CHP seeks to finance rosy pledges with frugal governance

The main opposition Republican People’s Party (CHP) has vowed to avoid extravagancy at state institutions and thus create adequate funds to finance its sound election promises, which have clearly disturbed the government.

For the first time in recent history, the election manifesto of an opposition party has generated unease among the ruling Justice and Development Party (AK Party). Ever since the CHP enumerated a number of noteworthy projects in the run-up to the parliamentary elections on June 7, outspoken AK Party deputies have continuously slammed its promises by citing a lack of administrational competence. Even though Prime Minister Ahmet Davutoilu later unveiled a replica of the CHP’s package to promote his own party, the government deputies have not refrained from critiquing the opposition’s pledges. Now, the CHP’s package has been brushing off sticks thrown at its supposedly high cost with regard to the state budget.

One of the most debated election pledges of the CHP is to prioritize those in retirement, a long-ignored section of the public, and to give them two top-up bonuses per year. After the CHP promised this, the AK Party also introduced a similar package seeking to consolidate the votes of retirees, who amount to 10.7 million, or a staggering 21 percent of the total vote.

Sunday’s Zaman talked with Faik Oztrak, a former Treasury undersecretary and the chairman in charge of the economy at the CHP, to shed some light on how the CHP might find the financial resources to support its election schemes.

Starting with a quick glance at the AK Party’s economic performance during its tenure, Oztrak described the past 12 years as an illusion-laden period. Starting with allegedly successful economic growth, Oztrak said the average growth rate between 2003 and 2014 is 4.7 percent, far behind the corresponding ratio — 5.1 percent — between 1946 and 2002.

Even the long-praised triple increase in the country’s gross domestic product (GDP) is a clear fallacy as the AK Party-presented calculation ignores the change in the value of the Turkish lira against the US dollar and the inflation rate over the past 12 years, turning a blind eye to real enrichment, Oztrak said.

“When you consider the change in consumer prices and exchange rates between 2002 and 2014, instead of $10,404, you would see that GDP per capita increased only from $3,492 to $5,210 in that period. Yet, even this increase falls well behind the growth rates sustained by the countries in our league — i.e., emerging markets,” he added. While Turkey was the 17th largest economy according to the purchasing power index in 2002, Oztrak added, in a bid to strengthen his argument, Turkey’s economy was still ranked in 17th place in 2014, suggesting that the country made no headway despite an abundance of funds generated by the AK Party in several ways.

“Fifty-seven governments between 1923 and 2002 financed their projects with merely $779 billion, of which $546 billion was generated from tax revenues, $130 billion from foreign debt, $95 billion from internal borrowing and $8 billion from privatization revenue. On the other hand, AK Party governments made use of $1.9 trillion, of which $1.5 trillion came from taxes, $273 billion from external borrowing, $96 billion from internal debts and a staggering $52 billion from privatization,” Oztrak stated, highlighting the AK Party’s extravagant expenditure across its tenure, saying that would be the resource with which the CHP will finance its projects.

“The CHP needs a total of TL 57.2 billion for the first year, which accounts for only 2.94 percent of the current GDP. State budgets have at least this much flexibility if not, this is another self-confession of [the] deteriorated economy,” Oztrak maintained, implying that his party projections are scheduled separately for both short and long terms. The main financial resources of the CHP will emerge after some alterations to the budget are made to overcome the ongoing lavishness at state institutions, Oztrak stated, referring to recent remarks made by Deputy Prime Minister Bulent Arinc. “Our record is poor on extravaganza,” Arinc said. “We would not need tax monies if we had prevented extravagance.”

Oztrak further explained: “We will use a shifting method through which some of the state funds allocated to certain institutions will be used in more effective ways under different state bodies. For example, a recent controversial amendment to the law granting a discretionary fund to the presidency will be repealed.quot The discretionary fund, previously, was a special pecuniary resource for only the prime minister to use to finance secret operations in which the state is not directly involved.

Rent expenditure for state buildings has risen by 352 percent rent for vehicles dedicated to state institutions have surged by 792 percent salary costs paid to advisers and consultancy firms skyrocketed by 1,204 percent between 2006 and 2014 and one of the world’s most luxurious presidential palaces has been built and some AK Party members are considering granting private planes to Cabinet members.

In light of this extravagance, Oztrak said: “Now they ask where we can find resources to grant extra salaries to retirees. While the unemployment rate was, on average, 8.3 percent between 1980 and 2002, it surged to 10 percent between 2003 and 2014. hellip It is hard to be ranked among the top 10 economies in the world by 2023 — one of the AK Party’s targets — yet we are already among the top 10 in the list of countries with the highest number of billionaires. While we have 32 US dollar billionaires, we have 17 million citizens living below the poverty line. Fifty-four percent of Turkey’s GDP is held by the richest 1 percent.”

On the other hand, the CHP’s economic model promises to build on four pillars, one of which is inclusive growth embracing as much of the public as possible. Transparent and accountable budget management will form another leg of the CHP’s economic model, competitive production at a micro level and sustainable macro balances will constitute other parts of its program, Oztrak said.

Concluding the interview, Oztrak added, the CHP would donate the newly built presidential palace to Turkey’s Middle East Technical University (ODTu).