Turkish Debt and Conditionality In Historical Perspective: A Comparison of the 1980s with the 1860s

Abstract

After the mid 1950s Turkey embarked on a industrialization strategy which relied heavily on foreign capital inflows to finance its intermediate and capital goods imports. Associated with this strategy were regular balance of payments crises, often leading to exogenously imposed stabilization measures. Such stabilization measures were negotiated with the IMF in 1958, 1970, 1978–79 and finally in 1980. Of these, the 1980 programme stands out as the most radical in terms of the extent of structural change it seeks to achieve. The implementation of the 1980 programme which liberalized and opened the Turkish economy to world markets has been accompanied by unprecedented levels of foreign capital inflows. The performance of private investment, however, has not matched expectations and the debt burden of the economy has steadily increased. There are a number of useful comparative analyses of the 20th-century stabilization programmes (see Schick and Tonak, 1987; Ekzen, 1984). The purpose of this paper is to widen the historical context of the comparative analysis by looking at the period of the Ottoman debt and the stabilization programme of the 1860 British mission.