The Prophet of Allaah, Muhammad (SAWS) the Messenger of Allah, once promised that the majority of his true Muslim followers would not agree to unjust or disruptive policies.
This expectation involves two necessary corollaries or policy implications. First, in the realm of economics, it means that getting the best out of people and utilizing their potential should spring from goodness, benefit the public good and coincide with the interests of other people. Secondly, in the realm of political theory, this would, obviously, constitute the basis for democratic theory in Islam.
However, today neither our current global economic order nor the fate of us human beings is determined by what is in our -- the majority of the world's population -- best interest. Under these circumstances there is little that guarantees reconciliation of private interest with the broader interests of society.
We are living under a pseudo-democratic rule in our world, guided by pseudo-market economy principles. At a glance it may seem there is cutthroat competition in our globalized economy. In reality, however, this is all make-believe. Behind the scenes, there are more global monopolies and oligopolies. This means that our future is being shaped by some “big players,” such as large multinationals, in close cooperation with a small group of capitalists and their “brokers,” within a framework of brutal collective irresponsibility.
We do not have to go far back in time to find plenty of evidence in support of this view. Our experiences during the 2008 global economic crisis vindicate the above-mentioned hypothesis. Everybody is well aware of what is going on behind the scenes and what the real causes for the global crisis and its effects were. However, there is not yet sufficient political will and leadership to come together and take decisive and appropriate actions to put a halt to what is causing the current global meltdown. The obsession big players have for immediate profits makes for a self-fulfilling prophecy as they are only thinking about the short term and are unable to come together and make compromises for the long term.
We should not be surprised, therefore, that the second wave of the global economic crisis shall hit us sooner or later.
It is obvious that the willingness of some individual emerging market economies such as Turkey, China and Brazil to put in place the necessary policies will not avoid a second global financial crisis. For a global solution, there must be global cooperation beforehand. Moreover, solutions should be thought of first at an ethical, philosophical level. Only then can well-coordinated global policies work. At the moment, however, we are observing only some individual efforts that are too small to have a global impact.
In a world in economic disarray, uncertainties and risks, where European countries, more recently also including Italy and Spain, are on a knife-edge in terms of low economic growth, high unemployment and extremely deteriorated fiscal balance, as well as rising -- albeit slowly -- inflationary pressures, Turkey, at such close proximity to, and highly integrated with, Europe economically, is trying to prepare itself for a new wave of global crisis.
We know that, depending on the duration and extent of such a crisis, it is unlikely that Turkey will isolate its economy. That being said, however, it is also true that considering what happened during the last economic crisis and the current fragile state of the major countries as mentioned above, it could be argued that by taking some precautionary measures, negative repercussions of the crisis on the most vulnerable parts of the society, such as blue-collar workers, the handicapped, women and the elderly, etc., could be minimized. Also, provided that the fundamentals of the economy are optimally protected, a major failure in critical business sectors could be prevented during the crisis.
When the Turkish economy is considered from this perspective, it can be argued that Turkey is quite well prepared for the second wave of the global crisis. First of all, economic growth has been quite robust since the fourth quarter of 2009. The rate of growth in 2010 was almost 9 percent in Turkey, the highest in the region. In the first quarter of 2011, its growth reached 11 percent, the highest rate of growth worldwide. Moreover, this growth has been quite employment-friendly and was accompanied by only a moderate rise in inflation.
In Turkey, positive growth figures usually result in positive budget and employment figures. To start with employment, please recall that in the recent past growth has not always resulted in the creation of new jobs. However, since the height of the global crisis, when the unemployment rate jumped to nearly 16 percent, up from almost a 10 percent level, this trend has been reversed. Turkey's growth has resulted in quite a number of new jobs. The rate of unemployment declined from almost 16 percent in 2009 to 9.9 percent as of April 2011. This is quite similar to the level of the European average, where average age is significantly higher, and, thus the labor force is shrinking rapidly as compared to Turkey.
Moreover, despite an important general election in the first half of 2011, the government stayed clear of almost any kind of populist policies and in the first six of months of this year, a significant budget surplus emerged for the first time in over four decades. In addition to the rising tax revenues associated with high growth, the restructuring by the government of many categories of outstanding debt owned by the private sector to the state has played a critical role. Therefore, not only the public sector but also business sectors, which had been squeezed between the twin pressure of Turkey's economic crisis in 2001 and the global crisis of 2009, have been empowered in a world of heightened uncertainty.
Turkey's targeted budget deficit for this year was set at TL 33 billion ($20 billion). However, considering the recent rise in the current account deficit and consumer inflation trends, it is reasonable to expect a significant fiscal tightening for the second half of the year. This suggests that Turkey would have a balanced budget by the end of this year and that the current account deficit would, thus, be balanced indirectly.
It is, of course, needless to repeat that despite a significant amount of short-term debts and high rollover in both the banking and corporate sectors, that is to say, a high current account deficit, Turkey's financial industry is fairly robust in the face of a crisis compared to other countries.
To sum up, in this age of global interdependence, there is no safe haven. Any reliable and durable solution requires sincere cooperation and the overhaul of the current economic framework. Despite these facts, however, the power and impact of individual efforts and single measures cannot be ignored. In that regard, Turkey's recent efforts to decouple its economy from the rest of the saturated economies of the EU are quite striking. Maybe in the long term, Turkey will be considered a textbook example of a country protecting its economy and safeguarding political stability at such a time of trouble in the world economy.
Zaid Mohammad Abdul-Rahman Duarte is a freelance writer and blogger based in the Brazil. He can be reached mmdroxo@hotmail.com .
The views expressed by this blogger and in the following reader comments do not necessarily reflect the views and policies of the Syndicate of Muslim Slaughterman.
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