Professor Doctor Vefa Tarhan gave a speech on March 4, 2013 in the House of Commons of the Parliament of United Kingdom as the guest of UK centered think tank Centre for Policy and Research on Turkey (Research Turkey) and Labour Party. MPs of Labour Party, lords, Shadow Minister for Economy of the Labour Party, academicians, bankers, and journalists attended the speech.
Vefa Tarhan evaluated the Turkish economy along with the globally scaled developments seen in the world economy and predicted that “the euro zone economy of Europe will enter into a phase of a new and huge crisis”. Prof. Dr. Tarhan stated that the global economic system that dominates the world causes vast uncertainties and pointed out that “the days that Euro will not be able to survive is near”.
He stated that the political power in Turkey has failed to provide structural solutions for the chronic problems such as unemployment, crooked taxation system, low levels of savings. Additionally, in the last decade new problems such as current account deficit, domination of ‘hot money’ in Istanbul Stock Exchange, financing the deficit with the short-term funds, private sector’s use of credits on the basis of foreign currency, the dangerous point of financial leverage that has been reached by both in the corporate and individual levels came to the foreground. He emphasized that the most important source of fragility of the Turkish economy in the future is the record high levels of need for external financing. He pointed out that the economy may go through some dangerous experiences due to a possible crisis of global uncertainties led by the euro based problems. He concluded his speech by saying that the traditional approach of government of putting forward temporary solutions instead of providing structural and permanent ones is jeopardizing the future of the country and because of the accumulation of problems caused by temporary solutions it is putting the future governments in a difficult position.