Turkey: Financial Crises in Context (CRS Report for Congress)
| Release Date |
March 13, 2001 |
| Report Number |
RS20842 |
| Report Type |
Report |
| Authors |
Carol Migdalovitz, Foreign Affairs, Defense, and Trade Division |
| Source Agency |
Congressional Research Service |
Summary:
In December 1999, with International Monetary Fund support, Turkey launched a major
economic
reform program intended to cure chronic inflation. Its main elements were a crawling exchange rate
peg, structural reforms, and privatization. Some progress was made in 2000, but implementation
was uneven. A severe liquidity crisis in late November 2000 required a new IMF loan. On February
22, 2001, after a second crisis, Turkey abandoned the currency peg and, with it, the program.
Analysts concur that stabilization, privatization, and banking reform are still needed, but Turkey's
statist ideology and divided coalition government may continue to undermine the prospects for
radical change in economic policy. Neither the government nor individual ministers have taken
responsibility for the crises, yet there may be no alternative to the current government under present
circumstances. The crises set back Turkey's hope to comply with economic criteria for EU
membership. U.S. officials believe that the United States needs a stable Turkey for geopolitical
reasons and, as a result, the U.S. supports continuing economic reforms. See also CRS Report RS20253(pdf) , Turkey: Continuity and Change after Elections .
