Category: Non-EU Countries

  • Sir James Crosby resigns from FSA

    Sir James Crosby resigns from FSA

     

    Former HBOS chief executive Sir James Crosby said there was 'no merit' in whistleblower Paul Moore's allegations. Photograph: David Levene

    Sir James Crosby

     

    has dramatically quit as deputy chairman of the Financial Services Authority following revelations that he fired a whistleblower who warned of dangerous lending practices at HBOS.

    Crosby, an ally of Gordon Brown, said today he was stepping down because he felt it was “the right course of action for the FSA”.

    The resignation sparked a furious row in parliament, where David Cameron accused the prime minister of a “serious error of judgment” in appointing Crosby to the FSA and knighting him for services to the financial services industry.

    Crosby’s shock departure came just a day after MPs heard damaging accusations that he had dismissed HBOS’s head of regulatory risk, Paul Moore, for raising concerns about the bank’s rapid growth.

    Crosby said there was “no merit” in the accusations made by Moore. In a statement, Crosby insisted he was “genuinely independent of government”, and that he had no political connection or affiliation to the prime minister.

    The allegations from Moore emerged yesterday as the Treasury select committee grilled four former bankers over their role in the financial crisis, including Crosby’s successor Andy Hornby.

    Moore supplied a dossier to the committee in which he said he had been dismissed in 2005 after trying to warn HBOS’s board that its “over-eager sales team” were putting the company’s financial stability in jeopardy.

    Moore welcomed Crosby’s decision to step down from the City watchdog.

    “People who finally accept their responsibilities should be given credit. Once they have accepted their responsibilities they should be allowed to move on,” Moore told guardian.co.uk.

    Brown said today it was right that Crosby stepped down from the FSA so that he could contest Moore’s allegations.

    The prime minister defended his decision to appoint the former head of HBOS as an adviser, insisting that claims had been looked into in 2005 and were found “not to be substantiated”.

    Brown added: “However, it is right that when serious allegations are made they are properly investigated.”

    David Cameron attacked Brown over his links to Crosby, who recently conducted a major review of UK mortgage lending. “[He was] knighted by the prime minister for his services, he relied on him for advice, he was going to sort out the mortgage market …”

    Cameron said the 2005 investigation into Moore’s claims was carried out before HBOS “went bust”, and asked whether Crosby had now been dropped as a government adviser.

    Brown said the former bank chief had completed the two reports he had been asked to undertake and so was no longer an economic adviser. He accused Cameron of focusing on trivial issues rather than wider economic problems.

    The Conservative leader retorted: “Why can’t the prime minister admit for once he made an error of judgment? James Crosby had the decency to resign, even the bankers have apologised, why can’t the prime minister admit he was wrong to appoint him in the first place?”

    Crosby led the merger of Halifax with Bank of Scotland, transforming the building society into a major player on the high street.

    MPs heard yesterday that HBOS’s reliance on wholesale borrowing to underpin its loans was its undoing, when the credit crunch left it unable to access the finance it needed.

    Guardian

  • Poor Richard’s Report

    Poor Richard’s Report

    Poor Richard’s Report
    Over 300,000 readers
    My Mission: God has uniquely designed me to seek, write, and speak the truth as I see it. Preservation of one’s wealth while continuing to provide needed income is my primary goal for these unsettled times. I have been given the desire to study and observe global money progressions and trends for the last 50 years. I evaluate possible future trends in order to provide positive concepts for you to form your own conclusions. The main purpose of this letter is to warn you of possible financial sinkholes.
    Good Bye Stocks – Hello Bonds

    We are leaving the golden era of free enterprise due to unmitigated greed and chicanery. We can easily adjust if we accept the true meaning of what awaits us. If we fight to retain our old dreams and fantasies we will see ourselves being spoon fed by fat socialist bureaucrats for the “common good”.
    In this letter I will present some facts for your perusal and then you can make up your own mind in regards to your financial decisions. Those willing to change their offensive strategy can become winners in life’s never ending battles.
    The result of these recent price disturbances (all the bubbles bursting) is the falling value of the property that has been borrowed against. The value of the property’s income also falls. We have come from extreme over indebtedness and now find ourselves in a hole – we should stop digging.
    This is a hard lesson that our grandparents learned in the 1930’s, but sadly has been forgotten as satanic greed took over our souls. We now find ourselves caught between a recession and a depression. I call it a MESSYSESSION.
    All the corporations whose bubbles have burst must work down their inventories; since many are in the financial sector this will take time. Individuals must use their earnings to pay down debts to save their homes instead of spending money on frivolous purchases. The Rule of 72 has the deck stacked against them, unless the Usury Law is resumed. The lack of the Usury Law is quicksand for our economic recovery.
    The working down of inventories alone can be deflationary, however, the Federal Reserve has been pumping money into our supply pipeline at super speed. When an entity goes bankrupt, those debts do not go back into circulation, they go to money heaven. This is why the Fed has to keep the supply pool full and why this action should keep us out of a depression.
    Having to pay down all this debt slows down our economy and hurts our suppliers worldwide. This is why we have a world wide Messysession.
    Corporations that have borrowed from the Government will have a hard time maintaining their common stock dividends because their first priority is bond interest. Their second priority is preferred dividends. What is left over will then be distributed to common stock holders or used for debt reduction. Debt reduction means job security.
    Sooner or later the US Government will have to go on a massive borrowing campaign. This could weaken the dollar and send interest rates soaring along with the price of Gold – for a while.
    Some recessions are “V” shaped, which means stocks fall down hard and come back up quickly. Stocks tumble, but recover because there are people looking across the valley. If the recovery is like an elongated “U” or “L” one needs binoculars to see across the valley to a recovery. This could cause price to earnings ratios to shrivel, since analyst’s earnings estimates will be suspect at best. The economy can take a year or two to recover based upon how responsible Congress is. It will be years before our economy fully recovers from all the bubble bursting. What we need is a cheap new energy invention.
    The only period, since 1872, where stocks substantially outperformed bonds on a prolonged basis was the 1950s to 1960s. This was a golden era for stocks and it has taken many abuses to wind down.
    These are some of the many issues that President Obama faces on the home front. Now we shall look at some of his international problems.
    Europe is changing. It used to be that France and Germany were the major players, with Great Britain looking on. The United States has encouraged the expansion of the European Community to diminish the power of the two largest countries. Poland is emerging as an economic power and if Turkey is admitted, as they should be, they will bring new found political clout for the first time since the demise of the Ottoman Empire 90 years ago. Their inclusion could bring stabilization to the chaotic Middle East situation. Turkey has freedom of religion, a vigorous economy (17th largest), and a solid government. Their influence is growing. They also have a strategic location to insure peace long term.
    Then, there is Russia, who can throw all kinds of money around, but when it comes to signing on the dotted line – they cannot be trusted. Turning off gas supplies in mid-winter and canceling major contracts with world-renowned companies are actions that are hard to forget. Obama has pledged to focus US military power on the war in Afghanistan. The bulk of supplies must come from the north. Russia does not want a ballistic missile defense system in central Europe. It wants a halt to NATO expansion and reduced American influence in the Caucus and central Asia. They also want a broad renegotiation on non-trivial treaties that are terrible for Russia in 2009. (Anyone want to be President?)
    We must come up with a way to renew confidence for the consumer. First and foremost is the renewal of our Usury laws that were dropped because disintermediation was wrecking the banking system in the 1970s. Creating lasting jobs will not happen by just building roads. These programs must be done so that they promote or improve future growth. It is difficult to do this on a national level because there are too many fingers in the pie. Programs done on a state level are easier to control. It is more realistic to meet regional needs.
    Lowering corporate taxes when a corporation moves into intercity areas would mean better roads, and businesses to support them. Raising taxes invites tax avoidance schemes that only benefit the issuer. It also removes money from the private sector. Today, pricing power has evaporated.
    There must be global reorganization of the securities laws, most importantly the Uptick rule. Countries that do not participate should be banned from trading within the member countries. Today hedge funds and institutions have spent millions of dollars on sophisticated trading programs. This makes for an uneven playing field and has driven the small investor to the sidelines, as witnessed by declining volume on the exchanges. The large institutional investor becomes the ultimate bag-holder at the bottom of markets when they have no one to sell to.
    If a country’s Gross Domestic Product (GDP) is declining that means the average on corporate earnings will be declining also. This means fewer companies will be showing an increase in earnings and therefore there will be fewer securities that have an investment grade value. Since there are already too many mutual funds and they all cannot buy the same stocks, that game is over. I would sell your mutual funds while you can if you are over 55 years old. If they get too many orders for liquidation they have the option of delivering stock of the same value to you. That is an easy way to get rid of their losers. If you are under 55 and own a balanced fund where the income can be reinvested on a periodic basis you are in the catbird seat. Lower prices will mean more shares and 10 to 15 years from now when the market recovers you could be a wealthy person. Other low income on non paying funds should be sold. It could be 20 to 25 years just to breakeven and that is only if it is a survivor.
    First quarter earnings are going to be a disaster. I suspect this is when many will throw in the towel and give up.
    Gold should be considered a hedge – possible short term.
    Here are some moneymaking ideas. A successful portfolio can be 20% equities 50% fixed income and 30% cash.
    By equities I mean income-producing securities yielding over 5%. There are a few out there that are “stupid” cheap versus dirt-cheap. Then there are preferred stocks, many of which are 85% tax-free. Many are selling below their call price. This means if a company wants to improve its balance sheet, they can do that by calling your preferred from you by paying the call price. If they fail to pay a preferred dividend it becomes cumulative. To resume payments they must make up the back dividends first. One that falls into this category is: AMERCO Pfd A (NYSE) 20 (2-6-09) pays $2.125 which yields 9.41%. gives you a tax free yield of 8%. If they call the stock at $25 you will have a $5 gain which amounts to a 25% gain. You won’t be able to have this return with common stocks over the next several years.
    Tax free bonds were good when income tax rates were 55%-92%. The low tax rates today are beaten by preferred stock’s rates, such as the one I mentioned above. You have a ready market and real value. What you see is what you get. There was an issue on Long Island that defaulted in the depression. A default like that today would wreck havoc in the entire sector. For safety reasons, please avoid tax-free bonds.
    Since the US has to borrow around a trillion dollars or more, Government bonds could be an instant loss. For now, I would avoid these also. That leaves us with corporate bonds. Many corporate bonds have a better balance sheet than the United States. Buying bonds in the five year range is the safest place to be. As the bond gets closer to maturity the price fluctuations are at a minimum and easily salable. You are better off buying an individual bond than a fund. The fund will charge a yearly management fee as well as anything else they can get away with. Also, some funds simply dump bonds into a portfolio and walk away. There was a case where a fund dumped their holdings of an issue right at the very bottom, only to have the bonds called a few months later. Please remember that corporate bond holders have first lien on a corporation’s asset.
    I suspect that in a few months you will see a stampede out of many mutual funds and a proliferation of all types of bond funds trying to cash in on the new trend. Keep it simple- buy your own.
    I know I have thrown many ideas your way in this letter and I apologize, but I feel the times warrant such thinking. I will be available, free of charge, to anyone who would want to discuss any of these ideas at the addresses below.
    CHEERIO!!!!
    Richard C De Graff 2/10/2009
    256 Ashford Road
    RER Eastford Ct 06242
    860-522-7171 Main Office
    800-821-6665 Watts
    860-315-7413 Home/Office
    rdegraff@coburnfinancial.com

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

  • Official: Aliya from Turkey to double

    Official: Aliya from Turkey to double


    The number of Jews expected to immigrate to
    Israel from Turkey this year is likely to double compared to last year,
    but the level remains extremely low despite surging anti-Israel and
    anti-Semitic incidents in the predominantly Muslim country, a Jewish
    Agency for Israel official said Sunday.

    A
    Turkish demonstrator displays a shoe on a banner during a protest
    against Israel at the Kocatepe mosque in Ankara, Turkey, Saturday.
    Photo: AP

    Separately,
    the Ashkenazi chief rabbi of Venezuela said Sunday that he doubted
    whether the South American country held any future for the Jewish
    community, following the Friday night vandalism of the oldest synagogue
    in the country.

    About 250 Turkish Jews are expected to immigrate to Israel this
    year, more than double the 112 who did so last year, said Eli Cohen,
    director-general of the Jewish Agency’s Immigration and Absorption
    Department in Jerusalem.

    The number of expected immigrants from Turkey this year makes
    up only 1 percent of the 25,000-strong Jewish community that traces its
    roots in the nation back more than five centuries, dating to the
    Spanish Inquisition.

    RELATED
    • Turkey: The longer view (Editorial)
    • A climate of fear

    “We
    would prefer that the main reason for aliya today [be] the ideology of
    those immigrants who come from Western countries, but we see that the
    anti-Semitic incidents, as well as the global economic crisis, are what
    is furthering aliya today,” Cohen said.

    He noted that many of the Turkish Jews seeking to make aliya
    were students or young couples wanting to study at Israeli universities
    or to live in Israel.

    Relations
    between Israel and Turkey hit a nadir last week after Turkish Prime
    Minister Recep Tayyip Erdogan, who has been a leading and vitriolic
    critic of Israel’s recent military operation against Hamas in Gaza,
    stormed out of a panel discussion with President Shimon Peres at the
    World Economic Forum in Davos.

    At the same time, the Jewish Agency official said Sunday that
    there was “a large interest” in immigration to Israel among Jews living
    in Venezuela. About 14,500 Jews live there, and only 60 immigrated to
    Israel last year.

    All Israeli representatives were kicked out of the country last
    month during Operation Cast Lead, but the agency is in daily contact
    with Jewish groups there, Cohen said.

    Meanwhile, Rabbi Pynchas Brener of Venezuela said Sunday that
    he was doubtful that there was any future for the Jewish community
    there.

    “There is a psychological mechanism which makes people within
    the country think things are not as bad as they seem,” Brener told The Jerusalem Post
    in a telephone interview from Caracas. “For psychological reasons,
    people who live in the country tend to justify actions taken against
    them.”

    His comments came after the main Sephardi synagogue in Caracas was vandalized by a group of attackers.

    Two security guards were overpowered by about 15 people who
    ransacked the synagogue’s sanctuary and offices late Friday, shattering
    religious objects and leaving graffiti such as, “We don’t want
    murderers,” and “Jews, get out.”

    The incident forced the synagogue to cancel Saturday services.

    “Reason makes us believe that this was done with the consent –
    if not the instigation – of some central power in Venezuela,” he said.

    He noted that Israel and Jews were viewed as synonymous in the
    South American country, adding that an upcoming vote on whether the
    president could be reelected indefinitely could prove to be a harbinger
    of things to come.

    “I do not know if in this environment there will be a future for the Jewish community here,” he said.

    The New York-based Anti-Defamation League called the synagogue incident “a modern day Kristallnacht.”

    “This violent attack, occurring on the Jewish Sabbath, is
    reminiscent of the darkest days leading to the Shoah, when Jews were
    attacked and synagogues and Torahs vandalized and destroyed under the
    guard of the Nazi regime,” said ADL National Director Abraham H.
    Foxman.

    Foxman said the heinous anti-Jewish hate crime was not random,
    but was “directly related to the atmosphere of anti-Jewish intimidation
    promoted by President Hugo Chavez and his government apparatus.”

    The organization called for Chavez to “abandon the official
    government rhetoric of demonization of Israel and the Jews and to
    publicly denounce this wanton act of anti-Semitic violence.”

    Separately, the Los Angeles-based Simon Wiesenthal Center said
    Sunday that Chavez’s attacks on Israel and the Jewish community had
    “set the stage” for the incident.

    “This was no mere hate crime from the margins of society, but a
    reflection of President Chavez’s campaign to demonize Israel and her
    supporters,” the organization said. “For this dangerous escalation of
    hate against a minority to stop, President Chav



    From: Haluk Demirbag,

    Subject: Official: Aliya from Turkey to double

    Israil senelerdir sayıları az bile olsa değerleri çok olan Turkiyeli Musevi

    kardeşlerimizi İsraile göçe itmek için çok yol denedi. Tayyip ve Simon

    amcaların danışıklı döğüş yapabileceğini neden kimse düşünemiyor?

    Bir taşla iki kuş vuruluyor:

    1. Tayyip secimler için müthiş bir hamle yapıyor
    2. Simon amca da, senelerdir danışmanlarının Israil’e çekebilmek için akla
    karayı seçtiği Türk milletinden ayrılmak istemeyen Türkiye Musevilerine,
    bilet kesiyor…

    Yakın zamanda Gürcistan’ı hatırlayalım…

    Siyonizmin güçlenmesi için sahte ve kontrollü anti-semitizm ispatlı ve iyi
    yazılmış çizilmiş bir yoldur.


    Eski tüfek Simon amca da Tayyip de ne yaptığını biliyor kendi hedefleri açısından…

    Türkiye’de olabilecek herhangi bir anti-semitizim çıkışına karşı
    herkesin duyarlı ve uyanık olması lazım. Biz asırlardır bağrımızda
    sakladığımız, koruyup kolladığımız sevgili Musevi dostlarımızı ve
    peygamberlerin torunlarını kimseye vermek istemiyoruz, Israil dahil,  onlar
    bize Osmanlı atalarımızın emaneti!!!

    Official: Aliya from Turkey
    to double

    ez’s hate campaign must be denounced by all leaders in the Americas and beyond.”

    —————–

  • Middle East parties must be brought together

    Middle East parties must be brought together

    Gordon Brown has insisted that all parties to the Middle East dispute over Palestine must be brought together to thrash out a lasting peace settlement despite the recent hostilities in Gaza.

    Speaking at a press conference with Palestinian President Mahmoud Abbas in Downing Street on Thursday, the PM said that peace could be achieved in the Middle East based on a secure Israel and a viable Palestinian state. Progress on the issue remains a top priority for the UK and international partners will be urged to work together to come to an agreement, he said.

     

    www.number10.gov.uk

  • Drama in Davos: A reading of the bizarre incident

    Drama in Davos: A reading of the bizarre incident

    By Ferruh Demirmen

     

    Turkish Prime Minister Recep Tayyip Erdogan’s walkout from the Gaza panel in Davos last week created quite a stir on the international scene. The walkout strained the Israeli-Turkish relations, and the direction the Turkish foreign policy is headed became a subject of debate.

     

    The occasion was a panel discussion on the Gaza crisis where two of the four panelists were Erdogan and Israeli President Shimon Peres. During his talk Erdogan blamed Israel for the Gaza violence, and Peres passionately defended his country’s policy. The tempers became inflamed when the moderator refused to allow Erdogan sufficient time to reply to Peres. This brought the panel discussion to a breaking point, and the PM walked off.

     

    The prevailing sentiment in Turkey is that Erdogan was justified in his action. Upon return from Davos, the PM was welcomed as a courageous leader by his supporters in Istanbul. The Arab world, in particular Hamas, lauded Erdogan’s action. There were alarm signals from the American Jewish lobby and the Israeli media, the former warning that Turkey’s image was damaged and making a sarcastic reference to PKK. In the rest of the world, the reaction was one of bemusement,

     

    The substance

     

    In substance, it is difficult to disagree with Erdogan on his criticism of Israel on the Gaza crisis. While the Jewish state deserved sympathy for the plight of its citizens that came under rocket attack from Hamas militants, its response was grossly disproportionate. Israel’s assault on the Gaza Strip created a humanitarian crisis in an area that was already reeling under a military lockdown. Some 1300 Palestinians lost their lives, as opposed to 13 on the Israeli side. Gaza’s industry was destroyed, and even schools, mosques, hospitals and a UN compound came under attack.

     

    The notion that a vastly superior military firepower was turned on a nearly defenseless population under siege, with graphic images of Palestinian civilians suffering and dying, was too much to bear for the world at large, in particular the Islamic world. Erdogan verbalized these sentiments.

     

    What made the Israeli action particularly offensive was that the military campaign appeared to be planned months in advance, and that Israel was timing its military campaign according to presidential turnover at the White House. Israel’s banning of journalists from the war zone also exacerbated anti-Israeli sentiments.

     

    The style

     

    Putting substance aside, the manner in which Erdogan handled himself in Davos was both right and wrong. To make sense of conflicting reports of the incident, this writer viewed the official webcast of the panel discussion. It is clear from the webcast that Erdogan was justified in protesting to the moderator.

     

    A cardinal rule in panel discussions is that the participants are allowed equal time. In this case, Peres was allowed to speak considerably longer than Erdogan.

     

    It is also a standard practice in panel discussions to allow a second chance to the speakers to respond to each other. There was no such provision in the panel discussion. Erdogan wrestled to get additional time to respond to Peres, the last speaker, but when the moderator cut him off after two minutes, the PM became visibly agitated. Turning red-faced, he stormed out.

     

    Because the other two panelists had talked shorter than both Erdogan and Peres, the moderator could have allowed Erdogan more time to respond, thereby preventing a diplomatic crisis.

     

    On the other hand, the PM could have chosen to remain calm, letting the audience judge the unfairness of the situation. His parting remark to the moderator, “For me, Davos is finished,” was unnecessary, and his rhetoric aimed at Peres, “You are older than me. Your voice is coming strong, this has to do with a guilty conscience.” … ”You know well how to kill,” were quite inappropriate. He had lost his temper.

     

    In diplomacy, there is no substitute for composure.

     

    In Ankara, retired Turkish diplomats who criticized Erdogan’s behavior in Davos also drew the PM’s ire, who called them “monsieurs” – a thinly disguised pejorative term.

     

    Some commentators in Turkish media compared the PM’s action to the bluster of Soviet leader Nikita Khrushchev when he, in a fury, took his shoe off and banged it at the table at a United Nations conference in 1960. The comparison, however, was off the mark.

     

    The motive

     

    Erdogan’s action raised some basic questions. What was the PM trying to accomplish by becoming the spokesman for Hamas when the Arab world is almost indifferent to the plight of Palestinians on the Gaza Strip?

     

    And if the PM was sincere in his humanitarian concerns over the Gaza crisis, why did he not raise similar objections to the killing fields in Darfur, and, for that matter, next-door Iraq?

     

    Erdogan twice welcomed in Ankara Sudan’s President Omar al-Bashira radical Islamist – who has been accused of war crimes in Darfur by the International Criminal Court. These are questions only the PM can answer.

     

    But there is little doubt that Erdogan’s stance in Davos was driven at least in part by domestic politics. Local elections are scheduled for March, and by embracing the staunchly Islamic-oriented Hamas, the PM calculated that he could boost his popularity with his Islamist base at home. His popularity, in fact, did receive a boost, at least temporarily.

     

    The rallying welcome the PM received at the Istanbul airport in the early hours of the morning just after leaving the panel discussion was obviously planned in advance.

     

    Israeli-Turkish relations

     

    The larger issue with the Davos incident is whether it heralded a major shift in Turkey’s foreign policy vis-à-vis Israel. In press releases, both sides tried to downplay the significance of the event, claiming that the relations between the countries remained fundamentally strong.

     

    There is considerable truth in that assessment, as the two countries have long had close bilateral ties, from tourism to commerce to defense. The two countries also have shared common strategic interests, a point verbalized by Peres during his talk at the Turkish Parliament in November 2007. Both countries will want to continue the alliance.

     

    The alliance, however, will face challenges. Hamas is widely recognized as a terrorist organization, and unless the organization becomes more moderate, a serious rift in the Israeli-Turkish alliance will be inevitable. Turkey’s relationship with the US and the EU will also be affected.

     

    There is also the concern, raised by the American Jewish lobby, but also by the Turkish Jewish community, that Erdogan’s pro-Hamas stance may stoke anti-Semitism in Turkey. The PM tried to allay this concern by stating that his quarrel is with the Israeli administration, not Jewish people.

     

    The problem with this argument is that his constituents in the Islamic camp may not make such distinction.

     

    Any rise in anti-Semitism in Turkey would be very unfortunate. Since the Ottomans welcomed Sephardic Jews expelled from Spain in the 15th century, Turks and Jews have lived in peaceful coexistence. The secular republic established by Kemal Atatürk bestowed full citizenship rights on Jews, as it did on other religious and ethnic groups.

     

    Conclusion

     

    In summary, a badly administered panel discussion was at the root of a bizarre incident in Davos. Although there will be challenges, Turkey and Israel should put the bizarre incident behind and move on. The Jewish state should use the Davos incident as a wakeup call from a friend for resolution of the long-festering Israeli-Palestinian conflict. On Turkey’s part, it should weigh carefully its association with Hamas. A lasting peace in the Middle East is far too important to let an emotionally charged panel discussion to be a distraction. On Erdogan’s part, he should learn how to control his anger in conflict situations.

     

    ferruh@demirmen.com

     

  • Temper tantrums

    Temper tantrums

    Temper tantrums

    Feb 5th 2009 | ANKARA
    From The Economist print edition

    A dramatic Davos walkout raises new questions about Recep Tayyip Erdogan

    WAS it premeditated? Or did Turkey’s prime minister, Recep Tayyip Erdogan, lose control? Mr Erdogan’s walkout from a debate with Israel’s president, Shimon Peres, in Davos has made him the most talked about Turkish leader since Kemal Ataturk. His audience of financiers and policy wonks was stunned. But Muslims worldwide cheered as Mr Erdogan scolded Mr Peres over Israel’s war in Gaza. “When it comes to killing, you know very well how to kill. I know well how you hit and kill children on beaches,” thundered a crimson-faced Mr Erdogan.

    The incident has led to new debate over Turkey’s strategic alliance with Israel, whether an increasingly erratic Mr Erdogan is fit to lead Turkey at all and, if so, in what direction: east or west? There is no question of Turkey walking away from NATO or the European Union, or scrapping military ties with Israel and America. Mr Erdogan’s critics say his outburst was a ploy to please voters. If so, it worked: his approval ratings have shot up. Polls suggest that 80% of Turks support Mr Erdogan’s actions. His mildly Islamist Justice and Development party will reap dividends in municipal elections on March 29th.

    Mr Erdogan’s defiance has also helped to assuage his people’s long-running feelings of humiliation and inferiority, which date back as far as the Ottoman defeat in the first world war. Many insist that Mr Erdogan’s reaction was spontaneous and utterly sincere. Turkey has assumed “moral leadership” based on Western values, opined Cengiz Candar, a liberal commentator. Mindful of the public mood, Turkey’s secular opposition leader, Deniz Baykal, grudgingly declared that his rival had done the right thing.

    Not everybody agrees, however. Mr Erdogan’s behaviour makes it less likely that Turkey can successfully mediate between Israel and Syria. His call to Barack Obama to “redefine” what terrorist means has been seen as an appeal to remove the label from Hamas. Although European and American reaction has been muted, in private officials are unhappy. “What [the Davos spat] does leave in Europe is the feeling that Mr Erdogan is unpredictable,” says a European diplomat. Mr Obama is highly unlikely now to pay Turkey an early visit.

    Mr Erdogan’s temper tantrums are not new. But they used to be reserved for his critics at home. The Davos affair, says another foreign diplomat, is further evidence of “Mr Erdogan’s conviction that the West needs Turkey more than Turkey needs it.” It is of a piece with Mr Erdogan’s threat to back out of the much-touted Nabucco pipeline to carry gas from the Caspian Sea to Europe via Turkey. In Brussels recently Mr Erdogan said that, if there were no progress on the energy chapter of Turkey’s EU accession talks then “we would of course review our position”. Meanwhile, Turkey sided with Saudi Arabia and the Vatican in opposing a UN statement suggested by the EU to call for the global decriminalisation of homosexuality.

    Mr Erdogan’s supporters argue that EU foot-dragging on Turkey’s membership bid explains why Turkey is now seeking new friends in the Middle East and beyond. Its growing regional clout is another reason why the EU should embrace Turkey. But the reverse is also true. It is because it is the sole Muslim country that is at once secular, democratic and allied with the West that Turkey commands such respect in the rest of the world. Growing numbers of Arab investors have flocked to Turkey, “because we see it as part of Europe, not the Middle East,” says an Arab banker in Istanbul.

    To retain its allure, Turkey will need to swallow its pride and make further concessions on Cyprus. The EU may suspend membership talks altogether unless Turkey meets a December 2009 deadline to open its ports to Greek-Cypriots. The hope is that Egemen Bagis, who was chosen as Turkey’s official EU negotiator in January, will remind Mr Erdogan that, at least in these talks, it is Turkey that is the supplicant not the other way round.

    Source:  Economist, Feb 5th 2009