Pitched battles between anti-government demonstrators and Turkish police over several days at Istanbul’s Taksim Square constitute a national uprising against Recep Tayyip Erdogan’s incipient Islamist dictatorship. As of this writing on June 2, tens of thousands of regime opponents are in control of the heart of Istanbul while police have withdrawn. The economic distress of Turkish households is an important factor in the country’s political upheaval.
News media have already dubbed the demonstrations a “Turkish Spring”. That is a turnabout, for the “Turkish model” was touted two years ago as the solution to the economic and social problems of the failing police states of Arab nationalism. Erdogan’s supposedly moderate Islamism and dynamic economic management supposedly offered a way out for Egypt and other failed economies of the Middle East.
Erdogan had declared himself a “servant of Sharia” during his 1994 mayoral campaign in Istanbul, but most Western observers chose to take the would-be Turkish dictator at his subsequent word that he would respect the secular character of the Turkish state.
It was never to be. Erdogan did not preside over an economic miracle – contrary to the credulous estimates of many Western observes – but arranged, rather the usual sort of Third World credit bubble, which has left Turkish consumers to tighten their belts in response to a devastating debt burden. “Economic troubles will dominate the political agenda, and Erdogan’s claim to leadership of the Islamic world – let alone his own country – will look far less credible,” I warned in this space April 23 (see Turkey’s ticking debt time-bomb, Asia Times Online), just before Moody’s assigned Turkey an investment-grade rating, perhaps the poorest judgment by the rating agency since it put a “AAA” stamp on securities backed by subprime mortgages.
Turkey’s problems can’t really be compared to the 2011 revolts in Muslim North Africa, to be sure: the country’s economy will keep functioning, although far below the expectations of ordinary Turks, and its political system is robust. But the anti-government demonstrations denote a turning point in the fortunes of Turkish Islamism.
The demonstrators’ anger, to be sure, centers on Erdogan’s creeping dictatorship: the gradual imposition of Islamic law in a Turkish state founded on secular principles, the jailing of hundreds of regime opponents, and the assimilation of enormous economic power into corrupt monopolies controlled by Erdogan’s party. Leaked US diplomatic cables claimed in 2010 that Erdogan amassed a huge personal fortune through bribery during his term and commissions on the sale of Turkish assets to foreign investors.  Kemal Kilicdaroglu, leader of the secular opposition party CHP, compared Erdogan to Hitler.
Syria’s civil war, moreover, sharpens Turkey’s sectarian and ethnic divisions. Perhaps a fifth of Turks adhere to the Alevi sect, a branch of Islam that fairly could be described as moderate, and which votes mainly for the secular parties. Erdogan’s emergence as the leader of militant Sunnism in Syria as well as Gaza, where he patronizes Hamas, worries the Alevis, who have a long memory of Sunni persecution. The Alevis have little to do with Syria’s Alawites, the Assad family’s minority sect, but the Alevis have some sympathy for the Assad government because the Turkish Sunnis are so determined to destroy it.
The Kurdish minority comprises more than a fifth of Turkey, and its fertility rate is double or triple that of Turkish-speakers. Ethnic Turkish Sunnis – the population segment to which the ruling Justice and Development Party (AKP) appeals – barely make up a majority of the Turkish population, and the demographic trend will make them a minority in 20 years or less. Syria’s two million Kurds have become an independent factor as a result of their country’s civil war, with their own municipal administrations and militias. They view Arab jihadists who dominate the rebel forces with justifiable fear and distrust. Again, Erdogan’s backing of the Sunni rebels upsets Turkey’s Kurds.
Only a small minority of the AKP base, moreover, favors its Islamist agenda. Only 12% of Turks want Sharia to be the law of the land, according to an April 2013 Pew Institute survey, compared to 84% of Muslims in South Asia, 77% in Southeast Asia, and 74% in the Middle East and North Africa.
That is why Erdogan’s mandate rested on economic performance. His Sunni fundamentalist agenda does not appeal to the Turkish majority. But he drew votes from secular Turks on the putative strength of his economic management. The analogy to Hitler is in some respects odious, but it holds in characterizing Erdogan’s covert agenda to impose an ideological dictatorship. The Turkish public correctly views as creeping Sharia the government’s new laws that prohibit the sale of alcohol after 10 pm and ban any portrayal of alcohol consumption in public media.
In his 2011 presidential campaign, Erdogan emulated an earlier Anatolian, namely St Nicholas. As I wrote in a 2012 study for Middle East Quarterly,
Erdogan’s bubble recalls the experiences of Argentina in 2000 and Mexico in 1994 where surging external debt produced short-lived bubbles of prosperity, followed by currency devaluations and deep slumps. Both Latin American governments bought popularity by providing cheap consumer credit as did Erdogan in the months leading up to the June 2011 national election. 
Erdogan’s politically directed generosity has come back to bite Turkish consumers. Personal consumption is falling in real terms. GDP growth is close to zero, propped by a 20% rate of growth in government consumption. With government spending dominating economic activity at the margin, it is not surprising that Turkey’s inflation rate stands at 7%.
The aggregate economic data disguise growing distress in the Turkish economy. Government data distinguish salaried employment in the formal sector from “unpaid family employment” and “self-employment”. During the past year, employment in the formal sector-has shrunk by 5%, while “unpaid family employment” has risen by 5%. That means simply that manufacturing and service workers with real jobs were laid off and took the bus back to hard-scrabble farms in central Anatolia or sponged on small family businesses. This is disguised unemployment. A 5% shrinkage in the formal economy workforce is a devastating result.
Turkey’s economy, oddly vaunted as the next China, relies on low- and medium-tech exports to Europe, the Arab world, and the former Soviet Union. It grew as a cheap-labor outlet for European and some Asian manufacturers and sank as the European economic crisis, Russian economic stagnation and disarray among Muslim trading partners shrank its markets. It has a lower rate of high-school graduation than Mexico and an enormous informal economy. A few Turkish universities teach to world standards, but Turkey has nothing to compare to the talent pool of China, Taiwan or Korea.
To sustain the consumer bubble, Turkey ran a current account deficit that reached 10% in 2012, financed overwhelmingly with short-term debt-provided in large measure, according to anecdotal evidence, by the Sunni Gulf States who view Turkey as a bulwark against Iran.
Turkey’s short-term foreign debt is still growing at a 30% annual rate year on year (and at a 70% annual rate during the first three months of 2013). The economic slowdown was supposed to have reduced Turkey’s foreign borrowing; instead, it has accelerated. The patience of Turkey’s funders in the Persian Gulf is long but not unlimited.
Consumer debt outstanding has risen nearly 10-fold since 2006, and jumped by 40% during the past year. As I noted in my April 23 essay, it is hard to reconcile a 40% annual increase in consumer debt with a 5% annual increase in nominal consumer spending (inflation is running at 7%, so real spending is down by 2%). The data imply that Turkish consumers are borrowing enormous amounts to refinance the interest they owe on their existing debt.
Erdogan’s spending spree of 2011 has left Turks with a horrendous hangover. Banks cannot balloon their consumer loan book by 40% a year indefinitely; when the music stops, Turkish households will have to reduce their consumption sharply. Debt-burdened consumers know that this must happen sooner rather than later, and this presentiment probably helps sour the national mood.
“Turkey’s longer-term risks are even more daunting,” I wrote in the cited essay for Middle East Quarterly. “A developing country cannot sustain a fertility rate that leads to a rapid increase in elderly dependents, yet the fertility rate of Turks for whom Turkish is a first language has been in steady decline over the past fifteen years, falling to only 1.5-equal to that of Europe-while its population is aging almost as fast as Iran’s, leaving the country’s social security system with a deficit of close to 5 percent of GDP. “If we continue the existing [fertility] trend, 2038 will mark disaster for us,” Erdogan warned in a May 2010 speech.” Within a generation, half of Turkey’s military age men will come from Kurdish-speaking homes if the present trend continues.
In retrospect, analysts of Turkish politics may conclude, Erdogan’s Islamism was not a fresh start for Turkey but rather a belated attempt to pour Islamic glue into the cracks that threaten to fracture Turkish society. He may already have failed. A growing proportion of Turkish voters has concluded that they made a deal with the devil, and that the devil hasn’t kept his side of the bargain.
 US cables claim Turkish PM Erdogan has eight Swiss bank accounts, Hurriyet Daily News, November 29, 2010.
 The World’s Muslims: Religion, Politics and Society, Pew Research Center on Religion and Public Life, April 30, 2013.
 Ankara’s ‘Economic Miracle’ Collapses, The Middle East Quarterly, Volume XIX, Number 1, Winter, 2012.
CHETRA Eyes Africa for Expansion
CHETRA is a Russian company that sells industrial equipment and spare parts under the brand “CHETRA” produced by the Promtractor plant, as well as supplies spare parts and components from the company. It uses a unique technique in the construction of production sites, seaports, development of natural resources and pipelines in 30 countries and in all climatic zones.
The goal is to provide its partners and customers with modern high-performance equipment for successful projects, even in areas with complex climatic and geological backgrounds. More than 3,000 units of equipment under the brand “CHETRA” are now in operation in the Russian Federation and beyond.
Executive Director Vladimir Antonov has been working in engineering industry for 19 years. He has successful experience in product export to the CIS countries and Ukraine, the Baltic States, Europe, Argentina, Africa and Cuba. He has been leading company as its Executive Director since 2018. During his leadership, the share of the company’s machinery in the Russian market has doubled.
In this snapshot interview, Vladimir Antonov talks about his company’s plans in the direction of Africa. Here are the interview excerpts:
Q:First, tell us briefly about tPlants previous working connection with Africa? What are your products and services, what African regions or countries are keen using products?
A:Our company has a long experience of cooperation with African countries which began in the Soviet times and continues today. Traditionally we collaborate in the African continent with such partner countries of Russia as Egypt, Algeria, Zimbabwe. About 50 units of CHETRA machines have been supplied to these countries over the last ten years. Our goal is to enlarge our footprint in the African continent. Nowadays, we are negotiating cooperation with potential partners in West Africa and the SADC region (Southern African Development Community, South Africa).
Q:Compared to other foreign players, how competitive is the African market? From the previous experience in the African regions, what key problems and challenges the company faces in Africa?
A:Today the market of mining and construction equipment in Africa is characterized by high competition, all our competitors work in the region, both from the West and from the East. This has led to the fact that the market applies high requirements to new products. For that reason today we do not just sell our machines to customers: we offer a range of services, which includes commissioning of the machines, training of local staff, organization of after-sales maintenance service at the customer’s site. The main challenge for us today when working in Africa is the need to find a local partner who has qualified staff, equipment, maintenance facilities and not bound by contracts with other manufacturers of similar machines.
Q:What kind of business perceptions and approach could be considered as impediments or stumbling blocks to business between Russia and Africa?
A:Another challenge for us when working in Africa is that many consumers have no free funds to purchase new machines. This often diverts our partner from the renewal of the fleet or makes them buy used machines on the after-market. We are trying to solve this problem by attracting Russian government agencies of export support, such as the Russian Export Center, in order to finance transactions.
Q:Business needs vital information, knowledge about the investment climate and so forth. Do you think that there has been an information vacuum or gap between the two regions?
A:Taking into account the level of development of information technology today there are no particular problems in obtaining information about the investment level of any country or about business situation of a particular company. Besides that, we are in constant contact with Trade missions at the Embassies of the Russian Federation in the countries of our interest, which are also a good source of information about the conditions of the market.
Q:And now how would you envisage the level of investment and business engagement with Africa? Is Sochi an opportunity for expanding business to Africa?
A:In my opinion the Economic Forum in Sochi was organized at the highest level. A lot of guests from Africa visited it. We held a number of meetings with companies that are new to us, and I hope that these will lead to long-term cooperation and geographic growth of supplies of CHETRA machines in Africa.
The Bust: WeWork’s diminishing stature of the perfect “start-up”
Until recently, the globally acclaimed startup, WeWork was transforming the future of office spaces and staff hiring processes. Truly, it was transformational in the sense that the startup was providing a vital service point to many multinationals around the world. However, Mark Dixon, the cofounder of IWG, another workspace solutions company, was not getting the trick. Here was IWG, a decently profitable startup with consistent annual growth, still unable to compete with the superstar of the industry. Soon after SoftBank poured cash into the company, WeWork was valued for more than $40 bn. Then, it was making headlines for overwhelm; now, WeWork is in a state of awe. As market reports suggest, WeWork even lacks the cash to fire its existing employees.
As Adam Neumann, the chastened cofounder of the dwindling company once proclaimed, co-working was the future and that employees would prove to become more productive and efficient. In his own words, different cultures and organizational goals would inspire the entire floor. Much as the concept is about renting an office space, Mr. Neumann deliberately did not elaborate on the nuisances of dealing with office neighbors, as seen from a tenant’s perspective. The idea would have charmed many organizations; it was a great opportunity to redeem operating costs or dealing with unwarranted office culture problems. Or, as many renting executives thought, WeWork would define the ground rules, aptly in accordance with global standards. For many, it was also an experiment for the future. Also, nobody could take away the fact of losing varied insights from “not” participating in what at first seemed like a once in a time revolution.
SoftBank, a Japanese conglomerate investing fund is writing the most important plot in the story. Strangely, both the rise and fall of WeWork has been catalyzed by SoftBank. However, the fact that WeWork was blessed by an investing fund is not strange, or surprising. Amongst sovereign funders, there is competition to stay one foot ahead of another. The Europeans have long stressed on how very few startups from their region go onto becoming a global giant. SoftBank’s associations elsewhere is a testimony to its deliberate strategy of staying ahead in the future. Notwithstanding the fact that the Japanese investors would have loved the idea of co-working space more than others. In early 2017, WeWork’s market value, shot over $40 bn, even though the company was registering profits below what Mr. Dixon’s firm were accounting to. There was a strange gossip in the market around why other investors were not jumping to what the SoftBank deemed as highly profitable. For many like Mr. Dixon and other investors, answers were soon to be found. If it could only be timely, Japanese angels would have anticipated why Mr. Neumann would sell his rights of the name, “We” in WeWork. It was a five million dollar (plus) exit for the charismatic man, whose venture was taken over by those who thought of multiplying their fortunes. SoftBank will be sorry for its decision to trust the hierarchy in Mr. Neumann’s leadership. Nevertheless, post takeover, Mr. Dixon will not be contemplating any further on why it has decided to appoint two CEO’s. Nor will there be any sort of contemplation on why the new appointees have secured their severance package before paying out dues.
As it stands, IWG is not doing a bad business in comparison to WeWork’s downfall. The American start-up was destined for success from its early years. Co-working will still be a grand idea in our times but filthy abundance in a short period of time has brought a winning project to a standstill. There will be other co-working competitors for IWG, but it will learn from the mistakes of a competitor who was bigger than the entire industry. If anything, Mr. Dixon will be smelling opportunities ahead.
Alibaba on Platform Economy
Alibaba on national mobilization of
entrepreneurialism on platform economy: today, Alibaba sold $38 Billion within 24
hours: Around the world, currently, there are 100 nations with less than $38
Billion dollars in annual GDP. Imagine if this single company performed at the
same rate for next 365 days, it would equal to annual GDP of Japan, Germany,
India, France, UK and Canada all combined. Bravo Alibaba, well done, the world in shock
is now fondling in own toolboxes.
Are Nations Awake: Are there enough reasons to explore how national mobilization of entrepreneurialism on platform economies and how it will uplift local grassroots prosperity? Are there enough trade-groups, Chambers of Commerce, Trade Associations with enough skills to play in these AI centric digitally advanced and globally friendly market-places? Outside a miniscule number most seriously out-dated trade-groups are in rapid transformation so they too would become shiny butterflies for the new global-age.
Old days of old ways are now new days of
Salvaging of exportability lost during last decade: Nation by nation, the grassroots medium-size economy was basically, ignored, abandoned and rejected, killing exportable goods and services. So long the trade groups around the 200 nations stuck in their old fashioned comfort zones spanning a century, outside handful organizations most nations are in deep trouble. Observe how nations with riots have the most disorganized, disconnected trade-groups, not due the lack of funding but due to lack of poor leadership with little or no global age skills.
Uplifting working-citizenry after a lost
decade on skills: So long the national leadership assumes that MBA degrees are
the saviors of their next economy and so long the corporations feels comfortable
that all their management is being well trained on YouTube, no additional proof
of this fallacy is necessary other than decimated economies and chaos on the
Understanding The Third Economy: During the first economy; rules of engagement and rules of balancing the books were established, the second economy; where fancy jargon was invented to cook the books to balance with political agenda and now the upcoming third economy where real numbers will balance the real books with real columns all managed by artificial intelligence and block-chain delivering honest picture instantly to all and all the times.
Alibaba proves the direct benefits of a Third Economy; such prosperity can only assured by respecting the balancing of pennies and cents with mobilizing millions of abandoned small and medium enterprises and using free technologies as starting base. Such deployments are only possible when leadership is skillfully equipped to understand global-age and able to serve the special transformation demands, by firing the first person for incompetence for saying they have no new funding to change and firing the next person for disorganization for saying they are too busy and have no time to change.
Public sector around the world had almost all
these resources available to deploy since last decade. Nation by nation, outside
the top business sectors rest of the small medium enterprise players
systematically abandoned and crushed were replaced by too big to fail nonsensical
hype. Now national races in the age of digital platform economy will demand
clarification on their internal conflicts of “digital-divide and mental-divide” and explain dysfunctional imbalanced spending on trade expansion
without “national mobilization of entrepreneurialism” …it is also a fact that
majority nations need massive in-depth-training at all top leadership levels to
understand the new language of the new days.
It’s time to choose; either build world-class export promotion agencies, vertical trade groups to foster trade by global-age showcasing on platform economies and bring home some grassroots prosperity or allow restless citizenry and rise of populism. It time to balance, that where public sectors mostly all over the world failed on such progressive affairs, technology has now blossomed as salvage operation with dramatic tools and deployment options. Is your national leadership ready now? Not to sidetrack, this is not an exclusive IT issues; this is global age expansion and entrepreneurial mobilization issues. Deeper studies and debates are essential.
The world is changing fast is no longer just a cliché, now growing into a warning
National Transformation: Futurism of ‘creating local grassroots economy’ demands two distinct national mobilizations. Firstly, creating skilled citizenry capable to swing with global-age demands and secondly, creating massive digitization of midsize economy to enable global-speed-performance to match trading with 100-200 nations. Mostly not new funding dependent but execution starved. Nations with such mastery will thrive and lead; generational transformation at magical speed with full deployments of platform economy is a prerequisite. Sounds rocket science, it is, but very doable and easy.
Rules of National Mobilization of Entrepreneurialism: To deploy such blueprints, launch a nationwide business-uplifting lifelong learning agenda for the entire export promotion bodies, Chambers, trade associations and also the entire small-medium-exporters base. Review this process meticulously every 100 days. Under right situation, the export promotion of the nation can easily quadruple within a year. It is necessary to keep asking what is blocking this and who is stopping this?
How do you mobilize public and private sector leadership after a lost decade on global-age expansion? With some 100 elections in 2019 alone and million promises on podiums the realities are hidden in creating real grassroots prosperity, now pending Presidential Elections of 2020 USA the mother of all elections will provide massive debates amongst calls of Impeachments, while December 12th Election of UK amongst calls of Brexit and European Union with loud and restless citizenry, a new world is unfolding. The public is informed, and slowly realizing what’s working and what’s not… deep silence at the public sector is not good, a growing sign of lack of skills. Urgent debates needed as 2020 starts with some dramatic shifts of markets, ideas and visions. We are now in the age of national mobilization of entrepreneurialism and platform economies.
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