Like Brazil's, Turkey's recent national election late last year initially spooked the markets as it was perceived that anti-Western elements could take the reins of power and derail difficult negotiations aimed at solving a debt crisis. In both cases, rationality and practicality prevailed, and both markets soared.
In the case of Turkey, the Islamic AK Parti's victory rattled investors as fears grew that Turkey's constitutionally secular state might become unglued from its long-held alliance with the West. The ability of the AK Parti to take and maintain a moderate stance was refreshing, and the capacity of Western nations to accept the political move with grace and aplomb was exciting. Recently concluded negotiations on Turkey's accession into the European Union were very good news. Barring a catastrophe, an entrance into the EU sometime after 2004 seems assured.
Things also look promising for Turkey on other fronts. The thorny issue of Turkey's occupation of Cyprus is looking more soluble than ever.
What is more surprising is the enthusiastic support from Greece for Turkey's accession. As for the possibility of extreme Islamic elements exerting overt influence in Turkey's politics, it seems rather unlikely. "There are pitfalls, but a virtuous cycle may be forming for the first time in a long while," said David Halpert, senior partner of Prince Street Capital, an emerging markets hedge fund.
Like Brazil's, the platform for Turkey's economic policy is simple: Deal in good faith with the IMF, take the path of reform and feed the poor. The Turkish government is pressing for about $600 million in medical care subsidies, a prickly issue with the austerity-obsessed IMF.
Subsidies are the price of democratic dealmaking and coalition building. Turkey was forced to make a Faustian bargain long ago when it offered massive agricultural subsidies to ease in a...