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Country Forecast: Turkey, Erdogan and Where Policy Leads

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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.

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Syria: 10 years of war has left at least 350,000 dead

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A decade of war in Syria has left more 350,200 people dead, High Commissioner Michelle Bachelet told the Human Rights Council on Friday, noting that this total was an “under-count of the actual number of killings”.

These are a result of a war that spiralled out of the 2011 uprising against President Bashar al-Assad’s rule.

Based on the “rigorous work” of the UN Office for the Coordination of Humanitarian Affairs (OCHA), she said that the tally, which includes civilians and combatants, is based on “strict methodology” requiring the deceased’s full name, the date of death, and location of the body.

People behind the numbers

In the first official update on the death toll since 2014, Ms. Bachelet informed the Council that more than one in 13 of those who died due to conflict, was a woman – 26,727 in all – and almost one in 13 was a child – a grim total of 27,126 young lives lost.

The Governorate of Aleppo saw the greatest number of documented killings, with 51,731 named individuals.

Other heavy death tolls were recorded in Rural Damascus, 47,483; Homs, 40,986; Idlib, 33,271; Hama, 31,993; and Tartus, 31,369.

Behind each recorded death was a human being, born free and equal, in dignity and rights”, reminded the High Commissioner.

“We must always make victims’ stories visible, both individually and collectively, because the injustice and horror of each of these deaths should compel us to action.”

More accountability needed

Her office, OHCHR, is processing information on alleged perpetrators, recording victims civilian or combatant status and the type of weapons used, Ms. Bachelet said.

To provide a more complete picture of the scale and impact of the conflict, the UN agency has also established statistical estimation techniques to account for missing data.  

The High Commissioner explained that documenting deaths complements efforts to account for missing people and that her office has been helping the families of the missing, to engage with international human rights mechanisms.

Given the vast number of those missing in Syria, Ms. Bachelet echoed her call for an independent mechanism, with a strong international mandate, to “clarify the fate and whereabouts of missing people; identify human remains; and provide support to relatives”.

No end to the violence

Today, the daily lives of the Syrian people remain “scarred by unimaginable suffering”, the UN human rights chief said, adding that they have endured a decade of conflict, face deepening economic crisis and struggle with the impacts of COVID-19.

Extensive destruction of infrastructure has significantly affected the realization of essential economic and social rights, and there is still no end to the violence.

It is incumbent upon us all to listen to the voices of Syria’s survivors and victims, and to the stories of those who have now fallen silent for ever”, the High Commissioner concluded.

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Lessons Learned: US Seek to Salvage their Relations with the Syrian Kurds

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The hasty retreat of the US troops from Afghanistan has left a sizeable dent in the reputation of the White House among the American public, in the Middle East and the world in general. Washington was criticised heavily for the betrayal of the Afghan government, which paved the way for Taliban to storm to power.

It’s only natural that such events created a breeding ground for uncertainty among US allies in the region. Some of them started to reevaluate their relationship with the White House after the Afghan fiasco; others were having doubts about the US’ commitment beforehand. Current situation forces Washington to take firm actions to validate their status as a powerhouse in the region. There are indicators that US leadership has found a way to regain trust from its allies starting with Kurdish armed units in Syria.

The Kurds became a key ally to the US in their quest to defeat ISIS in Syria. Washington helped to create the predominantly Kurdish Syrian Democratic Forces (SDF), who consequently established control over oil-rich regions in the north-eastern Syria. However the rapid rise of Kurdish influence triggered discontent from other parties of the Syrian conflict: the Assad government and Turkey, who considers SDF an offshoot of the PKK, designated as a terror group by the Turkish authorities. Under this pretext Ankara conducted three full-scale military operations against the Kurds in spite of its membership in the US led coalition.

Turkey remains a major headache for the US in northern Syria as it obstructs the development of a Kurdish autonomy. US failure to act during the Turkish offensive on Al-Bab and then Afrin is still considered one of the most agonizing experiences in the recent history of American-Kurdish partnership. On the flip side, this relationship had its bright moments. US forces were persistent in their cooperation with the Kurds despite Donald Trump’s efforts to withdraw US military presence from Syria. Furthermore, former Pentagon’s chief James Mattis increased funding of SDF in 2019 to a record high of $300 million.

Although the US cut back its support for the Kurds after proclaiming victory over ISIS, it’s still sufficient for SDF to stay among the most combat-capable forces in Syria. US provide machinery, equipment and ammunition, but most importantly teach the Kurds the skills to profit from their resources. Besides training SDF rank soldiers, the American troops prepare their special forces HAT (Hêzên Antî Teror, Anti-Terror Forces) primarily tasked with establishing security on oil facilities as well as detection and elimination of terrorists. In terms of their equipment they practically hold their own even against US troops. During their operations HAT fighters use standardized weaponry, night goggles and other modern resources.

Regardless of all the US aid military capabilities of SDF have one critical vulnerability, namely the lack of air defense. This weakness is successfully exploited by Turkey who uses their drones to bomb Kurdish positions. For the last couple of months the number of air strikes has significantly increased, which brought SDF to find new methods of deflecting air attacks.

There are good grounds to believe that Washington accommodated their partner’s troubles. Thus a source from an US air-base in Middle-East who asked to keep his name and position anonymous told us that on the 18th of September three combat-capable trainer aircraft T-6 Texan have been deployed to Tell Beydar air-base in Hasakah province, Syria. According to the source American instructors have begun a crash course in air pilotage with the candidates picked form the SDF ranks long before the airplanes arrived to their destination. This is implicitly confirmed by the large shipment of US weaponry, machinery and ammunition to Tell Beydar delivered on the 17th of September that included missiles compatible with Texan aircraft.

The sole presence of airplanes, even trainer aircraft, prompts a change in the already existing power balance. T-6 Texan can be used not only for air cover but also as a counter tool to Turkish “Bayraktar” UAVs especially if US grant Kurds access to intel from the radars situated on US air bases. Ultimately, from Turkey’s standpoint it must look like an attempt from the US military to create PKK’s own air force.

This being said the US are better off using political means rather than military if the goal is to handicap Turkish interests in Syria. The groundwork for this has been laid thanks to a reshuffle in the White House under Biden administration. First came the resignation of former US Special Representative for Syria Engagement James F. Jeffrey infamous for his soft spot for Turkey, who has been openly promoting pro-Turkish views in the White House during his tenure. In addition to the loss of their man in Washington, Turkey has gained a powerful adversary represented by the new National Security Council coordinator for the Middle-East and North Africa Brett McGurk. McGurk is a polar opposite to Jeffrey and has sided with the Kurds on numerous occasions. He is well respected among the leaders of SDF because of his work as Special Presidential Envoy for the Global Coalition to counter ISIS.

The only yet the most important question that is yet to be answered is the position of US president Joe Biden. So far Biden’s administration has been avoiding radical shifts regarding its Syria policy. Development of cooperation with the Kurds considering they have proven their reliability might come as a logical solution that will also allow the White House to show their teeth. Washington cannot endure another Afghanistan-like fiasco that will destroy their reputation figuratively and their allies literally. Even with all possible negative outcomes taken into account the enhancement of cooperation with the Kurds outweighs the drawbacks and remains the optimal route for the US.

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Turkish Geopolitics and the Kabul Airport Saga

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Image credit: Hurriyet daily news

The Taliban’s ultimate agreement to a prominent Turkish security presence at Afghanistan’s only airport completes an important power-play for the latter. Ankara wishes to establish itself as a dominant player in the post-U.S. withdrawal Afghan affairs, ensuring that the U.S. looks to it as an ideal partner for its future policies in Afghanistan. It is in this context that Turkey having overcome the formerly heated rejections by the Taliban of its proposed role at the airport is highly significant as it portends the closer integration of Afghanistan into familiar Turkish geopolitical agendas.

Turkey’s Afghan power-play and the U.S.

Turkey’s announcement in June of plans to militarily manage the security at Kabul’s Hamid Karzai International Airport with U.S. financial support incensed the Taliban.

By not consulting or informing the powerful Islamist group on such a major issue in a post-withdrawal Afghanistan, Turkey signaled its view of the Taliban as inimical non-state actors lacking the stature to act upon the pretext of Afghan sovereignty. Indeed, President Tayyip Erdogan accused the Taliban of the ‘occupation’ of the Afghan territory in response to their warnings that Turkey’s airport plan violated the Doha Accords in terms of the exit of all foreign forces from Afghanistan and that they would harshly react to it.

The Taliban’s near-effortless takeover of Kabul in mid-August seemed to close the chapter on the airport saga, but deadly ISIS bombings near the airport two weeks later forced the new regime to consider external help in filling the Afghan security vacuum.

Consequently, Turkey gained not only an acquiescence from Afghanistan’s strongest faction to its desired role at the airport but also an affirmation of its capacity to face down and override local actors as a foreign power seeking to guide its Afghan initiatives to fruition.

This may appeal strongly to the U.S., which has increased its geoeconomic interests in Afghanistan in parallel with the process of its military disengagement from the country. These interests take the form of large infrastructure trade projects of a regional scale and would benefit if shielded from the whims of domestic Afghan factions that tend to cripple governance and policy implementation. Ankara’s assertive posture during the airport tussle with the Taliban helps it pitch itself to Washington as capable of doing precisely this.

The Central Asia factor

These trade infrastructure projects in Afghanistan aim to develop it as a transit hub for Central Asian trade to extra-regional markets as outlined in the U.S. ‘Strategy for Central Asia 2019-25’. The U.S. affords considerable importance to this strategy both as a means of rebuilding Afghanistan and providing the Central Asian states with new trade routes that do not need to transit the territory of Russia, their former Soviet patron and America’s great-power rival.

Turkey shares the goal of increasing Central Asia’s global connectivity, whilst envisioning itself the natural leader and conduit for the Turkic Central Asian states’ growing socio-economic bonds with the outside world. By acting as a lead-from-the-front partner for the U.S. in the post-withdrawal Afghanistan, Turkey can persuade the U.S. to entrust it with the Afghan leg of the Strategy for Central Asia.

Turkey could then inculcate the progress of its own connectivity projects for Central Asia into the U.S. priorities as a premium of sorts for its services tackling Afghanistan-based risks and hazards to the U.S. Strategy for Central Asia. These Turkish-led projects include the East West Trans-Caspian Middle Corridor (connecting Turkmenistan-Kyrgyzstan-Uzbekistan or Kazakhstan to Europe via the Caspian Sea-South Caucasus-Turkey route) and its Eastern spur for Afghanistan, the Lapis Lazuli Corridor (connecting northwest Afghanistan via Turkmenistan to the same Caspian Sea-South Caucasus-Turkey route to Europe).

The text of the US Strategy for Central Asia does mention and pledge favourable visa and customs policies for the Lapis Lazuli Corridor, but does not mention the Middle Corridor or Turkey at all. The absence of the latter two key names indicates that U.S. backing for the Lapis Lazuli Corridor likely owed to the simple fact that it directly includes Afghanistan and has already been functional since December 2018. Thus, the U.S. does not formally endorse the East-West connectivity for Central Asia—which Turkey specializes at—under the rubric of its Strategy for Central Asia.

“Senior [Trump] administration officials have expressed support for specific infrastructure projects—such as, notably, Georgia’s deep-water port project in Anaklia—but without having cast them as part of a broader regional agenda,” commented Middle East Institute scholar Dr John Calabrese on the erstwhile Donald Trump administration’s position on the Middle Corridor months before the Strategy on Central Asia’s release.

All this greatly limits the pool of U.S. financial and political support that Turkey could tap into for developing and expanding the Middle Corridor, which is the lynchpin for its push for pan-Turkic leadership. Ankara’s remedy for this problem, however, may lie in gaining the mentioned lead-from-the-front ally status vis-a-vis the U.S. in Afghanistan.

As observed by the Central Asia-Caucasus Institute’s Chairman and Director Frederick Starr and Svante Cornell, the present U.S. approach represents important shifts in the American conceptualization of Afghanistan and Central Asia relative to each other. These are a departure from the long-standing tendency to ‘view Central Asia as an appendix to Afghanistan policy’ and an embrace of Central Asia as a bloc. Both these shifts laid the basis for the U.S. Afghan policy to take its cue from Central Asia’s development. Officially mandating the development of an East-West transport corridor from Central Asia to Europe—in short, Turkey’s Middle Corridor—is the next logical step in this paradigm.

Starr and Cornell, leading proponents in the U.S. policy advocacy community for treating Afghanistan as part of Central Asia, identify the East-West transport corridor as crucial to the Strategy for Central Asia and criticize the document for not mentioning it.

Thus, from its position in Afghanistan, Turkey can orient the inputs it feeds back to its diplomatic and military partners in Washington around the case for the merger of the U.S. Afghanistan and Central Asia policies that Starr and Cornel advocate. The U.S. will expect actionable suggestions from its top consultative partner for Afghanistan to actualize this merger, paving the way for Turkey to impactfully pitch the Middle Corridor as the solution.

This could well become an elusive opening that Turkey has long needed to bridge the chasm between the Middle Corridor’s innate appeal to the U.S. great-power sensitivities underpinning its Central Asia posture and the U.S. seeming disinterest in the corridor. After all, the Middle Corridor bypasses Russia, challenging its monopoly over Central Asia’s trade routes. It also acts as what Starr describes as a ‘Land Suez’ for China to connect to Europe—reducing China’s reliance on transiting Russia for this purpose and offsetting, from Washington’s perspective, the prospect of its two great-power rivals’ geoeconomic priorities aligning too closely.

Subsequent U.S. endorsement of the Middle Corridor would stimulate greater U.S. investment in the mega-project, hitherto limited by the Strategy for Central Asia’s non-mention of East-West connectivity as explored prior.

In addition to this, the Middle Corridor could become an agenda item in multilateral platforms for Central Asia, such as the C5+1, set up by the U.S. with a focus on the Afghan-Central Asian connectivity. This would prop up advocates in Turkic Central Asia for a formal embrace of an Ankara-led Turkic bloc by enabling them to present this as part of the institutionalization of Central Asian affairs as opposed to a pro-Turkish tilt which might alarm Russia, who has a past record of reacting forcefully to external powers engaging in bloc-building in its former Soviet backyard in Eurasia. This will greatly benefit Turkey.

Restoring balance with the West

Afghanistan can arguably bring Turkey’s ideologically-driven desire to carve a Turkic bloc from Central Asia and its more general desire to mitigate the strains in bilateral ties with the U.S. closer together than any other foreign policy file in Ankara.

Linked to Central Asia or not, Afghanistan stands out as a vacuum left by American strategic miscalculations at the regional doorstep of several U.S. rivals. Turkish initiatives, such as the Kabul airport project, clearly designed to preserve U.S. stakes in Afghanistan—at a time when Russia, Iran and China appear poised to capitalize on the U.S. shrinking presence there—can inject fresh credibility into Turkey’s historical image as the West’s Eurasian vanguard.

This will help President Erdogan as he tries to stabilize relations with the U.S. against their list of disputes, from Turkey’s purchase of Russian air defense systems to the U.S. support for Kurdish groups near the Turkish-Syrian border and beyond. Additionally, President Joe Biden faces mounting public and political pressure at home over the rapid collapse of the former U.S.-backed Kabul government in the Taliban’s wake; in this context, Turkey volunteering itself as a new and coherent vehicle for U.S. interests in Afghanistan may prove the very ice-breaker Erdogan needs for his notably bleak relationship with Biden.

However much progress Ankara makes in these endeavours, its headstrong approach and eventual success in securing a role at Kabul’s airport points to strategic clarity and an expectation of Afghanistan’s seamless integration into Turkish geopolitics.

From our partner RIAC

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