In the last issue of the Bulletin, we mentioned the three-year medium-term economic program announced by Vice President Cevdet Yılmaz. There, as an institutional backtrack, we stated that there were 3 programs for 2024.
Several other issues were raised for discussion in the context of the Medium-Term Program (MTP). The MTP included references to structural reforms, yet it lacked detailed information on the implementation of these reforms. The program was formulated in rather general terms, which may not align with the principles of a free-market economy.
On the other hand, although they are now referred to as 'programs,' these were previously referred to as 'plans.' Despite this change being presented as a commitment to a free-market economy, the transition from 'plans' to 'programs' does not alter the underlying essence. In essence, the centralist and exclusionary approach that we previously termed a planned economy continues, albeit with a change in nomenclature. This renaming practice is indeed one of the prominent features of Erdogan's leadership. Erdogan has a penchant for renaming things in a manner that suits his agenda, and he effectively promotes these changes through the media channels at his disposal and his bureaucratic capabilities.
Returning to our main topic, it's important to note that the MTP is not intended to be a panacea. In economics, it is often more prudent to introduce general programs like this rather than unconventional ideas that claim to be brilliant. However, this is where we can delve into the reason behind giving this note its seemingly unconventional title.4
At the end of 2020, Turkey enacted a regulation titled the 'Law on the Prevention of Financing the Proliferation of Weapons of Mass Destruction,' following a recommendation by the Financial Action Task Force (FATF). Turkey is a founding member of the FATF, with its secretariat housed within the Organization for Economic Cooperation and Development (OECD). The primary motivation behind this enactment was to avoid being graylisted by the FATF. However, the passage of this law in parliament was marred by flaws, leading to Turkey's immediate placement on the gray list. The gray list comprises countries that lack adequate safeguards against money laundering, proliferation, and terrorism financing on a global scale. In essence, Turkey is currently regarded as a country that does not align with international standards in combating issues like the financing of weapons of mass destruction and terrorism. Consequently, Turkey faces significant challenges in integrating into the global financial system. This issue also serves as a hurdle for credit rating agencies to assign Turkey an 'investment grade' status.
So, why did this law go awry? Regrettably, factors such as corruption, a lack of transparency, and the instrumentalization of the law all played a role. In the draft law proposed by the FATF, the most crucial aspect of the WMD prevention measures focused on imposing restrictions on the financial accounts of politicians, corrupt officials, or influential individuals. However, in the final law, the Turkish government shifted its emphasis towards the more peripheral issue of controls on non-governmental organizations. As a result, Turkey was unable to avoid being placed on the gray list.
In light of all these issues, Turkey should prioritize the development of its institutional capacity and view the rule of law as the cornerstone of progress and prosperity, rather than formulating plans for the short, medium, or long term. As long as situations like the aforementioned instrumentalization of the law continue, any measures or regulations enacted will likely yield limited results.