Turkey 2001

Exchange rate of the Turkish lira


In 2001, in Turkey , concerns about political instability led the U.S. to intervene financially. Concern over a political confrontation between the country's prime minister and its president, along with fear that Turkish nationalist or Islamic fundamentalist parties would take power in an important U.S. ally, led to the creation of a special working group of the National Security Council and was discussed frequently and intensely at the White House. In the end, the new Bush administration adjusted its free market rhetoric and worked with the IMF to arrange a $10 billion financial rescue; the loan was increased later in 2001 and then again in 2002, with Turkey finally receiving $23 billion from the IMF for a higher relative payout (as a percentage of pre-crisis GDP) than that provided to Mexico in 1995 (see chapter five of the book). 1


1) Roubini and Setser (2004: ch. 4); “Turkish Market Rises on Promise of Aid Package,” Washington Post , 27 April 2001; “How Bailout Skeptics Were Overcome. Turkish Aid: Ankara's Importance as American Ally Was Behind Washington's Support for IMF Funding,” Financial Times , 28 April 2001.