Category: Saban Kardas

Turkish Government Criticized for its Policy on Kyrgyzstan

Turkish Government Criticized for its Policy on Kyrgyzstan

June 25, 2010—Volume 7, Issue 123

Eurasia Daily Monitor

Saban Kardas

On June 21, Turkish Foreign Minister Ahmet Davutoglu, paid a visit to Kazakhstan. Davutoglu met his Kazakh counterpart, Kanat Saudabayev, and President, Nursultan Nazarbayev, to discuss the situation in Kyrgyzstan as well as bilateral relations. The two nations agreed to coordinate their assistance to Kyrgyzstan. They announced their agreement on a joint action plan, which would be put into effect following the constitutional referendum on June 27. They sent a letter to the Kyrgyz interim leader, Roza Otunbayeva, expressing support for her plans to hold a referendum and readiness to assist the nation’s reconstruction. Although no details of the roadmap was announced immediately, Davutoglu said that upon consultation with other friendly nations, they would form the contents of the action plan. Davutoglu and the Kazakh leadership underscored that long-term stability in Kyrgyzstan depends on the formation of a workable and self-sufficient political system in the country (Anadolu Ajansi, Cihan, June 21; Zaman, June 22).

The declaration follows Turkey’s earlier diplomatic efforts during the recent crisis. When the first signs of violence were reported in the region, it caught Ankara by surprise, as the government was preoccupied with other international crises. Turkey established crisis desks at the foreign ministry in Ankara and its embassy in Bishkek. Ankara initially committed to provide humanitarian aid through the Turkish Red Crescent and undertook measures to ensure the safety of Turkish citizens living in Kyrgyzstan. Turkey dispatched planes to evacuate Turkish citizens in the two cities that were affected the most by the conflicts, Osh and Jalalabad. Davutoglu and Turkish Prime Minister, Tayyip Recep Erdogan, contacted the interim Kyrgyz government and conveyed their readiness to take all steps required aimed at contributing to regional stability. Turkish leaders urged their Kyrgyz counterparts to avoid provocations and maintain calm in the crisis (Anadolu Ajansi, June 13, June 14).

Meanwhile, Turkey sent a special envoy to Bishkek who met with the Kyrgyz interim government officials to gauge their expectations from Turkey. Prior to his departure for Astana, Davutoglu stressed that Turkey’s utmost priority was to maintain a neutral position in the conflict and ensure that the country would not split into two separate parts (Today’s Zaman, June 18). The joint declaration with Kazakhstan reflects Turkey’s desire to realize those objectives.

Several factors explain Turkey’s attempts to address the crisis in cooperation with Kazakhstan. First, the two countries’ current tenure in regional organizations has naturally pushed them to the forefront in efforts to address the unrest in Kyrgyzstan. Kazakhstan holds the rotating Chairmanship of the Organization for Security and Cooperation in Europe (OSCE). Turkey has also assumed the term presidency of the Conference on Interaction and Confidence-Building Measures in Asia (CICA) from Kazakhstan. The two countries, thus, will seek to implement the joint road map on behalf of their respective organizations, which might enhance the effectiveness of such action.

Moreover, Kazakhstan occupies a key role in Turkey’s Central Asia policy. As part of its recent efforts to revitalize its presence in Central Asia, Turkey has sought closer coordination with Kazakhstan. During a June 18 security conference in Istanbul, a representative from Turkish foreign ministry labeled Astana as the lynchpin of Ankara’s Central Asian policy and maintained that the Turkish-Kazakh axis could serve as the best guarantor of regional stability. Nonetheless, Turkish experts expressed reservations, arguing that the rapprochement with Kazakhstan was hardly based on realistic calculations and Ankara might find it difficult to sustain.

Nonetheless, a growing volume of bilateral contacts is apparent. During the Kazakh President, Nursultan Nazarbayev’s, visit to Turkey last year, both sides agreed to deepen their “strategic partnership” in economic and political affairs, especially in energy cooperation (EDM, October 26, 2009). In May, the Turkish Chief of Staff, General Ilker Basbug, also visited Kazakhstan to foster closer bilateral military cooperation (Anadolu Ajansi, May 21). Turkish President, Abdullah Gul, visited Kazakhstan in the same month, during which he emphasized that Turkey was watching closely the rising power of Kazakhstan in the region. The parties signed various agreements intended to carry bilateral relations to higher levels (Anadolu Ajansi, May 24). Gul is also scheduled to visit Kazakhstan next month.

However, the Turkish government was still criticized by opposition parties and many civil society organizations, alleging it had failed to respond adequately to the crisis in Kyrgyzstan on the one hand, and having ignored the Turkish speaking countries in Central Asia due to its excessive involvement in the Middle East, on the other. In support of their arguments, for instance, critics pointed to how Turkey wasted the opportunity provided by the recent CICA summit in Istanbul, where Turkey assumed the chairmanship of the organization. The meeting was overshadowed by Israel’s attack on the humanitarian aid convoy, which resulted in the deaths of several Turkish activists (www.cnnturk.com, June 7). For government critics, the fact that Ankara invested time and energy in persuading the participating nations to issue a declaration condemning Israel’s attack, instead of addressing the volatile security situation in Kyrgyzstan was a sign of neglect on the government’s part (Hurriyet Daily News, June 18).

In his address to parliament on June 16, and during his Astana trip, Davutoglu defied critics, referring to the various high-level contacts Turkey established with the region in recent months. Davutoglu also pointed to several projects being carried out by Turkey’s state-run development agency, TIKA, in Kyrgyzstan, in particular and more widely within Central Asia (Anadolu Ajansi, June 21).

Davutoglu might be correct to highlight the recent Turkish activism, while defending his government’s Central Asia, policy. Nonetheless, it is also difficult to deny that, in the first few years of the Justice and Development Party government, Turkey’s involvement in the Central Asian Turkish-speaking republics remained rather limited. Only in recent years, has Turkey refocused its attention on the region, owing largely to President Gul’s efforts and Davutoglu’s appointment as foreign minister last year. It remains to be seen if the newly found Turkish interest may make a modest contribution to stability in Central Asia, or whether its role will prove “too little, too late.”

https://jamestown.org/program/turkish-government-criticized-for-its-policy-on-kyrgyzstan/

June 25, 2010
Turkish-Azeri Deal May Herald New Competition in Southern Corridor

Turkish-Azeri Deal May Herald New Competition in Southern Corridor

Publication: Eurasia Daily Monitor Volume: 7 Issue: 115

June 15, 2010

By: Saban Kardas

On the sidelines of the Conference on Interaction and Confidence Building Measures in Asia (CICA) summit held in Istanbul, Turkey and Azerbaijan concluded agreements on natural gas cooperation. On June 7, during a ceremony attended by Turkish Prime Minister, Tayyip Recep Erdogan, Azeri President, Ilham Aliyev, the Turkish Energy Minister, Taner Yildiz, and his Azeri counterpart, Natiq Aliyev, signed an agreement which will end a two year long price dispute on Turkey’s gas imports from the first phase of Azerbaijan’s offshore Shah Deniz-I, as well as setting the volume and price for Turkey’s imports from the second phase of the field, expected to come online in 2016-17. A related agreement will regulate the terms and mechanisms for the sale and transit of Azeri gas to Europe through Turkey.

Turkey currently imports 6 billion cubic meters (bcm) of gas from Shah Deniz-I, paying $120/thousand cubic meter (tcm), well below the current market prices. However, the original agreement allowed for price renegotiation, which is exactly what Azerbaijan asked for when the pricing terms expired in April 2008. As the negotiations were underway, Turkey continued to import gas, though stressing that it would compensate for the price differences retroactively. Despite several rounds of negotiations, which were eclipsed by the discussions on gas transit, the parties failed to bridge their differences, which also raised concerns in the West that the delays might undermine Nabucco and other projects seeking to ensure supply diversification from the Caspian basin to Europe (EDM, February 26). Moreover, the gas disagreements also aggravated the diplomatic row between Baku and Ankara, caused by Turkey’s efforts to normalize relations with Armenia, raising questions about future relations between the two fraternal countries (EDM, October 21, 2009).

Earlier, both parties announced that they had reached a breakthrough, and during Erdogan’s Baku visit in May, they expressed their determination to sign the deal in Istanbul (EDM, June 1). The recent deal, which apparently came about only after intense negotiations, signifies not only their willingness to reactivate the energy partnership, but also in repairing Turkish-Azeri strategic ties. As statements issued during Aliyev’s trip attest, Turkey will continue to place Baku at the center of its South Caucasus policy.

Still, energy is likely to remain the most important component of Turkish-Azeri ties. For instance, the Azeri State energy company SOCAR is already a major player in Turkey’s energy market, through its control of the country’s largest petrochemicals group PETKIM. Recently, it was announced that PETKIM would expand its operations through new multi-billion dollar investments in the coming years (www.azernews.az, June 3).

The exact details of the agreements have not been disclosed and some sources maintain that both parties still have to work towards elaborating many details. Yildiz declined to specify the revised price, indicating that it will be flexible in order to allow for adjustment to market conditions. Yildiz also added that it will be more favorable compared to what Turkey is currently paying to Russia (Anadolu Ajansi, June 8). However, Turkish media speculated that the price will be raised from $120 to $300/tcm. Turkey will have to pay around $1.5 to $2 billion to compensate for price differences. The price for Turkey’s imports from Shah Deniz-II, which will be around 6-7 bcm annually, is likely to be higher than $300 per tcm, and will be assessed by taking into account investment costs (www.haberturk.com, June 8).

The other major item, terms for the transit of further Azeri gas to Europe, was also settled. Ankara had been insisting on purchasing Azeri gas and then re-exporting it to Europe on its own terms, as was the case for Shah Deniz-I. Neither side clarified whether Turkey retained that right (Hurriyet Daily News, June 8), but Yildiz indicated that Turkey would be able to re-export the gas it imports from Azerbaijan in collaboration with PETKIM (Cihan, June 7). Some sources maintain that Azerbaijan will pay Turkey $45 per tcm in transit fees for its direct export to Europe, passing through Turkish territory (Sabah, June 8). There remains some uncertainty over who exactly will export Azeri gas to Europe, as Azeri sources failed to confirm that Turkey retains the re-exporting rights (www.enerjivadisi, June 9).

Previously, delays in negotiations with Turkey had invited the ire of Azerbaijan, because the development of the Shah Deniz-II had to be postponed. The resolution of the transit issue and the interest from different pipeline projects is definitely welcome news for Azeri officials, as they can now discuss with their European partners the commissioning of Shah Deniz-II. Both parties also publicized the agreement as a positive step that would facilitate other projects to transport gas to Europe, most notably Nabucco. Natiq Aliyev emphasized that they were willing to support Nabucco, but they still had not received any purchase commitment from Nabucco. Currently, Turkey is able to export Azeri gas to Greece through the Turkey-Greece Interconnector (TGI) which integrates Turkish and Greek grids. The planned Trans Adriatic Pipeline (TAP), which will run from Greece to Italy, also seeks to tap into Azeri gas.

Impending competition between Nabucco and other pipelines forming the EU’s Southern Corridor seems certain. While many believe Nabucco will be a non-starter without locking in Azeri gas, TAP has been awaiting the conclusion of the Turkish-Azeri negotiations.

Representatives from both TAP and Nabucco welcomed the Turkish-Azeri deal (www.today.az, June 8). Azeri officials, anticipating the country’s gas output to increase substantially in future, welcome such outside demand which will boost their export potential. However, as the initial phase of Shah Deniz-II might only have limited extra output after it was allocated for Azerbaijan, Georgia and Turkey, it remains to be seen if Azerbaijan can supply all the Southern-corridor pipelines simultaneously at their desired levels. Turkish media maintain that Italy might soon sign a transit agreement with Ankara and a supply commitment agreement with Baku, which will commit the entire remaining volume from Shah Deniz-II to TAP, leaving no extra capacity for Nabucco (Referans, June 9). Yildiz stated that Turkey supports both projects and the final decision will be taken by the Shah Deniz consortium (ANKA, June 9). In any case, the Turkish-Azeri agreement might herald new competition in the Southern Corridor.

https://jamestown.org/program/turkish-azeri-deal-may-herald-new-competition-in-southern-corridor/

June 17, 2010
Economic and Defense Ties Between Turkey and Israel in Crisis

Economic and Defense Ties Between Turkey and Israel in Crisis

Publication: Eurasia Daily Monitor Volume: 7 Issue: 109

June 7, 2010

By: Saban Kardas

In the wake of the flotilla crisis between Israel and Turkey, attention is shifting to the question of what this development might mean for their bilateral relationship. Angered by the Israeli army’s treatment of Turkish citizens seeking to break Israel’s blockage of Gaza, which resulted in nine deaths and various injuries, the Turkish public has expressed deep outrage. While demonstrations throughout the country called for punitive retaliatory actions, the Deputy Prime Minister, Bulent Arinc, set the limits of Turkey’s response. “No one should expect us to declare war against Israel,” said Arinc (Anadolu Ajansi, May 31).

Granted, Turkish leaders unanimously used harsh language, accusing Israel of state terrorism and vowing that they would hold Tel Aviv accountable for its actions. However, representatives of opposition parties and many NGO’s found the government’s response insufficient, demanding concrete measures rather than “political rhetoric” (www.ntvmsnbc.com, May 31).

Amidst these discussions, the Turkish parliament held an extraordinary session to adopt a declaration condemning Israel. The debates in parliament reflect the depth of feeling in the country against Israel, which exerts pressure on the government. Reportedly, the governing Justice and Development Party (AKP) expressed reservations over a clause in the draft declaration that stated: “Parliament expects the Turkish government to reconsider economic and military ties with Israel and take the necessary effective measures.” Only after the AKP bowed to growing pressure from opposition parties could parliament adopt the declaration (www.haberturk.com, June 2).

Overall, the Turkish government has stressed that it would prefer to explore instruments provided by international law and diplomacy to force Israel to compensate victims for its actions. So far, Israel has proven reluctant to accept an independent international inquiry into the flotilla incident and it is unclear if it will agree to pay reparations for the material and human losses suffered by Turkish citizens. Inevitably, Turkish-Israeli relations might come down to coercive instruments short of force. Therefore, it is necessary to ponder the following questions: what instruments can Turkey bring to bear on Israel, and how effective will they be in terms of achieving Turkey’s stated objective of punishing Israel? What price will Turkey pay if it continues on this confrontational path?

The economic and military relationship might suffer from the nationalist urge to punish Israel. As regards economic ties, the public has called for boycotting Israeli products. However, experts point out that even if the crisis results in the limitation of the bilateral trade volume, it will not have a major impact either on Turkey or Israel. In 2009, Turkey’s imports from Israel were $1.1 billion, while Turkish exports to Israel were $1.5 billion. Since this trade volume accounts for only 1 percent of Turkey’s foreign trade, its economy will not suffer from any escalation of the crisis. Experts further note that despite similar calls to limit economic activity with Israel following the Gaza crisis in January 2009, Turkish-Israeli trade continued unabated. Nonetheless, analysts observed that since the 2009 crisis, Turkish businessmen doing business in Israel have faced bureaucratic obstacles and those problems are likely to accelerate (Referans, June 2). Turkish Finance Minister, Mehmet Simsek, also expressed similar opinions, arguing that given the limited trade volume, economic measures against Israel will not undermine Turkey’s economic recovery efforts (Anadolu Ajansi, June 3). Nonetheless, major Turkish firms scheduled to invest in Israel announced that they might freeze their investment or downgrade their operations to support the government’s policies (Milliyet, June 1).

Since severing Turkish-Israeli economic ties will hurt neither Israel nor Turkey to a considerable extent, Ankara is evaluating energy cooperation. Although Energy Minister, Taner Yildiz, said it was too early to talk about sanctions in the energy sector early on in the crisis (Star, June 2), he later supported nationalist arguments, saying “we are not considering any projects with Israel, until things return to normal” (www.haberturk.com, June 3). Yildiz emphasized that major energy and infrastructure projects with Israel will be suspended. He was obviously referring to the plans for the construction of multiple pipelines to transport oil, gas and water from Turkey to Israel, commonly termed Med-stream. These are, however, multinational projects that also involve other countries including Russia, Azerbaijan and India (EDM, November 25, 2008; August 7, 2009), and it remains to be seen how they will react to Turkey’s plans to politicize these projects.

Escalation of tensions may have considerable repercussions in military affairs. Israel has been a major supplier to the Turkish army, especially in sophisticated weapons systems. Moreover, Israel has, in the past, undertaken various multi-billion-dollar contracts to modernize Turkey’s aging military hardware. Turkish Defense Minister, Vecdi Gonul, highlighted that although no new large-scale projects with Israeli defense companies were being considered, the ongoing programs, worth hundreds of millions of dollars, would continue (Hurriyet Daily News, June 3). Attending a TV show, a representative from the AKP argued that all agreements with Israel, including defense cooperation, would be cancelled (www.ntvmsnbc.com, June 6). It is, however, too early to tell if Turkey will indeed take this route.

Even if military cooperation continues, relations will fall short of earlier levels, which had led observers to describe Turkish-Israeli ties as a “strategic partnership.” The new era might harm both sides to a significant degree. Previously, in addition to reaping the gains of lucrative Turkish defense contracts, Israel had also benefited from military-defense cooperation with Turkey in strategic terms. Various agreements signed in the 1990’s enabled Israel to conduct joint military exercises and develop defense cooperation with Turkey, which expanded its strategic depth vis-à-vis Syria and Iran. Following the 2009 crisis, Turkey limited Israeli access to its airspace, and have now announced cancellation of further exercises with Israel. Overall, Israel might suffer from the loss of such a valuable “ally,” not to mention its possible alienation in the Middle East due to the deterioration of diplomatic relations with Turkey. Ankara, also might have to pay a price, as Israel is reportedly reluctant to transfer to Turkey advanced strategic weapons systems which are considered essential for the country’s security needs, especially those required in the fight against the Kurdistan Workers Party (PKK).

https://jamestown.org/program/economic-and-defense-ties-between-turkey-and-israel-in-crisis/

June 9, 2010
Turkey Prioritizes Independent Regional Policies in the Middle East and the South Caucasus

Turkey Prioritizes Independent Regional Policies in the Middle East and the South Caucasus

Publication: Eurasia Daily Monitor Volume: 7 Issue: 105

June 1, 2010

By: Saban Kardas

Turkey continued its regional diplomacy, following the historic visit by Russian President Medvedev to Ankara (EDM, May 20). Prime Minister Tayyip Erdogan paid back-to-back trips to Greece, Iran and Azerbaijan, which underscored Turkey’s rising activism in its neighborhood, as well as highlighting divergence with the United States.

The most controversial development was the deal Turkey brokered jointly with Brazil regarding the Iranian nuclear issue. Building on the groundwork laid by their foreign ministers, Turkish and Brazilian leaders convinced their Iranian counterpart to agree on a proposal made earlier by the international community, under which it would swap its low-enriched uranium with enriched rods for a medical research reactor. The exchange will take place in Turkey.

Turkey portrayed the agreement as a historic achievement that would end the stalemate over Iran’s nuclear program, and bring peace to the Middle East, emphasizing that Iran agreed to sign a document stipulating concrete obligations (www.cnnturk.com, May 17). However, the reactions to the deal from the United States and Western powers put Turkey in a rather controversial position rather than to earn the sort of praise it was anticipating. Since the deal came amidst news that the United States succeeded in getting other permanent members of the UN Security Council agree on new sanctions, this development increasingly pit Ankara and Washington against each other.

From an American perspective, the deal was not satisfactory because Iran agreed to the conditions proposed back in October 2009 while it did not commit to end its nuclear program. In particular it is emphasized that while the amount of fuel Iran agrees to return, 1,200 kilograms, was significant at the time it was first proposed, since then Iran is likely to have expanded its stockpile of enriched uranium, which is not under inspection. Turkish Foreign Minister, Ahmet Davutoglu, remained defiant. Arguing that the United States was kept informed about the negotiations with Iran, Davutoglu contended that Iran’s promises were satisfactory and should be the basis of efforts to solve the diplomatic standoff (Today’s Zaman, May 20). Meanwhile, a recent development somehow adds credibility to Turkey’s arguments. Reportedly, Obama sent a letter to Brazilian President in April wherein he urged him to pursue the efforts to convince Iran to accept the exchange the 1,200 kilograms of uranium on Turkish territory, though noting that the US would also pursue the sanctions path (letter available at:www.politicaexterna.com/archives/11023.

Amid statements coming from the United States and other powers that concerns over Iran’s nuclear program did not disappear, Erdogan sought to mobilize the international community behind the deal with Iran. He telephoned President Barack Obama, Russian Prime Minister Vladimir Putin and many other leaders, as well as sending letters to many others, asking them to prevent sanctions against Iran and give diplomacy a chance. Although Obama appreciated Turkish efforts, he underlined that they would expect to see Iran’s interpretation of the deal, and kept the option for sanctions open (Anadolu Ajansi, May 20, May 22).

Iran sent a letter to the International Atomic Energy Agency (IAEA) on Monday explaining the deal brokered by Turkey and Brazil in detail. As anticipated, while the United States did not find Iran’s commitments satisfactory, Turkey insisted on its earlier position. Meanwhile, Erdogan started his historic tour of South America. Speaking in Brazil, he reiterated in strong words that the deal brokered by Brazil and Turkey was a historical breakthrough, and they would continue to work toward a nuclear free world (www.haberturk.com, May 28).

The challenges posed by Iran’s nuclear program are unlikely to subdue, as Iran remains committed to continue with its program. Turkey’s policy so far demonstrates that it is increasingly self-confident in undertaking foreign policy initiatives in its region and toward that end it could even risk confrontation with the United States. Especially the fact that Turkey went ahead with these efforts despite the news about a new draft UN Security Council being prepared is worth mentioning here. Turkey has made clear on many occasions that it would not approve tougher measures against Iran considering the negative repercussions of such a move (EDM, March 20). Reiterating this position on several regional and international platforms, Davutoglu invested much of his time on this issue over the last couple of months, as he and his team held numerous meetings with their Iranian counterparts to find a negotiated solution. Therefore, Turkish leaders would not like to see all their efforts go in vain as a result of a new round of sanctions, which would pose a serious blow to their credibility in the region and at home.

Overall, the Turkish leaders seem to assume good will on Iran’s part and do not seriously consider the possibility that Iran might be manipulating their willingness to mediate in this crisis to undermine the quasi-coalition the United States has delicately managed to form. Given Iran’s track record, the United States is increasingly concerned that Iran might not be acting in good faith and is using such last-minute deals to avoid tougher reactions (Today’s Zaman, May 24). Given these conflict interpretations of Iran’s nuclear program, we might observe growing divergence of opinions between Ankara and Washington.

Erdogan also paid a visit to Baku and Tbilisi, following his trip to Tehran, which also underscored another dimension of Ankara’s regional policies, conducted independently of Washington’s priorities. After the normalization with Armenia, which was promoted by Washington, hit an apparent deadlock, Erdogan’s trip to Baku served as yet another affirmation of Ankara’s determination to keep Baku at the center of its Caucasus policy. Erdogan reiterated support for the Azeri position on Karabakh, which seemed to go a long way toward repairing the damage caused by Turkey’s efforts to achieve a rapprochement with Armenia.

As a concrete indication of such a thaw, it is expected that Azerbaijani leader Ilham Aliyev will visit Turkey in early June. Aliyev had avoided visiting Turkey in apparent protest of Turkish-Armenian normalization and Turkey’s position on the natural gas negotiations (EDM, October 21, 2009). A deal recently reached between the two countries would bring an end to the negotiations concerning the price for Turkey’s purchases from Azerbaijan and conditions for the passage of Azeri gas to Europe through Turkish territory. Although the agreement was expected to be signed during Erdogan’s visit, it is postponed for Aliyev’s visit by which time the two parties will also finalize the remaining details. While saying that they “will crown the agreement during Mr. President’s visit,” Erdogan perhaps expressed how much he attaches significance to Aliyev’s upcoming trip (Hurriyet, May 17).

June 4, 2010
Turkey Proceeds with its Economic Recovery Plans

Turkey Proceeds with its Economic Recovery Plans

Publication: Eurasia Daily Monitor Volume: 6 Issue: 174September 23, 2009

By: Saban Kardas

On September 16, Turkey’s Economy Minister Ali Babacan revealed the government’s medium term economic plan for 2010-2012, prepared by the state planning agency. Babacan acknowledged that the contraction in growth by the end of the year may reach 6 percent, rather than the previous estimate of 3.6 percent. According to his forecasts, the economy will experience growth rates of 3.5 percent in 2010, 4 percent in 2011 and 5 percent in 2012. The government also expects the budget deficit to reach 62.8 billion TL ($42.9 billion), then starting to fall to 50 billion TL ($33.8 billion) in 2010 and 45.1 billion TL ($30.5 billion) in 2011, and 39.1 billion TL ($26.4 billion) in 2012. Similarly, the current account deficit is also forecast to reach $18 billion. Babacan acknowledged that despite a modest recovery, unemployment is set to remain at around its current rate of 14 percent in 2010, which is well above the pre-crisis rate of 10.8 percent (www.cnnturk.com, www.ntvmsnbc.com, September 16).

The global financial crisis was a serious blow to the Turkish economy, which led to a drastic decline in production and employment in sectors heavily dependent on exports. Although the government initiated several economic stimulus packages, their effectiveness has proven limited. They slowed the contraction of the economy, but are far from stimulating a sustainable economic recovery. The soaring budget deficit due to the economic crisis has been a growing concern among economists (EDM, August 11).

Therefore, economists expected the government to focus on taking precautions to address the budget deficit in 2010-2012. In contrast to initial speculation that the government might have set unrealistic targets in terms of growth and fiscal balances, experts evaluating the middle term economic plan argued that it is based on a realistic prognosis of the economic conditions and a pragmatic outlook to address the problems. Rather than expecting an ambitious short term recovery, the government prefers a gradual approach aimed at improving economic conditions (Anadolu Ajansi, Today’s Zaman, September 17).

Following the announcement of the plan, international credit rating agencies also responded positively. Standard & Poor raised Turkey’s credit rating outlook from negative to stable, while Moody’s upgraded the outlook on Turkey’s Ba3 bond rating from stable to positive (www.ntvmsnbc.com, September 18).

On the implementation side, one factor that makes economists believe that the plan is realistic is the decision to introduce a “fiscal rule” into public administration starting from 2011. Once it is in place, it is expected to contribute to long term fiscal stability, by setting limitations on public spending. This rule was required by the IMF as part of the loan negotiations with Ankara (EDM, January 29).

However, the role of the IMF in the implementation of the plan has proven controversial. Ankara was engaged in protracted negotiations for over a year with the IMF in order to secure a loan. Despite the recent announcement of progress in these talks, it remains unclear whether Turkey will eventually sign a stand-by deal. The critics of the AKP’s economic policies argue that an agreement with the IMF is necessary to inject credibility into its economic policies and boost confidence in the market, contributing to a more sustainable recovery.

However, some analysts believe that the medium term plan indicates that the government might implement the precautions without the IMF, while others speculate that the IMF could remain an option. Babacan also added to the sense of confusion. On the one hand, he said that Turkey will discuss the new medium term plan with the IMF. If both sides achieve consensus, Ankara will prefer to sign a stand-by deal. On the other hand, he maintained that although an IMF loan would help the Turkish economy, the IMF financing was not necessary for the implementation of the plan. He added that the plan was prepared on the assumption that in case an agreement was reached with the IMF, the extra resources would be channeled into the domestic market directly, in order that the banking sector could distribute money for private consumption and investment (www.cnnturk.com, September 16).

The IMF welcomed the plan and found it realistic, reflecting the impact of the global financial crisis on Turkey. In addition to the fiscal rule, the announcement supported Ankara’s plan to cut the ratio of public debt to GDP. It called on Turkey to adopt supporting policies and structural reforms, including measures to address areas that create spending pressures, so that Ankara might achieve its goal of controlling public debt (www.cnnturk.com, September 17).

Prime Minister Recep Tayyip Erdogan announced that Turkey had survived the crisis without IMF loans. It could continue its path without IMF assistance and would not accept IMF requirements concerning taxes and spending. Therefore, the future of an IMF deal remains uncertain (Hurriyet Daily News, September 18).

Another major aspect of the plan is that it does not foresee any major hikes in corporate, income and value-added taxes, which equally motivates the government to restrict IMF involvement. Although there were widespread expectations that the government might opt for tax increases to reduce the budget deficit burden, it refrained from pursuing this policy. This decision partly reflects the government’s desire to limit the effect of the economic recovery plan on consumers and the markets, by avoiding policies that might curb economic activity. The government believes that the Turkish economy could recover quickly based on its own dynamics, as long as it is kept vibrant, once the global economic environment starts to improve.

One factor that boosts the government’s self-confidence is the condition of the Turkish banking sector. Babacan, therefore, argued that unlike other Western economies where the collapse of the financial institutions triggered the economic crisis, the Turkish banking system remained intact and was in good condition. Consequently, he expects a rather smooth economic recovery, centered on the private sector (www.cnnturk.com, September 16).

Despite the government’s positive outlook on the Turkish economy’s vibrancy, the implementation of the plan and a sustainable economic recovery will also depend upon developments in the global economy. Moreover, the government’s ability to withstand the spending pressures to be generated by the next general election slated for 2011 will be a major test of its determination to reduce public debt, a core element of Turkey’s medium-term economic plan.

https://jamestown.org/program/turkey-proceeds-with-its-economic-recovery-plans/

September 24, 2009
Turkey Boosts its Ties with Syria and the Middle East

Turkey Boosts its Ties with Syria and the Middle East

Publication: Eurasia Daily Monitor Volume: 6 Issue: 171September 18, 2009 05

By: Saban Kardas

The Syrian President Bashar al-Assad visited Turkey on September 16-17 as the special guest of Prime Minister Recep Tayyip Erdogan, during which the two countries signed landmark agreements to deepen their bilateral relations. Assad attended a Ramadan fast-breaking dinner on September 16, held in his honor by the Justice and Development Party (AKP). He expressed Syrian support for Turkey’s recent Kurdish opening. Both leaders emphasized their desire to end the terrorist problem in Turkey through democratic initiatives and transform the Middle East into an area of peace and stability. Assad also praised Turkey’s role as peacemaker in the Syrian-Israeli indirect peace talks, which he described as “reliable.” He said that they still needed Turkey’s impartial mediatory role in the peace process (Anadolu Ajansi, September 16).

The first visible achievement of Assad’s trip was the lifting of visa requirements between the countries. In a related development, they also agreed to remove taxes on trailer trucks operating between both countries. Given the flourishing of bilateral trade, these developments were welcomed by many Turks, especially those living in provinces on the border, where trade with Syria constitutes a major source of economic activity. Representatives of the business community expect the trade volume to double following the agreement on these new regulations (Yeni Safak, September 18).

In a related decision a High-level Strategic Cooperation Council (HLSCC) was established between the two countries. Turkey has followed a similar pattern in its efforts to deepen its multi-dimensional political, economic and cultural ties with Iraq. The format of the Turkish-Syrian council will resemble the model used between Turkey and Iraq (EDM, August 12).

During his joint press briefing with his Turkish counterpart Ahmet Davutoglu, the Syrian Foreign Minister Walid Mualem said that “this is the biggest demonstration of cooperation, solidarity and mutual trust.” Davutoglu concurred by saying that this decision moved the brotherhood between the two nations to a political level (Anadolu Ajansi, September 17).

Meanwhile, the first ministerial meeting of the Turkey-Iraq HLSCC also took place in Istanbul on September 17. Speaking at this meeting, Davutoglu said that the two governments are willing to shape their countries’ future in line with the model partnership framework being developed. He added that their goal is to achieve the most comprehensive economic integration between the two countries. His Iraqi counterpart reciprocated by saying that “we desire cooperation that could help shape the future of the region” (Anadolu Ajansi, September 17).

This intensive diplomatic traffic also provides another opportunity for Turkey to act in a mediation role. On the sidelines of the Turkey-Iraq HSCC, Davutoglu brought together Mualem and his Iraqi counterpart Hoshyar Zebari, joined by the Arab League Secretary-General Amr Moussa. The meeting was held to facilitate the ongoing dialogue between Syria and Iraq aimed at reducing tensions between the two countries following Baghdad’s claim that Damascus was behind the terrorist attacks in the Iraqi capital in August. They mutually withdrew their ambassadors and Turkish diplomats have been working intensively to heal the strained relations, which it views in terms of developing closer regional integration. Earlier, Davutoglu toured the two capitals and attended an Arab League meeting in Cairo to address this problem. Although no specific steps to solve Syrian-Iraqi tensions were announced, Davutoglu emphasized that Turkey would promote confidence building measures between the two brotherly nations, and he will also explore the involvement of the United Nations in the crisis (Cihan, September 17).

The removal of barriers between Turkey and Syria has a strong symbolic meaning, and reflects a deliberate attempt on the part of the two governments to overcome the political divisions that kept them apart for decades. When the Turkish-Syrian border was formed following the First World War, many families were separated on both sides of the border. During the Cold War even mutual family visits on the occasion of religious feasts were difficult to conduct. In the post-Cold War era, such border crossings were facilitated through the issuing of short term visas. Nonetheless, for decades, the Turkish-Syrian border and those visa difficulties symbolized the political and ideological isolation of Turkey from its Middle Eastern, cultural hinterland. This decision, therefore, complements earlier initiatives undertaken by the AKP government to normalize Turkish-Syrian relations, such as the clearing of the mines on the Turkish side of the border (EDM, May 21), or holding joint military exercises in border areas (EDM, May 1). Through such steps, Turkey has moved toward reconnecting with its Middle Eastern neighbors. Moreover, it sees this reorientation as more than a cultural project: rather, it is part of Turkey’s efforts to develop platforms to resolve security problems in the region through the involvement of local actors.

Indeed, Assad also underscored a similar vision when he addressed the fast-breaking dinner. After emphasizing that for centuries people sharing the same culture were divided, he maintained that this problem was caused by the local leaders’ failure to appreciate the pitfalls of acting in line with the manipulations of great powers. However, he avoided apportioning the blame exclusively on great powers, and engaged in self-criticism by noting that many of the problems in the region were of their own making. He called for the resolution of “regional problems by the regional countries themselves,” a sentiment that resonates well with Turkey’s foreign policy vision (www.cnnturk.com, September 17).

Nonetheless, such initiatives raise the question of whether Turkey is reorienting its foreign policy priorities. Although the main opposition Republican People’s Party (CHP) Deputy Head Onur Oymen, a former diplomat, supported the establishment of the HLSCC and the normalization of relations with the country’s neighbors, he still raised key questions: “Given its values, Turkey belongs to Europe. We do not even have mutual visa lifting agreements with our E.U. neighbors… But we sign such agreements with Syria and other Muslim countries with which [we do not share the same world view]. Is this indicating a break with Turkey’s traditional foreign policy orientation?” (ANKA, September 17).

https://jamestown.org/program/turkey-boosts-its-ties-with-syria-and-the-middle-east/

September 23, 2009