Category: Business

  • How Does Turkey Look From the U.S.?

    How Does Turkey Look From the U.S.?

    Arzu Kaya Uranli

    Arzu Kaya Uranli

    “Mr. Erdogan, a conservative Muslim, has often seemed more at home in Tehran or Baghdad than in Berlin or Paris, and in recent years he has sought to fashion the country as a power in the Middle East.” –Dan Bilefsky, The New York Times.

     

    “What does Turkey look like from abroad?” is the most common question I’ve been hearing recently when I contact someone in Turkey. What can I say? Since last May, Turkey’s image in the U.S. has noticeably been going somewhere we don’t want to know…

     

    Prime Minister Recep Tayyip Erdoğan has been called an autocrat by Westerners since last May. His arrogance, autocratic impulses and the way he uses anti-Semitic clichés have made him a unique figure in Turkish political history. Since the Justice and Development Party (AK Party) has experienced great success in improving health care, raising incomes and improving infrastructure and has been able to push the army out of politics, Mr. Erdoğan has become triumphant and has started acting as a lecturer. He has been telling people how many children they should have (three); whether or not women need abortions; that cesarean sections are not necessary or where and when people can consume alcohol. As a result, a poll last June showed that 54.4 percent of Turks said the “government was interfering in their lifestyles.”

     

    Then the social tsunami started. Since June with the Gezi demonstrations, uncertainties have been ongoing, especially after Dec. 17, 2013, when news of alleged corruption in the current government spread. However, the government’s autocratic moves are much clearer nowadays. The way the AK Party has proposed new laws to increase government control over judges and prosecutors and how many investigations have slowed down have raised suspicions that the government might be trying to hide corruption. The censorship of Turkish media and the recent attempts to change laws about the Internet to easily increase censorship are raising concern.

     

    Strangely, emergency care has been criminalized, too! Under a new law, a doctor faces the risk of being sentenced to up to three years in jail if he attends to an injured person who requires urgent medical attention outside a hospital. It seems as though the law is against doctors’ Hippocratic Oath, which embraces a principle of the Universal Declaration of Human Rights that prioritizes saving lives before anything else.

     

    “This new law is outrageous! It basically disregards medical doctors, humanity, the virtue of the Hippocratic Oath that is shared as a universal value, but puts forward a new kind of law that says ‘do as we say,’ ‘we will tell you whom to take care of and whom to ignore.’ Please tell us, where in the world would this be acceptable, except for the Erdogan’s new Turkey? Turkey is up for a big challenge. Erdogan is dragging the whole country with him as he is destined for an awful political ending. Will the country follow him or raise again from the ashes?” Dr. Hande Ozdinler indicated to me in our interview. She is a professor at Northwestern University, Feinberg School of Medicine

     

    The common view from the U.S. is that Turkey’s democracy, which has admittedly been improved in the last 10 years, is now being destroyed by the Turkish prime minister. Every day the problems between Turkey and its Western allies get deeper. They are watching quietly in order not to damage short-term interests, but they are concerned for Turkey’s longer-term stability.

    While all of these problems are happening at home, Mr. Erdoğan is accusing the investigation of being a politically motivated plot against his government from within the state. He ordered Turkish Ambassadors to explain the recent graft and bribery scandal from a conspiracy-oriented and partisan perspective to the foreign diplomats. It seems that the main goal is to stave off scandal. However, it would only demonstrate how vulnerable and helpless Erdoğan is and how he is losing his credibility in the international arena. Actually, some experts even consider that the recent developments are not merely an effort to cover up corruption, but that Erdoğan is trying to gain complete control over Turkey.

     

    “Democracy in Turkey has been damaged by the recent corruption allegations and probes. They demonstrate how fragile the democratic institutions of the state really are and how easily they can be manipulated by political masters.” Joshua W. Walker, director of Global Programs at APCO Worldwide, told me in an interview. He added, “The checks-and-balances of independent institutions that guarantee democracy in Turkey are certainly under attack. A vibrant civil society and media that can express dissenting views and are free to be critical are equally important, therefore I worry that both of these are under attack from aggressive Turkish politics that wants to win at all costs.”

     

    Also, Fırat Demir had said in Foreign Policy:

    Excuses notwithstanding, the corruption scandal and the government’s response to it have already weakened democratic accountability in Turkey, and deepened dividing lines among an already polarized populace. Once lauded for its democratic strength, or at least its willingness to move up the democratic ladder, Turkey threatens to become just like many others in its neighborhood: a hybrid regime ruled by a strong man who does not even try to give his rule the pretense of a democracy.

     

    Yes, the way Mr. Erdoğan has behaved shows us he still doesn’t fully understand and has not internalized democracy. He is viewed more and more as an autocrat rather than a democrat. Nevertheless, his defining value should not be majority rule but individual liberty. He has to understand that when a leader implements official authority he depletes the trust he has earned, but when he exercises moral authority, leading by example and treating people with respect, he strengthens it. Can Erdoğan learn these lessons for the sake of Turkey’s near-term stability or it is already too late?

  • Turkeys targeted as next crisis brews

    Turkeys targeted as next crisis brews

    Australia, as a large borrower will not be immune to another financial crisis.

    Fancy a trip to Turkey? It’s nice at this time of year and you too could marvel at what could be the next financial crisis unravelling.

    What’s more, the lira is as cheap as chips, although that’s part of the problem. Currencies in many emerging markets are being battered, with the Argentine peso plunging 16 per cent so far this year.

    So what’s that got to do with us? Nothing and everything, as the 1997 Asian or the 2007 global financial crisis showed. We know it’s always something from left field that triggers a financial run from which Australia, as a large borrower, is not immune.

    Maybe it won’t be Turkey, which last week had to double its key interest rate, but there are enough vulnerable countries for the problems each one has to come together in another global exodus of capital.

    All have some political problem, invariably with corruption at its root, along with an economic one such as too much debt, high inflation or a dangerous current account deficit, and often all three. They include Brazil, Russia, South Africa, India and Indonesia, which Abbott would do well to note.

    The rug is being pulled from under them by the United States Federal Reserve. It has been pumping extra dollars into the US economy, funding the world’s biggest carry trade. This is banks borrowing at a low interest rate in the US – in fact, at almost none at all – and investing it in bonds, stocks or commodity futures that earn much more.

    This carry trade is also why the dollar hasn’t dropped further.

    But the Fed confirmed last week that it would continue what it calls tapering this down. The T-word is making Wall Street inordinately jittery, even though it’s a plus that the US economy has recovered enough to come off life support. Still, it doesn’t want to lose its sugar hit of near zero official interest rates and increasing amounts of easy money looking for a home.

    The key difference between 2013 and 2014 is that the US will be driving world growth again. Better still, the Fed has told the market it’s not about to raise interest rates, either. In fact, they’re falling as money flees emerging markets for the safe haven of US bonds. Their yields are the benchmark for setting mortgages.

    Yet falling yields aren’t what you’d expect from tapering, considering it’s achieved by the Fed buying back fewer government bonds. You’d think less demand would lower bond prices, which increases their yield.

    Either way, they’ll determine our sharemarket, currency and interest rates this year. While Wall Street is due for a correction anyway, expect tapering to lift the US dollar and pull our dollar down. Even our interest rates have been falling slightly, although the Reserve Bank hasn’t done anything, and won’t at Tuesday’s meeting. And, if US bond yields stay down, this will discourage money from fleeing the Turkeys of the world.

    via Turkeys targeted as next crisis brews.

  • Istanbul staring at water crisis

    Istanbul staring at water crisis

    Turkey’s largest and most well known city of Istanbul is confronted with a serious threat of drought with water reserve now being sufficient for only 100 days due to lack of rain and snow, a senior water expert has revealed.

    “Having only 100 days of water reserve means that very tight measures should be taken,”Xinhua quoted Tugba Maden, a water expert in the Center for Middle Eastern Strategic Studies, as telling over phone.

    With a population of 14 million, Istanbul tries to obtain the city’s needs of water from 10 dams built in the Marmara and the Black Sea regions. Water levels in these dams have been decreased to the lowest point in six years with 35 percent in total. Three dams have already run short of water.

    Istanbul’s dams have capacity of holding 868 million cubic metres of water. Currently the water reserve is around 300 million cubic metres. Most seriously, the Melen streamlet has reduced its water reserve to 35 per cent of the total, sending the alarm signals.

    Melen streamlet, located in the Black Sea province of Sakarya, provides Istanbul with 676,000 cubic metres of water a day via Omerli dam.

    If the condition deteriorates, the authorities should begin transporting water to Istanbul from different water basins, said Maden.

    Turkey’s Forestry and Water Minister Veysel Eroglu tried to calm down the public, saying: “It is true that drought threats Istanbul in 2014. But we are taking all the necessary preconditions.”

    “We will build a new dam in Melen, which will bring a release to Istanbul people.”

    The minister also announced that two other giant dams would be built in Agva, 100 km from Istanbul at the Black Sea coast.

    The concerns related with the water shortage is not only limited with Istanbul. Experts foresee serious threat of drought in overall Turkey in general.

    via Istanbul staring at water crisis | Business Standard.

  • Turkish authorities purge regulators, state TV employees in backlash against graft probe

    Turkish authorities purge regulators, state TV employees in backlash against graft probe

     

    By Humeyra Pamuk, Published: January 18

     

    ANKARA, Turkey — Turkey has extended a purge of official organizations to the banking and telecommunications regulators and state television, firing dozens of executives in moves that appear to broaden Prime Minister Recep Tayyip Erdogan’s push back against a corruption investigation.The authorities had previously reassigned thousands of police officers and about 20 prosecutors and fired some state TV officials in response to the graft probe, the biggest challenge to Erdogan’s 11-year rule.

     

    Investigators are believed to have been looking into allegations of corruption and bribery involving trade in gold with Iran and big real estate projects, although full details of their charges have not been made public.The prime minister says the investigations, which began a month ago with arrests of high-profile figures including the sons of three of his cabinet ministers, are part of an attempted “judicial coup.”

    His opponents say they fear a purge of official bodies will destroy the independence of the judiciary, police and media.

    “It’s like reformatting a computer. They are changing the whole system and people in various positions to protect the government,” said Akin Unver, assistant professor of international relations at Istanbul’s Kadir Has University.

    Among dozens of officials dismissed in the latest round of firings, Turkish media reported Saturday that the deputy head of the banking watchdog BDDK and two department heads had been removed.

    Five department chiefs were fired at the Telecommunications Directorate, a body that carries out electronic surveillance as well as serving as the country’s telecom regulator, and a dozen people were fired at Turkey’s state channel TRT, including department heads and senior news editors.

    A government official said the firings were for “the benefit of the public” and that more could come.

    Pictures of money-counting machines and reports of cash stacked in the homes of people linked to the graft investigation have caused an uproar among the Turkish public.

    Unver said the aim of the purge at the telecom watchdog could be to prevent further videos and pictures being published on the Internet. “They are seeking [to impose] a monolithic structure over the Internet,” he said.

    Several thousand people took to the streets in Turkey’s biggest three cities Saturday demonstrating against a government-led draft bill to increase controls over the Internet. The bill would give the courts the power to rule on removing online material that “violates individual rights,” an article that opponents say is murky and could lead to the arbitrary closure of Web sites.

    In Istanbul’s Taksim Square, where police fired tear gas and water cannons to disperse the crowd, protesters called for the government to resign. Some chanted: “There are thieves around,” referring to the corruption allegations.

    Erdogan has suggested that the graft inquiry, which has led to the resignation of three cabinet ministers and the detention of businessmen close to the government, is an attempt to undermine his rule that has been orchestrated by Fethullah Gulen, a U.S.-based cleric with influence among the police and members of the judiciary.

    — Reuters

  • Nasdaq to take stake in Istanbul exchange

    Nasdaq to take stake in Istanbul exchange

    Nasdaq OMX will take a five per cent stake in Turkey’s stock exchange as part of a partnership deal providing the US firm’s technology and advisory services.

    The companies on Tuesday, said Nasdaq OMX, which operates the tech-rich Nasdaq Stock Market, would bring its most advanced suite of technologies and advisory services to Borsa Istanbul to build a “world-class capital markets hub” for the Eurasia region.

    In exchange, Nasdaq OMX will take a five per cent shareholding in the Istanbul exchange and in addition receive “a series of cash payments”.

    Nasdaq OMX has an option to increase its stake by an additional two per cent.

    The partnership also opens the possibility of Borsa Istanbul taking a minority position in Nasdaq OMX.

    “We are pleased to be working side-by-side with Borsa Istanbul as they evolve toward becoming an international hub that will attract global investors to the Eurasia region,” said Bob Greifeld, chief executive of Nasdaq OMX.

  • Turkey Stocks are Biggest Loser as Erdogan Crisis Persists

    Turkey Stocks are Biggest Loser as Erdogan Crisis Persists

    ihwCJJT3V__E

    The Turkish national flag sits atop of a traders work station as he monitors financial information while working on the floor of the Borsa Istanbul, the stock exchange in Istanbul. Photographer: Kerem Uzel/Bloomberg

    The mounting power struggle between Turkish Prime Minister Recep Tayyip Erdogan and the judiciary is turning the country’s stock market into the world’s worst performer and driving the currency to unprecedented lows.

    The Borsa Istanbul 100 Index (XU100) has slumped 15 percent in dollar terms this month, the most among more than 90 benchmark gauges tracked by Bloomberg. The measure extended this year’s slide to 27 percent, as a corruption probe embroiled Erdogan’s cabinet and led to three ministerial resignations. Turkey’s lira has sunk 4.9 percent in December, second only to Argentina’s peso among emerging-market currencies, and traded at a record low of 2.1764 per dollar last week.

    The crisis threatens to undo the economic gains Erdogan made in orchestrating a decade of almost uninterrupted growth that earned Turkey its first investment-grade credit ratings since the early 1990s. The investigation, which Erdogan labeled a coup attempt, is deepening the conflict between the government and followers of U.S.-based Islamic cleric Fethullah Gulen, who are influential in the judiciary and police force.

    VIDEO: Protesters Call for Turkey’s Erdogan to Resign

    “This is going to make Turkey stick out like a sore thumb,” Arnab Das, founder of London-based consultancy Das Capital, said in a telephone interview on Dec. 26. “The risks in Turkey are becoming more manifest.”

    Ihlas Holding (IHLAS) AS, an Istanbul-based holding company of construction, health care and education businesses, fell 66 percent this year, the worst performer among the 100 members in the Borsa index. Anel Elektrik Proje Taahhut ve Ticaret AS, which offers electromechanical contracting services, tumbled 53 percent.

    Bond Selloff

    Investors are also dumping Turkish bonds at the fastest pace in two years, sending yields on benchmark two-year notes to a 23-month high of 10.17 percent Dec. 27, according to data compiled by Bloomberg. Foreigners sold a net $1.9 billion in the two weeks through Dec. 20, cutting holdings to a three-month low of $54 billion, from $72 billion in May, central bank data show.

    “If interest rates were to remain elevated for a long period and if the currency were to continue weakening, then it definitely would start to impinge on economic performance,” Julian Rimmer, a broker at London-based CF Global Trading U.K. Ltd., said in a telephone interview on Dec. 27.

    The investigation has become the battleground in a struggle for control of the majority Muslim country between Erdogan and Gulen. The cleric broke with the prime minister this year, ending a partnership that had helped sustain the single-party government since 2002.

    BlackRock Buys

    For some investors, it has been an opportunity to purchase shares cheaply. BlackRock Inc., the world’s biggest money manager, said Dec. 23 it added to its Turkish holdings, especially financial stocks, in a bet that the worst of the turmoil may have passed.

    The crisis began Dec. 17 with arrest of the sons of three cabinet ministers as well as the chief executive officer of state-run Turkiye Halk Bankasi AS (HALKB) amid probes into bribery, money laundering, gold smuggling and corruption in government tenders. Erdogan said in a Dec. 27 televised speech that it was an attempt to derail the government. Earlier that day, a top judicial body blocked his order requiring the government to be notified of investigations, a ruling he called unconstitutional.

    “What started as a local power struggle within the ruling religious political elite would appear to have become an issue broad enough to not only destabilize Turkey’s financial markets but potentially spill over into the wider arena of emerging market fixed-income and currency markets,” Michael Shaoul, chief executive officer of Marketfield Asset Management LLC, wrote in a note to clients on Dec. 27.

    Share Gains

    Until this year, Turkey, the Middle East’s only member of the North Atlantic Treaty Organization, was an investor favorite as Erdogan fought off pressure from secularist generals, reined in government spending and sold state-owned companies.

    The benchmark stock index jumped 505 percent in dollar terms between March 2003, when Erdogan took office, and the end of 2012, compared with the 275 percent gain in the MSCI Emerging Market Index. Dollar-denominated bonds returned 207 percent, outpacing the 173 percent increase in JPMorgan Chase & Co.’s EMBIG Diversified index for emerging markets.

    Investors started to pull back in May when the Federal Reserve signaled it was preparing to withdraw the U.S. monetary stimulus that had helped fuel demand for developing-nation assets over the past five years. That month, anti-government protests over a planned development in Istanbul spread across the country in the worst unrest during Erdogan’s reign.

    “The underlying issue is that Erdogan is becoming more authoritarian and less focused on the institutions in Turkey,” Das said. “That’s ultimately got to be a bad thing.”

    via Turkey Stocks are Biggest Loser as Erdogan Crisis Persists (3) – Businessweek.