Category: Business

EU squanders £100m on train line in Turkey

BRUSSELS bureaucrats have handed more than £100million to Turkey to build a high-speed rail link – in case the country joins the EU.

There will be no return on investment from the railway for Brussels

The staggering sum does not have to be paid back and there will be no return on the investment.

The cash is from a £12.1billion fund to support nations hoping to join the EU to which Britain contributes £120million a year.

News of the money for the rail link between Turkey’s two biggest cities, Istanbul and Ankara, provoked outrage last night.

Tory MP Douglas Carswell labelled the EU’s decision “bizarre”.

He said: “Other countries that have given money to Turkey, such as China, expect a return on their capital.

“It is funny how a communist country understands the fundamental principal of capitalism while the EU elite are giving money to Turkey without looking for a return on their investment.”

Euro MP William Dartmouth, Ukip’s trade spokesman, called for an end to funding for countries awaiting membership.

He said: “I cannot see how this project would really benefit the EU. The fact that British taxpayers’ money is going towards funding a new railway line in Turkey when our Government is forcing huge cuts on services and infrastructure at home will no doubt appal many people.”

Work on the 331-mile high-speed train line began in 2003. The EU’s European Investment Bank has so far ploughed £1billion into the project in loans on top of the £100million grant.

Other countries that have given money to Turkey such as China expect a return on their capital.

Tory MP Douglas Carswell

EU official Jean-Christophe Filori defended handing over the sums, saying the line will help European businessmen get to Ankara quickly to sign contracts.

But public appetite in Turkey for joining the EU is waning and last night one of their senior officials warned they would not wait forever.

Turkey’s chief negotiator on EU accession Egemen Bagis said his country was committed to joining the 27-member bloc but admitted they were not in favour of adopting the euro currency – despite it being a condition for entry.

Mr Bagis touted Turkey’s sway in the Middle East as a major boon for Europe should it be allowed to join the EU.

via EU squanders £100m on train line in Turkey | World | News | Daily Express.

February 15, 2013
Turkey’s current account: in better shape – for now

That was quite a drop.

Turkey’s current account deficit, seemingly all but out of control in 2011, plunged in 2012. According to central bank statistics released on Wednesday, the total fell from $77.2bn in 2011, just about the highest in the world outside the US, to $48.9bn last year.

At $4.7bn, the figure for the month of December was well below market expectations of $5.4bn or so. Having previously reached 10 per cent of GDP, the deficit is now at the markedly more manageable level of around 6 per cent.

The Turkish central bank and finance ministry argue that it is all a sign of their success in rebalancing the economy from its unsustainable previous levels of growth (above 8 per cent in both 2010 and 2011). Indeed, at present levels, the deficit is wholly accounted for by the country’s $50bn plus energy import bill.

The fall is undoubtedly impressive, particularly in one short year. But many analysts expect the deficit to widen again later this year, if domestic demand revives. And although exports rose by 13.1 per cent last year compared with 2011, to $152bn, much of the rise was due to direct and indirect gold sales to Iran. That trade is now targeted by US sanctions and unlikely to continue at the pace it experienced last year, for much of which it exceeded $1.5bn a month. There is no mathematical doubt: if all else is equal, a halt in a trade of that scale will mean a bigger deficit.

Meanwhile, as further proof that soft landings are hard to pull off, economists are worrying that the economy may be proving slow to pick up – which is not bad news for the current account figures per se, but hardly welcome in general terms.

There is one last issue of concern, amid the news of a plummeting deficit. Institutions such as Moody’s, the rating agency, often argue that it is not just the size but the financing of Turkey’s deficit that is an issue. And here the news is not altogether good. In 2011, there was $16bn of foreign direct investment in Turkey and Turkish groups invested $2.3bn abroad. In 2012, the figures were, respectively, $12.3bn and $4bn.

That means net foreign direct investment in Turkey was $8.3bn last year, almost 40 per cent down on the previous year – leaving more than 80 per cent of the current account deficit to be financed by (relatively fickle) portfolio flows. In the current, extraordinary era of loose monetary policy in the west, that is not an immediate concern. But it is an enduring structural issue – and a potential point of vulnerability.

via Turkey’s current account: in better shape – for now | beyondbrics.

February 15, 2013
Aselsan to Build 4G System for Turkey by 2016 With Partners

Aselsan Elektronik Sanayi & Ticaret AS, a producer of civilian and defense electronic systems, and partners will build fourth-generation mobile phone software and equipment, allowing Turkish operators to avoid costly imports.

Aselsan, along with Netas Telekomunikasyon AS and Argela, a software company owned by Turk Telekomunikasyon AS, signed a $46.8 million contract with the Turkish government, according to Transport, Maritime and Telecommunications Minister Binali Yildirim.

“Turkish telecom operators spend billions of dollars for telecommunication equipment,” Yildirim said today at an Istanbul conference where the agreement was signed. “We have to cut that spending and get them to use locally made equipment instead of imports.”

Turkey’s three mobile operators — Turkcell Iletisim Hizmetleri AS, Vodafone Group Plc and the Avea Iletisim Hizmetleri AS unit of Turk Telekom — bought equipment from suppliers including Ericsson AB and Huawei Technologies Co. for third-generation systems when they got government licenses in 2008. The three operators spent about 19.4 billion liras ($11 billion) on investments from 2008 to the end of September last year, primarily for third-generation equipment, according to telecom market regulator BTK.

The new system for civilian and military use will be capable of delivering speeds of 100 megabits per second for mobile and 1,000 Mbps for fixed-line telecommunication, Yildirim said. Speeds for current third-generation mobile systems average 10 Mbps and can occasionally reach 40 Mbps, Ahmet Hamdi Atalay, a member of the executive committee of Netas, said at the conference.

Mobile Transmission

The Aselsan-led group will complete the development of the system, also known as Long-Term Evolution, or LTE, by 2016 for commercial use and 2017 for the military, the Ankara-based company said in a filing with the Istanbul Stock Exchange. The system includes development of software and building of base stations for mobile transmission.

Aselsan shares rose as much as 6.4 percent in Istanbul and were up 3.4 percent at 9.10 liras at 5:15 p.m., a record high.

via Aselsan to Build 4G System for Turkey by 2016 With Partners – Bloomberg.

February 15, 2013
Frustrated Turkey still wants EU entry, but maybe not euro

By Mohammed Abbas

LONDON | Wed Feb 13, 2013 2:14pm EST

(Reuters) – Turkey is committed to joining the European Union despite mounting frustration over decades of talks on the issue, but has little appetite for adopting the euro currency, a senior Turkish official said on Wednesday.

In a speech in London, Turkey’s chief negotiator on EU accession said it was time the EU made up its mind on whether Turkey can join the 27-member bloc, and said it should be allowed in even if some countries object.

Talks on Turkish integration into Europe originally began in 1963, but the intractable dispute over the divided island of Cyprus – an EU member that Turkey does not recognize – have blocked talks on several policy issues candidate states must conclude before entry.

“We want to be in the EU, but the EU has to make a decision. The decision to start the negotiation process with Turkey was a unanimous decision, and only a unanimous decision can put an end to this process,” Egemen Bagis, EU affairs minister and senior member of the ruling Justice and Development (AK) Party, said.

“If there’s one principle of the EU I would like to criticize it’s the unanimity principle … One single member country, the Greek Cypriots, can block the opening of the energy chapter,” he said, accusing Cyprus of holding the EU “hostage”.

The island was split in a Turkish invasion in 1974 triggered by a brief Greek-inspired coup.

Turkish Prime Minster Tayyip Erdogan has said the delay was “unforgivable”, warning that the EU would lose Turkey, a mostly Muslim and largely conservative country, if it was not granted membership by 2023.

Enthusiasm among the Turkish public for EU membership is waning given the bloc’s economic woes, particularly the sovereign debt crisis hitting some members of the currency union, but Bagis was confident any referendum would pass.

“If there was a vote today I could easily get a yes vote … on membership of the EU, but I’m not so sure about joining the euro zone,” Bagis said.

GROWING INFLUENCE

That could pose problems for accession given that joining the euro zone single currency bloc is a condition for entry.

However, Bagis said economic circumstances and opposition to the euro and could change by the time accession is agreed.

Formal talks to join the EU have stalled since they were launched in 2005, and Turkey has completed only one of the 35 chapters need for entry.

On Tuesday, France said it was ready to unblock membership talks on one of the chapters, in contrast to its position under former President Nicolas Sarkozy, who said Turkey did not form part of Europe.

Bagis said France’s change of heart was “better late than never”, and lambasted “narrow minded” politicians who have objected to accession, citing discrimination and Islamophobia.

Some EU countries express concern about Turkey’s handling of human rights, freedom of expression and treatment of minorities. Turkey says it is addressing those concerns, and on Wednesday drafted changes to its penal code [ID:nL5N0BD3D9].

Bagis dismissed concerns about mass Turkish emigration to other EU countries after accession, saying that Turkey’s growing economic clout meant that it instead was at risk from immigration from other EU states.

“Of course, every nation has their pride. So does mine. And no country has been kept in the waiting room for 54 years. Sometimes our reactions might seem emotional, but believe me if anyone else was in our shoes …,” he said, referring to when Turkey applied for association with the then European Economic Community.

Turkey, a long-time NATO member, has seen its diplomatic influence rise alongside its economic prosperity. The Islamist-rooted AK Party says Turkey has jumped to 16th largest economy in the world from 26th since it came to power in 2002.

Turkey’s stock is particularly high in the Middle East, where it is seen as a model for a prosperous Islamic democracy, and has won admiration for its tough stance on Israel.

Bagis touted Turkey’s sway in the Middle East as a major boon for Europe should it be allowed to join the EU.

“The EU is the grandest peace project in the history of mankind … Turkey, being the most eastern part of the West, and the most Western part of the East, can turn this continental project into a global peace project,” he said.

(Editing by Alison Williams)

via Frustrated Turkey still wants EU entry, but maybe not euro | Reuters.

February 15, 2013
Turkey seeks more air connectivity with India to boost tourism, trade

NEW DELHI: Turkey today said it wants to double the number of flights from Delhi and Mumbai connecting the country to boost tourism and enhance trade and investments relations.

“We want to double the frequency of flights from Delhi and Mumbai. We also want to start flights to more Indian destinations. It will help in boosting tourism sector in both the countries,” Ambassador of Turkey to India Burak Akcapar said here at a CII function.

At present, a total of seven flights from Mumbai and Delhi connect India to Turkey.

“We have completed all the procedures from our side (to increase flight frequency). Now the ball is in India’s court,” he added.

Akcapar emphasised on the need to increase awareness among the business community of both the countries to enhance trade and investments relations.

He said that the bilateral trade between the countries reflects that a lot needs to be done to increase two-way commerce as India is lagging behind several of its peers including China and several African nations.

“Trade figure is very low. India lags behind in the way it represents in Turkey. It lags behind China, Africa and its peers in the world,” he said.

The bilateral trade stood at USD 4.5 billion in 2011-12. The Ambassador said that huge opportunities exists in Turkey for Indian business community in sectors like infrastructure, IT and automobile.

He also emphasised to increase cultural cooperation between the countries and urged the Indian Prime Minister to visit Turkey.

Major imports from Turkey comprise minerals, fertilisers, nuclear reactors and machinery, while exports include pharma, manmade yarn and electronic goods.

via Turkey seeks more air connectivity with India to boost tourism, trade – The Economic Times.

February 15, 2013
Turkey should look to an ancient king for tips on energy

The giant stone heads scattered around Mount Nemrut in south-eastern Turkey combine several cultures. Raised in 62 BC, these statues of Greek, Armenian and Iranian gods have Hellenic faces but wear Persian hats, testament to their builder, King Antiochus.

A worker checks the valve gears at a natural gas storage facility in Kinali. Turkey is heavily dependent on imports of oil and natural gas. Osman Orsal / Reuters

Today, as the sun sets behind the Atatürk dam to the south, their blind eyes look out over a key pipeline – part of Turkey’s energy policy, which also must balance East and West.

Turkey receives less energy attention than it should. The European Union tends to consider it primarily as a transit country for oil and gas from the Caspian and Middle East.

But Turkey is the fourth-largest gas market in Europe (outside the former Soviet Union), and the only one that is growing strongly – more than 11 per cent a year over the past decade. By 2020, it could well be the continent’s largest gas consumer.

With Europe mired in recession, Turkey grew 8.5 per cent in 2011, even if a slowdown last year raised concerns. Inflation has been mostly brought under control, its young population is the second-largest in Europe (just behind Germany) and public debt is modest.

With little domestic petroleum, the country relies heavily on gas imports. Expensive energy purchases comprise two thirds of a worryingly high current account deficit. More than half of Turkey’s gas comes from Russia, known to use energy as a geopolitical tool; a further 18 per cent from Iran, often cut off in winter. Iranian supplies are coming under pressure from United States-inspired sanctions and restrictions.

Ankara-Tehran relations have suffered further over the conflict in Syria. Increased use of coal, nuclear and renewable energy can slow, but not reverse the growth in gas requirements.

In principle, Turkey’s geography presents it with ideal solutions. The EU long sought to encourage it to become the “fourth corridor” of gas imports (the other three running from Russia, North Africa and Norway), via the Nabucco Pipeline. But Turkey’s own energy needs are more important for its policy than any desire to assist the EU – especially after being cold-shouldered for membership.

To the east, Turkish policymakers look out over the gas-rich Caspian – Azerbaijan and Turkmenistan – speaking languages closely related to Turkish. To the south-east, Iraq and its Kurdish region, Ottoman provinces less than a century ago. To the south-west, massive new gas finds in the deep waters of the eastern Mediterranean.

But all of these regions are politically problematic. The Caspian is the most straightforward – Turkey already buys Azeri gas. The new Trans-Anatolian pipeline will expand imports, and run westwards to connect to EU markets – either Italy or, via a scaled-down version of Nabucco, into central Europe.

But eccentric, isolationist Turkmenistan has not reached agreement with Azerbaijan on laying a pipeline under the Caspian Sea, where the two countries dispute a border – nor is there much reason for the Azeris to facilitate a rival.

Baghdad seems in no hurry to expedite its own gas exports, and relations with Ankara are poor – over Syria, where the two capitals back opposite sides, and over Turkish support for oil exports from the Kurdish region of Iraq. But it would be a dramatic move for the Turks to permit an independent gas pipeline from the Kurdish region- condoning effective Kurdish independence and breaking relations with Baghdad.

And in the Mediterranean, Turkish relations with Israel are cold, Syria is in chaos, and the continuing dispute over the divided island of Cyprus blocks pipeline routes.

Ankara’s policy of “zero problems with neighbours” has rapidly transformed into “many problems”.

To meet its needs, Turkey needs to emulate King Antiochus and rebuild constructive relations with at least some of its energy-rich neighbours.

Robin Mills is the head of consulting at Manaar Energy, and the author of The Myth of the Oil Crisis and Capturing Carbon

via Turkey should look to an ancient king for tips on energy – The National.

February 15, 2013