Online Extra: Q&A with the AKP's Ali Babacan

Says the founding member of the one-year-old party: We value tradition...family...ethics.... We are pro-European Union

Turkish voters will head to the polls on Nov. 3 to elect a new Parliament. The ballot promises to rewrite the political landscape of this longtime U.S. ally, where large, secular parties have traditionally held sway. The election comes at a dicey time, since Turkey is still recovering from its worst-ever economic slump, and war may be looming in neighboring Iraq:

It looks like the one-year-old Justice & Development Party (AKP, as it's known by its Turkish acronym) -- whose roots are in a previously banned Islamist party -- could come out as winner of the most parliamentary seats. According to public opinion polls, the AKP could gain 30% of the popular vote or more. Its political leaders expect to form Turkey's next government -- either on their own or in a coalition. Several parties that have ruled Turkey in the past may almost disappear from the political stage because they have been tainted with charges of corruption and chronic economic mismanagement. Parties winning less than 10% of the vote are not allowed to enter Parliament.

Since it's so new, the AKP has no track record in governing. But its leader, former Istanbul Mayor Recep Tayyip Erdogan, 48, is by far Turkey's most popular and charismatic politican. He has been banned from running in the general election because of a 1998 conviction for inciting religious strife. But he's still likely to play a role in advising any incoming AKP government.

To learn more about the party's policies, BusinessWeek Senior Writer Rose Brady spoke to Ali Babacan, 35, an AKP founding member. A graduate of Northwestern University's Kellogg School of Business, Babacan is helping to shape the AKP's economic policy. He runs his own textile trading company in Turkey and is currently a candidate for Parliament. Babacan was in New York to speak to investors about his party. Following are edited excerpts of their conversation:

Q: How do you expect your party to do in the November vote?

A: According to almost every single opinion poll, our party is the No. 1 party by far. It is highly probable that we are going to form a single ruling government after the elections. There is a small chance that we may have to form a coalition. Our leader, Mr. Erdogan, will be chairman of the party no matter what. We will declare another person to be Prime Minister if we get a majority of seats in the Parliament.

Q: What does your party stand for politically?

A: We define the AKP as a democratic, conservative party. We believe that we have a lot of things to do to have a well-functioning democracy in Turkey. We also value traditions. We value family. We value ethics. We are very vocal about this, and we are vocal about the religious rights of the people.

In terms of how we position our party, we are pro-European Union. We are a full supporter of EU accession. We believe Turkey is going to grow faster as a member of the EU. The norms and criteria of the EU will bring discipline and transparency to Turkey.

Q: Do you consider the AKP a pro-Islamist party?

A: Not at all. We call ourselves a secular and democratic party. We envision a government at equal distance to all religions. We envision a state that does not operate on religious rules. We don't think government should be involved in daily religious practices of people. Our vision of becoming a full member of the EU supports that. Our leader and his friends came from [former Islamic parties]. But they had a different vision of Turkey. That is why they split from those parties and founded the AKP.

Q: The outside world perceives your party as an Islamist party, however.

A: The problem is that we have a gap between perception and reality. When the party was founded, there was not much understanding at the beginning what it was all about. But we know that the gap is getting narrower, and we are doing a better job of describing ourselves. Our polls show that we get support from everywhere in Turkey, from all ethnic backgrounds, from people with different income levels, and people with different religious backgrounds.

Q: What sorts of reforms do you plan if you party forms the government?

A: We will restructure the government. We are trying to have a Cabinet of less than 25 ministers, compared to 38 in the current government. We are going to emphasize decentralization. We would like to have stronger, more autonomous, and more efficiently working municipal governments. Transparency and accountability are our key words. We will fight corruption, which is currently a problem. And we are planning to write a new constitution that will be prepared with international law in mind.

Q: What about the economy?

A: Turkey has a record of high and fluctuating inflation. We have to reduce inflation and have stable and low inflation. This year it will be 35%. And next year the target is 20%. We believe that the targets are attainable. We support the independence of the Turkish Central Bank. We also have to reduce debt. We will follow a tight fiscal policy, which is important for debt management.

We are putting emphasis on growth as well. The Turkish economy has to get a sustainable growth rate, which we envision to be at least 3% this year and 5% from next year. The whole objective of our economic program is building confidence. This could be a new era, when Turkey can make a leap to becoming a more developed nation that is more ready to become a member of the EU.

Q: Will Turkey support the U.S. in any military campaign in Iraq?

A: This is not directly in my area of responsibility. But the foreign policy of our party is parallel to the official policy [of the current government] of Turkey. We will be cooperative. We put a lot of value in [finding agreement on] a U.N. resolution [on Iraq]. We are a close ally of the U.S., of course. We would like to have a peaceful solution, but sometimes it is not enough. It is a difficult situation.

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