The paradox of Turkey today is that its economic problems are so desperate that there may be some hope for it.
The military and political repercussions of those problems are so ominous that, acting in self-interest, Turkey's NATO allies have begun to move to save it.
The moves have been swift and substantial. In April the United States, West Germany and others in a consortium of nations put together a $1.16 billion package of aid for Turkey.
In June, the International Monetary fund approved the largest credit of its history -- $1.6 billion for Turkey.
Turkey's private and public creditors have been negotiating in Paris to save the country $800 million per year by refinancing and restructuring its outstanding loans.
But even these substantial steps, which have made Turkey the largest recipient of foreign aid in the world, may not be enough to rescue the Turkish economy. It appears that large-scale continuing assistance will be necessary for three to five years more to ensure that NATO's staunch southern bastion will not be lost as a democratic, anticommunist, Western-oriented power.
Turkey's economic woes are in part common to many countries trying to pull themselves into the 20th century. They were compounded, however, by the device Turkey chose to accomplish the transformation: state socialism.
Whether or not every such system is doomed per se, its gross inefficiency in Turkey was guaranteed by the inheritance of outdated educational and bureaucratic organizations on the Franco-Prussian model and the early manning of its civil service by the least able of its university graduates, while the best found careers in the professions are what was left of private enterprise.
The country limped along during the 1950s and 1960s with Marshall Plan and other economic and military foreign aid sizable enough to make its Army the second largest of the European NATO nations, next to West Germany's. Its poor, hard-working farm families made it into one of the seven or eight countries in the world self-sufficient in food. Even today no one starves.
The fundamental troubles were concealed, however, and sometimes falsely made to appear as successes beginning in the 1970s by the hard-currency remittances from the many turks who left to work in industrial Europe (as many as 1.7 million in 1977) and the huge loans showered on Turkey without intelligent conditions by international banks.
The reality was exposed by the successive leaps in the 1970s of oil prices and the ensuing downturn of the world's economies. With vastly higher prices to pay for the four-fifths of the oil it has to import and the heavy layoffs of its "guests workers" in Europe, Turkey's huge surplus in international payments in the mid-1970s dispappeared overnight. By then, the costs of its debt servicing were enormous.
Turkey's foreign debt today is generally estimated to be between $14 billion and $18 billion (some say $22 billion). Its debt servicing -- if in fact it were to meet its obligations -- amounts to about half of all the foreign aid it is due to receive this year.
Under forced draft and given the most optimistic estimates, its exports will reach $3.5 billion, which will barely pay for its oil imports, assuming constant prices. Unemployment is estimated at 25 percent or more, with huge underemployment making matters worse. Factories, denied enough hard currency to import needed machines, parts and raw materials, were operating at less than 50 percent capacity at the end of last year.
Inflation runs between 75 and 100 percent annually; shortages of basic consumer goods such as gasoline, sugar, coffee, heating and cooking oil and light bulbs have been acute. During last winter, a particularly cold one, electric power outages were daily events in the large cities. Even hospitals could scarcely function; some refused to operate on patients for fear that they would perish of pneumonia.
Conditions have eased somewhat since the first of the year, thanks to international assistance. But even with aid and Turkey's usual sources of foreign exchange, the country is expecting to fall about $3 billion short of its projected $8 billion foreign exchange requirement during the next few years.
Turkey's economic growth rate, a stunning 6 or 7 percent a few years ago, has dropped to zero and is due to stay there or fall further for some time. Its black market, euphemistically called "the parallel economy" and tolerated by the government helps abate some of the cruelest deprivations both in consumer goods and industrial materials. But the black market fires inflation.
There is, however, one new and hopeful development in Turkey's economy. Under Suleyman Demirel leader of the nation's moderately right-of-center Justice Party, which came to power in January after two years in opposition, a change almost revolutionary in scope is being attempted. y
It amounts to nothing less than a major dismantling of the state socialism set up by Mustafa Kemal Ataturk and developed by his successors. Turkish state socialism now includes more than half of the nation's non-agricultural enterprises.
Except for transportation and public utilities and one or two other areas, all state-owned or controlled businesses, most of them high-cost and efficient, will lose their subsidies and be made to charge prices that cover their costs. Many may fall by the way, to be replaced by private enterprises; others may survive and compete.
Demirel is also aiding the private sector by giving its industries, especially exporters, much more foreign exchange to import necessary equipment and supplies.
Given time, a healthy economy can emerge. Turkey is a potentially rich country, with considerable mineral and hydroelectric resources, a large and excellent work force, and great potentials for agricultural exports and tourism.
For the moment, Turkey is in the vertical descent of the economic J-curve, enduring shortages and debt problems before it can build production for export and domestic consumption. It is not likely to turn around for several years. The financial crisis of this year will certainly be just as severe for two or more years to come; the need for aid and postponement, or forgiveness, of debt repayment and for other relief measures will continue well into the decade.
Turkey's success will depend on how long Demirel and his party can hold power. The unemployment, inflation, shortages and sacrifices that his economic program will mean over the long haul will cause severe political strains. Although the medicine seems right, Turkey's citizens may find it intolerable.