It is certain that Turkey's PM doesn't want an IMF deal

It is my evaluation that the prime minister doesn't want to cut any deal with the IMF. However, on the other hand, he sees that such a deal is crucial and approaches the issue thinking, "I can postpone this for as long as possible". In other words, he is aiming to drag out the deal process for as long as possible until just ahead of or after the upcoming March bi-elections.

He probably would choose not to sign any deal, if he thinks that he is no longer obliged to following the elections.

He can't see the fact that an IMF deal is not a simple bargaining process, but a progress that includes certain principles. He is also unable to see that such a deal is not assured, especially when talks are suspended or a challenging atmosphere is created during the bargaining.

In fact, Erdogan is unaware of the relations with the IMF since during his term he has never been faced with these difficulties. He has not seen just how much international institutions such as the IMF can increase tension, particularly when he doesn't keep promises he gave to IMF, and when it is becomes understood that his policy aims at "distracting markets".

Erdogan failed to understand how important these diplomatic moves were, especially since the IMF was very tolerant in the atmosphere that emerged from the 9/11 attacks, when the U.S. had felt an obligation towards Turkey.

He doesn’t know that for three years the IMF was extremely demanding in its relations with Turkey after former Prime Minister Tansu Ciller failed to keep her promises.

But, there is something he does know, something that happened during the term of the then prime minister, Abdullah Gul. They had just seized power in the country at the time and were not close to an IMF deal. Investors, realizing the economy would worsen after seeing the government’s approach, began transferring their assets out of the country. Extremely severe and immediate moves took place in the markets.

Following these reactions, Gul met with businessmen and declared that they would sign a deal with the IMF. The markets calmed and a period of relative stability returned. Erdogan was not faced with such problems after that.

IMF STILL TOLERANT

Are the markets unable to see Erdogan's intentions? And if so, why they don't show the same harsh reactions of the past?

My view, the government’s approach of: "We will do what is necessary, despite our opposition," still dominates the markets. In other words, they still think that eventually the prime minister will accept the deal.�What’s more, the current mood in the market drives them away from perceiving bad news under the crisis conditions. What I mean to say is that they see the risk in the IMF relations but they deliberately don't want to recognize it.

But, we know for certain that when this risk becomes more determined the markets will react harshly.

Erdogan said that the IMF was placing before them a new condition each day, and that they could not accept this. But, as far as we understand, the IMF is still flexible; for instance, the primary surplus target was lowered. Despite this move, since the budget is in bad shape, and new measures, cuts and revision are needed even  in order to meet past budgetary targets. The prime minister doesn't take the actual figures in the budget into consideration, but concentrates on the cuts.

That is why, I say that the situation has reached a point where I say, “That’s enough,” and believe that the prime minister does not want and is intentionally delaying an agreement

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