This conversation, which took place on September 28 2014, is in four parts - here is part 1, part 2 and part 4. There was much internal debate at openDemocracy about whether or not to publish the series. Read the Editor in Chief's reasons for doing so, along with the many responses we have invited: Behlül Özkan on the dangerous flaws in the AKP's foreign policy; Bulent Gokay on why Turkey will only become a real global power when it has a functional democracy; Bill Park on how governance is becoming more troubled under the AKP; Alexander Christie-Miller on the mass arrests of journalists this weekend; Firdevs Robinson on why Turkey's politicians must not be let off the hook; Oguz Alyanak on how they live in a parellel universe–and the political scientist Umut Özkırımlı on why we should not have published this piece at all.

In Turkey about 20% of population lives below the poverty line and there are approximately 1 million child labourers. Demotix/Wiktor Szymanowicz. All rights reserved. 

Richard Falk: The 9-point program that you unveiled in your speech to the AKP party congress outlined a comprehensive vision. But there appeared to be some tensions between your promise of fiscal discipline and tighter control of public expenditures, and your promise to make life better for the very poor and those who currently don’t have adequate health coverage. This creates an impression of inconsistency in your twin objectives.

This raises a further question: so far the economic success of Turkey has been premised on growing its own capacity to take advantage of economic globalization, and thereby adopting a kind of neoliberal orientation. This approach has been successful for growth but very regressive for equity and the distribution of income. As everywhere in the world, the rich are growing considerably richer, the poorer getting poorer.

As everywhere in the world, Turkey’s rich are growing considerably richer, the poorer getting poorer… How will you provide welfare for society as a whole despite a larger framework of neoliberalism?

So how can you reconcile fiscal discipline while restricting public expenditure, and how will you provide welfare for society as a whole despite a larger framework of neoliberalism that seems disinclined to restrict the efficiency of capital to achieve a more equitable distribution of income?

Ahmet Davutoğlu: There is a difference here between theory and practice. Fiscal discipline of course is important for the stability of the economy and politics. At the same time countries such as Turkey should have both a strategy based on the benefits of actual production and the goal of greater production.

Some of the assumptions that you raise have already been proved wrong in Turkey. Take the supposed tension between fiscal discipline and income distribution. Fiscal discipline has been maintained while income distribution is much more equitable than before. I can provide you with the relevant statistics in due course. For now I am describing an approximation of the situation.

When we came to power around 3% of the population were earning less than a dollar per day: around 20% were earning less than two dollars per day: around 40% earned less than 3 dollars per day. This is a very bad income distribution. Today there is no Turkish citizen who is earning one or two dollars. There are only 3-4% who earn less than 3 dollars. And we believe that in 2-3 years there won’t be anybody in Turkey earning less than 3 dollars per day. This indicates the improvement in the lot of our people who have a low income.

This brings up the relationship between fiscal discipline and neoliberalism. It is not true that there is no concern about social welfare. Yesterday, I received a briefing devoted to our assistance to handicapped people, which is at the annual level of $10 billion, almost one quarter of our total national investments. Such a considerable expenditure has prompted some to say that we are spending too much on welfare, given our other needs.

Sare Davutoğlu (wife of the prime minister): University education, for example, is free. I would say that this is also too costly. Health services are almost free. That’s also too much. Because some people are exploiting the system and they should pay something towards it.

AD: This is not neoliberalism as a heartless dogma, something we are against. Ali Babacan, [deputy prime minister of Turkey, responsible for the economy] is also the first to criticize such an understanding of economic policy. And this is not neoliberalism as generally understood. For example, we give public officers four weeks’ holiday. We are putting handicapped persons in public institutions so that their families can have a proper break. It is true that these people supported our campaigns, but we responded, promoting the dignity of handicapped persons.

For the first time in Turkish history, the share going to education in our budget is greater than the share allotted to defense. The highest item in the budget is for education. So there is an important social component of our economic policies. Many people may not realize this.

How do we finance such an approach? This is an interesting question. We are not an oil rich country, and we are not a capitalist country that achieves its accumulation of capital by exploiting other nations. That’s not our history. We have two sources of income. One is our human capital: a well-educated population. And the second is our geography, which is a big asset. We continue to invest for growth and in my government program, if you read the chapter titles, I have proposed some new concepts.  These include ‘humanitarian growth’ and ‘humanitarian development’.

I said in my program that I am against ‘horizontal architecture’ and that we have to be respectful of the environment and protective of the history of our cities, which will require a combination of several policies. The challenge is before us. I agree with you that when I came to power there was much idle capacity in the economy, but since then we have taken up the slack. We promoted fiscal discipline, taking steps to end corruption in order to realize our potential and act with greater economic efficiency. What we did was to fight corruption immediately, and to increase the capacity of the economy we mobilized our human resources.

In this process, the growth of our per capita income, which has increased four times since 2002, was not due to the adoption of neoliberal policies. For example, there was major investment in huge investment projects. In 2002 there were only 6,000 kilometers of two-way roads in the country. In the last ten years we have built 60,000 kilometers. Any neoliberal economy does not do such things. They think this is not an efficient use of public funds.

I was in Istanbul yesterday, and visited two or three construction projects, each expected to be the biggest in the world. One of these will be the biggest airport. We are taking measures to protect the environment. If we cut down one tree we plant three in carrying forward these construction projects. If two million trees are to be destroyed by road building, we plant ten million trees in the vicinity of the road. I told the project managers that I will come and count the number of trees they have put in place.  

So this fiscal discipline is needed but it is not the whole economic story. Now with this new economic program we will invest more on education because this is the main source of economic dynamism in Turkey. And to invest more in technology and science we need to invest in other sectors as well. Investments in textiles will continue.  And there’ll be new economic sectors that will be promoted.

RF: One of the most serious aspects of idle capacity in Turkey has been the failure to use woman creatively and productively, partly as a result of discrimination in the past. But take a look at the gender of those running government at present and there is surprisingly little representation of women. Will you address this issue? Take a look at the gender of those running government at present and there is surprisingly little representation of women. Will you address this issue?

AD: The role of women has increased during our period of leadership. The proportion of women in all aspects of life has increased. In politics, our party has opened a way, beginning with a change to the executive board of our party. I realized that there was only one woman and I said we should appoint another one. We have one woman minister, now on family and social affairs. But before this, there were no such influential women politicians. And I appointed another woman to run public relations for the AKP: so she is a public figure for our party now. In the cabinet there’ll be more. The only criteria for appointment will be merit and eligibility.

Read on: Here is part 1, part 2 and part 4–and here again is a summary of responses from the Editor in Chief.