Category: Business

  • ‘Commerce is stronger than politics’

    ‘Commerce is stronger than politics’

    Even as Israel-Turkey ties strain to the limit and calls for trade boycotts grow stronger on both sides, industrialists believe financial ties will persevere Tani Goldstein

    Published: 06.06.10, 08:28 / Israel Business

    Anti-Israel protest in Ankara Photo: Dudu Azulai
    Photo: Dudu Azulai The growing rift between Israel and Turkey following the tragic results of the Gaza aid flotilla raid is beginning to take an immediate toll on the two countries' financial and commercial ties. On Thursday, Ankara announced it was suspending all of its joint infrastructure projects with Israel, Turkish businessmen are cancelling meetings with Israeli counterparts and it seems tourist activity between the two countries has come to a screeching halt.
    Repercussions
    Turkey suspends all infrastructure projects with Israel / Shoham Levy, Calcalist
    Turkish energy minister makes announcement in wake of Gaza flotilla incident
    Full story
    Moreover, investment firms like Helman Aldubi announced they were divesting Turkish ventures and many Israelis are calling for a boycott on all Turkish goods. The shekel and the new Turkish Lira (TRY), it seems, have never been so estranged.

    Significant commercial ties

    According to the Manufacturers Association of Israel (MAI) and the Israel Export and International Cooperation Institute (IEI), some 900 large Israeli corporations are currently operating in Turkey, mainly in the chemistry, pharmaceutical and medical supplies, software and communication industries; and of course – various defense contractors. Those include some of the biggest companies in Israel, such as Elbit Systems, Israel Chemicals, Israel Aerospace Industries (IAI), Netafim Crop and Israel Oil Refineries (ORL). IMA and IEI data indicate that in 2009, some 1050 small exporters had commercial ties with Turkey and 557 had significant sales in the country. Still, the Industry, Trade and Labor Ministry, IEI and MAI refused to divulge the names of all the Israeli companies trading with Turkey, citing business confidentiality. The decision may also stem from their desire to protect Israeli companies from a possible ban – or worse.Israel's trade with Turkey came to $2.5 billion in 2009, with imports amounting to $1.4 billion and exports amounting to $1.1 billion. Turkey was Israel's 10th largest market in 2009, with exports to it making up 1.6% of Israel's total exports, which came to $67.5 billion. Turkey exported $109.7 billion worth of goods and services in 2009, with 2.2% of it to Israel. IST10 wa Mutual interests will prevail? Anti-Israel rally in Turkey (Reuters)

    Talks of boycott unrealistic'

    "Talking about cutting all ties and a boycott are exaggerated and unrealistic," said Dan Catarivas, MAI's director of Foreign Trade and International Relations. "We have to keep things in proportion. The vast economic ties between the two countries will persevere. The driving interests – on both sides – are stronger than any call against them." Turkey's decision to suspend all joint ventures, he said, "was a government decision… which I'm not so sure can even come to pass, because it contradicts various international treaties Turkey is a part of, like the World Trade Organization, or the OECD – both of which prohibit such bans." Catarivas said that even if Turkey declares an embargo, it would affect only the public sector in Israel, "which is only a small part of Israel's activity in Turkey." Jerusalem and Ankara practice free market policies with an independent, robust business sector that is not subject to government directives, he added. "And since the majority of the activity lies with the business sector, the financial forces will overcome any political pressure." Catarivas believes that the "overall panic, as if Israeli and Turkey are on the verge of severing all ties," is mostly media-made. "I know of no Turkish company that has severed ties with Israeli partners, nor do I know of any Israeli importer or exporter that has decided to do so."

    Complexities of diplomatic relations

    Catarivas said that there is no need to read too much into Ankara's decision to recall its ambassador. "Diplomatic relations have many facets – political, economical, cultural – and they don't always coincide. Israel's political and strategic ties with Turkey are experiencing an obvious crisis; but in many cases, even if diplomatic ties are cut, commercial ties are preserved. "Venezuela recalled its ambassador, Israel had no diplomatic relations with Austria for a year and Jordan and Egypt recall ambassadors on a regular basis, but it's always business as usual." ANK01 wa Entangled with the West. Turkish PM Erdogan (Photo: Reuters) Turkey, he added, is facing a complex situation not only where Israel is concerned, but with the United States and Europe as well. "(Turkish Prime Minister Recep Tayyip) Erdogan's policies are hurting Turkey's ties with the West, but even within his powerbase – and a big part of that is Turkey's new business elite – many have business ties with Israel and their interests are to preserve ties. "Here too, there are those who are furious with Turkey, but want to preserve business ties."

    Checks and balances

    As for concerns that Israeli defense contractors are supplying Ankara with weapons it may one day turn against Israel, Catarivas said he trusts that the defense establishment's system of checks and balances "would prevent Israeli exports from ending up in the wrong hands." Catarivas went on to dismiss claims suggesting maintaining business ties with Turkey would be unpatriotic, maybe even self-serving: "It's in Israel's best interest to maintain business ties with as many markets as possible, Turkey included. "Israel's existence relies on its continued market activity and exports. We employ thousands of people, which bolsters Israel just as much as national pride. "In my opinion, conducting business – even with Turkey – is true patriotism." Chairman Israel-Turkey Business Council Menashe Carmon agrees: "There is a strong interest to preserve commercial relations and they will persevere.
    "What happened will, naturally, have a detrimental effect, but it's too early to say how much damage has been caused. I believe it will turn out to be less severe than we think." He too believed the media contributed to a "sense of catastrophe, which isn’t true… At the end of the day, both parties want trade to continue – so it will."
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  • BP faces criminal probe over oil leak

    BP faces criminal probe over oil leak

    Oil giant BP is fighting to secure its future as the US government has launched a criminal and civil investigation into the Gulf of Mexico oil spill.

    US Attorney General Eric Holder announced the probe into the disaster after the oil giant suffered its biggest one-day shares fall for 18 years.

    Shares plunged by as much as 17 per cent at one stage on Tuesday, before settling around 13 per cent lower. That wiped £12 billion off its market value.

    The stock tumbled into the red after BP’s latest attempts to block the leaking oil well proved unsuccessful and amid mounting fears over the ultimate financial toll on the company.

    Launching the investigation which will involve the FBI, Mr Holder said: “We will closely examine the actions of those involved in the spill. If we find evidence of illegal behaviour, we will be extremely forceful in our response.”

    Though he would not specify which companies or individuals might be targeted, BP’s actions are expected to come under intense scrutiny.

    One analyst said the relentless oil leak – the worst in US history – has the potential to “break BP” if the well is not brought under control soon.

    BP’s “top kill” operation to cap the well with mud and other debris proved unsuccessful over the weekend and the company is now working on using robot submarines in the latest move to stem the flow of oil.

    ITN

  • Germany’s Deutsche Bank divests from Israel firm linked to West Bank separation fence

    Germany’s Deutsche Bank divests from Israel firm linked to West Bank separation fence

    the wall
    The West Bank separation fence that runs through Bethlehem. Photo by: Tess Scheflan

    In 2009, Norway pension fund also divested from Elbit, which manufactures a monitoring system installed on several parts of the separation fence.

    By Haaretz Service

    Deutsche Bank, Germany’s largest bank, had sold its holdings in Israeli arms firm, Army Radio reported Sunday, citing pressure by pro-Palestinian groups as the reason for the move.

    Although Deutsche Bank CEO Josef Ackermann did not state the reason for the bank’s divestment of the Israeli firm, the Jewish Telegraphic Agency reported that International Physicians for the Prevention of Nuclear War and Pax Christi, two groups critical of Elbit’s involvement in the West Bank Separation fence, issued a joint statement Friday calling their divestiture campaign “a major success.”

    Last year, Norway’s finance minister, Kristin Halvorsen, announced at a press conference in Oslo earlier in the day that its divestment of Elbit had been spurred by the firm’s involvement in the construction of the separation fence.
    According to a political source in Jerusalem, the Foreign Ministry had planned to issue a harsh statement of condemnation immediately after the announcement, but following the meeting with Lian the ministry decided to tone it down.

    The explanations for the divestment provided by the Norwegian envoy at the meeting were apparently the reason for the ministry’s moderation of its response.

    At the press conference, Halvorsen said the decision was based on the recommendation of Norway’s Ministry of Finance council on ethics, whose role is to ensure that government investments abroad meet ethical guidelines.

    “We do not wish to fund companies that so directly contribute to violations of international humanitarian law,” said the minister. She said the shares were sold secretly ahead of the announcement.

    Elbit manufactures a monitoring system installed on several parts of the separation fence.

    https://www.haaretz.com/israel-news/business/2010-05-30/ty-article/germanys-deutsche-bank-divests-from-israel-firm-linked-to-west-bank-separation-fence/0000017f-db87-df62-a9ff-dfd738d40000, 30.05.10

  • Rising Powers Do not Want to Play by the West’s Rules

    Rising Powers Do not Want to Play by the West’s Rules

    Financial Times

    By Philip Stephens May 20 2010

    There are two ways of looking at the efforts of Turkey and Brazil to resolve the dispute about Iran’s nuclear programme. One dismisses the initiative as collusion with Tehran’s attempt to derail a fourth round of United Nations sanctions; another welcomes a recognition in Ankara and Brasilia that rising powers have a stake in sustaining a rules-based global order.

    Unsurprisingly, the default response in the west has been the former. Reactions in Washington, London and elsewhere to the agreement brokered by Turkey’s Recep Tayyip Erdogan and Brazil’s Luiz Inácio Lula da Silva ranged along a spectrum from condescension to intense irritation. Ankara and Brasilia, at best, were dupes.

    The bargain struck by the two leaders with Iran’s Mahmoud Ahmadi-Nejad, if implemented, would see Iran transfer to Turkish custody a large proportion of its stockpile of enriched uranium. In return, Tehran would be supplied with the more highly-enriched material used in medical isotopes. The risk of an Iranian bomb would be reduced, while Tehran would retain what it sees as a sovereign right to mastery of the nuclear fuel cycle.

    There is nothing novel about the idea. It is modelled on an offer made last autumn by the five permanent members of the UN Security Council. The difference is that this first proposal envisaged the Iranian uranium would be sent to Russia.

    The latest plan raises plenty of legitimate questions. Among other things it does not tell us what Iran proposes to do with the rest of its uranium stockpile and why it is continuing to produce more. Tehran has also yet to explain why it is now enriching to a higher concentration.

    The timing of the deal raises the justified suspicion that Iran’s primary objective is to upset the US-led move towards further UN sanctions. During many years of negotiations with the west, Tehran has hardly been subtle in its tactics: the pattern has been one of apparent concessions at moments of pressure followed by lengthy prevarication and enrichment as usual. On a generous interpretation, one western diplomat told me, Mr Erdogan and Mr Lula da Silva were naive.

    Against this background, the US, France and Britain have unveiled their plans for the latest sanctions – this time directed at Iran’s Revolutionary Guard – with obvious satisfaction. Turkey and Brazil might think their deal had abrogated the need for further punitive measures, but China and Russia had been persuaded otherwise.

    Perhaps I am overly cynical but I detect a certain petulance here. Turkey and Brazil have temporary seats on the Security Council, and it is as if the permanent members are affronted the two nations should presume to strike out on their own.

    The Iranian nuclear issue, you could almost hear diplomats saying, is an argument that has to be settled by the established powers. If others want to help that is fine – but they should do so by backing the west’s plan rather than coming up with crackpot ideas of their own.

    There are several reasons why this is short-sighted. Most obviously the permanent five have got just about nowhere so far. Even those arguing that sanctions are the only way to coerce Iran into toeing the UN line do not really believe the measures can work on their own. If Tehran really has decided to build the bomb, a squeeze on the Revolutionary Guard will not change its mind.

    It is evident, too, that in the event that the present regime were to change course and seek an accommodation on its nuclear programme, ways would have to be found to ensure it was not seen as capitulating to the great, and lesser, Satans of the west. A deal struck with a neighbouring Islamic state might – and I emphasise the might – be a route out of the impasse.

    For Mr Erdogan’s government the attempt to broker a deal is a natural extension of Ankara’s active regional diplomacy. The last few years have seen a marked rise in both Turkey’s economic prosperity and its political confidence. As France, Germany and others have found reasons to exclude it from the European Union, Turkey has turned eastwards.

    Ankara’s rising stature in the region has been based on the brilliantly simple proposition that nations that want to project influence should start by fixing their own disputes. Mr Erdogan has settled long-running arguments with Syria and Iraq and sought to lower tensions in the Caucasus.

    The neighbourhood problem-solving has not been universally successful but it has been sufficiently so to turn Turkey into a big regional player. Mr Erdogan’s government now shows the political confidence that comes with understanding that it has opened up options for itself beyond frustrating and fruitless negotiations in Brussels about the terms under which it might at some point qualify as a “European” power. Here, I think, lies a source of the irritation in Washington and elsewhere about the latest initiative.

    The off-stated ambition of western governments is that the world’s rising powers should bear some of the burden of safeguarding international security and prosperity. The likes of China, India and, dare one say, Turkey and Brazil, are beneficiaries of a rules-based global order and, as such, should be prepared to contribute. They should, in a phrase coined some years ago by Robert Zoellick, act as stakeholders in the system.

    Seen from Ankara or Brasilia, or indeed from Beijing or New Delhi, there is an important snag in this argument. They are not being invited to craft a new international order but rather to abide by the old (western) rules. As I heard one Chinese scholar remark this week, it is as if the rising nations have been offered seats at a roulette table only on the strict understanding that the west retains ownership of the casino.

    As it happens, the US understands better than Europeans the shifting distribution of power. Barack Obama’s administration has been thinking hard about the new geopolitical geometry, even as Europe remains trapped in its anxiety to cling on to the old Euro-atlantic order.

    In its excellent exercise in crystal-ball gazing, Global Trends 2025, the US National Intelligence Council presciently included a scenario in which Brazil acts as a mediator at a moment of crisis in the Middle East. Imagining a different future, though, is not the same as coming to terms with it. If the west wants global order, it has to get used to others having a say in making the rules.

    philip.stephens@ft.com

    More columns www.ft.com/philipstephens

  • Ban Ki-Moon calls on Turkish youth to take role in world politics

    Ban Ki-Moon calls on Turkish youth to take role in world politics

    United Nations Secretary-General Ban Ki-Moon called for young people to take an active role in the world of politics in a remarking speech at Boğaziçi University on Friday.

    “As young people living in Turkey you should aim beyond here for broader security and prosperity in the world,” said Ban.

    Referring to Turkish Prime Minister Recep Tayyip Erdoğan’s visit to Greece last week and Turkey’ efforts to come to an agreement with Iran on the exchange of enriched uranium, Ban said Turkey has a dynamic diplomacy and a solid economy in times of crisis.

    He said Turkey’s credibility is increasing more and added that Turkey has three ways to go further in the international arena. First is by increasing its active contribution to the issues in its region and the world. “Turkey has learned the right to speak up, let your voice be heard and clear on the issues of security and peace. You have to become a force of progress in the region,” said Ban.

    Secondly, Turkey should do more efforts to give power to women. Thirdly, the alliance of civilizations, an initiative supported by Turkey and many other states, should be an ongoing project. “I feel proud to be part of this process and the United States will join as the hundredth member. Turkey has been second to none in supporting this initiative and as students of this university you have the power to contribute,” said Ban.

    As a former diplomat from South Korea, Ban made an emotional speech on Turkey’s deployment of troops to Korea back in the early 1950s. “We are all grateful to your sacrifice; you were one of the first to answer the call from the U.N. back then. Turkish soldiers went to fight for liberty and peace in a place where they didn’t know following their government’s orders. Out of 5,000 Turks who fought, nearly 500 of them died, but in the end they were there celebrating the victory with us,” said Ban, adding that Turks and South Koreans have been friends and brothers since then.

    Meanwhile, Ban said the Cyprus issue would definitely be on his agenda on his meeting with Erdoğan on Saturday.

    Hürriyet Daily News

  • Fears of new ‘Great Depression’

    Fears of new ‘Great Depression’

    Leading City experts have started raising the prospect of “Great Depression II” amid worries that the European economic crisis could trigger a deeper bout of chaos.

    Leading City experts have started raising the prospect of “Great Depression II” amid worries that the European economic crisis could trigger a deeper bout of chaos.

    Markets on both sides of the Atlantic dipped to fresh lows as fears surrounding the fate of the euro project transmuted into worries about the wider global economic system.

    Bill Gross of bond fund Pimco said that hedge funds were starting to liquidate their positions in a bid to preserve their capital a worrying “mini relapse” towards 2008 territory.

    Andrew Roberts, head of European rates strategy at RBS (LSE:RBS.L – news) , said “Great Depression II” could now be approaching, adding: “It now has potential to speed toward its conclusion; a European $1trn package which does little and political panic tells you we are about to reach the end of the road. The world should be discussing deflation, not inflation.”

    The FTSE 100 flirted briefly with the 5,000 point mark, eventually finishing the day down 84.95, or 1.7pc, at 5073.13, while the French CAC 40 index was 2.3pc lower and Germany’s Dax (Xetra: news) dropped 2pc. The S&P 500 and the Dow Jones (news) index both suffered their sharpest one-day falls in more than a year. The S&P fell 3.9pc to 1071.59, while the Dow closed 3.6pc lower at 10,068.01.

    The falls in share prices coincided with increases in the price of government bonds in Germany, the US and much of the developed world as investors sought a safe haven. German 10-year bund yields consequently hit a record low, while in the UK gilt yields dropped to the lowest level since early last December.

    Although the rush to safety stems originally from the euro’s difficulties this week and German efforts to ban short-selling on its banks , fears that the episode may evolve into a deeper economic crisis were bolstered by fresh data. The European Commission produced “flash” data showing consumer confidence falling from a 23-month high of -15 in April to a seven-month low of -17.5 in May. Howard Archer, of INS Global Insight, said: “This is clear evidence that the deepening and spreading eurozone debt crisis… is now weighing down appreciably on consumer confidence. This is a very worrying if hardly surprising development.”

    In the US there was a surprise 25,000 increase in jobless claims to 471,000 in the week ending May 15. The deterioration in the employment picture, coming hard on the heels of Wednesday’s drop in inflation, underlined worries that the US is exposed to a possible global double-dip recession.

    Mr Gross said investors were now being frightened off by worldwide “fiscal tightening momentum”, adding that markets were facing “a mini-relapse of a flight to liquidity as hedge funds and other leveraged positions are liquidated to preserve capital”.

    One worry is that European leaders are not sufficiently behind the $1 trillion bail-out fund they announced, in collaboration with the International Monetary Fund, last week. A second fear is that other indebted countries could soon be exposed.

    One rumour abounding on Thursday was that a major rating agency will soon have to downgrade Japan’s credit score, potentially bringing the world’s second-biggest economy into the spotlight.

    The Telegraph