Connect with us

Middle East

Country Forecast: Turkey, Erdogan and Where Policy Leads

Published

on

With its 81 provinces and a population of nearly 80 million inhabitants, Turkey continues its state of emergency imposed under President Tayyip Recep Erdoğan after a planned coup in July, 2016. The attempted overthrow of Mr. Erdogan, by a faction of the Turkish Army, was said to be blamed for the putsch.  Though failed, the violence predetermined how Turkey would proceed via Erdogan in the future to prevent further upheavals seen that July. Today, the outcomes of governmental acts have long-term consequences to democratic principles particularly freedom to protest and protect speech, basic tenets of a freely elected and democratic society. Using its emergency powers does question the country’s leadership role in the eastern region of Europe and global image to the outside world. Its stability as a NATO member as well as its prospects joining the EU too comes into question. In addition, extending a state of emergency has a parallel affect regarding foreign investments within an unstable environment, i.e. companies and or countries pulling out from Turkey.

While Erdoğan insists he remains committed to the goal of eventual membership in the EU, he has made clear that he does not intend to let that objective interfere with other priorities, namely, the pursuit of expanded political power at home and what he deems to be Turkey’s national interests abroad. Erdogan feels the state of emergency is needed to deal with ongoing security threats; and, while the President doesn’t seem bothered image wise by a potential extension, this type of instability may negatively impact foreign capital inflows further fracturing new investment opportunities from the outside.

Erdogan’s government re-structure through a referendum back in June, 2017 will change the constitution from a parliamentary style to a presidential form of government consolidating more power to this president in 2018. It abolishes the office of the prime minister while decreasing the powers of Turkey’s parliament. These moves coupled with a more authoritarian disposition from Mr. Erdogan has fractured the nationalistic bloc causing consternation amongst political parties ultimately setting up Meral Aksenar, former interior minister, to challenge the AKP/Erdogan in the 2019 elections(now there’s a chance snap elections will take place this summer). This may have more implications to new investment strategies, and; yes, political instability will continue to develop and unfortunately flourish due to Erdogan’s attempt to reign in critics.

A potential extension of state of emergency for the seventh time erodes government transparency and confidence, and the Turkish government’s rule of law. Since an extension will soon be discussed in Ankara, the question of political stability and policy initiatives promoting economic growth invariably are linked to upticks of foreign investments and portfolios to the nation. While stability versus instability is a main topic of discussion, Turkey’s GDP has grown over 7 per cent in 2017 making the nation an attractive investment center. Not bad for a country with all the volatility described.

Policies Relevant to Investing Strategies and Market Opportunities

Political instability can dampen the attractiveness for direct investment while the need for enhanced security, the issue of domestic uncertainty, and populist spending measures, too, may generate financial market volatility affecting capital inflows. Yet, Turkey, with its strong domestic market and growing economy, remains an attractive point to foreign investors. For instance, over the past year, FDI increased over 50 per cent where both European, Asian and Middle Eastern countries have become key to Turkey’s success as an investment hub.

These successes may be attributed to central government policies. One in particular is The Turkish Commercialization Code(TCC). Enacted in 2012, the code enables foreign investors to decide whether to partner or not to partner with Turkish businesses with respect to new ventures in the country.Also of interest to those companies and countries viewing Turkey as an investment center is the opportunity to obtain Turkish citizenship and its combined benefits, such as the access to all Schengen Zone countries. On that note, Turkey has signed bilateral agreements with other countries for the protection of foreign investments.  One in particular is Japan, which in recent years has invested over $200,000,000 in Turkey in the automotive, consumer electronics, energy and food sectors. As an aside, compared with other countries, Japan did not withdraw or disinvest from Turkey after the attempted coup nor did they remove funding regarding risks related to terror, open borders, and Erdogan’s crack down on dissidents.  Despite the risks involved, Turkey remains attractive to countries wanting to tap into its market of nearly 80 million people. In addition, along with household spending, the country’s economy has grown giving fodder to Japan’s foresight to remain a player in investing and commercial development, job and wage creation.

Bilateral agreements steady the course in future investment opportunities. Japan is a perfect example to how and why these agreements help sow new commercial relations where both countries benefit from these activities.

Tax incentives to entice new business development, both externally and internally, include generous tax breaks, tax reductions and exemptions from import duties to Turkish businesses. These initiatives, for instance, have helped incentivize domestic defense projects within the country which is trying to increase home-grown defense programs such as building unmanned aerial drones, a defense linchpin that many in the Turkish military and civilian leadership see as essential in fighting asymmetric battles against countries like Syria or Iraq.

Regarding economic relations, Free Trade Agreements (FTAs) mark poignant milestones between Turkey and other nations looking to develop new markets in each other’s countries. For example, both the Erdogan regime and nations like Singapore, Algeria, and Serbia to name a few, have benefited through mutual investments. In Algeria, for instance, both countries signed a number of agreements particularly related to the petrochemical sector. Algeria’s state-owned energy company SONATRACH and Turkey’s Rönesans and Bayegan energy firms agreed on a $1 billion investment. Cooperation on agriculture too was signed between the agriculture ministers of the two countries to continue the notion of bilateral investments.

Economic Conditions

Turkey’s economy will be influenced by consumers being a bit more cautious than the previous several years. Compared to last year, consumer credit slowdowns are expected to determine Turkey’s economic outlook for 2018-2020.  2017 saw debt fueled spending. Ensuing years not so much buying via credit; in addition to a slow down credit wise, account deficits and inflation pose downside risks to growth. Yet, Turkey remains one of the world’s top 20 economies due to steady growth and pragmatic fiscal policies.

Yet a dichotomy exists: political risk and monetary policies have impeded the Turkish economy particularly in reference to high inflation rates which hover close to 10.50 per cent. As of January, 2018, inflation did not come down to single digits and remained at 10.2 percent.

Central governments budget balance last year saw TL 47.4 BN or $13BN+ deficit projection. With respect to GDP growth, it is expected to be .80 percent end of Q2/18. In general GDP growth is projected to trend around 1.00 percent in ensuing years.

While business investments will help the country develop new markets for its people, unemployment is still projected to be between 9.9 percent to 10.2 percent in 2018. Gaining the upper hand to overcome high unemployment will take a continuing recovery and new measures to lower the unemployed and create new jobs. Job growth in the country will be driven by the industrial, services and construction sectors.

The Turkish lira, which has struggled in recent months on political concerns as well as worrying inflation has lost over five percent of its value against the dollar since January. This may portend to what Turkey and Erdogan, specifically, are facing in the future.

Dean Klovens, Managing Director, Strategic Intelligence Research and Resourcing. Dean has extensive experience in research & writing for business and public policy projects in areas of strategic intelligence to benefit leadership’s decision making. He earned his Master’s in Public Administration and Policy at DePaul University with a BA in Political Science at the University of Illinois-Chicago.

Continue Reading
Comments

Middle East

The Turkish Gambit

Dr. Arshad M. Khan

Published

on

The only certainty in war is its intrinsic uncertainty, something Turkish President Recep Tayyip Erdogan could soon chance upon.  One only has to look back on America’s topsy-turvy fortunes in Iraq, Afghanistan and even Syria for confirmation.

The Turkish invasion of northeastern Syria has as its defined objective a buffer zone between the Kurds in Turkey and in Syria.  Mr. Erdogan hopes, to populate it with some of the 3 million plus Syrian refugees in Turkey, many of these in limbo in border camps.  The refugees are Arab; the Kurds are not.

Kurds speak a language different from Arabic but akin to Persian.  After the First World War, when the victors parceled up the Arab areas of the Ottoman Empire, Syria came to be controlled by the French, Iraq by the British, and the Kurdish area was divided into parts in Turkey, Syria and Iraq, not forgetting the borderlands in Iran — a brutal division by a colonial scalpel severing communities, friends and families.  About the latter, I have some experience, having lived through the bloody partition of India into two, and now three countries that cost a million lives.   

How Mr. Erdogan will persuade the Arab Syrian refugees to live in an enclave, surrounded by hostile Kurds, some ethnically cleansed from the very same place, remains an open question.  Will the Turkish army occupy this zone permanently?  For, we can imagine what the Kurds will do if the Turkish forces leave.

There is another aspect of modern conflict that has made conquest no longer such a desirable proposition — the guerrilla fighter.  Lightly armed and a master of asymmetric warfare, he destabilizes. 

Modern weapons provide small bands of men the capacity and capability to down helicopters, cripple tanks, lay IEDs, place car bombs in cities and generally disrupt any orderly functioning of a state, tying down large forces at huge expense with little chance of long term stability.  If the US has failed repeatedly in its efforts to bend countries to its will, one has to wonder if Erdogan has thought this one through.

The Israeli invasion of Lebanon in 1982 is another case in point.  Forever synonymous with the infamous butchery at Sabra and Shatila by the Phalange militia facilitated by Israeli forces, it is easy to forget a major and important Israeli goal:  access to the waters of the Litani River which implied a zone of occupation for the area south of it up to the Israeli border.

Southern Lebanon is predominantly Shia and at the time of the Israeli invasion they were a placid group who were dominated by Christians and Sunni, even Palestinians ejected from Israel but now armed and finding refuge in Lebanon.  It was when the Israelis looked like they were going to stay that the Shia awoke.  It took a while but soon their guerrillas were harassing Israeli troops and drawing blood.  The game was no longer worth the candle and Israel, licking its wounds, began to withdraw ending up eventually behind their own border.

A colossal footnote is the resurgent Shia confidence, the buildup into Hezbollah and new political power.  The Hezbollah prepared well for another Israeli invasion to settle old scores and teach them a lesson.  So they were ready, and shocked the Israelis in 2006.  Now they are feared by Israeli troops.   

To return to the present, it is not entirely clear as to what transpired in the telephone call between Erdogan and Trump.  Various sources confirm Trump has bluffed Erdogan in the past.  It is not unlikely then for Trump to have said this time, “We’re leaving.  If you go in, you will have to police the area.  Don’t ask us to help you.”  Is that subject to misinterpretation?  It certainly is a reminder of the inadvertent green light to Saddam Hussein for the invasion of Kuwait when Bush Senior was in office. 

For the time being Erdogan is holding fast and Trump has signed an executive order imposing sanctions on Turkish officials and institutions.  Three Turkish ministers and the Defense and Energy ministries are included.  Trump has also demanded an immediate ceasefire.  On the economic front, he has raised tariffs on steel back to 50 percent as it used to be before last May.  Trade negotiations on a $100 billion trade deal with Turkey have also been halted forthwith.  The order also includes the holding of property of those sanctioned, as well as barring entry to the U.S.

Meanwhile, the misery begins all over again as thousands flee the invasion area carrying what they can.  Where are they headed?  Anywhere where artillery shells do not rain down and the sound of airplanes does not mean bombs.

Such are the exigencies of war and often its surprising consequences. 

Author’s Note:  This piece appeared originally on Counterpunch.org

Continue Reading

Middle East

Could Turkish aggression boost peace in Syria?

Published

on

On October 7, 2019, the U.S. President Donald Trump announced the withdrawal of American troops from northeast Syria, where the contingent alongside Kurdish militias controlled the vast territories. Trump clarified that the decision is connected with the intention of Turkey to attack the Kurdish units, posing a threat to Ankara.

It’s incredible that the Turkish military operation against Kurds – indeed the territorial integrity of Syria has resulted in the escape of the U.S., Great Britain, and France. These states essentially are key destabilizing components of the Syrian crisis.

Could this factor favourably influence the situation in the country? For instance, after the end of the Iraqi war in 2011 when the bulk of the American troops left the country, the positive developments took place in the lives of all Iraqis. According to World Economics organization, after the end of the conflict, Iraq’s GDP grew by 14% in 2012, while during the U.S. hostilities the average GDP growth was about 5,8%.

Syria’s GDP growth should also be predicted. Not right away the withdrawal of U.S., French, British, and other forces, but a little bit later after the end of the Turkish operation that is not a phenomenon. The Turkish-Kurdish conflict has been going on since the collapse of the Ottoman Empire when Kurds started to promote the ideas of self-identity and independence. Apart from numerous human losses, the Turks accomplished nothing. It is unlikely that Ankara would achieve much in Peace Spring operation. The Kurds realize the gravity of the situation and choose to form an alliance with the Syrian government that has undermined the ongoing Turkish offensive.

Under these circumstances, Erdogan could only hope for the creation of a narrow buffer zone on the Syrian-Turkish border. The withdrawal of the Turkish forces from the region is just a matter of time. However, we can safely say that the Turkish expansion unwittingly accelerated the peace settlement of the Syrian crisis, as the vital destabilizing forces left the country. Besides, the transfer of the oil-rich north-eastern regions under the control of Bashar Assad will also contribute to the early resolution of the conflict.

It remains a matter of conjecture what the leaders of Saudi Arabia, the United Arab Emirates, and Russia agreed on during the high-level talks. Let’s hope that not only the Syrians, but also key Gulf states are tired of instability and tension in the region, and it’s a high time to strive for a political solution to the Syrian problem.

Continue Reading

Middle East

Turkey and the Kurds: What goes around comes around

Dr. James M. Dorsey

Published

on

Turkey, like much of the Middle East, is discovering that what goes around comes around.

Not only because President Recep Tayyip Erdogan appears to have miscalculated the fallout of what may prove to be a foolhardy intervention in Syria and neglected alternative options that could have strengthened Turkey’s position without sparking the ire of much of the international community.

But also because what could prove to be a strategic error is rooted in a policy of decades of denial of Kurdish identity and suppression of Kurdish cultural and political rights that was more likely than not to fuel conflict rather than encourage societal cohesion.

The policy midwifed the birth in the 1970s to militant groups like the Kurdish Workers Party (PKK), which only dropped its demand for Kurdish independence in recent years.

The group that has waged a low intensity insurgency that has cost tens of thousands of lives has been declared a terrorist organization by Turkey, the United States and the European Union.

Turkish refusal to acknowledge the rights of the Kurds, who are believed to account for up to 20 percent of the country’s population traces its roots to the carving of modern Turkey out of the ruins of the Ottoman empire by its visionary founder, Mustafa Kemal, widely known as Ataturk, Father of the Turks.

It is entrenched in Mr. Kemal’s declaration in a speech in 1923 to celebrate Turkish independence of “how happy is the one who calls himself a Turk,” an effort to forge a national identity for country that was an ethnic mosaic.

The phrase was incorporated half a century later in Turkey’s student oath and ultimately removed from it in 2013 at a time of peace talks between Turkey and the PKK by then prime minister, now president Erdogan.

It took the influx of hundreds of thousands of Iraqi Kurds in the late 1980s and early 1990s as well as the 1991 declaration by the United States, Britain and France of a no-fly zone in northern Iraq that enabled the emergence of an autonomous Iraqi Kurdish region to spark debate in Turkey about the Kurdish question and prompt the government to refer to Kurds as Kurds rather than mountain Turks.

Ironically, Turkey’s enduring refusal to acknowledge Kurdish rights and its long neglect of development of the pre-dominantly Kurdish southeast of the country fuelled demands for greater rights rather than majority support for Kurdish secession largely despite the emergence of the PKK

Most Turkish Kurds, who could rise to the highest offices in the land s long as they identified as Turks rather than Kurds, resembled Palestinians with Israeli citizenship, whose options were more limited even if they endorsed the notion of a Jewish state.

Nonetheless, both minorities favoured an independent state for their brethren on the other side of the border but did not want to surrender the opportunities that either Turkey or Israel offered them.

The existence for close to three decades of a Kurdish regional government in northern Iraq and a 2017 referendum in which an overwhelming majority voted for Iraqi Kurdish independence, bitterly rejected and ultimately nullified by Iraqi, Turkish and Iranian opposition, did little to fundamentally change Turkish Kurdish attitudes.

If the referendum briefly soured Turkish-Iraqi Kurdish relations, it failed to undermine the basic understanding underlying a relationship that could have guided Turkey’s approach towards the Kurds in Syria even if dealing with Iraqi Kurds may have been easier because, unlike Turkish Kurds, they had not engaged in political violence against Turkey.

The notion that there was no alternative to the Turkish intervention in Syria is further countered by the fact that Turkish PKK negotiations that started in 2012 led a year later to a ceasefire and a boosting of efforts to secure a peaceful resolution.

The talks prompted imprisoned PKK leader Abdullah Ocalan to publish a letter endorsing the ceasefire, the disarmament and withdrawal from Turkey of PKK fighters, and a call for an end to the insurgency. Mr. Ocalan predicted that 2013 would be the year in which the Turkish Kurdish issues would be resolved peacefully.

The PKK’s military leader, Cemil Bayik, told the BBC three years later that “we don’t want to separate from Turkey and set up a state. We want to live within the borders of Turkey on our own land freely.”

The talks broke down in 2015 against the backdrop of the Syrian war and the rise as a US ally of the United States in the fight against the Islamic State of the PKK’s Syrian affiliate, the People’s Protection Units (YPG).

Bitterly opposed to the US-YPG alliance, Turkey demanded that the PKK halt its resumption of attacks on Turkish targets and disarm prior to further negotiations.

Turkey responded to the breakdown and resumption of violence with a brutal crackdown in the southeast of the country and on the pro-Kurdish Peoples’ Democratic Party (HDP).

Nonetheless, in a statement issued from prison earlier this year that envisioned an understanding between Turkey and Syrian Kurdish forces believed to be aligned with the PKK, Mr. Ocalan declared that “we believe, with regard to the Syrian Democratic Forces (SDF), the problems in Syria should be resolved within the framework of the unity of Syria, based on constitutional guarantees and local democratic perspectives. In this regard, it should be sensitive to Turkey’s concerns.”

Turkey’s emergence as one of Iraqi Kurdistan’s foremost investors and trading partners in exchange for Iraqi Kurdish acquiescence in Turkish countering the PKK’s presence in the region could have provided inspiration for a US-sponsored safe zone in northern Syria that Washington and Ankara had contemplated.

The Turkish-Iraqi Kurdish understanding enabled Turkey  to allow an armed Iraqi Kurdish force to transit Turkish territory in 2014 to help prevent the Islamic State from conquering the Syrian city of Kobani.

A safe zone would have helped “realign the relationship between Turkey’s Kurdistan Workers Party (PKK) and its Syrian offshoot… The safe-zone arrangements… envision(ed) drawing down the YPG presence along the border—a good starting point for reining in the PKK, improving U.S. ties with Ankara, and avoiding a potentially destructive Turkish intervention in Syria,” Turkey scholar Sonar Cagaptay suggested in August.

The opportunity that could have created the beginnings of a sustainable solution that would have benefitted Turkey as well as the Kurds fell by the wayside with Mr. Trump’s decision to withdraw US troops from northern Syria.

In many ways, Mr. Erdogan’s decision to opt for a military solution fits the mould of a critical mass of world leaders who look at the world through a civilizational prism and often view national borders in relative terms.

Russian leader Vladimir Putin pointed the way with his 2008 intervention in Georgia and the annexation in 2014 of Crimea as well as Russia’s stirring of pro-Russian insurgencies in two regions of Ukraine.

Mr. Erdogan appears to believe that if Mr. Putin can pull it off, so can he.

Continue Reading

Latest

Trending

Copyright © 2019 Modern Diplomacy