Political Stability Index (PSI)
Hologram Network calculates political stability based on the following nine categories, which each include additional sub-categories and parameters that are formulated to predict Political Stability Index (PSI) ratings primarily for Turkey, as well as other Middle Eastern countries. Brief descriptions of these PSI methodologies are provided below.
1. Basic Legitimacy & Administrative Norms
The main legitimacy norms of a political system rated under this category refer to the qualities of the type of governance and the foundations of the nation defined under its constitution. Basic management norms provide a medium to monitor the security of the legal order and practice defined under the constitution using the Parliament’s laws, regulations and practices of ministries and other levels of government.
Basic Legitimacy & Administrative Norms comprise 15% weight in the general PSI index.
2. Parliament Support & Structure
The basic quality of a political system lies in the foundation and practice of its government. In the case of Turkey, Parliament Support and Structure rates Turkey’s commitment to democratic principles through the structure and practices of its Parliament and its durability, composition, viability and other critical factors. Additional developments affecting the legislative-executive branches are also rated with critical care.
The number of parties in the parliament, party discipline, deputy transfers which affect operations of government, occurences during legislative discussions, working conditions and sessions of the parliament, proposal and design of laws, quality of parliamentary organizations and voting procedures are all among the observed cases under this category. Parliament Support & Structure comprises 15% weight in the general PSI index.
3. Government Forming & Operation
Government is obviously the centerpiece in the measurement of political stability of any regime. The ability of a government to function in times of crisis is critical in measuring political stability. In short, “the presence and execution of government, is much better than not having government” which is a commonly used phrase by parliamentary crisis theoreticians.
Ratings within this category include, the stability of a government, its programs, the strengths and weaknesses of the programs, the execution of its responsibilities, its cooperation with other parties, the absence of corruption and ultimately the success of the government in fulfilling its promises to its constituents. Government Forming & Operation constitutes 10% weight in the general PSI index.
4. Political Efficiency & Governance
Political Efficiency and Governance may seem similar to Government Operation, however, in Turkey and many Middle Eastern countries, the size and intensity of the bureaucracy, necessitates a differentiation.
Government’s political decision making process, aka “its political bureaucracy” is rated by investigation of cases including the government’s ability to provide "action plans" and deadlines which are strictly followed, ability to abide by the checks and balances within the system of government, or developments concerning government’s application of the law equally for all bureaucrats and citizens are all among the observed cases under this category for example. Political Efficiency & Governance comprises 10% weight in the general PSI index.
5. Relations with Institutions
In general, Relations with Institutions monitors and rates developments concerning all interactions among government institutions, including civil, bureaucratic, independent, economic and international institutions. Cooperation/noncooperation, competition/collaboration, approval/resistance tendencies as well as relations within upper management organs such as the Presidency, the judiciary, civil and military organs, security and intelligence organizations and relationships with the Central Bank are also monitored and rated in this category. Relations with Institutions has 10% weight in the general PSI index.
6. Relations with Foreign Political Actors
Foreign policy preferences are at the core of monitoring foreign political relationships within the scope of PSI. Global trends are observed with special attention but before their impacts are certain we do not incorporate them within our rating system. There are four main parameters rated under this category: relationships among military bureaucracies, relationships among civil bureaucracies, relationships among high level politicians, and public perception. The relationships with actors such as the U.S. and E.U. differ, as with NATO, the U.N., the World Bank or the IMF, for example.
Since Turkey's unique geographic, geopolitical and strategic location is so vital, the PSI valuation for Turkey incorporates this reality into consideration. For example developments concerning the Kurds, the Syrian refugee crisis, military actions on the border, the Turkish ruling AK Party’s or any other political party’s attempts to thwart other parties or trials such as Ergenekon and Balyoz are also included. Relations with Foreign Political Actors comprise 5% weight in the general PSI index.
7. Bureaucratic Capacity & Full Usage
Modern societies have encountered many structural and long-term problems due to the scope, depth and even effectiveness of bureaucracies. On the one hand, while the effectiveness and security that bureaucracy can provide is applauded, on the other hand the level of limitations that it places over the dynamism and development of a society is often negative. Our ratings make sure that we make this distinction, given the widespread level of bureaucracy in Turkish and Middle Eastern societies.
We assess the general tendency and full utilization of Bureaucratic Capacity, together with the state of “commonality-equality-adoptability and consistency” of the government’s public services. Bureaucratic Capacity & Full Usage has 5% weight in the general PSI index.
8. Political Violence
Hologram Network monitors widespread violence as well as each singular violent event, regardless of its nature. Developments rated under this category include border conflicts, external conflicts that are not at the national level, attacks on financial institutions and foreign branches of corporations, terrorist attacks or riots within the country’s borders.
Other examples include, continuous violations of public order/safety, repeated threats regarding public health, operations of international political factions, criminal gangs and their interactions with the bureaucracy, as well as questionable criminal justice statistics. Political Violence constitutes 10% weight in the general PSI index.
9. Economic Stability Factors
Political analysis of economic stability does not aim to determine whether the economy of a country is in a good condition or not. What is politically valuable from a PSI standpoint is to what extent the assessments of the voters can impact an elected government’s economic plans. Within the scope of PSI what is measured is whether economic actors within the government follow what the population expects. Prices or interest rates may decrease or increase, but what is rated is the reaction of the public to this increase or decrease.
Hologram Network rates Economic Stability Factors within three phases. Developments rated under the first category include price fluctuations, strength of economic cycles, liquidity and credit fluctuations, conditions that shape general investment environment, size and ratio of public and private sector debt, the job market, GDP growth, interest rates, portfolio investments, foreign direct investments, and developments in the energy sector.
At the second phase, we monitor and rate the developments concerning the health of the securities markets, general investment appetite, limitations on foreign currency and the level of liquidity in markets, tax monitoring and nationalization projects. Protectionism; under all circumstances, is considered unfavorable from a PSI perspective.
At the third phase, developments concerning the government’s budgetary goals, plans and success of their economic goals are rated. Debt restructuring or delay, late credit payments or collections, sudden or large nationalizations, cancellation of large or common contracts are also assessed under this category. Economic Stability Factors constitute 15% weight in the general PSI index.
Our signature Hologram Meter summarizes Hologram Network's approach in scoring each individual development in time.
For each data point, occurrence or development, Hologram Network provides ratings according to the following weights and probabilities:
"Definite" with probabilities of 1 and 0.875;
"Serious" with probabilities of 0.75 and 0.625;
"Potential" with probabilities of 0.50 and 0.375;
"Possible" with probabilities of 0.25 and 0.125.
Probabilities are assigned according to our specially formulated time, conjuncture, marginality and resource filters. Their signs are either positive (+) or negative (-) and can change direction, depending on their effect on political stability. Each development can be rated as a "discrete occurrence", or part of an “incident series”, which represents continuous occurrences.