Fiscal Crisis and Foreign Borrowing in the Ottoman Empire: Historical and Contemporary Discourses and Debates

Abstract

From the 1850s on, the Ottoman state increasingly resorted to foreign loans in order to finance warfare and the lavish expenditures of the Imperial court, starting down the road to insolvency. In 1875, the Empire, unable to cope with mounting debt and deteriorating financial circumstances in the European markets, defaulted on its loans and ultimately agreed to compromise its financial autonomy by ceding control over more than one-third of state revenues to a foreign controlled council, the Ottoman Public Debt Administration (OPDA). In the last decades of the Empire, the OPDA played a pivotal role in the transformation of the Ottoman economy and became a symbol of western imperialism in the country. Still today, the Ottoman experience with foreign borrowing and the resulting European control of Ottoman finances are occasionally cited by politicians and pundits all along the political spectrum. This paper explores historical and contemporary discourses and debates on Ottoman foreign borrowing and their relevance to contemporary Turkey.