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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)

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Update No: 189 - (26/05/13)

Summary: The Syria crisis has once more spilled onto Turkish soil with a major incident claiming the lives of 52 citizens. A meeting was held between Erdogan and Obama in Washington to much fanfare but little ostensible progress. Relations between Turkey and Iraq and Turkey and Israel remain somewhat fractious.

This month began with rioters clashing with police at May Day protests in Istanbul. The disgruntlement of workers who claim that the government represses workers’ rights is unlikely to have been quelled by the news, celebrated by the economy ministry, that Moody’s has upgraded Turkey’s investment grade. The situation in Syria has dominated the political agenda however, after two car bombs killed dozens of people on May 11 in the southern town of Reyhanli. A subsequent meeting with Barack Obama advanced the notion of ending the civil war in Syria, but with little detail on how.

Whilst the peace deal with the PKK might have indicated that Turkey’s southern region would after a very long time, be more pacific these days. Unfortunately the civil war in Syria seems to have once more spilled over onto Turkish soil. Since Turkey turned against its one-time ally Bashar Al-Assad, it has become a vocal supporter of the rebel movement and has unsurprisingly earned itself an enemy in the form of the Syrian President, who steadfastly refuses to relinquish power. Meanwhile the state continues to sink into a period of severe blood-letting. On May 11th, 52 people were killed and many more injured, when twin car bombs exploded in the town of Reyhanli, close to the Syrian border. This was the fourth attack upon Turkish soil (perhaps by the Bashar-Al Assad regime). Although no-one claimed direct responsibility, Deputy Prime Minister Bulent Arinc pointed the finger at Syria shortly after the attack, stating: "Our thoughts are that their Mukhabarat [the Syrian intelligence agency] and armed organisations are the usual suspects in planning and the carrying out of such devilish plans." There are always of course, the car bomb specialists of Al Qaeda and lookalikes, thick on the ground, seeking to have Turkey put just that kind of construction on it as a serious provocation. It is typical of the degree of evil exhibited by both sides in this foul war in Syria, that the culprits are not obvious.

The international community was quick to offer support to Ankara. NATO Secretary General Anders Fogh Rasmussen sent his condolences, as did the US Secretary of State John Kerry. The town of Reyhanli has been a base for Syrian refugees (around 300,000 of whom are now in Turkey) and a hub of rebel activity, so were it not a random explosion against civilians, perhaps a logical target for Assad’s forces.

It was anticipated in the Turkish media that the event would place the Syria situation firmly at the top of the agenda for Erdogan’s meeting with Barack Obama (which would have been a good enough motive for rebel terrorists).

The Milliyet newspaper predicted (hoped) that, ‘in Washington this week, Ankara, which has willy-nilly become a party to the conflict through supporting the opposition in Syria, will tell its closest ally, the US, that "the time to do something has already come". The Zamam newspaper asserted that ‘Ankara's target is to make its financial and moral losses felt more acutely in Washington and to persuade the Obama Administration to change its non-involvement stance.’ The results of Erdogan’s meeting in Washington were therefore hotly anticipated and proved interesting. In his bilateral meeting with Obama on May 16, Erdogan was, one newspaper said, treated to, ‘the most lavish welcome ever given to a Turkish leader visiting Washington’. What was less obvious however were the actual concrete gains made on the Syria situation.

At the press conference following talks, when Erdogan was asked a question about the impact there would be if the US did not increase its involvement in Syria, he offered a cautious response: "I would like to look at things with the glass half full, instead of half empty. What we would like to see is the sensitivity on the part of the international community with respect to what is going on in Syria. This is what we as Turkey strive for, and I do believe the United States is doing the same."

This is far from the urgency and insistence hoped for by some parties at home. The mood was rather one of cooperation and clemency, than arrogation. Obama, for his part, stated, ‘We both agree that Assad needs to go […] because it is in the profound interests of all our nations, especially Turkey’. The salient result of the summit is that Turkey has signed up to involvement in the Geneva II conference, an upcoming summit on the matter brokered by Moscow and Washington, in a rare sign of agreement between the White House and the Kremlin over Syria. Some have interpreted this as an indication that Turkey’s relations with Washington are playing second fiddle to its new coordination with Russia against Syria. Nonetheless the pomp and ceremony of the Washington trip will, many say, have done enough to present a diplomatic coup de grace for Erdogan, even if little has come in the way of actual progress.

Another issue raised at the bilateral talks was that of normalizing ties with Israel. As mentioned in last month’s report, Israel recently issued an apology for the Mavi Marmara flotilla incident of 2010, which since then has clouded relations, but Ankara, whilst accepting the apology, has been somewhat hesitant in terms of restoring ties to the extent desired by Washington. Israel’s Shimon Peres was quick to offer his condolences for the Reyhanli massacre, sending a personal message as President to Turkey’s Abdullah Gul, in an indication that Jerusalem is keen to heal ties.

Accepting the restoration of ties will be necessary if Ankara hopes to keep Washington on side and it has numerous reasons to do so. On May 20, Turkey signed an agreement with the Kurdistan Regional Government in Northern Iraq in a joint venture with Exxon Mobil to begin importing oil and gas. The decision to establish an agreement with the Kurdish government, bypassing Bagdad, has angered the Al-Maliki regime. [see current report on IRAQ].
The fact that Ankara is cooperating with US giant Exxon Mobil in the region is, some analysts say, a way of warning Bagdad not to protest too much, since it is effectively acting in solidarity with the US in its energy operations.

Turkey looks set to profit greatly from the deal even if it comes with diplomatic risks. Instead of paying an average of $450 for 1,000 cubic meters of natural gas purchased from Russia, Iran and Azerbaijan, Turkey will now be paying $200- 250 for this amount. Trade remains strong for Turkey with its near neighbours, regardless of political problems. Relations with Israel may have suffered last year, but trade remained strong, at over $4 billion last year. This year has seen even stronger advances in commercial ties, with Turkey’s exports to Israel reaching $612 million in the first quarter of 2013, from $555 million in the same period last year. Equally Israel’s exports to Turkey reached around $475 million in the first quarter of 2013, from around $448 million. Turkey’s buoyant economy has been the envy of its neighbours and the crisis-hit Eurozone. It has also gained prestige in financial terms, thanks to rating agency Moody’s decision on May 16 to lift its government bond ratings to ‘investment grade’, following the example of Fitch’s back in November.

“Turkey long deserved this rating, or an even higher one, both economically and politically. I see this as a delayed recognition of what we deserved,” Economy Minister Zafer Caglayan said in a statement. “We now expect much greater investments, both in terms of direct and portfolio investments. The central bank needs to be ready for the pressures this will exert on the lira.” Moody’s has predicted that Turkey’s debt burden will keep falling after a drop of 10 percentage points to a “manageable” 36% of gross domestic product since 2009. Its share of debt denominated in foreign currencies is at 27% now. Ten years ago this stood at 46%.

There are some, however, who do not feel that Turkey’s economic prospects are worth celebrating, or that its high growth rate has ushered in an improvement in quality of life. Just over two weeks before the upgrade, tens of thousands of demonstrators used the May Day celebration to rally in Istanbul in favour of better working rights, and against what they say are practices restricting workers’ rights relating to trade union activities. The May Day holiday was reinstated in 2010 after its revocation in 1980 at the behest of trade unions, and has since seen clashes break out between citizens championing workers rights and the authorities. This year’s rally ended with 72 arrests. Police used tear gas and water cannon to disperse rioters in Taksim Square, the traditional locus of left-wing demonstrations.

Many decried the dispersal tactics as heavy handed. The marchers were not merely trade unionists but some of them members of the political opposition, as well as feminist groups and students. Erdogan had previously attempted to have the rally banned on the basis that building work is being done in Taksim Square, the subject of a major redevelopment, which could make rallying unsafe. Protestors believe that the whole project of redeveloping the square is an attempt to stop people from using it for protests. Ostensible progress, they say, is in fact a veiled attempt to roll back rights.


 

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