Seeing tomorrow through the lens of economic history (1)

To what extent will Hamas's attack on a concert venue in Israel, and Israel's retaliatory response in the Gaza Strip against Palestine, escalate?

What would be the effects of the war on the economy and on Turkey if it is short-lived or if it drags on and spreads?

Let us give very brief answers to these questions.

There has been no movement in exchange rates in Turkey due to the war. The rise in gold is explained by the influence of international markets. There are small fluctuations in oil prices.

However, if the war lasts for a long time, exchange rates will increase at least enough to close the gap with inflation; in the first stage, the dollar will reach the 36-40 level. There will be a rise in oil and commodity prices in world markets. The foreign capital inflows that Turkey urgently seeks will become even more difficult, and the cost of any foreign capital found will be higher than it is today. These are predictions that almost anyone can easily make.

The real question here is whether the war will spread and how long it will last?

Military experts and people working in the field of foreign policy have various analyses and opinions based on these analyses. In such situations, I try to "see tomorrow by looking at history, especially by looking at economic history."

What I am telling you from this moment on is not a prediction or a prophecy. I will try to establish a similarity between history and today. But I have no claim that this will necessarily happen. We can see this article as an attempt to take the issue out of the hot debates of the day and look at it from a broader perspective. For that reason, the article will be a bit long. I suggested to my editor friends that they publish the article as a series.

Let us remind you that there is a direct relationship between wars and economic interests.

The real reason behind the major wars in the world is the impact of severe and long-lasting economic crises, destructive market sharing, and economic and social structures that change especially according to developments in technology.

Capitalism has entered three major crises so far.

The first is the Vienna Stock Exchange crisis, which lasted 23 years (1873-1896) and is called the Long Depression. It is counted among the causes of the First World War.

The second is the 1929 Great Depression, which broke out in the USA and spread to Europe, lasting 10 years, and is among the causes of the Second World War.

The third is the stagnation of the Neoliberal system, which broke out in 2008 and, although it seemed to ease in 2016, is still ongoing and has also merged with the Covid-19 crisis.

How will Hamas's attack on an open-air concert in Israel and the killing of hundreds of people from different countries have an impact? Will it be a short-lived war of revenge? Or will it trigger the tensions, inequalities, and crises caused by the unipolar Neoliberal economic system since the Second World War, especially after the collapse of the Soviets, and lead to a major war?

On June 28, 1914, a Serbian nationalist killed Archduke Franz Ferdinand of the Austro-Hungarian Empire and his wife in Sarajevo. A month later, Austria declared war on Serbia and bombed it. The events led to the First World War.

Let's rewind the film by looking at economic history.

The first major crisis that capitalism entered began with the collapse of the Vienna Stock Exchange in Europe and was recorded as the Long Depression. The crisis, which began on May 9, 1873, due to the large amount of compensation France had to pay to Germany after the Franco-Prussian War, is cited among the economic causes of the First World War that broke out in 1914, even though it seemed to have eased or been overcome in 1896, 23 years later.

Germany surpassed England in the industrial revolution, in which it had lagged behind. In the 1860s, England's share of world industrial production was 25 percent. By 1913, this rate had fallen to 10 percent, while Germany's share had risen to 15 percent.

Germany became involved in overseas imperialism. In 1892, it obtained a concession from the Ottoman Empire and started the Baghdad Railway project. In 1895, it challenged Britain's naval supremacy and began a project to build the world's second-largest navy after England. These developments worried England and France. A military cooperation agreement was established between France and England (1904). In 1907, Russia joined this agreement. As a counter-alliance, the alliance agreement between Germany, Austria-Hungary, and Italy was renewed in 1907.

The Slavs and Balkan states, which declared their independence after the 1912 Balkan Wars, wanted to fight against Austria-Hungary after the Ottoman Empire and gain territory. The Balkan States gathered under the leadership of the Serbs. A Serbian nationalist killing the Austrian Archduke and his wife in Sarajevo triggered all the accumulated tensions.

The Austro-Hungarian Empire received a promise of support from Germany to declare war on Serbia and establish power in the Balkans, and to prevent France. Following this promise, one month after the murder, Austria declared war on Serbia and bombed Belgrade.

Russia declared mobilization and war against Austria, and Germany against Russia. Germany, taking advantage of this tension, occupied Belgium, which was under French control, with the aim of breaking the England-France-Russia agreement that surrounded it and receiving a heavy indemnity.

The importance of oil in the Middle East had emerged. England could not leave its imperial power over the Balkans, the Ottoman Empire, and the Middle East to the Germans. A major war broke out, not a war of revenge between Austria and Serbia, with a Serbian nationalist killing the Austrian Archduke and his wife. More than 20 million people died. (For the causes of the First World War, see: Understanding Global Conflict and Cooperation (Joseph S. Nye, Jr. & David A. Welch, translated by Renan Akmak, Türkiye İş Bankası Cultural Publications))

At the end of the war, 5 important treaties were signed in 5 suburbs around Paris. Germany, which was rising in Europe, lost 65 thousand square kilometers of territory both in Europe and in its colonies outside Europe. Its army was disbanded. It was sentenced to pay 5 billion dollars in war reparations, which was very heavy by the money of that day. (Treaty of Versailles).

With the Treaty of Saint-Germain, the Austro-Hungarian Empire was dissolved, Austria lost territory, and its army was disbanded.

With the Treaty of Neuilly, part of Bulgaria's territory was left to the Kingdom of Serbs, Croats, and Slovenes, part to Romania, and Komotini and Alexandroupoli to Greece.

With the Treaty of Trianon, the Kingdom of Hungary could only retain 28 percent of its territory. Yugoslavia and Czechoslovakia were established in the rest. (Today, Yugoslavia is divided into six states, and Czechoslovakia into two states.)

With the Treaty of Sèvres, the Ottoman Empire was confined to Central Anatolia around Ankara, and its army was disbanded.

Before the Treaty of Sèvres could come into effect, it was torn up by the unique leadership of Gazi Mustafa Kemal and the War of Independence, and the Republic of Turkey was established in its place with the Treaty of Lausanne.

The treaties from which the desired results were not fully achieved are Sèvres and Versailles. The 5 billion dollar war indemnity is very heavy and is not really payable. Germany enters a very severe crisis.

(TO BE CONTINUED)