest on about $4.3 billion in agricultural loans...

...The coalition has sought to allay the market's fears with assurances that it will finance its programs by accelerating privatization, improving the efficiency of tax collection and selling state-owned lands...

...Opponents of the odd-couple coalition charge the parties struck a deal to halt two ongoing parliamentary investigations...

...If the investigations are halted later this year, Ciller may try to withdraw her party from the government...

...One concerns allegations of corruption against Ciller...

...ERBAKAN'S philosophy is mainly evident in the call for a "switch from a rentier economy to one oriented toward production...

...The Republic of Turkey, founded by staunch secularist Mustafa Kemal Ataturkin 1923,hadnev-er strayed far from its roots...

...The RP and DYP emerged from the December election with 158 and 127 seats, respectively—or a 10-seat majority in the 550-member body...

...The RP has the Labor, Public Works, Energy, Agriculture, Environment, Culture, and Religious Affairs portfolios...

...Yet many observers see Erbakan—who was Deputy Prime Minister during the 1974 fighting in Cyprus —baiting Athens to boost his popularity...

...the second concerns Suleyman Mercimek, a convicted embezzler said to be an RP operative who tunneled funds to Bosnian Muslims...

...The government may also be counting on faster than usual economic growth to boost vat and corporate tax revenues...

...A coalition policy protocol suggests that the DYP dissenters have little to complain about, beyond their opposition to an Islamist prime minister...

...The magnitude of the increase surprised most economists, especially since the Treasury had warned that the country could not afford a hike above 30 per cent...

...Indeed, some observers believe Erbakan may be acting on this assumption and making whatever populist moves he can in an effort to quickly strengthen his position before seeking an early general elections...

...Missing from the coalition protocol are earlier RP promises to overturn the military cooperation agreement signed in February with Israel, halt Operation Provide Comfort (the U.S.-led air mission that patrols northern Iraq from bases in southern Turkey), and withdraw Turkey from nato...

...Merely to fund its early initiatives the government seems to have two choices: printing more money, or borrowing from banks at interest rates currently running around 40-45 per cent...

...Even so...

...Certainly not when other decrees pronounced by Erbakan shortly after he assumed office are taken into consideration...

...Neither bodes well...

...The document's economic objectives, for example, tend to reflect True Path's free market orientation...

...For another...

...The greatest pressure for an early vote could in fact come from RP supporters who probably wonder why Erbakan handed so much power to a woman he once called "bride of the infidel...

...Or she may stay on as long as possible, since she has angered much of True Path's secularist constituency...

...The coalition's division of top government posts further favors the DYP...

...What a difference a few months—and a few corruption scandals—can make...

...The Welfare Party has shown people that it is possible for an Islamist to become prime minister...

...Investment in Turkish securities, particularly by foreigners, is expected to drop substantially if, as promised during the campaign, Erbakan pursues additional populist economic policies...

...But few here have faith that the coalition will last very long...

...The first would almost surely trigger triple-digit inflation...

...The essential basis of the government," he said, "is that the Turkish Republic is a democratic, secular and social state based on law and the principles of Atatiirk...

...According to the State Institute of Statistics, compared with last year's corresponding period, Turkey's GNP grew 9.9 JOHN DOXEY, a previous XL contributor, is a freelance journalist in Turkey...

...Thus the budget's 3.5 per cent GNP growth target will probably be surpassed...

...There is no reference to Turkey's traditional rival in the government's agenda...