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TURKEY


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 237,972 182,848 147,700 21
         
GNI per capita
 US $ 2,790 2,500 2,530 92
Ranking is given out of 208 nations - (data from the World Bank)

Books on Turkey

REPUBLICAN REFERENCE

Area (sq.km) 
780,580

Population 
68,893,918

Capital 
Ankara 

Currency 
Lira 

President 
Ahmet Necdet Sezer 



Update No: 109 - (29/06/06)

Mayhem in the courts
The Turks have been badly shaken by a bizarre case of assassination. In mid-May a judge in Turkey's highest administrative court was hit by a gunman, while four other judges were wounded in the attack. Council of State judge Mustafa Ozbilgin died in the 17 May incident.
It appeared to be a case of religious fanaticism striking a blow against the country's secular system of justice, a key to the general secularism introduced by Ataturk before the war. It propelled tens of thousands of Turks to protest what they saw as an Islamist assault on the country's secularist tradition - the accused gunman, Alparslan Arslan, was depicted as a religious radical. Now, this certainty has evaporated.
After being taken into custody, Arslan reportedly said his actions were motivated by a desire to "punish" the judges for a February ruling upholding a ban on women wearing the Islamic headscarfs in public institutions. This would chime in with the idea that he was a lone religious nutter.
More recently, however, investigations have been unable to provide convincing evidence in support of the allegation that Arslan is an Islamicist. Even the widely-reported contention that he shouted "Allah is great" before opening fire has been denied by one of the four judges wounded in the attack. 

The ultra-right responsible
Turkish media are now revising their conception of Arslan, portraying him instead as a man steeped in the violent world of ultra-right-wing nationalism since his days as an Istanbul law student. Judging by the 17 men police are questioning in connection with the shooting, Arslan also has friends in patriotic places. Most of the suspects are small-time organized crime figures, and at least one man claims he received money for his work. But media attention has focused largely on Muzaffer Tekin, a former army captain whose CV reads like an encyclopedia of Turkey's shadowy anti-democratic opposition. 
Suspected by police of being the gang's mastermind, Tekin's links with some of Turkey's more notorious organized crime bosses have made headlines for days. For skeptics, his arrest after an apparent suicide bid dispelled all notions of an Islamist plot. Two other individuals besides Arslan and Tekin are now in custody in connection with the shooting incident, and Turks have begun to suspect the involvement of the so-called "deep state". 
The phrase is shorthand for ultra-nationalist elements close to the security forces willing to take the law into their own hands to defend what they see as Turkey's best interests. "We know the murderer's identity", columnist Ergun Babahan wrote in the mass-market daily Sabah on 23 May. "Whenever there is an increase in demands for democracy, freedom and justice, his signature is on acts designed to frighten people back into the authorities' arms." 

Slight on the government
After decades spent watching the state cover up its relations with the criminal underworld, few Turks expect police to get to the bottom of Ozbilgin's murder. But it hasn't escaped the attention of most Turks that the attack did considerable political damage to the governing Justice and Development Party (AKP). Accused by secularists and pro-establishment media of encouraging Islamic extremism with their religious-minded brand of politics, several ministers were physically attacked by crowds as they tried to attend the judge's 19 May funeral. The next day, Turkey's normally mild-mannered army chief, Gen. Hilmi Ozkok, called on the public to maintain protests, drawing a swift condemnation from Prime Minister Recep Tayyip Erdogan.
During a meeting of the AKP parliamentary faction on 24 May, Erdogan said that the "bloody conspiracy, behind which stands a gang of traitors, targeted economic and political stability, as well as democracy," according to the Zaman Online web site. 
Relations between the AKP government and staunchly secular elements of the state apparatus have never been warm. Many members of the judiciary and army believe that the AKP's fast-fading, pro-European reformism is a ploy aimed at weakening Turkey's secularist tradition.

Electoral frenzy
Recent comments by AKP members about the need to rethink Turkish secularism have generated considerable controversy. But commentators say the main reason that staunch secularists want to send the present government packing is connected with the upcoming rotation of the country's presidency. The term of the incumbent, Ahmet Necdet Sezer, is set to expire in May 2007. Some believe Erdogan is angling to succeed Sezer. 
Though largely ceremonial, the president is seen as the figurehead of Turkey's secular state. Veteran commentator Mehmet Ali Birand has no doubt the killing of the judge was a veiled warning to the AKP. "Something's become very clear: a secular lobby will not let Erdogan get the presidency," he says. "If he tries, it will be as bloody as we have witnessed."
For months, opponents of the government have been calling on it to take the country to early elections. Now, some of their supporters are joining in. A political analyst sympathetic to the AKP, Cengiz Candar points out the growing signs of stress in Turkey's economy. "To ward off more tension and potentially even worse crises ahead," he wrote in the daily Bugun on 24 May, "the public must be asked its opinion." 

Turkey raises rates to tackle inflation surge
Turkey's central bank recently raised interest rates by 175 basis points to 15 per cent, its first increase in five years, in an attempt to calm financial markets battered by a heavy fall in the value of the lira, the Financial Times reported on June 8th.
The scale of the increase, twice what the markets had expected, signalled the bank's resolve to tackle a sharp rise in inflation that has unsettled financial markets.
Analysts said the move - which is sure to dismay the government - was designed to reassert both the bank's anti-inflationary credentials and its operational independence. Both have been called into question in the past two months as inflation has edged up towards double digits again, leading to accusations that the monetary policy committee had misread the inflation outlook. The increase in rates also followed a political controversy over the appointment in April of a new governor.
Serhan Cevik, an economist at Morgan Stanley, said the rise was "a move to manage (inflation) expectations and curb the secondary effects of what is a supply-side shock. More importantly, this declares the independence of the central bank."
The rise announced after Turkish financial markets had closed for the day, marks a decisive reversal of five years of monetary easing that has helped to fuel strong economic growth. The government had been banking on a continuation of Turkey's economic boom ahead of next year's general election.
Prime Minister Erdogan and his cabinet are struggling to convince investors and the European Union that their agenda of political and economic reforms are on track. Ministers have been accused by Turkish business leaders of taking their eye off the task of meeting EU accession criteria for the sake of electoral considerations. Tensions have also been rising between the government, which has its roots in political Islam, and the secular establishment, including the president and the military.
Ali Babacan, appointed Turkey's chief EU negotiator a year ago, is to give his first press conference in that role, which he has yet to turn into a position of influence in the government. He is expected to make a robust case for government policy and to argue that the EU accession process remains on track.
The lira rose in London trading after the announcement by the central bank, headed by Durmus Yilmaz. The currency has fallen by up to 20 per cent against the Euro and the US dollar in the past six weeks.
Mahmut Kaya, head of research at Garanti Securities, said a 10 per cent fall in the lira lifted Turkish inflation by 3 percentage points. That made it essential for the bank to act. "There is absolutely no doubt that the weakening of the lira is inflationary and has been filtering through to many sectors of the economy," he said.

Turkey as a base
Among foreign countries, Turkey has always maintained the strongest relations with the Central Asian Republics, including Kazakstan. Turkish companies have been investing in Central Asia for years due to strong geographic, cultural and language affinities with investments focused on sectors such as food, beverages, oil industries, banking, retailing and tourism in Kazakstan. This relationship is one that many others from the Muslim world can look to leverage.
In early March, Dubai Bank signed an agreement with Daruma Corporate Finance of Turkey to develop and market Shari'ah compliant corporate finance and merchant banking services which would also be marketed to Turkey's Central Asian neighbours including Kazakstan. This partnership is reflection of Turkey's strength as a partner in helping launch many businesses into the Central Asian markets.
In 2000, the trade volume reported between Kazakstan and Turkey was US$465 million which was highest amongst Turkey's trade with the CA countries. Alarko Holding, a Turkish conglomerate is one of the biggest foreign infrastructure contractors in Kazakstan Republic. They also Chair the Turkish - Kazak Business Council run under the auspices of DEIK (Foreign Economic Relations Board) a non-profit private sector organization. The Council serves to remove trade bottlenecks amongst the two countries as well as disseminate information on business opportunities in Kazak market.
Even with such strong relations, the feeling amongst the Turkish business community seems to be that much more is desired. Yakup Kocaman, a Turkish business journalist comments that, "Even though the Central Asian countries have got very good relations with Turkey, many there say that Turkey has not realized the full potential of its Central Asian opportunities." Perhaps, partnering with other Muslim world investors to enter the Kazakstan market is just the impetus that is needed to boost its trade and investment relations there.

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Turkey battles bout of EU reform fatigue 
Though Turkey is continuing with preparations for the start of accession negotiations with the European Union, some troubling developments in recent months have prompted European diplomats and local observers to question the country's determination to enact and adhere to EU-related reforms. 
"Watching it from Ankara, there's a sense that the political will in Ankara is not as strong as it was, if there's any left at all, to invest in this process with Europe," says a diplomat from an EU country, who asked not to be named due to the sensitivity of the issue. 
"There's a perception among international observers in Ankara that the initiatives that they [Turkish officials] are still announcing, and the commitment to the EU process that they are still professing is less convincing because its not being reflected by their actions," the diplomat added. 
Most troubling from the EU perspective have been a number of court cases in which writers have been accused of insulting the state and "Turkishness," raising concern about Turkey's commitment to freedom of speech. Rights activists are worried that a new anti-terror bill that the government plans to introduce contains several troubling articles, including one that would allow for the jailing of journalists accused of "propagating terrorism." Such a bill could mark a step back in Turkey's legal reform process. 
There is also worry that renewed violence in Turkey's predominantly-Kurdish southeast will prompt the military to reassert itself in domestic affairs. A revival of the Kurdish separatist issue could also cause the judicial system to backslide on human rights. Already, some 36 Kurdish children are currently awaiting trial for their involvement in violent riots that took place in the southeastern city of Diyarbakir in late March, some of them facing as much as 24 years in prison. 
Turkish Foreign Minister Abdullah Gul tried to brush aside suggestions that Ankara is experiencing reform fatigue, saying in a recent statement, "our reform efforts aimed at raising standards and practices in all areas of life to the highest contemporary standards will resolutely continue." 
Foreign Ministry officials point out that Turkey and the EU have already successfully agreed on negotiation points for 19 of the 35 "chapters" on which the accession talks will be based, adding that actual negotiations on two of those chapters will start in the coming months. 
Despite the Turkish assurances on reforms, EU officials remain skeptical. Speaking to reporters during a recent visit to Bulgaria, EU Enlargement Commissioner Olli Rehn voiced dissatisfaction with Turkey's reform pace, and strongly admonished the Turkish government to get back on track. "It is necessary that the Turkish government take immediate action to restart the momentum of the reforms in the country," he said. 
"This is the best and only way to avoid a train crash later this year in the negotiations between the European Union and Turkey," Rehn added. "It's really in the hands of the Turkish government, parliament and civil society to achieve this." 
There is very likely a domestic consideration to the reform slowdown. While public support for EU membership was close to 80 percent two years ago, it now hovers at around 50 per cent. Many Turks believe the EU has betrayed Turkey on the Cyprus issue by not rewarding a successful Turkish Cypriot referendum vote to accept a UN plan to unify the island. Many also feel that moves, such as a recently shelved French bill that would criminalize the denial of the Armenian genocide, are an outgrowth of a wider European unwillingness to see Turkey join the EU. 
With Turkey facing elections in 2007, analysts say the ruling Justice and Development Party (AKP) is reluctant to be viewed as intimately connected with Turkey's EU project. "There is a rising nationalism in the country and [the AKP] also has a constituency that is rather conservative in a nationalist sense," says Mensur Akgun, foreign policy director at the Turkish Economic and Social Studies Foundation, an Istanbul-based think tank. "They can do a lot more, if they wanted to, but they don't want to take a risk." 
"What [the government leaders] are doing is focusing on elections and on the mood in the country, and that mood is very inward looking and with a feeling of vulnerability on several issues," says the European diplomat. "Instead of showing a way and leadership, the government is listening much more to these ghosts that have been haunting Turkey for decades, and somehow they have been caught up in all of that." 
There is some concern now that growing political tension in Turkey may further hinder the reform process. The recent killing of the judge in Ankara has placed the AKP government firmly on the defensive. There have been large-scale demonstrations in support of the country's secular order.
But some of the reform slowdown might also be attributed to a kind of disillusionment with the EU within the inner circles of the AKP, a liberal Islamic party. A European Court of Human Right ruling late last year supporting Turkey's headscarf ban in public universities stunned many in the party, who thought EU membership would lead to greater religious freedoms. 
"Concerning the EU process, it doesn't seem as if Europe will admit Turkey together with its Islamic identity," Ali Bulac, a leading Islamic intellectual, recently wrote in the daily newspaper Zaman. "Europe does not accept the existence of any other civilization apart from its own." 
Adds Fehmi Koru, a columnist with the liberal Islamic newspaper Yeni Safak, which is considered to be close to the AKP government: "Of course there are some disappointments, especially in the field of human rights. Intellectuals who support the AKP had the idea that with the headscarf issue and other issues related to basic human rights would be solved by becoming EU members, but of course this hasn't been realized." 

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ENERGY

World Bank approves loan for power project 


The World Bank recently approved a US$350 million project loan for Turkey to support the country's restructuring of its electricity sector. The World Bank said the goal of the loan was two-fold: to help lessen the risks of supply shortages as Turkey institutes energy reforms and to support the restructuring of Elektrik Uretim AS, the state-owned electricity generation company, the news portal reporter.gr reported.
"Turkey faces a risk of potential shortfall of electricity between 2008-2010 depending on prospective economic and demand growth," World Bank Country Director for Turkey, Andrew Vorkink, said in a statement.
Vorkink was cited as saying the electricity market would need to establish an operating track-record to address the concerns of investors. In addition, Turkey needs to develop cost-effective generation sources to provide capacity and energy to fuel private enterprise and household needs, he said.

Kazakstan to build refinery in Turkey 

Kazak President, Nursultan Nazarbayev, and Turkish Prime Minister, Recep Tayyip Erdogan, during talks agreed that Kazakstan would build an oil refinery on Turkey's Black Sea coast, Interfax News Agency reported.
"The agreement reached for Kazak investors to build an oil refinery on the Black Sea coast of Turkey is very important. We will be able to transport oil from Novorossiisk to Turkey and there sell a refined product," Nazarbayev said in an interview with the Kazak media, published on the president's official website on May 22nd . He said that the project is connected with plans to expand the Caspian Pipeline Consortium pipeline. Nazarbayev said that the issue of expanding the CPC was also discussed during his talks with Russian president Vladimir Putin recently in Sochi.

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FOREIGN RELATIONS

Iran's Larijani seeks support in Turkey

Iran Chief Nuclear Negotiator, Ari Larijani, was in Turkey recently for talks with the Ankara government about his country's nuclear programme, Deutsche Presse Agentur (dpa) reported.
On his arrival in Turkey, Larijani stressed that Tehran sought a peaceful outcome to its row with the west over its refusal to suspend uranium enrichment and provide ample clarification about its nuclear programme.
Iran considered the International Atomic Energy Agency (IAEA) in Vienna, and not the UN Security council, as the appropriate body with which to "find a solution," he said.
Larijani was slated to meet with both Turkish Prime Minster, Recep Tayyip Erdogan, and Foreign Minister, Abdullah Gul. Turkey has in the past called for greater "transparency" from Iran with regard to its nuclear activities, which the United States and other Western countries suspect of concealing a weapons programme, which Iran instead insists is for civilian energy purposes only.

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