But they’re all very general. I agree with what you’re saying, of course. We have so many fundamental problems that first we have to deal with those fears and issues, and then set to work.


A friend of mine at the Central Bank once said, “We’re like a dysfunctional family that can’t agree on everything, so they can’t agree on anything.” It shouldn’t be this way, but since we can’t solve everything in one go, we don’t even make a start somewhere. But what we need to do is so obvious in places that you have to make a start there. We can think about the rest in the meantime; there’s no obligation to sort it all out in one go. We’re all in agreement, for example, that independence of the judiciary is essential, and it’s not like we don’t know how to achieve it.


Before concluding this enjoyable conversation I’d like to touch on conditions worldwide, as these are important to our discussion. Could we look at global developments from two angles? What’s your evaluation of the short term, that is, of present conditions? Let me summarize the Eczacıbaşı Group’s view: We see encouraging improvement, especially in our export markets. This naturally depends on Europe. How indicative this is of the general global outlook is debatable, but we’re quite pleased about developments in recent months, especially in view of the long stagnation period after 2011. Is this permanent, or merely a temporary improvement? We’re not entirely unjustified in worrying, because we’ve had similar situations in the past. We kept expecting things to get better after the 2007-2008 global financial crisis, but there was no real improvement. I wonder if this time the light at the end of the tunnel is in fact daylight. Does it signal a bright period, a better time? In economics-speak, do you see the present recovery as cyclical or structural? I’m very interested in your views.

The second angle I’d like to touch on is the more fundamental, long-term issue of the uncertainties caused by surprising political developments: Brexit in the UK in 2016, and the rise of Trump in America. Volumes have already been written on the similarities between the two. Are these signs that the world order will face a very grave and fundamental problem in the long term?

Are we in a situation where we’re looking for a solution but this time there are no options? As we all know, there was a time when the slogan “the system must change” had entered the political discourse in Turkey. The meaning was very clear then. The desire – or at least the intention – was to replace the system with socialism. It sounds like the same cries for change are ringing across the globe now. All these political developments seem to indicate that, too. But this time thinkers, ordinary people and politicians aren’t presenting socialism as a serious alternative. Of course, socialism has its supporters, that’s only natural, but the perceived lack of alternatives seems to weigh more heavily. What might be the consequences of this? Could we please touch on that topic a little?

I’ll ask one more thing that might alter the direction of the debate and really matters to me: What would you recommend to business leaders? What should we do? What are our duties with respect to the issues in Turkey, new approaches to global challenges, and the signs of dire straits ahead? Would you say, “Just get on with your work and never mind the rest,” or would you have other recommendations for us?

I think that this time the recovery is going to be lasting. True, interest rates are still too low, and the growth environment is very fragile. There’s still far too much debt in the system, the demographics are no secret, and productivity is stagnating across the world. But although the basic determinants of growth are weaker, the European and American economies seem to be recovering, albeit slowly. Unless there’s a major catastrophe or shock, growth appears to be a bit more durable this time. The greatest risk is the second matter you touched on, the political aspect. That is the great black cloud over our heads. We still can’t make Trump out. There seem to be two Trumps: one who throws down the gauntlet to China with a 3 a.m. tweet, Trump the protectionist. Then there is the Trump hailed by the markets, especially in the past few months. Why? Trump the businessman will spend, reform taxes, and deregulate finance. So, the greatest risk for the global economy is if Trump ends up disappointing business. Let’s take a broader perspective: Where are we going? As you’ve just expressed so well, will we see the ill-founded “populist” ideology flounder and disband with minimum damage when it’s unable to finance itself and deliver on its promises? Take the UK; for example, I think it would be a good thing as well as a bad thing for Brexit to create a recession in a couple of years. The British would be able to see that Brexit was the wrong decision, and the “center” would regain strength. That’s my only hope, because populism isn’t something you can sell indefinitely; it’s empty and unsustainable. We know the backlash that previous waves of globalization have led to.


I’d like to add something here: It’s best not to expect very rapid growth in Europe, because it experienced a Turkey-like crisis, a developing country crisis. We know those crises very well, mainly because we’ve experienced so many, and another thing we know is this: One of the best things we did in the wake of the 2001 crisis was to reform our banking sector, to recapitalize it. During the 2008 crisis American banks collapsed and their shares fell dramatically. The same happened to European banks.

Right in the middle of the crisis, the FED told American banks that their assets would be seized unless they recapitalized, and the banks had to comply kicking and screaming. European banks are still way undercapitalized. Rapid growth for the European economy is out of the question with that banking system. There’s no will to tackle it either, neither politically, nor through a regulatory body. And because there isn’t, there’s no banking system in Europe to finance rapid growth. That’s why Europe’s doing only as well as it can. As you can see, at least it’s growing and unemployment is falling, albeit slowly. The eurozone is now going through the worst growth period in its history. It’s very sad, but not puzzling; we all know that growth after a financial crisis will be slow, but there is one more reason why growth isn’t faster in Europe – and it’s one we’ll understand all too well. It’s not going to be easy for Europe to grow faster with their current level of capitalization and non-performing loans.


Are we going to defend globalization? Wouldn’t you say to a businessperson who does, “It’s obviously helped you. So, defending it is quite natural, but you can’t see the problems it’s created. Not everyone benefits equally. Standing on the winning side, you ignore the trouble it’s caused.” Wouldn’t you make this criticism?

Quite right, but lessons will be drawn as well. At the end of the day, globalization has made the pie much bigger.


What are those lessons?

Forging safety nets, giving people a hand up: it’s quite important to give those left behind a hand up. At the end of the day it’s not all about the economy either; there are lots of issues concerning belonging and identity, like the Americans who’ve lost their jobs in the manufacturing industry. They’ve lived with that job all their lives, and when their job goes, everything goes. There are no simple answers, of course, but as long as these troubles are recognized and certain measures are taken, I still defend globalization as the best model we have at present. A little like Churchill’s view of democracy as “the worst form of government except for all the others.” Perhaps what I mean is fighting against populism rather than defending globalization. Because populism is truly empty, and it could have awful consequences for the world.


Do you attribute the rise of populism or the political developments it’s triggered to the growing imbalance in income distribution, and do you see this as a threat in the long term?