Series: 1944-2020, 76 years of interference from the World Bank and the IMF (Part 12)

The World Bank’s support of the dictatorship in Turkey (1980-1983)

24 April 2020 by Eric Toussaint

In 2020, the World Bank (WB) and the IMF are 76 years old. These two international financial institutions (IFI), founded in 1944, are dominated by the USA and a few allied major powers who work to generalize policies that run counter the interests of the world’s populations.

The WB and the IMF have systematically made loans to States as a means of influencing their policies. Foreign indebtedness has been and continues to be used as an instrument for subordinating the borrowers. Since their creation, the IMF and the WB have violated international pacts on human rights and have no qualms about supporting dictatorships.

A new form of decolonization is urgently required to get out of the predicament in which the IFI and their main shareholders have entrapped the world in general. New international institutions must be established. This new series of articles by Éric Toussaint retraces the development of the World Bank and the IMF since they were founded in 1944. The articles are taken from the book The World Bank: a never-ending coup d’état. The hidden agenda of the Washington Consensus, Mumbai: Vikas Adhyayan Kendra, 2007, or The World Bank : A critical Primer Pluto, 2007.

  1. The World Bank: an ABC
  2. The International Monetary Fund (IMF): an ABC
  3. Concerning the founding of the Bretton Woods’ Institutions
  4. The WB assists those in power in a witch-hunting context
  5. Early conflicts between the UN and the World Bank/IMF tandem
  6. SUNFED versus World Bank
  7. Why the Marshall Plan ?
  8. Why the 1953 cancellation of German debt won’t be reproduced for Greece and Developing Countries
  9. Domination of the United States on the World Bank
  10. World Bank and IMF support to dictatorships
  11. The World Bank and the Philippines
  12. The World Bank’s support of the dictatorship in Turkey (1980-1983)
  13. The World Bank and the IMF in Indonesia: an emblematic interference
  14. Theoretical lies of the World Bank
  15. The South Korean miracle is exposed
  16. The debt trap
  17. The World Bank saw the debt crisis looming
  18. The Mexican debt crisis and the World Bank
  19. The World Bank and the IMF: the creditors’ bailiffs
  20. Presidents Barber Conable and Lewis Preston (1986-1995)
  21. James Wolfensohn switches on the charm (1995-2005)
  22. The Meltzer Commission on the IFI at the US Congress in 2000
  23. The World Bank’s accounts
  24. From Paul Wolfowitz (2005-2007) to David Malpass (2019-...): the US President’s men control the World Bank
  25. World Bank and IMF: 76 Years is Enough! Abolition!
  26. The World Bank, the IMF and the respect of human rights
  27. The IMF and the World Bank in the time of Coronavirus: the failed campaign for a new image
  28. The World Bank did not Foresee the Arab Spring Popular Uprisings and still Promotes the very same Policies that triggered them

«The World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

tried very hard to make the the Turkish military appear salutary, and to avoid criticising their interventions.The official comments from the Bank, that the 1980 coup d’état would not jeopardise the Bank’s intention to lend, were very courteous. [1]

The World Bank’s strategy in Turkey clearly recalls its policy towards Ferdinand Marcos’ dictatorship in the Philippines from 1972, Augusto Pinochet’s in Chile from 1973, and the economic model they promoted. Geopolitical reasons are once again a determining factor: a hinge between Europe and Asia, Turkey is an essential pawn on the Middle East chessboard. Consequently it is necessary to subordinate this country to Washington’s interests by giving full support to an authoritarian regime. The World Bank works in this direction when, in perfect agreement with the military leaders, it develops neoliberal economic policies that open the door wide to investments by transnational corporations and suppresses both trade unions and far-left parties. Such policies consolidate the rôle of Turkey as a spearhead for the United States in a historic new context.

In the 1950s the World Bank got off to a bad start in Turkey. Its signing officer, Pieter Lieftinck, from the Netherlands, was expelled by the Ankara authorities on the grounds of excessive interventionism.

Under Robert McNamara, Turkey’s geostrategic importance led the World Bank to increase its efforts to improve matters. A few months after becoming president, in July 1968, Robert McNamara visited Turkey. He knew the country well since it had been a military ally of the United States. As Defense Secretary until 1967 he was in close contact with Ankara. Anxious not to repeat what had happened with Pieter Lieftinck, the World Bank took great care Care Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine. not to appear too openly intrusive in the 1970s [2]. By the end of the decade it had gradually increased its pressure on the Turkish government, particularly in 1978 when the left-wing nationalist, Bülent Ecevit, became Prime Minister. In particular, the Bank tried to force an increase in the price of electricity.

The September 1980 military coup, which resulted in a dictatorship that lasted until May 1983, was very convenient for the World Bank, since the military leaders agreed to maintain the neoliberal plan it had drawn up with Süleyman Demirel [3] and Turgut Ozal.

Turgut Ozal [4] had been appointed state undersecretary for economic coordination by the then Prime Minister Süleyman Demirel. These two were to launch the neoliberal economic programme in January 1980. But its implementation was made difficult by TU actions, the sense of insecurity resulting from confrontations between right-wing and left-wing students, manœuvers in the Muslim Party which drove a hard bargain for its parliamentary support of Süleyman Demirel’s minority government… and the army’s thirst for power, intent on destabilising the government with the help of the US. However, the military regime, which dissolved parliament and put Süleyman Demirel in jail in September 1980, appointed Turgut Özal as plenipotentiary minister for economic affairs. He was then able to implement neoliberal policies for two years, until the financial crash that resulted in his eviction.

The World Bank enthusiastically supported the policies developed by the military leaders and Turgut Özal since they led the way to “increasing export incentives, improving external debt management, eliminating the budget deficit (…), reducing the level of public investment.” [5]

The historians of the World Bank wrote: “the Turkish program became a prototype for the institution’s structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

loan series.” [6]

Several factors made such developments easier:

1. the close connections between Turkish political leaders and Turkish senior officers in the World Bank. In addition to already cited names we can mention Attila Karaosmanoghu [7] and Munir Benjenk [8] men of the Bank par excellence. [9]

2. In 1977 a highly indebted Turkey experienced a crisis, and contrary to other indebted countries it was granted significant aid by Western powers (United States, Germany), the World Bank and the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
so that it did not go under. [10]

Turkey’s neoliberal turnabout was not easy since the Constitution that had been drafted in the early 1960s stipulated that the country develop an industrialization policy aiming at import substitution, and implement both protectionism and public investment to this end.

The military coup in September 1980 therefore had the World Bank’s wholehearted sympathy. It is likely that Robert McNamara knew about preparations for the coup for he entertained close relations with the Carter administration.

The example of Turkey is another illustration of how thoroughly the World Bank’s policies are determined by geostrategic interests, particularly those of the United States.

Historians of the World Bank even acknowledge this openly: “Personally as a global statesman, McNamara was not blind to Turkey’s geopolitical salience” [11]. Faced with the danger of the 1979 Iranian revolution that was hostile to the United States’ policy, Turkey’s stability had to be ensured by supporting an authoritarian regime. [12] The military coup in Turkey was prepared with the help of the United States.

In neighbouring Iraq, Saddam Hussein’s 1979 coup against a pro-Soviet regime was part of the same convergence of strategic interests. Later Saddam would serve the interests of the United States and of Western Europe when he launched the war against Iran in 1980.

This is not something the historians of the World Bank ever mention. However their comments on Turkey are clear enough: “The Bank seemed to take special pains to attribute benign motives to the Turkish military and avoid exhibiting displeasure at its interventions. The institution’s formal comments to the effect that the military takeover in 1980 would not displace the Bank’s lending intentions were extremely polite.” [13]

En 1988, la Banque mondiale écrit : “Parmi les clients de la Banque, la Turquie représente l’une des plus spectaculaires réussites »

When the military leaders handed power back to civilians, Turgut Ozal and his Motherland party led the government.

In subsequent years Turkey received five structural adjustment loans (until 1985). In 1988 the World Bank wrote: “Among the Bank’s clients, Turkey represents one of the most spectacular success stories.” [14]

Such a self-congratulatory observation deserves comment. If we look at one of the Bank’s major objectives, namely reducing inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. , there is little success to be celebrated: the annual inflation rate before structural adjustment was between 40 and 50 % at the end of the 1970s; under the military dictatorship that implemented adjustment, inflation reached 46% in 1980-1983, 44% in 1984-1988, 60% in 1989. In the following decades it reached an average of 70% with peaks as high as 140%.

In short, the objective of reducing inflation was definitely not achieved. The same applies to the public internal debt which exploded and to the external debt that increased even further.

But if we consider the Bank’s hidden agenda, it can indeed be said that it achieved a remarkable victory in the 1980s :

  • Turkey remained one of the Western powers’ staunch allies;
  • it completely relinquished the industrialization model by import substitution with a high level of protectionism and a high level of public investment;
  • it developed a model focusing on exports by increasing its competitiveness, forcing down real wages and devaluing its currency in significant proportions;
  • the TU movement and both the reformist and the revolutionary Left were repressed thanks to the dictatorship.

From the end of 1979 to 1994 the relative value of the US dollar to the Turkish lira multiplied by 900; this process started with a 30% devaluation Devaluation A lowering of the exchange rate of one currency as regards others. in 1980. In the 1970s real wages had significantly increased as a result of the trade unions’ influence and the political position of the far left among young people and workers. The 1980 military coup made it possible to ban trade unions and strikes, reduce wages and increase profits.

Turkey thus became a veritable haven for corporate investments. Turgut Ozal was rewarded and elected President from 1989 to 1993.

The World Bank steadily supported the military regime and the subsequent regime through loans of close to one billion USD per year.

In 1991, in exchange for its services to the United States and its allies in the first Gulf War, Turkey benefited from reparations paid by a defeated Iraq.

We can thus claim that the World Bank’s strategy in Turkey clearly recalls its policy towards Ferdinand Marcos’ dictatorship in the Philippines from 1972, Augusto Pinochet’s in Chile from 1973, and the economic model they promoted.

In 1999-2001 Turkey went through a financial crisis as severe as that of Argentina. Geostrategic interests again prevailed in the decisions taken: the IMF abandoned Argentina in December 2001 when it refused a new loan to President de la Rua while it simultaneously pursued its policy of loans to Turkey in order to prevent social disruption that would destabilise an essential pawn on the Middle East chessboard.

Now, as everywhere else, the aid provided by the IMF and the World Bank only increases the debt of recipient countries and Turkish citizens have a right to refuse further reimbursement to the Bretton Woods institutions. The debt that was contracted to the IMF and the World Bank is odious by any standards.


[1Kapur, Devesh, Lewis, John P., Webb, Richard. 1997. The World Bank, Its First Half Century, Volume 1: History, Brookings Institution Press, Washington, D.C., 1275 p. This book was financed by the World Bank for its 50th anniversary.

[2“The Bank in the 1970s was at pains in Turkey not to overreach” in D. Kapur, J. Lewis, R. Webb, 1997, vol. 1., p. 547

[3Süleyman Demirel (1924) served several times as Prime Minister (1965-1971; 1975-1978 ; 1979-1980). He was head of government again in 1991 then president of the Republic from 1993 to 2000.

[4Turgut Ozal (1927-1993) was Prime Minister from 1983 to 1989, then President of the Republic from 1989 to his death in 1993. He worked at the Bank in Washington from 1971 to 1973.

[5D. Kapur, J. Lewis, R. Webb, 1997, vol. 1., note 60 p. 548.

[6D. Kapur, J. Lewis, R. Webb, 1997, vol. 1., p. 548.

[7In the mid-1980s Attila Karaosmanoglu became vice-president of the World Bank for East Asia and the Pacific. He had been responsible for hiring Turgut Ozal as head of planning in 1960 and was deputy Prime Minister immediately after the 1971 coup.

[8Munir Benjenk was vice-president of the World Bank for Europe, the Middle East and North Africa all through the 1970s. Munir Benjenk was Robert McNamara’s direct advisor for Turkey.

[9Later it would turn into quite a tradition with, for instance, Kemal Dervis, former vice president of the World Bank, becoming Turkey’s finance minister from March 2001 to August 2002. In 2005 Kemal Dervis became director of the UNDP.

[10This continued in the 1990s and early 2000s.

[11D. Kapur, J. Lewis, R. Webb, 1997, vol. 1., note 62, p. 549.

[12At the time of the coup, tensions between the United States and Iran were very high since about a hundred American hostages were being detained in Teheran. The issue was at the core of the election campaign opposing Ronald Reagan and Jimmy Carter (running for a second term of office).

[13D. Kapur, J. Lewis, R. Webb, 1997, vol. 1., p. 547.

[14D. Kapur, J. Lewis, R. Webb, 1997, vol. 1., p. 550.

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

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