Amid political turmoil in Istanbul, foreign powers seize portions of the Ottoman Empire. In Europe, the latter is reduced to Turkey, comprising Eastern Thrace and Istanbul. After brief constitutional rule, Turkish war minister Enver Pasha and his nationalist reform group, the Young Turks, overthrow the government. Agriculture and foreign-owned industry dominate the economy.
Turkey, the European remnant of the Ottoman Empire, allies itself with Germany, then suffers defeat in war against Russia, France, and Britain. By 1918 Ottoman resistance, in part led by Mustafa Kemal of the Young Turks movement, is exhausted. Turkey signs an armistice with the Allies, who plan to occupy Istanbul. The government resigns. Foreign debt burdens the economy. Agricultural exports drop.
Mehmet VI, brother of the former sultan, heads an Allied-controlled government. Mustafa Kemal, revered as a symbol of Turkish nationalism, leads negotiations with the Ottoman government. The resulting National Pact guarantees the remaining Ottoman territory inhabited by Turkish Muslims and retention of Istanbul. Nationalists convene a Grand National Assembly and elect Kemal its president.
Facing a strong Grand National Assembly (GNA), France, Italy, and Greece withdraw from Anatolia. But the Dardanelles Straits remain under Allied control. The Treaty of Lausanne with the Allies recognizes present-day Turkey. The GNA deposes the sultan and proclaims the Republic of Turkey, with Kemal, now known as Atatürk, as its president and Ankara its capital. The Ottoman Empire dissolves.
The GNA adopts a new constitution and becomes a unicameral body elected by universal suffrage. The GNA is to elect the president who appoints a prime minister. To ensure passage of major reforms before entrusting the government to the democratic process, however, Atatürk governs by personal rule and founds the state party, the Republican People's Party (CHP). The liberal economy begins to recover.
President Atatürk, reelected in 1927, initiates radical reforms based on republicanism, nationalism, populism, reformist, statism, and secularism to "modernize" Turkey. A liberal economic policy enables strong economic growth, especially in export-oriented agriculture. The 1927 Law of Encouragement of Industry encourages private enterprise. Western European models influence welfare and social policy.
The global depression causes the collapse of Turkish agricultural exports. Atatürk, once again reelected in 1931, adopts government-directed, five-year economic plans. The introduction of comprehensive protective tariffs establishes a pattern of import-substitution industrialization. Turkey, saddled with Ottoman debt and seeking to avoid dependence on the West, refuses foreign loans.
Turkey seeks friendly relations with its neighbors and strengthens its ties with the West. In 1936 Turkey peacefully regains control the Dardanelles. Economic growth, led by state-owned industry, reaches an annual rate of 6 percent. After Atatürk's death in 1938, elections put Ismet Inönü of the CHP (the only legal party) in the presidency, with Celal Bayar as prime minister.
President Inönü maintains Turkish neutrality until 1945, when Turkey declares war on Germany and Japan in order to participate in postwar negotiations. The Soviet Union denounces a 1925 treaty of friendship with Turkey, marking the end of Turkish-Soviet relations. The dramatic drop in foreign trade and the cost of maintaining armed neutrality for five years cause economic stagnation.
The United States, seeing Turkey as a barrier to the spread of communism into the Middle East and Asia, extends substantial loans to Turkey to strengthen its economy and defenses. The government allows greater democratic liberties and opposition parties. Prime Minister Bayar is elected president in 1950 as a member of the opposition Democratic Party (DP) and selects Adnan Menderes as his premier.
Under Prime Minister Menderes, Turkey aligns itself with the West, allows U.S. air bases on its territory, and receives U.S. financial aid through the Marshall Plan. Tension with Greece mounts over the disputed island Cyprus. The economy expands, and investment laws attract foreign capital. Turkey covers current account deficits with external borrowing. In 1954 Menderes's government is reelected.
Greece and Turkey grudgingly reach an agreement setting up an independent Cyprus. In 1958 the Menderes government and the Democratic Party return to power, but with a reduced majority. Discontent regarding slow economic growth, the government's corruption, authoritarianism, profligate foreign borrowing, and increasing partiality to Islam results in a coup led by Gen. Cemal Gürsel.
Parliamentary government is reestablished. A new constitution provides for a bicameral legislature and a strong executive, but retains many Kemalist principles. Turkey's Second Republic is born. Gen. Gürsel is elected president, and former President Inönü of the CHP becomes premier. The DP weakens when many of its members are put on trial for treason and violation of the constitution.
The center-right opposition Justice Party (AP) adopts many of the DP's policies, appealing to peasants and recent migrants to cities. Mounting opposition and tense relations with Greece cause political instability. After staving off two coup attempts, Inönü resigns. The AP wins an absolute majority in elections, and Süleyman Demirel becomes premier. Poverty and unemployment are widespread.
The AP encourages private-sector development. The economic plan favors manufacturing and intermediate goods to the detriment of agriculture. Gen. Cevdet Sunay succeeds the ailing President Gürsel. The army, suspicious of Prime Minister Demirel's roots in the DP, clashes with the government and political extremists. Demirel wins the general elections in 1969, but the AP majority is reduced.
Economic distress and strengthening ties to the West fuel nationalist violence which, combined with earthquakes and a Kurdish separatist movement, cripples the government. The army forces Prime Minister Demirel to resign and imposes martial law until elections in 1973. CHP leader Ecevit forms a tenuous coalition government with the religious National Salvation Party under President Fahri Korutürk.
Turkish invasion of Northern Cyprus partitions the island, and Prime Minister Ecevit resigns amid political conflict over its annexation. Former Prime Minister Demirel forms a coalition government. Rising oil prices weaken the economy, which is dominated by inefficient, state-led enterprises. Inflation and unemployment soar. Industrial exports drop. Short-term foreign loans finance the deficit.
Ecevit of the CHP forms a coalition government in 1978. Facing a deteriorating economy and political violence, he loses the majority in 1979 and resigns. Demirel returns as prime minister, summoned by President Korutürk. A stabilization plan, devaluation of the Turkish lira, and rescheduling of Turkey's massive foreign debt fail to bring economic recovery.
The army stages a coup and sets up a junta, with Bülent Ulusu as prime minister and Gen. Kenan Evren as president. The junta imposes martial law and suspends political activity. Thousands of "terrorists" are captured. With state-owned companies draining the budget, the government begins a program to open the economy to international markets and ends its policy of import substitution.
A new constitution restores a unicameral parliament and keeps President Evren in power until 1989. Economy minister Turgut Özal cuts back subsidies and price controls and encourages exports and foreign direct investment. Turkey, under international pressure, allows political parties to operate. The conservative Motherland Party (ANAP) wins a large majority, and Özal becomes prime minister.
The liberalization program reduces external deficits and restores growth. Turkey attracts foreign investment, but continues to rack up debt. Discrimination against ethnic Kurds culminates in a separatist Worker's Party of Kurdistan (PKK) and guerrilla fighting under the leadership of Abdulla Ocalan. Human rights violations prevent Turkey from becoming a candidate for European Union membership.
Turkey enjoys strong economic growth. Prime Minister Özal succeeds Evren as president. Demirel, now leader of the conservative True Path Party (DPY), returns as prime minister to form a coalition government with the Social Democratic Populist Party. In 1991 Turkey allows the United States to launch air strikes against Iraq from its territory and keeps its borders closed to Kurdish refugees.
Demirel is elected to replace President Özal, who dies suddenly, and Tansu Çiller becomes the country's first female prime minister. High inflation, foreign debt, and years of deficit spending lead to financial crisis. The lira is devalued. Turkey announces stabilization measures and borrows heavily from the International Monetary Fund (IMF). Çiller advocates privatization of some state firms.
ANAP's Mesut Yilmaz becomes prime minister in a coalition government with the Islamist Welfare Party (RP) and the DYP. PKK leader Ocalan is captured and convicted of treason. Turkey enters a customs union with the European Union. The economy expands despite continued inflation. The government encourages private infrastructure investment despite legal and regulatory obstacles to privatization.
Corruption allegations force Prime Minister Yilmaz to resign. Former prime minister Ecevit heads a coalition of the Democratic Left Party (DSP), the far-right Nationalist Movement Party (MHP), and the ANAP. The government enacts banking reform to aid a faltering financial sector. A massive earthquake wreaks havoc on the economy. Turkey becomes a candidate for European Union membership.
Economic weaknesses, political instability, and the failure of an IMF-led structural reform package trigger a financial crisis. Ahmet Necdet Sezer, chief justice of the constitutional court, is elected president, backed by both the government and the opposition. The IMF prepares a second loan package as Turkey prepares to rehabilitate the banking sector and liberalize state-dominated industries.
A drastic devaluation deepens the recession and sparks capital flight. In the third bailout in two years, economy minister Kemal Dervis obtains $15.7 billion in loans from the IMF and the World Bank. Turkey pledges spending cuts, anti-inflation measures, and privatization. The pro-Islamic Justice and Development Party (AKP) sweeps elections in November 2002, and Abdullah Gul becomes prime minister.
The AKP, seen as Islamist, calms Western governments' and investors' fears with a new IMF agreement. It plans $4 billion in privatizations within the year. In refusing the U.S. military access to its border with Iraq, it sacrifices $5 billion in U.S. aid proffered to offset the war's adverse economic effects. Turkey stands firm against the emergence of an independent Kurdish state in northern Iraq.
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