12 September 2013

What if?

In his wonderful book on Turkish history – The Young Turk Legacy And Nation Building – Dutch historian Eric J Zuercher has an intriguing chapter on “Turning Points and Missed Opportunitities in the Modern History of Turkey: Where Could Things Have Gone Differently?”. Here he discusses how Ottoman and later Turkey history might have developed if the wars of 1877 and 1912 had NOT taken place; if there had NOT been the Istanbul uprising of April 1909; if Kemal Ataturk had NOT established “an almost totalitarian grip” over the country in the 1920s; and if the transition to democracy after World War II had happened differently. And Zuercher concludes:

“it is a very useful exercise for us historians to remind ourselves that the historical developments with which we are all too familiar, should not be seen as inevitable … Thinking about what could have been makes us more sensitive to processes and contingencies that we too easily overlook when we already know how the story ends.”

It is indeed a useful exercise and I only regret that Zuercher stops his what if in the 1950s.

One of the most intriguing missed opportunities in Turkey’s modern history surely took place in the late 1970s, when Turkey decided not to follow Greece, Spain and Portugal and did not submit an application for full EU accession. Why did it not? Would it have succeeded?  Was it discouraged by EU member states or was this above all a result of its internal politics?

I have long been puzzled by this question; and so far I have found it difficult to find detailed accounts of what actually happened then. For now I only hope that Zuercher, or some other curious historian, will go and look in the diplomatic archives to tell us the full and real story.

Here are, for now, the outlines of this missed opportunity as I have pieced them together from different sources.

On 12 June 1975 Greece, having just emerged from military rule, submitted its application to the (then) European Economic Community (EEC). Negotiations started in July 1976. On 28 March 1977 Spain submitted its application. This was followed by Portugal in July that same year.

If Turkey had submitted an application at the time chances are that it would have been very difficult for the EEC to reject it while accepting Greece. While some EEC countries (including, not surprisingly, the France led by president Valery Giscard d’Estaing) did not believe that a Greek and Turkish application would necessarily be treated together, others apparently disagreed. Armagan Emre Cakir discusses evidence that some high level European politicians and officials travelled to Ankara and urged the government of the prime minister Bulent Ecevit in 1978 to apply. Ecevit was opposed; so was his deputy prime minister at the time, the Islamist Necemettin Erbakan. It seems that for Ecevit the EU was too capitalist; for Erbakan it was too much a “Christian club.”

There were even then those in Turkey who urged the country to be more proactive. The Turkish ambassador in Brussels, Tevfik Saracoglu, returned to Ankara in summer 1975 (after Greece had just applied) urging the prime minister Demirel, and party leaders Turkes and Erbakan to do the same. He left empty handed.

In May 1978, as the membership for Greece was finalized, Ecevit, instead of submitting a Turkish application, froze relations with the EEC.

But this was not the last chance. In 1980 the foreign minister of Turkey, Hayrettin Erkmen, told the government of Suleyman Demirel that Turkey should apply urgently. Erkmen failed. In fact, in July 1980 the Islamist Erbakan brought a motion against him into the parliament because of his idea to take Turkey into the EEC. This motion was supported by the left-wing Kemalist Bulent Ecevit. And so Erkmen was removed from office on 5 September 1980.

A week later, on 12 September, tanks rolled in streets of Ankara and Istanbul, as a military junta took control of the country. One of Turkey’s darkest periods was about to begin.

This is the rough outline of what must surely be regarded as one of the great missed opportunities of modern European history. I wonder if a Turkey on route to joining the EEC would have experienced the brutal coup in 1980 that finally and decisively separated its fate from that of other European Mediterranean countries with autocratic traditions. Greece joined the EU in 1981. Spain and Portugal followed in 1986. In 1989 the Berlin Wall came down and the division of Europe ended. During this time Turkey first adopted a military-inspired constitution, then fought a bitter counterinsurgency campaign against the PKK – while trying in vain to suppress all expressions of a separate Kurdish identity. Economically the gap between Turkey on the one hand and Spain, Portugal and Greece on the other became ever wider during the two decades that followed.

I hope this fascinating episode will one day soon be researched in depth. Unfortunately Hayretting Erkmen died in 1999, so it is no longer possible to interview him. Erbakan also died, as did Ecevit. And yet, there must be witnesses and documents that would allow a diligent historian to reconstruct the events that led to such a tragic denouement.

This also qualifies a claim sometimes still made by Turkish politicians that the EU has prevented them from joining the EU “for half a century”. For much of that period it appears Turkey’s biggest obstacle were the attitudes of Turkey’s leaders.

One also hopes that Turkey’s leaders do not repeat the mistakes of this time and miss further windows of opportunities. I could think of a few even now. This is, however, another story.

PS: If any readers know of any more detailed study of this period, in English , German or Turkish, please let me know at g.knaus@esiweb.org!

Filed under: Enlargement,Europe,Greece,Turkey — Gerald @ 8:14 pm
5 September 2013

Gerald Knaus with next Minister of Labor and welfare, former ESI analyst Erion Veliaj, incoming prime minister Edi Rama and the next minister of Finance, Shkëlqim CaniModerating a one day brainstorming on the future of the Albanian economy in Tirana, August 2013 with next Minister of Labor and welfare, Erion Veliaj, incoming prime minister Edi Rama and the next minister of Finance, Shkëlqim Cani

Last week I went to Tirana to participate in two events on the Albanian economy. One was a brainstorming with senior international economists and some of the incoming new Albanian ministers, which I was asked to moderate (see picture above); the other was a public event on the future of the Albanian economy.  It was an interesting, and sobering, debate.

The economic challenges Albania faces are familiar, and enormous. There is the prospect of short-term crises. There is concern about an energy supply crisis later in the year. Some worry about discovering the true state of public indebtedness following an audit (including all unpaid bills by Albanian public institutions which will come due).  The motor of previous growth, the construction sector, has come to a halt. At this moment there is almost no credit being given to Albanian companies by banks, a disaster if the goal is structural change.

More than two decades after the end of communism the private enterprise sector is small and weak. The total number of companies with more than 50 employees that are in manufacturing is 282. There are only 851 companies in the country with an annual turn-over higher than 250 million Lek or 1.8 million Euro. Without credit for investment, and with limited savings by companies due to low turn-over and even lower profit margins, it is hard for entrepreneurs to develop and move up the value chain, to invest in producing more sophisticated products or train their work force. And without a more competitive manufacturing sector and rising exports Albania will never catch up.

In preparation for this event ESI prepared a handout for three pages with four tables. I share it here for those who are interested:

 

FOUR TABLES, TWO MAIN CONCLUSIONS –  How Albania is not catching up

Gerald Knaus, European Stability Initiative (ESI) www.esiweb.org

 

Here are four simple tables to inform a debate on the Albanian economy and on the challenge of catching up with the rest of Europe in terms of employment and overall welfare of citizens.

On 23 June 2013 Albanian voters went to the polls in parliamentary elections. Voters had the choice between dozens of parties organised in two main coalitions. Both coalitions presented a vision of Albania’s long-term future as member of the European Union. The Alliance for a European Albania led by the Socialist Party announced its program in is very name.

Here is a simple argument in three pages to suggest that there is a good economic reason for this focus on EU integration. Since 2003 – when the EU first promised a European future to the Balkans in Thessaloniki – the economic gap between the wealthier and the poorer countries of the Balkan region has grown further between two groups of countries. Countries that negotiated accession to the EU during the past decade (Croatia) or joined the EU (Bulgaria and Romania) were already richer in 2003 than the “Balkan five” – Albania, Bosnia, Macedonia, Serbia and Kosovo. Since 2003, rather than catching up, the laggards have fallen further behind.

 

1

Today Western Balkan states remain poor compared to the rest of Europe, including Greece (see Table 1).

However, within the Western Balkans there is significant diversity: some countries – Kosovo, Albania – are significantly poorer than others.

Table 1: GDP per capita in 2011 in comparison2

EU27 average is 100
Kosovo

18

Albania

30

Bosnia-Herzegovina

30

Serbia

35

Macedonia (candidate)

35

Montenegro (candidate)

42

Bulgaria (EU)

46

Romania (EU)

49

Croatia (negotiating)

61

Greece (EU)

79

 

One correlation is striking: the poorer a country in terms of per capita GDP, the less advanced it is in its EU accession (here the status in 2011). Or should we reverse the argument: the more advanced a country on its EU accession, the higher its GDP per capita is likely to be? A correlation is not causation, but this is certainly noteworthy.

 

2

If one looks at development and growth in the past decade (since 2003) a clear trend emerges.

In some countries Gross National Income per capita has increased significantly more than in others. Again there is a correlation between increases in gross national income per capita and EU accession (with Montenegro an outlier; this may be due to its small and peculiar economy with a population of only 600,000). Romania, then Bulgaria, then Croatia did best in the years since 2003. Bosnia, Albania and Kosovo did worst.

Table 2: Gross National Income (GNI) per capita 2003-2011
(PPP-adjusted, in international USD)3

2003 2011 Change
Romania 7,600 15,800 +8,200
Montenegro 7,500 13,700 +6,200
Bulgaria 8,400 14,400 +6,000
Croatia 13,00 18,800 +5,800
Macedonia 6,400 11,400 +5,000
Serbia 6,900 11,600 +4,700
Bosnia 5,700 9,200 +3,500
Albania 5,400 8,800 +3,400
Kosovo (5,800)4 7,500 +1,700
EU27 24,400 32,600 +8,200

 

3

There is another interesting correlation between per capita GDP and exports per capita. Compare Albania on the one hand and Bulgaria on the other (table 3).

Bulgaria already had higher exports in 2003, exporting goods per capita worth 900 USD more that Albania did. In 2011, however, Bulgarian exports per capita were worth 3,500 USD more than those exported from Albania. The absolute gap has more than tripled: it is growing, not closing.

Table 3: Annual export of goods and services per capita (current USD) 5

2003 2011 Increase
Slovenia 7,858 17,447 9,589
Hungary 5,064 12,957 7,893
Bulgaria 1,282 4,844 3,562
Croatia 3,273 5,930 2,657
Romania 950 3,403 2,453
Montenegro 833 2,857 2,024
Macedonia, FYR 893 2,759 1,866
Serbia 583 2,277 1,694
Bosnia Herzegovina 670 2,038 1,368
Albania 375 1,362 987
Kosovo 718

One final table shows the social cost of not catching up (table 4). Employment rates (all people of working age actually working) are significantly lower in Kosovo, Bosnia and Albania than in Croatia, Greece, Bulgaria or Romania (all Balkan countries are below the EU average here). Only 42 percent of the working age (!) population in Albania actually works.

Table 4: Employment rate (percent)

employment rate – people of age 15-64 working (percent)
Kosovo

37

Bosnia Herzegovina

39

Albania

42

Macedonia

44

Montenegro

46

Serbia

47

Croatia

52

Greece (EU)

56

Bulgaria (EU)

58

Romania (EU)

59

EU (27 countries)

64

Employment rate for Kosovo 2012, for Albania 2010

This indicates an enormous development challenge. A decade of peace has allowed all the Western Balkan countries to develop. However, growth based largely on construction and remittance-powered simple services has not helped a country like Albania catch up.

These four tables, and common sense, point towards two central policies for Albanian leaders to focus on in the coming decade to do better and break out of the current trap: 1. take exports seriously; 2. take EU integration seriously.


Erik Berglof, Chief Economist of the EBRD, listening to the incoming prime minister


The former Mayor of Korca (and incoming deputy prime minister) and Erion Veliaj, incoming minister of Labor


Preparing for an interview on the future of the Albanian economy. There are no easy answers.

 

Filed under: Albania — Gerald @ 10:49 am
2 September 2013

Summer always offers plenty of opportunities for reading. One of the most interesting new books I came across this time was a little tome, freely available on the internet, written a long time ago and almost from the moment of its first publication in 1759 part of the canon of European literature: Voltaire’s Candide, or Optimism.

This is a text everyone who ever went to school in France has probably read then; although I wonder if an adolescent can appreciate it as much as an adult with a bit more experience of the ways of the world. Since I had not read it before it was a pleasure to discover its wit this summer.

Classics can be read in myriad different ways. I read Candide while thinking about the economic and social future of the Western Balkans. I feel impatience with complacent assumptions that it is somehow a given that countries of the region will develop and catch up before long (because they remove trade barriers; because they have a European perspective; because they rise in the Ease of Doing Business tables; etc …). There is little sign for it at the moment and no reason to assume that they will unless a lot changes. On the other hand, it seems clear that there are also no simple and obvious policy prescriptions to be applied with no new intellectual effort, certainly not without taking into account the specific realities, legacies and potentials of these societies.

I read Candide while preparing project applications for ESI to work more on economic development in Macedonia, Albania and Kosovo in the coming months. And as I looked up from this little book one thought struck me:  unless policies, mentalities and public debates in Balkan societies change a lot, and fast, it is perfectly possible and indeed likely that in ten years the main economic activities will still be what they have been ten years ago, and are now: construction of private houses (some of them never to be inhabited), fuelled by remittances; the organisation of sumptious weddings, funded from money earned abroad; the purchasing of gold bracelets for brides for thousands of Euros, with little left for investments in education, new skills, or technologies to bring about development; misallocating scarce resources, one household at a time.

There is no need here to further interpret Voltaire’s 18th century master piece; this has been done before by tens of thousands of impressed readers, many much more qualified than I am. Candide is one of the most biting and witty attacks ever written against superstition and optimistic determinism, authoritarian rule and religious extremism, scholarly arrogance and brutal traditionalism. However, I do want to  whet your appetite if you happen to belong to the small group of people coming here and not having read it yet. I simply defer to the wisdom and genius of Voltaire and quote three short excerpts (The whole book is online.)

Candidate is, above all else, an unrivalled attack against complacency, as presented by the German teacher of the ingénue Candide, Professor Pangloss:

“Pangloss was professor of metaphysico-theologico-cosmolo-nigology. He proved admirably that there is no effect without a cause … “It is demonstrable,” said he, “that things cannot be otherwise than as they are; for all being created for an end, all is necessarily for the best end. Observe that the nose has been formed to bear spectacles–thus we have spectacles. Legs are visibly designed for stockings–and we have stockings. Stones were made to be hewn, and to construct castles–therefore my lord has a magnificent castle; for the greatest baron in the province ought to be the best lodged. Pigs were made to be eaten–therefore we eat pork all the year round. Consequently they who assert that all is well have said a foolish thing, they should have said all is for the best.”

Candide, after erring around the world, like a naive and hapless 18th century Ulysees, from France to Constantinople and across the world, discovers in the end that looking for ultimate answers to the biggest questions may well be in vain.

“In the neighbourhood there lived a very famous Dervish who was esteemed the best philosopher in all Turkey, and they went to consult him. Pangloss was the speaker.

“Master,” said he, “we come to beg you to tell why so strange an animal as man was made.”

“With what meddlest thou?” said the Dervish; “is it thy business?”

“But, reverend father,” said Candide, “there is horrible evil in this world.”

“What signifies it,” said the Dervish, “whether there be evil or good? When his highness sends a ship to Egypt, does he trouble his head whether the mice on board are at their ease or not?”

“What, then, must we do?” said Pangloss.

“Hold your tongue,” answered the Dervish.

“I was in hopes,” said Pangloss, “that I should reason with you a little about causes and effects, about the best of possible worlds, the origin of evil, the nature of the soul, and the pre-established harmony.”

At these words, the Dervish shut the door in their faces.”

So what is the conclusion of this tale, the distilled wisdom Candide arrives at … after travelling the four corners of the world? It is a lesson of startling simplicity: let everyone cultivate their gardens. The good life, and the good philosophy, is practical, like that of a gardener … sweating while working to help along things which can grow, aware that all good things are the result of patience as much as effort.

“”Grandeur,” said Pangloss, “is extremely dangerous according to the testimony of philosophers. For, in short, Eglon, King of Moab, was assassinated by Ehud; Absalom was hung by his hair, and pierced with three darts; King Nadab, the son of Jeroboam, was killed by Baasa; King Ela by Zimri; Ahaziah by Jehu; Athaliah by Jehoiada; the Kings Jehoiakim, Jeconiah, and Zedekiah, were led into captivity. You know how perished Croesus, Astyages, Darius, Dionysius of Syracuse, Pyrrhus, Perseus, Hannibal, Jugurtha, Ariovistus, Cæsar, Pompey, Nero, Otho, Vitellius, Domitian, Richard II. of England, Edward II., Henry VI., Richard III., Mary Stuart, Charles I., the three Henrys of France, the Emperor Henry IV.! You know—-”

“I know also,” said Candide, “that we must cultivate our garden.”

“You are right,” said Pangloss, “for when man was first placed in the Garden of Eden, he was put there ut operaretur eum, that he might cultivate it; which shows that man was not born to be idle.” “Let us work,” said Martin, “without disputing; it is the only way to render life tolerable.

The whole little society entered into this laudable design, according to their different abilities. Their little plot of land produced plentiful crops. Cunegonde was, indeed, very ugly, but she became an excellent pastry cook; Paquette worked at embroidery; the old woman looked after the linen. They were all, not excepting Friar Giroflée, of some service or other; for he made a good joiner, and became a very honest man.

Pangloss sometimes said to Candide:

“There is a concatenation of events in this best of all possible worlds: for if you had not been kicked out of a magnificent castle for love of Miss Cunegonde: if you had not been put into the Inquisition: if you had not walked over America: if you had not stabbed the Baron: if you had not lost all your sheep from the fine country of El Dorado: you would not be here eating preserved citrons and pistachio-nuts.”

“All that is very well,” answered Candide, “but let us cultivate our garden.”

I just returned from Albania. There I came across a strong sense of new optimism in this late August; a can-do-spirit accompanying the arrival of a new government.  Now I just hope that Candide’s final motto will become the guiding idea for reformers, there and across the Balkans, in coming years: let them all be like good gardeners!

Committed, hard working, confident. Better harvests are possible. Panglossian philosophies are dangerous. All good things take time and patience. And politics is either a succession of rulers, one replacing the other, in an almost meaningless carousel of vanity (at least today this no longer involves bloodshed in the Balkans) … or, at its best, the noble art of helping society cultivate its talents: producing crops, embroidery, citrons and pistachios.

Can this be all? And how does this argument relate to other current debates, like those on international interventions – from Afghanistan to Egypt? Is this really an argument for wise restraint or an excuse for selfish navel gazing?

What you make of it depends on you, of course. And yet it is always worth hearing this call for humbleness, this appeal in favour of practical, concrete and modest activism. Voltaire seems to say: do not pretend to change things you do not understand … but do change those you can, and make every effort then.

 

PS: If you want to read Candide you find the whole text here: http://www.gutenberg.org/cache/epub/19942/pg19942.txt

Filed under: Albania,Europe — Gerald @ 6:12 pm
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