Erdogan's Is Right

It appears that Turkish Prime Minister Recep Tayyip Erdogan is at loggerheads with his business community over whether to go to the IMF for aid.

Erdogan does not want to deal with the IMF, and the moneyed elites do:

"We will not cast our tomorrows into darkness by bowing to IMF demands in such a time of crisis," Erdogan said on Oct. 26, accusing the IMF of seeking to "squeeze Turkey's throat" by curbing needed spending programs.

That is a pretty good definition of what the IMF does, at least what it does to non-white countries. You can be sure that the strictures on recents IMF loans to Ukraine, Hungary and Iceland would be far less punitive than anything that Turkey would get, even though, by all standards, Turkey has cleaned up its act over the past few years, culminating in paying off the IMF in 2005.

What is going on here is what Naomi Kline outlines in The Shock Doctrine. Times are bad, so Turkey must return to economic policies that are in reality colonialism with a polite veneer.

One need only look at Malaysia in the Asian financial crisis, which did better because it refused IMF money and directives:

Malaysia stood out as a country that refused IMF assistance and advice. Instead of further opening its economy, Malaysia imposed capital controls, in an effort to eliminate speculative trading in its currency. While the IMF mocked this approach when adopted, the Fund later admitted that it succeeded. Malaysia generally suffered less severe economic problems than the other countries embroiled in the Asian financial crisis.

The long term solution is to tax or otherwise restrict foreign denominated loans because they always result in a crisis in which foreign powers dictate the shape of a local society.