The Kapali Carsi

The economic consequences of the peace (for Turkey)

John Maynard Keynes wrote “The Economic Consequences of the Peace” one year after the Great War ended. Misconceptions on the economic consequences of Turkey’s peace with the Kurdistan Workers’ Party (PKK) led me to act now.

This is is the intro. to one of my recent Hurriyet Daily News (HDN) columns. I am sure that most Economonitor readers would have heard that Turkey is in a peace process with separatist Kurdish PKK, as it features every few days in all the major newspapers. While almost everyone has concentrated on the political process, there has been a huge hype, in Turkey at least, on the economic consequences of the peace. I feel that this optimism is exaggerated. I argue in the column that while peace will naturally have a positive economic impact, it won’t transform Southeastern Turkey, the Kurdish region of Turkey affected most by terrorism, overnight. This is simply because the binding constraint preventing investment in the region is not really terrorism; at least it is not the only one. Without an educated workforce and decent infrastructure, firms, domestic and foreign alike, will not be rushing to invest there. Anyway, you can read the whole thing at the HDN website, but if you want more optimistic views, have a look at the articles at FT’s beyondbrics blog- their in-house view as well as a guest post… And there is another one in Turkish over at ekonomiturk blog– in case you happen to read our beautiful language…

Of course, there is also Norhern Iraq/energy implications of the peace, but you could also argue that Turkey already has obtained huge commercial benefits there, and that the additional impact of the peace would be marginal. And Seyfettin Gursel of Radikal makes a similar argument (in Turkish), arguing that the region was not as adversely affected from terrorism as many thought in the first place.

As a final point, I am a mere economist, so maybe it’s just me,  but I have yet to figure out what the PKK is gaining from peace, unless they believe it will ultimately lead to independence. This is an organization that makes a significant amount of money from drugs and extortion, and so dismantling itself would mean depriving itself of some serious revenue. But it seems politics authors are asking the same question as well: In her column at Radikal (in Turkish), Ezgi Basaran quotes leaders of the pro-Kurdish party BDP, who argue the PKK will gain legitimacy. Dunna…

2 Responses to “The economic consequences of the peace (for Turkey)”

BurakApril 29th, 2013 at 8:50 am


I asked the same question yesterday. All I hear is PKK fighters are pulling out of Turkish borders. Ok great, but what's their motivation?

ErsinMay 23rd, 2013 at 8:20 am

I totally agree!

To uplift the economicy in southeast Turkey you need infrastructure which has never been built up there and, sure, suffered by the conflict over decades. But maybe this was the origin of the conflict and now we got a chance for a change!?

And I agree again: you cannot correct this overnight!