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Poor Richard’s Report

Poor Richard’s Report

Over 300,000 readers
My Mission: God has uniquely designed me to seek, write, and speak the truth as I see it. Preservation of one’s wealth while providing needful income is my primary goal in these unsettled times. I have been given the ability to evaluate, study, and interpret world and national events and their influence on the future of the financial markets. This gift allows me to meet the needs of individual and institution clients.

AS I SEE IT

O.K. Here is some straight talk about the economy and the stock market. The economy is bottoming out. Notice I said bottoming, not rebounding. Think of it this way: you own a swimming pool that has sprung a pretty good leak. By the time you have stopped the leak you have lost 5% of your water. The problem is you have been experiencing a dry spell and your reservoir (credit) is almost empty. You now have just a glass full of water to refill your pool, just one cup at a time, slowly.
Now, has our Congress come to the rescue just in time? They have redefined the credit card industry, which makes it a little harder for the companies to gouge us. They left the interest rates the same. Before 1974 it was called USURY. That was and should be a very bad word. Who do they think they are conning? We are not that dumb. Both parties are on the take. They use a once honored term- Lobbyist. Today that stands for bribery. Everyone in Washington feels they can just keep on printing money. If we were on some form of a gold standard, where excessive debt meant a weaker dollar and less trade, they would think twice about padding their own boudoir.
I am not a true economist and I must rely on sources that I know are competent. I have studied and learned from them for over 48 years.
One thing is very clear. When a US Treasury bill has a negative yield; we are in deep trouble. The last time that happened was 1932. This means big money is scared and they are paying the government to hold on to their money. Today, May 29, 2009 the 2 year Treasury note is yielding 0.97%. Buying bonds today is an instant loss.
When most bonds were issued, it was when business was booming and the revenues at that time supported the intended interest rate. Now with business at a snails pace the debt coverage of these bonds is in serious jeopardy. Debt coverage means how many times the liquid assets can cover the bond interest payments. The greater the coverage on the bond interest payments – the higher the rating. If a bond cannot pay it’s interest payment then the whole company is in default and they have to find some way to pay the bondholders. They have first crack at a corporation’s assets. What is left goes to the preferred shareholders and common stock holders get the crumbs. So buying a bond fund or any instrument that holds many bonds should be avoided. Even the managers are not sure which bond will go down next. You should only buy bonds, if you must, as individual issues. This makes insurance companies very suspect.
General Motor’s bondholders are getting a royal shafting by being made to accept common stock or “funny money”. This is, in theory, to protect the pension funds, which still own the preferred and common stock. Balderdash! I believe this will end up in the Supreme Court of the United States.
Don’t get me wrong; buying bonds at the appropriate time can reward an investor handsomely. Timing is everything.
Now here is the really bad part. Don’t fret because at the end of this letter I have the answer for you. The stock market has not bottomed in my opinion. In March I called the bottom, and we have had a fantastic rally, but now I have second thoughts. I know we will test the lows by October of this year. Whether they hold, nobody knows. One can only guess. Right now my guess is no.
Speculators and the media believe naively that we are ready to resume a rain-delayed ball game. Too bad we can’t refund our tickets.
The problem is that the mechanic’s of the market place have not been corrected.
You can see the speculators still playing the market – especially the big capitalization stocks – and are swimming in shark-infested waters. These sharks have no regard for ethics or laws or anyone’s skin but their own. At the present time the media is impressed by wealth, but not how it was earned. Financial morals are lower than the bottom of the ocean.
What we have to do is trash the conservatives and liberals at the same time and elect middle of the roaders that work with both sides of the isles. We need some hard nose politicians that are not afraid to speak plainly and openly. The problems of today are here because we had weak-kneed bureaucrats that were either paid off or lacked the intestinal fortitude to right a wrong. When you are around money, unless the laws are strictly enforced, slimy eels mess up your boat badly.
We now need global enforcement so that citizens of countries that do not comply are blackballed. The US was once known as the safest haven with the toughest laws in the whole wide world. Sadly, the keepers of the faith retired.
So until we have a global regulatory agency that will protect investors, the stock markets for the most part are a crapshoot, or like picking a single number on a roulette wheel.
Buying a bond is going to be an instant loss at best. We have to borrow trillions of dollars to finance this socialist experiment. Who wants to borrow the first trillion? China and Brazil want to trade in their own currency. When a central banker sells a government security he receives dollars. They then sell the dollar to pay for the gold. That is why you see gold go up when the dollar goes down.
The whole world is in debt.
My big fear is that in January Obama will try to get rid of Bernanke who is Chairman of the Federal Reserve. That is like changing horses in mid stream to borrow a quote from yesteryear. Right now the whole world is listening to him. He has made honest mistakes and corrected them quickly. In the past when a stock analyst made a mistake I would pay careful attention to him, because I knew he was trying very hard to make up for the previous mistake and had learned from his error. Then there were some that could turn a load of manure into gold bars. Caveat Emptor.
In my last letter I recommended buying Spider Gold Trust (NYSE GLD $96.16) and today I am adding Central Fund of Canada (NYSE CEF $12.56) which hold gold and silver bars in one of Canada’s largest bank vaults.
My reasoning is this: they keep increasing their benefits while decreasing ours and refuse to really fix the inequities. By going back on some form of the gold system this puts pressure on them to perform properly. If they spend too much it will weaken the dollar and send them out of office quicker than you can blink.

In 1950 we held 68.2% of the worlds’ gold at Fort Knox. Today it is less than 28%. The whole world is awash in debt and dollars and sooner or later something has to give. To protect yourself, your family, and your job or business you should consider buying some gold stocks that own gold.
If countries decide to go back on some form of the gold standard the price could increase two to tens times the current price or more. If the Government tries to confiscate it like they did in 1932 they went from $21 to $35. That is a pretty good percentage increase- so I would not worry about that now.
Remember when things get really bad, they can only get better.
Those needing income should look at preferred stock of sound companies selling below their call price. The sharks can not mess around with these with ease. Many are qualified preferred’s which means 85% is tax free. I prefer AMERCO $2.125 preferred list on the NYSE. The Symbol is AO-A. They own U-Haul Trailer Company. That is also traded on NASDAQ- UHAL-$36.85. A good way to keep track of the preferred is to watch for any sudden shift in UHAL.
There are also lots of values north of our borders in Canada. The Canadians did not monkey around with their banking system so many of their companies are in fairly stable condition versus the United States.
A word of caution; I was having my Saturday morning breakfast at the Woodstock Country Store when I met this gentleman who told me this amazing tale. In his business he has to buy nickel, about 400 pounds per year. This year he placed his order and found out the price had dropped 50%. I found out later that China had stopped buying.
This example is just another reason why we should be moving to some form of a gold standard. It puts a ball and chain on our politicians, who cannot get a real job, and gives a solid standard of living for us and for our grandchildren.
Buy some gold as a protection and a hedge. If you have any problems you can contact me personally at the numbers listed below.
Thank you and Cheerio!!!

Addendum

Chairman Bernanke’s plan if we ever had a depression again was to go into a helicopter and spread dollar bills all over the country in every town, village and farm. This is what he wrote his thesis on while getting his doctorate at M.I.T.
Nothing goes as planned. He has his depression, and he has the chance to implement his ideas, but there is always a catch. An election came and a populace president and his party were swept into office.
Now everyone wants on the ‘gravy train’, which is actually more like a giant lemming lumbering towards the seaside cliff. States are now knocking on the door like hobos of the past for a needed handout. Except this time there will be no thank you, instead they will simply rush to get in line again for more.
The mighty dollar is ready to be downgraded to compete with the Chinese Yuan and the Mexican Peso and the Italian Lira. Interest rates will catapult over night as computers change the price of our bonds in the twinkling of an eye.
The idea of the good Doctor Bernanke was to distribute funds into private hands that would create jobs where needed, which is certainly not in Washington D.C. Washington should be responsible for creating rules and umpires to make sure the game is played honestly.
The lesson we learned from the 1930’s was that our banks and credit system had to be sacrosanct. Once those standards were lowered the blood sucking vampires landed in Washington DC. They are called Lobbyists. What is your interest rate?

Richard C De Graff
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This report has been prepared from original sources and data which we believe reliable but we make no representation to its accuracy or completeness. Coburn & Meredith Inc. its subsidiaries and or officers may from time to time acquire, hold, sell a position discussed in this publications, and we may act as principal for our own account or as agent for both the buyer and seller.

June 2, 2009
ARMENIAN CRIME AMNESIA?

[Note by Ergun KIRLIKOVALI, 29 May 2009: This article appeared in the October 16, 2007 issue of the Washington Times. Since then, nothing seems to have changed on the Armenian lobby’s front: same old resolutions infested with same old lies and deceptions. It is almost like time stands still in the Armenian psyche.

How one lives one’s life is one’s own business, true. But it seems to me, being consumed with hatred (for all things Turkish) is a terrible way for anyone (Armenian or others) to waste one’s own life.

Solution? Simple.

Armenians can apologize to Turks right now for destroying a millennium of Turkish-Armenian harmonious cohabitation in Anatolia with territorial demands, rebellions, terrorism, and treason hundred years ago and duping the unsuspecting international community with tall tales of a bogus genocide since then and Turks, in return, will forgive Armenians.

Armenia can end the brutal military occupation of Karabakh and Western Azerbaijan and allow 1+ million Azeri refugees to return to their homes and Turkey, in return, will open her borders with Armenia.

Fail to do these and expect to be confined to a life of hatred and vengeance in America and poverty, corruption and violence in Armenia.]

***

Armenian crimes against humanity and war crimes against the Ottoman Turkish and Kurdish populations of eastern and southern Anatolia during World War I and its aftermath have been forgotten amidst congressional preoccupation with placating the vocal and richly financed Armenian lobby.

Last Wednesday, the Armenians hectored members of the House International Relations Committee by a 27-21 vote into passing a counterfactual resolution convicting the Ottoman Empire and its successor state, the Republic of Turkey, of genocide. A historically supportable resolution would have condemned massacres against Armenians with the same vigor, as it should have condemned massacres by Armenians against the innocent Muslim populations of the crumbling Ottoman Empire.

Capt. Emory Niles and Arthur Sutherland, on an official 1919 U.S. mission to eastern Anatolia, reported:

“In the entire region from Bitlis through Van to Bayezit, we were informed that the damage and destruction had been done by the Armenians, who, after the Russians retired, remained in occupation of the country and who, when the Turkish army advanced, destroyed everything belonging to the Musulmans. Moreover, the Armenians are accused of having committed murder, rape, arson and horrible atrocities of every description upon the Musulman population. At first, we were most incredulous of these stories, but we finally came to believe them, since the testimony was absolutely unanimous and was corroborated by material evidence. For instance, the only quarters left at all intact in the cities of Bitlis and Van are Armenian quarters … while the Musulman quarters were completely destroyed.”

Niles and Sutherland were fortified by American and German missionaries on the spot in Van. American Clarence Ussher reported that Armenians put the Turkish men “to death,” and, for days, “They burned and murdered.” A German missionary recalled that, “The memory of these entirely helpless Turkish women, defeated and at the mercy of the [Armenians] belongs to the saddest recollections from that time.”

A March 23, 1920, letter of Col. Charles Furlong, an Army intelligence officer and U.S. Delegate to the Paris Peace Conference, to President Woodrow Wilson elaborated:

“We hear much, both truth and gross exaggeration of Turkish massacres of Armenians, but little or nothing of the Armenian massacres of Turks. … The recent so-called Marash massacres [of Armenians] have not been substantiated. In fact, in the minds of many who are familiar with the situation, there is a grave question whether it was not the Turk who suffered at the hands of the Armenian and French armed contingents which were known to be occupying that city and vicinity. … Our opportunity to gain the esteem and respect of the Muslim world … will depend much on whether America hears Turkey’s untrammeled voice and evidence which she has never succeeded in placing before the Court of Nations.” The United States neglected Col. Furlong’s admonition in 1920, and again last Wednesday. Nothing seems to have changed from those days, when Christian lives were more precious than the lives of the “infidels.” Justin McCarthy of the University of Louisville concluded that a staggering 2.5 million Anatolian Muslims died in World War I and the Turkish War of Independence. More than 1 million died in the Six Provinces in Eastern Anatolia, as Armenians with the help of Russia’s invading armies sought to reclaim their historical homeland.

In contrast, best contemporaneous estimates place the number of Armenians who died in the war and its aftermath at between 150,000 and 600,000. The Armenian death count climbed to 1.5 million over the years on the back of political clout and propaganda.

The committee voiced horror over the Armenian suffering, but said nothing about the suffering Armenians inflicted on the Muslim population. Nor did the committee deplore the 60 years of Armenian terrorism in the Ottoman capital Istanbul, including assassination of the Armenian patriarch and an attempted assassination of the sultan as he was leaving prayer. Armenian terror was exported to the U.S. mainland and Europe by fanatics who murdered over 70 Turkish diplomats, three of them in Los Angeles and one honorary consul general in Boston.

Mourad Topalian, erstwhile head of the Armenian National Committee of America, a lead lobbying group behind the resolution and major campaign contributor to House Speaker Nancy Pelosi and other members, was sentenced to 36 months in prison for complicity in a conspiracy to bomb the Turkish mission at the United Nations. Yet Topalian has escaped a terrorist label by either Armenian-Americans or their echo chambers in Congress.

The home of the late Professor Stanford Shaw of the University of California-Los Angeles was firebombed in retaliation for his academic courage in disputing the Armenian genocide claim. Like Benito Mussolini, Armenians believe truth is an assertion at the head of a figurative bayonet.

In parts of Europe, disbelief in the Armenian genocide allegation is a crime on par with Holocaust denial. But the Holocaust was proven before the Nuremburg Tribunal with the trappings of due process. Armenians, in contrast, have forgone bringing their genocide allegation before the International Court of Justice because it is unsupported by historical facts.

In contrast to open Ottoman archives, significant Armenian archives remain closed to conceal evidence of Armenian terrorism and massacres.

If the resolution’s proponents had done their homework and put aside religious bigotry, they would have reached the same conclusion as author and Professor Bernard Lewis of Princeton University:

“[T]he point that was being made was that the massacre of the Armenians in the Ottoman Empire was the same as what happened to Jews in Nazi Germany and that is a downright falsehood. What happened to the Armenians was the result of a massive Armenian armed rebellion against the Turks, which began even before war broke out, and continued on a larger scale.” Brian Ardouny of the Armenian Assembly of America in a videotaped interview for a documentary on the Armenian Revolt clucked:

“We don’t need to prove the genocide historically, because it has already been accepted politically.”

Congress should reject that cynicism in defense of historical truth. ***

Bruce Fein is a constitutional lawyer and international consultant with Bruce Fein & Associates and The Lichfield Group.

June 2, 2009
Erdogan Prioritizes Foreign Policy in State of the Union Address

Erdogan Prioritizes Foreign Policy in State of the Union Address

Publication: Eurasia Daily Monitor Volume: 6 Issue: 104

June 1, 2009

By: Saban Kardas

On May 30 Turkish Prime Minister Recep Tayyip Erdogan delivered his State of the Union address, focusing on Turkey’s enhanced profile in regional diplomacy. Erdogan provided details relating to his trips to Azerbaijan, Russia and Poland, and discussed recent foreign policy initiatives, most importantly Turkey’s role in energy security. Erdogan attempted to boost public confidence in the foreign policy agenda, which he described as “very active, dynamic and intensive,” essentially offering a restatement of the Justice and Development Party (AKP) government’s position on these issues (www.bbm.gov.tr, May 30).

Erdogan highlighted Ankara’s role in energy policies, which he described as one of the most important issues on the global political agenda. He illustrated how his government had “turned Turkey’s geographic position into an effective foreign policy instrument,’ while arguing that the country’s location enables it to act as an “energy corridor and terminal” between Western markets and the Middle Eastern or Caspian energy producers. However, he noted that if Turkey fails to develop longer term planning, it will be unable to fully capitalize on these opportunities or meet its domestic needs.

Erdogan’s views on energy geopolitics reflect the growing energy demands of an emerging economy. Although Turkey has initiated various projects to increase its domestic production and invest in alternative energy sources, its domestic energy output accounts for only one third of the country’s needs. Recent Turkish foreign policy initiatives have endeavored to turn this ongoing dependence on imports from a liability into an asset, by capitalizing on Turkey’s position between the suppliers and Western consumers.

Erdogan maintained that the AKP government had taken important steps toward diversifying suppliers and energy transportation routes. After summarizing several existing and planned oil and gas pipeline projects across Turkish territory, Erdogan added that Turkey had become an integral part of the discussions on ensuring European energy security. He claimed that once these projects are completed, “Turkey will emerge as the fourth largest hub after Norway, Russia and Algeria, in supplying gas to Europe.” He also suggested that the Turkish port of Ceyhan will become an “important energy distribution center and the largest oil sale terminal in the eastern Mediterranean.”

In that context, Erdogan prioritized the Nabucco project, since it will consolidate Turkey’s role within European energy security. He hoped the construction of the pipeline will begin soon and become operational by 2010: “we will sign the [intergovernmental] agreement in June,” he added. Erdogan’s statements also reflect recent changes in Turkey’s position over the stalled Nabucco project, which raised expectations that the intergovernmental agreement might be concluded in June (EDM, May 15).

Turkey’s diplomatic initiatives in the South Caucasus were another key feature of Erdogan’s agenda. After noting Turkey’s cooperative policies within the region, he highlighted his trip to Azerbaijan. He underlined the close ties between the two nations by referring to the growing bilateral trade volume, and Turkish investment in Azerbaijan’s economic development.

Erdogan also stressed Turkey’s continued support for international initiatives to resolve regional issues, most importantly the Karabakh question. He repeated his government’s recent stance on the Azeri-Armenian dispute by maintaining that “Turkey and Azerbaijan will continue to share a common destiny, and walk on the same path” and that Turkey “will protect Azerbaijan’s interests as much as our own interests.” He warned the Turkish and Azeri peoples against those “who work to undermine the friendship and brotherhood between the two countries through false claims” (www.bbm.gov.tr, May 30).

He was clearly seeking to alleviate domestic concern over the normalization process between Turkey and Armenia. Nationalist forces within Turkey had successfully mobilized public opinion against the AKP government’s overtures toward Armenia. They argued that it had betrayed the interests of Azerbaijan, by separating the Turkish-Armenian normalization from Azeri-Armenian negotiations. The mounting domestic pressure and criticism from Baku forced the government to reduce the pace of Turkish-Armenian rapprochement (EDM, April 29, May 6). Erdogan’s trip to Azerbaijan as well as other recent high level contacts between the countries, has served to reassure Baku (EDM, May 14). Nonetheless, these moves toward Baku added to uncertainty surrounding the future of the Turkish-Armenian rapprochement, and Turkish politicians have recently proven reluctant to comment on the issue.

He also referred to the recent naval exercises carried out by the Turkish military in the Aegean and Mediterranean. Erdogan stressed the use of high-technology weaponry and said the successful conclusion of the exercises was proof of the country’s power of deterrence in the region. Moreover, he emphasized that the Turkish army not only ensures national defense, but it also makes significant contributions to global security.

Erdogan’s address provided significant clues concerning Ankara’s strategic vision, which underpins the thinking of the Turkish political elite on foreign affairs. Erdogan repeated the geopolitical argument that Turkey is uniquely located in a strategic position at the intersection of several regions. He maintained that Turkish foreign policy strategies are devised with the aim of turning this position into an asset. Moreover, he reflected on how a constant search for markets and energy supplies to sustain Turkey’s economic development now drives many of the country’s foreign policy initiatives. Equally, he revealed that military power remains an essential component of Turkish foreign policy, despite the government priding itself on its effective use of soft power.

Erdogan’s use of geopolitical rhetoric also highlighted the shifting priorities of Turkish foreign policy under the AKP government. He said that since a large part of Turkey’s territory is in Asia, that part of the world naturally occupies a vital place in Ankara’s foreign policy agenda. This admission is important, since some analysts describe the reorientation of Turkish foreign policy toward the Middle East and the South Caucasus as an indication of an ideological shift and the emergence of neo-Ottomanism – whereas Erdogan rightly explains it as a geopolitical necessity.

https://jamestown.org/program/erdogan-prioritizes-foreign-policy-in-state-of-the-union-address/

June 2, 2009
Davutoglu signals Turkey’s growing agenda-setting role within the Islamic world

Davutoglu signals Turkey’s growing agenda-setting role within the Islamic world

Turkey Calls for OIC Involvement in Conflict Resolution

Publication: Eurasia Daily Monitor Volume: 6 Issue: 102

May 28, 2009

By: Saban Kardas

On May 23-25 the Turkish Foreign Minister Ahmet Davutoglu participated in the thirty sixth session of the Organization of the Islamic Conference (OIC) Foreign Ministers Council in Damascus. As well as marking Turkey’s increased profile within regional diplomacy, the event provided an opportunity for Davutoglu to hold several bilateral meetings with his counterparts.

Envoys from Muslim states discussed a wide range of issues, and considered proposals for mitigating Western Islamophobia, increasing the OIC’s role in conflict resolution, and raising its visibility in humanitarian affairs. The Turkish Secretary-General of the OIC, Professor Ekmeleddin Ihsanoglu, also organized a brainstorming session on the organization’s role in promoting peace and security. Reminding its members of the numerous conflicts taking place within the Muslim world, he called on them to consider developing OIC’s mechanisms for conflict resolution, including establishing future peacekeeping capabilities (www.oic-oci.org).

Since his election in 2005, Ihsanoglu has launched several initiatives to reform the organization, and his recent proposal is consistent with such efforts. Turkey has welcomed his appointment and praised the subsequent activities of the OIC under his leadership, as evidence of the country’s increased profile in international diplomacy.

Commenting on his discussions during the conference, Davutoglu told reporters that Turkey supported Ihsanoglu’s initiatives to reform the institution, and added that the proposal for greater OIC involvement in conflict resolution was developed in coordination with Ankara. He said “We cannot expect others to solve our problems… This [conflict resolution] is its [OIC’s] founding mission. Although everyone acknowledges this mission, there is no mechanism to realize it.” Davutoglu added that the formation of peacekeeping forces might be considered at a later stage, but it is urgently required to develop conflict prevention mechanisms which address the crises within the Islamic world (www.cnnturk.com, May 24).

Davutoglu said that all participating countries respected Turkey’s recent initiatives and Ankara’s leading role in regional diplomacy, while having high expectations from Turkey. Davutoglu argued that Turkey is no longer a country that is merely a passive recipient of an agenda from international organizations. He called the country’s new role as surukleyici (pioneer or leader) and added that Turkey is now acting as an agenda-setter within international organizations (Anadolu Ajansi, May 25).

In his address, Davutoglu touched on several issues facing Muslim communities, including the plight of Palestine, the instability in Afghanistan and Pakistan, the denial of minority rights to the Turkish community living in Western Thrace and the frozen conflict in Karabakh. He highlighted Ankara’s constructive policies and effective use of its soft power toward the resolution of these issues. Emphasizing an urgent need for “peace, dialogue, communication and stability,” Davutoglu called on Muslim countries to respond to their contemporary challenges: “There is a new geostrategic, geopolitical and geoeconomic culture within the Islamic world. We need to develop a new vision according to the expectations, traditions and values of our era” (Anadolu Ajansi, May 24).

Davutoglu also held several bilateral meetings, including with the Syrian President Bashar al-Assad, the Arab League Secretary-General Amr Musa and the foreign ministers from other OIC countries, including his Iranian, Iraqi and Azeri counterparts (Cihan Haber Ajansi, May 24). The statements emerging from these discussions emphasized the new sense of cooperation that exists between Turkey and its eastern neighbors, which the Justice and Development Party (AKP) government has fostered since coming to power in 2002.

Davutoglu demonstrated a constructive attitude toward Baghdad and Damascus. Following his meeting with Iraq’s foreign minister Hoshyar Zebari, Davutoglu told reporters that Turkey will release more water from its dams on the Euphrates to meet the needs of Iraqi farmers threatened by a drought. Earlier, an Iraqi delegation composed of Sunni leaders visited Ankara and submitted similar proposals. Turkey has now officially opened the dams and increased the water flow to Syria and Iraq (Yeni Safak, May 24; Hurriyet Daily News, May 25).

As the former chief advisor to the Turkish prime minister and now in his role as foreign minister, Davutoglu has been the architect of the new Turkish foreign policy (EDM, March 25, May 4, 8). Davutoglu’s geopolitical approach to international relations has been complemented by his understanding of the role played by civilizations in world history. In Davutoglu’s weltanschauung, the Islamic civilization faces a major challenge and needs to transform itself in the fields of economics, politics, culture and education to meet its contemporary challenges. He links the transformation in Turkish domestic and foreign policies to this broader trend, and assigns the country a “special mission” in this process. He does not want to enforce Turkish leadership on other Islamic countries, but he believes that Turkey can set an example. In his view, other OIC countries will naturally come to recognize Turkey’s leadership if it can develop constructive policies within the Islamic world.

His efforts to boost Turkish ties within the Islamic world have led some analysts to criticize his policies, by representing them as a drift away from the West -making Turkey more Islamic or Middle Eastern. However, though the Islamic world has been increasingly more central in Turkish foreign policy priorities, such initiatives are not necessarily at the expense of the country’s Western orientation. Since his appointment as foreign minister, Davutoglu has pursued an active agenda aimed at revitalizing stalled Turkish-European relations, improving ties with the United States, and refocusing Ankara’s attention on Central Asia. This reflects Davutoglu’s emergence as a major geopolitical thinker, advocating a more proactive and multi-dimensional foreign policy -balancing Ankara’s interests within several regions simultaneously along Turkey’s fragile Eurasian periphery.

The real question may not be ideological -whether Turkish foreign policy is drifting away from its traditional Western orientation- but a practical consideration. Davutoglu faces the challenge as to whether Turkey can sustain this ambitious, multi-dimensional foreign policy agenda, and fulfil the many expectations this creates without overstretching its resources.

https://jamestown.org/program/turkey-calls-for-oic-involvement-in-conflict-resolution/

May 29, 2009
Turkey and Brazil to Explore Oil in the Black Sea

Turkey and Brazil to Explore Oil in the Black Sea

Publication: Eurasia Daily Monitor Volume: 6 Issue: 100

May 26, 2009 09:43 AM Age: 12 hrs

Category: Eurasia Daily Monitor, Home Page, Energy, Turkey, Latin America

By: Saban Kardas

On May 20-23 Brazil’s President Luiz Inacio Lula da Silva visited Turkey. Bilateral economic ties were an important element on da Silva’s agenda, who was accompanied by government ministers and leading businessmen. The visit highlighted the prospects for improving cooperation between the two emerging economies, which complements Ankara’s efforts to diversify its economic and political relations.

During his first day in Istanbul, da Silva met Prime Minister Recep Tayyip Erdogan to discuss bilateral relations (ANKA, May 20). The following day, he participated in the Turkish-Brazilian Business Council organized by Turkey’s Foreign Economic Relations Board (DEIK). In his address, he said that the two countries had failed to realize their full potential for cooperation. Noting that each county offered unique opportunities, he urged the business community to explore further investment opportunities. Miguel Jorge, Brazil’s Minister of Development, Industry & Foreign Trade, also noted that although the trade volume between the two countries quadrupled since 1999 and had reached $1,5 billion, this was still unsatisfactory. The Turkish Minister of Finance Mehmet Simsek and the head of Union of Chambers and Commodity Exchanges (TOBB), Rifat Hisarciklioglu, also suggested both economies were “rising stars” within the global economy. They highlighted many areas for enhancing economic ties including energy, construction, automotive, household appliances and tourism (www.deik.org.tr, May 21).

In an interview with the Turkish press, da Silva described the current low-key status of the bilateral relationship as absurd, and called on prompt action to reverse this trend. He added that multi-billion dollar economic investment plans, will ensure continued growth within the Brazilian economy and facilitate its rapid recovery from the global financial crisis. He noted that after coming to power, he prioritized strengthening the country’s relations with South America, and then launched new initiatives focused on Africa and Asia. He presented his contacts with Turkey as an extension of those efforts. Before arriving in Ankara, da Silva had also visited China and Saudi Arabia as part of the same tour (Hurriyet Daily News, May 21, 22).

In Ankara da Silva met his Turkish counterpart Abdullah Gul, and agreed to boost bilateral trade (www.cankaya.gov.tr, May 22). The most tangible result of his visit was in the energy sector. Following their meeting, Gul and da Silva announced that the state-owned petroleum companies, Turkey’s TPAO and Brazil’s Petrobras, signed an agreement for the exploration of oil in the Black Sea, a project estimated to be worth $800 million. Petrobras, which has invested $130 million in Turkey since 2006, will provide an additional $300 million by 2010. The TPAO will also earmark $500 million for offshore drilling (Anadolu Ajansi, May 22).

The Turkish government has hoped that the hydrocarbon reserves beneath the Black Sea might meet its growing energy requirements and reduce its dependence on imports. In recent years, the TPAO has stepped up its oil and gas exploration drilling in several sites in the Black Sea, through joint projects with international companies (EDM, June 17, 2008). The experience of Petrobras in offshore drilling plays an important role in Turkey’s decision, while the Brazilian government views this investment as a step toward asserting itself as a major global player.

Jorge Zelada, Petrobras’s international business director, said that they decided to take a risk and invest in oil exploration. He added that based on the initial prognoses, they are hopeful about finding oil (Sabah, May 22). According to the TPAO’s estimates, there are 10 billion barrels of oil and 1.5 trillion cubic meters of gas in the Black Sea. The TPAO plans to conduct drilling in different sites in collaboration with Petrobras and ExxonMobil over the next three years. If the results are positive, oil production might begin by 2017 (Hurriyet, May 23).

Turkey and Brazil’s prospects for developing an energy partnership transcend fossil fuels. To achieve energy independence, Turkey has considered investing in alternative energy sources. Given Brazil’s leading role in bio-diesels, joint investments in ethanol-based fuels was also on the agenda. De Silva proposed that Turkey and Brazil might collaborate in agriculture, to produce ethanol in Africa (Radikal, May 23).

The Brazilian delegation was also keen to promote closer aviation cooperation. One representative from Brazil’s aircraft producer Embraer confirmed that they were already in contact with Turkish firms to access this market. Although the head of Turkish Airlines said that they currently had no joint projects with Embraer, he did not rule out such future options (Dunya, May 21). Jorge also explained that Brazil will welcome projects in which both countries can produce jets jointly (Today’s Zaman, May 22).

Both countries are major powers within their respective regions, and as emerging economies, their markets offer lucrative business opportunities. Equally important, given their location, they also provide access to the surrounding markets. However, although they have attracted foreign investments, their level of bilateral trade remains low. To sustain their economic growth and reduce the impact of the global financial crisis, both countries are seeking to penetrate new markets. In particular, Turkey wants to sign a free trade agreement with Mercusor to eradicate the duties on Turkish exports to South America, which has been long delayed. President Gul and the representatives of the Turkish business sector, solicited President da Silva’s assistance to conclude this deal. If de Silva can accelerate these negotiations and ensure that the deal is concluded in time for Erdogan’s visit to Brazil next year, it will mark a significant achievement for the Turkish government.

https://jamestown.org/program/turkey-and-brazil-to-explore-oil-in-the-black-sea/

May 27, 2009
Cooperation and Confrontation between the USA and Russia in Caspian Region

New monopolar world system had created new interests which depend on big powers in Caspian region after the collapse of Soviet Union. This situation shared a chaos on governmental system in this area. Big powers created a competition with Caspian Sea status and energy subjects to use their interests. Dominant power of the USA and Russia shared some conflict and cooperation circumstances as interdependent body in their relations. Particularly common threat position establishes cooperational theme. Caspian region which is second big energy sphere is a bridge between Europea and Asia, also it is a main point of the world domination conditions.

Subjects of Confrontation and Hegemony Tools

Big powers need conflict, cooperation and hard-soft balance tools as political subjects to increase their activity in the region. The USA and Russia have enough advantages according to their situation. But confrontation of powers can be transformed to common interest activities so to analyse foreign politics of states can provide to know near future. Today anxieties of the USA’s foreign affairs to Russia are existing as these subjects:

– Monopoly situation of Russia in energy area,

– Against position of Russia to NATO enlargement,

– Russian force to Georgia,

– Possibility of same circumstances to post-Soviet states by Russia,

– Against position to Western initiatives about Iranian nuclear system.

         The USA used soft balance politics to Saudi Arabia and forced in Iraq to control Middle East which is first big oil sphere in the world. The USA supported first energy sharing agreement BTC in 1994 and for saving energy corridor it founded GUAM to be against CIS organisation about the subject of influence to Central Asia. The USA which a country had acted firstly in energy line plans to establish new cooperations to be dominant power in the region. American supported regional organisation GUAM targets new cooperations with West and to solve regional conflicts with Europen initiated projects. Also GUAM organised first military operations which Russia didn’t join. But Russia created a dilemma over the European energy corridor target of this organisation. Russia works to establish alternative energy lines and coordinate near abroad countries to common aims.

         Russia had an advantage to pressure over the post-Soviet states with energy event. Middle Asian countries which have big energy resources provide energy transportation via Russian territory. External projects are American supported issues. Shortly there is a competition that energy is used as a weapon.

         The USA interfered Afghanistan after the 11 September terrorist attack by this way the super power took a strategic point in Middle Asia. The USA shared a dangerous position for Russia because of the USA founded military points in Uzbekistan, Tajikistan and Kyrgyzistan after the Afghanistan intervene. So Russia organised Shangai Cooperation Organisation to build an alternative body against the USA with other regional states. It shares a bandwagoning system for this region which had been established by Russia as a main actor.[1] By this way Russia that is a main state of CIS shared strong resist against the USA with its initiatives.

         Bilateral agreements in NATO circle with the USA of Caspian states formed a dependent system to West. In this subject Georgia had been a pro-American arena in this region.[2] On the other hand Azerbaijani and American relations increased after annuling 907. article in the USA that has supporting event to South Caucasus states without Azerbaijan. Russia and Iran speeched as against the USA after opened airspace of Azerbaijan to the USA. Additionally security of BTC is important to the USA. New American forces in Romania and Bulgaria can intervene Caucasus area if there is a problem in Baku Ceyhan pipeline. Also American soldiers in Georgia can be used in emergency circumstances.[3]



         Russia said possible intervenes of Collective Security Cooperation of Shangai Cooperation Organisation to NATO’s activities in this region as against the military activation of NATO. Other advantages of Russia are conflict events as without regional cooperations against NATO. Fergana, Osetia, Abkhazia and Karabakh issues give chances to Russian invasion on the region. Because solutions can be producted by Russian mediator situation. Otherwise western initiated organisation GUAM targets that solutions can be existed without Russia. Nobody can guarantee that Russia will not save its interests about regional conflicts in Ukraine-Crimea, Moldova-Transdiester, Azerbaijan-Karabakh as additionally Georgian conflicts. For this moment Russian conflict politics focused on Georgia in South Caucasus area. Abkhazia and Osetia problems are punishments to Georgia by Russia because of Georgian new Western oriented politics.



         Bandwagoning countries rejected American activities after 2004. These countries supported Russian decisions against to the USA after this date. European Union continued its enlargement politics in Caspian as paralel to American issues. Caspian states easily can depend on West with some projects like Nabucco. Specially European Union projects TACIS, INOGATE[4] and TRACECA[5] can create influence over the regional countries like other cooperational acts. New resist of Caspian states’ outlook shares itself as internal cooperation and contr-politics of Russia. Also America can take an advantage in Caspian status problem against to Russia.



            Obligatory Cooperations in the Region

         There is no possible way to fight new movements’ expansion in the region of Russia which is a problem of American foreign affairs. Struggle to terrorism that is in directly Iraq, Iran and Afghanistan is a main aim of the USA political issue in Middle Asia. There is a Russian anxiety about results of possible conflict between the USA and Iran. Additionally Russia doesn’t want cooperations of these countries[6];

– Iran can buy weapons and nuclear technology from the USA,

– The USA can approve oil and gas transportation via Iran as alternative to Russia in Caspian sphere,

– The USA won’t need Russian support in struggle against Iran issue.



         The USA is a main power about struggle to terrorist movements in this region. Also Russia trusts this power in this subject and main result of that is American military foundation by permission of Russia. There is a new progress to decrease American influence in Manas military point’s closing process. But it can be a start line of enlargement terrorist activations which is Russia’s afraid. There is a different situation in East Europea initiative of the USA about military approach. It shares an interdependent relation among great powers. President Bush again gave his assurance that the proposed American missile shield was not aimed at Russia. NATO summit in Bucharest, Russia scored a partial victory on the question of expanding the alliance. NATO did not invite Ukraine and Georgia, both former Soviet states, onto its Membership Action Plan.[7]

         At the present time in which cold war rivalry is waking up, Caspian region is becoming a field of conflict at the same time a collaboration in view of energy resources and military cooperation to activate grand forces’ sovereignty. Cooperation needs occured by common benefits cause means used to reduce another one’s activity. In this backgroung that power balances are occured outside the states of Middle Asia, bandwagoning countries which got free of being unrelated to others may cause new situations. Of course all the same, political declinations, which work directed by Mackinder’s Heartland Theory, have the ability to form new balances in this region. Athority of the region countries which have rich resources will indicate that the world will being run by how many poles.

[1] Walt, Stephen M. (1987). The Origins of Alliances. Ithaca, NY: Cornell University Press

[2] Klare Michael T., “Transforming the American Military into a Global Oil-Protection Service”

[3] Purtaş Fırat, TÜRKSAM, “Hazar Bölgesinde Rekabetin Yeni Boyutu: Silahlanma Yarışı”

[4] There are at present 21 countries which have acceded to this agreement with the EU (Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Croatia, Georgia, Greece, Kazakhstan, Kyrgisztan, Latvia, Macedonia, Moldova, Romania, Slovakia, Tajikistan, Turkey, Turkmenistan, Uzbekistan, Ukraine and the Republic of Serbia).Thus, all of them have agreed to cooperate towards the establishment of one or several systems of oil and gas pipelines which pass through their territories, while observing the jointly accepted rules embodied in the agreement.

[5] Saraç Naciye, AZSAM “Tarihi İpek Yolu Yeniden Hayata Döndürülüyor”

[6] Prof. Dr. Mark Katz, “The Role of Iran and Afghanistan in US-Russian Relations”

[7] “Bush and Putin’s bittersweet farewell”, 06.04.2008

Mehmet Fatih OZTARSU

Baku Qafqaz University

International Relations

May 23, 2009