Turkish Premier Announces Sweeping Economic Reforms

Prime Minister Tansu Ciller ordered massive repairs to Turkey’s debt-damaged economy on Tuesday in the boldest reform and economic stabilization package the country has seen since 1980.

Turkey’s leader turned in the best television performance of her troubled nine-month premiership in announcing the sale or closure of dozens of public-sector companies, a huge wave of price increases and a freeze on wages.

“We may have hyper-inflation and stagnation if no measures are taken. . . . Some Latin American states represent perfect examples of what may happen,” Ciller told a news conference transmitted live to Turkey’s 60 million people.

The wealthy, 47-year-old former professor of economics gambled that a warning of financial meltdown would persuade the Turks to swallow what she admitted was a bitter prescription.

Some worker protests broke out in Istanbul and provincial towns at the news that loss-making, overstaffed state steelworks, shipyards and breweries will be closed. But the protests were more somber than angry, and Ciller’s package contains some provision for social safety nets.

After years of debate, many Turks seem to understand the need to sort out the state sector. Some fear that economic failure will only aid the pro-Islamist Welfare Party, which won the mayors’ seats in Istanbul and the capital, Ankara, and 19% of the national vote in municipal elections March 27.

The economy clearly needs shock therapy as well. Inflation is at 73% and looks set to soar. Economic growth, which reached 7.4% in 1993, has collapsed since January, when the government ratcheted up interest rates.

To start reducing the deficit, Ciller announced price increases of 50% to 100% for a wide range of goods and services, including fuel, air tickets and the Turkish national drink, raki.

More convincing for worried observers like the International Monetary Fund was a range of long-delayed structural reforms.