Daniel Pipes on Turkey's fragile economy

A fresh look at what can happen to Turkey's economy which we  thought was doing beautifully, but is actually only a heavily made up mask of huge deficits requiring even bigger credit borrowing.  

Rebellion has shaken Turkey since May 31:   Is it comparable to the Arab upheavals that overthrew four rulers since 2011, to Iran's Green Movement of 2009 that led to an apparent reformer being elected president last week, or perhaps to Occupy Wall Street, which had negligible consequences?
The unrest marks a deeply important development with permanent implications. Turkey has become a more open and liberal country, one in which leaders face democratic constraints as never before. But how much it changes the role of Islam in Turkey depends primarily on the economy.
China-like material growth has been the main achievement of Recep Tayyip Erdoğan and the party he heads, the AKP. Personal income has more than doubled in the decade that he has been in power, changing the face of the country. As a visitor to Turkey since 1972, I have seen the impact of this growth in almost every area of life, from what people eat to their sense of Turkish identity.

That impressive growth explains the AKP's increased share of the national vote in its three elections, from 34 percent in 2002 to 46 percent in 2007 to a shade under 50 percent in 2011. It also explains how, after 90 years of the military serving as the ultimate political power, the party was able to bring the armed forces to heel.

At the same time, two vulnerabilities have become more evident, especially since the June 2011 elections, jeopardizing Erdoğan's continued domination of the government.

Dependence on foreign credit. To sustain consumer spending, Turkish banks have borrowed heavily abroad, and especially from supportive Sunni Muslim sources. The resulting current account deficit creates so great a need for credit that the private sector alone needs to borrow US$221 billion in 2013, or nearly 30 percent of the country's $775 billion GDP. Should the money stop flowing into Turkey, the party (pun intended) is over, possibly leading the stock market to collapse, the currency to plunge, and the economic miracle to come to a screeching halt..........