Detroit as a Bad Omen

Since the reforms of 2001, Turkey was well on its way to becoming an economic power. It was believed that the country would be immune to the current financial crisis. In a recent trip to the auto manufacturing city of Bursa, however, Daniela Schröder discovered how tightly Turkey's economy is interwoven with that of Europe

Every workday, Erhan Sever leaves home early in the morning just after four, drives his rickety, old Fiat to the other end of town, walks through the factory gates, drinks a cup of strong, sweetened tea in the break room, changes into his work uniform, puts on his safety goggles, and starts up his welding machine. The whole time, just one thought swirls through his head: "Maybe this is the last time."

Erhan Sever's job hangs by a thread. Many of his colleagues have already seen their last day. Already in mid-November, his employer, Tofas, Turkey's third largest automobile manufacturer, temporarily laid-off 700 of 5200 production workers. One after another, customers in the EU, finding themselves under pressure from the financial crisis, have cancelled their orders. As a result, manufacturing in the Bursa plant has been reduced by more than half.

It has been young workers, in particular, who have lost their jobs at Tofas. Many now have to complete their military service. What awaits them afterwards is anyone's guess. Sever, 42, and his colleagues already foresee what is in store for them, but don't want to talk about it and prefer not even to think about it. "People will always have to drive cars," says one.

Bursa, some 90 kilometres south of Istanbul and the fourth largest city in Turkey with a population of 1.4 million, is regarded as the engine of the Turkish auto industry. More than 60 percent of all the cars in the country roll off the assembly line here. Orders come from Fiat and Renault. Factories in this green landscape around Marmara Lake also fill orders for automobile part suppliers such as Bosch as well as the bus and truck manufacturers MAN and Daimler.

Export sectors hit hard

Tofas, jointly run by Fiat and the Turkish company Koc Holding, was founded 40 years ago and from the very start obtained a licence to produce Fiat models. Today, Tofas workers build the mid-line Linea sedan, the Doblo high ceiling hatchback, and the supermini Palio, developed for the world market. In 1971, the plant produced 8000 cars. Last year, it was 197,000. "We want to be the most successful Fiat plant outside of Italy," says production manager Erkan Polat euphorically. For 2008, Tofas has set its manufacturing goal at 324,000 automobiles.

Nothing will come of this, however, at least for the time being. The crisis on the financial markets has also hit Turkey, especially its export sectors. "Every day, the tsunami comes that much closer," warned Ercan Tezer, head of the Turkish Motor Vehicle Manufacturers Association (OSD), a few weeks ago. This situation is hardly imaginable for a sector so used to success. In the first nine months of this year, car manufacturers and suppliers increased production by 25 percent. Export profits actually increased by 31 percent to 20.7 billion US dollars.

Then came an abrupt turnaround. In October, exports shrunk by 27.5 percent and production fell by more than 20 percent. The OSD forecasts a further 15 percent drop in production for 2009.

Turkey suffers along with the EU

The collapsing figures in the automobile sector are a bitter blow to Turkey's financial balance sheets. The car industry provides 31 percent of export earnings and is the country's most important source of hard currency. Eight out of ten vehicles are sold abroad and 90 percent of these exports are to the EU. When the Europeans face tough times, Turkey suffers as well. The greatest risk for the Turkish economy is that the sudden slack in foreign trade will push the country's balance of trade, which is already deeply in the doldrums, even further downwards.Major foreign investments have similarly dried up. Whereas last year, some 22 billion US dollars poured into Turkey, only between 12 and 14 billion are expected for 2008. In addition, the huge mountain of debt owed by the private sector has put an even greater strain on the economy. Because of the high rate of interest on the Turkish lira, many companies have taken out credit in foreign currency in recent years. This summer, their foreign debt burden stood at 193 billion dollars. After the sharp decline in the worth of the lira, it will now be more expensive for Turkish companies to pay back this debt.

Clever reforms after the crisis of 2001

Many in Turkey, although not having actually committed any great mistakes themselves, have been caught up in the financial crisis. Back in 2001, Turkey already suffered its own banking crisis, which threatened to bring about financial collapse. The International Monetary Fund stepped in with 40 billion dollars of credit and saved the state from bankruptcy. The aid guarantee from the IMF proved to be an engine for reform, and, as a result, banking regulations were tightened and state finances consolidated. The stable situation calmed foreign investors and the economy subsequently boomed. The IMF package ran out in May.

At first, Prime Minister Erdogan and his team resisted new credits, yet finally appeared to give in to pressure from the business community. "We remain spared from the crisis," has been the constant mantra from Ankara. "The politicians haven't realized that we are dealing with a worldwide crisis and that despite the reforms instituted in Turkey over recent years, the country is not immune," explained Fatih Özatay, a financial expert from Istanbul. Only a new agreement with the IMF can renew investor confidence in Turkey, he says.

Waiting for Godot

To the contrary, help from the IMF is not the solution, warns Korkut Boratav, an economic expert. Turkey must fundamentally restructure its economic model, he suggests. Erol Katircioglu from the Bilgi University in Istanbul also says that "political thinking must undergo a radical transformation." Although the Erdogan government does have "a few ideas, it is still, in effect, just sitting there and waiting for Godot."

There were, however, great plans. Turkey had hoped to be one of the ten largest national economies by 2023, the 100th anniversary of the founding of the state. It now appears to be a utopian goal. Yet, perhaps not, says Katircioglu. In order to realize this goal, the business sector and civil society must have a greater say in policymaking. "In this respect, Turkey can learn from the EU and be willing to accept its assistance," thinks Katircioglu. Ankara has to orient its policies on the basis of the needs of individual regions and not just pursue general policies. The agricultural east and southeast of the country, for instance, are years behind the industrialized large urban centres in the west.

"The Detroit of Turkey" is how the Bursa Chamber of Commerce advertises its dynamic region. Until now, the slogan exuded self-confidence. Now, it sounds like a bad omen.

During his tea break, Erhan Sever reads in the newspaper about the bailout plan for the American car metropolis. He also reads about the halt in production at the Ford factory in Gülücek. And then he reads how his government persistently clings to its economic growth forecasts while the number of unemployed in Turkey has risen sharply. Sever will not say what he thinks about all of this. He just puts his safety glasses back on and returns to the welding machine with his co-workers. Perhaps he'll be able to continue here for the days, months, and years ahead. Or perhaps this was the last time.

Daniela Schröder

Translaetd from the German by John Bergeron

Qantara.de

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