The outcome of tonight’s apparent coup attempt in Turkey remains unclear, but the motivation for regime change in Turkey has been building under the surface for years. Turkey faces a perfect storm of economic, political and foreign policy problems.

First, Turkey’s much-heralded economic growth spurt of the 2000’s has come to a grinding stop. The Erdogan boom, which inspired predictions that Turkey might emerge as another China, resembled the Asian experience less than it did the Latin American credidt bubbles of the 1980s or the American subprime bubble of the 2000s. I wrote last April 25:

Turkey’s economy appears to defy gravity: with annualized GDP growth of 5.7%, it is the emerging market that has held up best under stressed global economic conditions. That is entirely due to the growth of domestic consumption; Turkish exports are flat despite the sharp devaluation of the country’s currency.  And domestic consumption depends on a flood of high-interest consumer loans.

According to the Turkish central bank, consumer debt is now almost equal to total personal income in Turkey, vs. a bit over 20% in the United States. The average interest rate on consumer debt, the central bank reports, is just under 17%.


That means Turks pay about 14% of their personal income as debt service, compared to about 5% a decade ago (in America, by contrast, debt service is just 10% of disposable income, which is less than personal income — vs. 14% in 2007 just before the crash).


The collapse of the oil price has reduced the cost of Turkey’s imports, which have fallen by 8% year on year. That should have led to a decline in the country’s external borrowing. Instead, external borrowing according to the BIS data jumped by more than 20% during the past year. It is hard to reproduce the BIS numbers (which are likely to be very accurate) from the foreign borrowing data provided by the Turkey central bank.

Turkish banks finance their balance sheet on global capital markets, which the rating service Moody’s thinks risky. In an April 9 report, Moody’s warned, “The Turkish banking sector’s dependency on external wholesale markets could contribute to higher funding costs in light of a weaker international investor confidence. Banks also face challenges from a slower economic growth, increasing dollarization of liabilities and volatile sentiment towards emerging markets, all of which keeps the banking system on a negative outlook.”

Moody’s may be looking at the wrong problem: too many countries have a stake in Turkey’s stability to allow a banking crisis to develop. The Gulf states appear to have financed Turkey during 2013-2014, when the country ran an enormous current account deficit. The Europeans will continue to finance Turkey for the time being. Bank balance sheets are fragile, but there is a political motivation to keep the banks funded. Turkish consumers have a different kind of problem: debt service consumes so much of their income that they cannot continue their present level of purchases much longer.

Turkey’s financial bubble will pop eventually, despite the best efforts of its funders to postpone the problem. In the meantime, enabling Ankara ensures continued instability in the region, more humanitarian crises and more refugees.

Secondly, Turkey’s internal cohesion is at risk due to the rapid increase of its Kurdish-speaking minority and the relative decline of the ethnic Turkish population. In a May 31 review  of Turkey’s latest demographic reports, I argued that Turkey could not hope to maintain its present borders for very long:

A review of the recently-released 2015 population data shows that the demographic scissors between Kurds and Turks continues to widen. Despite Erdogan’s exhortations on behalf of Turkish fertility, the baby bust in Turkish-majority provinces continues while Kurds sustain one of the world’s highest birth rates. Even worse, the marriage rate outside of the Kurdish Southeast of the country has collapsed, portending even lower fertility in the future.

According to Turkstat, the official statistics agencies, the Turkish provinces with the lowest fertility rates all cluster in the north and northwest of the country, where women on average have only 1.5 children. The southeastern provinces show fertility rates ranging between 3.2 and 4.2 children per female.

Turkish Fertility, Highest and Lowest Provinces

Even more alarming are Turkey’s marriage statistics as reported by Turkstat. Between 2001 and 2015, the number of marriages in Istanbul, the country’s largest city, fell by more than 30%, and by more than 40% in the capital Ankara. Most of the northern and northwestern provinces report a decline of more than half in the number of marriages. Not only are Turkish women refusing to have children; they are refusing to get married. The plunge in the marriage rate among ethnic Turks makes a further sharp decline in fertility inevitable.

Marriages by Province (% Change 2001-2015)

As I reported in my 2011 book Why Civilizations Die (and Why Islam is Dying, Too), Muslim countries that achieve a high rate of adult literacy jump from infancy to senescence without passing through adulthood. Like their Iranian, Algerian and Tunisian counterparts, Turkish women reject the constraints of Muslim family life as soon as they obtain a high school education. The shock of sudden passage from traditional society into the modern world has produced the fastest-ever fall in fertility rates in the Muslim world.

Iran, whose fertility rate fell from 7 children per female in 1979 to less than 1.8 today, has the fastest-aging population of any country in the world. Turkey has an average total fertility rate of 2.18, or just at replacement, but the split between ethnic Turks and ethnic Kurds will make Turkey’s present geographic configuration untenable.

The Kurdish demographic problem has led Erdogan into a political swamp from which he may not emerge. He won last year’s presidential election by stirring up national ardor against the Kurdish minority, and has kept the Kurdish southeast of the country in a low-level civil war since then. The leader of the Kurdish People’s Democratic Party warned last March that Erdogan had brought Turkey to the brink of an ethnic war.


To prevent the Syrian Kurds from controlling the northern border of their country and linking up with their Iraqi compatriots, Erdogan covertly supported Sunni terrorists, including ISIS, as Michael Rubin explained last March in Newsweek. Erdogan’s back channel to ISIS blew up in Turkey’s face–literally–when ISIS suicide bombers killed 42 people and injured hundreds at the Istanbul Airport June 29.

Since the collapse of the Ottoman Empire after World War I and the foundation of the modern state, Turkey’s army acted as the guarantor of the country’s secular state. The Islamist Erdogan attempted to reverse that, jailing hundreds of military officers on a spurious charge of plotting  a coup in 2012. Most were released in 2014. Erdogan could not do without the military, however; his failed foreign policy made him dependent on the Turkish army, which reasserted its influence this year. Erdogan proudly called himself a “black Turk,” that is, a devout Muslim from the Anatolian hinterland, in contrast to the “White Turks,” the Europeanized secular party who came to power under Kemal Ataturk and ruled the country until the 2000s.

Turkey’s political crisis stems from profound economic weaknesses, demographic imbalances and confessional, social and ethnic fractures. Whatever emerges from the coup attempt, it will take a great deal more than a change at the top to cure the sick man of Europe.


David Paul Goldman (born September 27, 1951) is an American economist, music critic, and author, best known for his series of online essays in the Asia Times under the pseudonym Spengler. Goldman sits on the board of Asia Times Holdings.

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