Wish we were in Rio

Turkey: Recep Erdogan needs both skill and luck. The Turkish prime minister has done a pretty job good economically — stabilising the government’s deficit and presiding over substantial growth before the recession. But his AK Party, which has been in office since 2002, has to deal with some tough internal problems, without much outside help.

The economy is not a disaster. The recession has been deep and inflation and unemployment levels are worrying, but Turkey’s budget deficit remains under control. As the global economy enters healthy recovery, growth should resume.

But the Greek crisis has further darkened the already dim prospects for Turkey’s entry into the EU. A European Union worrying about member bailouts will not want to let in a country that is poor, populous and prone to big budget deficits.

Membership — welcomed by the government as an aid to development and by the secularist opposition as a check on any Islamist tendencies in the government — is not on the cards.

The recession has naturally reduced the Erdogan government’s popularity. The AK Party’s approval rating in the polls has slipped from 47 per cent in 2007 to 29.5 per cent in January.

That’s pretty respectable under the circumstances, but the decline inevitably energizes the regime’s opponents.

Those opponents are mostly on the other side of the AK Party government’s long-running dispute with the old secular and military establishment. This may be reaching a crisis point after the arrest of senior officers on suspicion of plotting a coup. The battle saps political capital which Erdogan could use to propel economic reforms.

Erdogan’s attempt to beef up relations with Turkey’s radical neighbors has annoyed the United States, Turkey’s traditional ally, without helping economic prospects much, since the non-oil producing nations are in poor shape. Closer ties with China and East Asia might help, but China-Turkey trade, $12.8 billion in 2008, is heavily unbalanced in favor of China while Chinese direct investment in Turkey totaled only $313 million in September 2009.

Erdogan might sometimes wish he was running Brazil, which has a similar economic position, but faces far less daunting obstacles to progress.