Turkey – Review of Political and Economic Developments
March 15, 2010
EPA has decided to discontinue its bi-weekly Review for Turkey.
EPA’s quarterly assessments and projections as well as monthly indicators, however, will be made available on its website as they are updated.
Political Developments
Chicken come home to roost. The Davutoğlu-inspired high wire act, otherwise known as Turkey’s new foreign policy orientation is now stuck with two ambassadors recalled home and Erdoğan spewing fire all over the globe – something he seems to be thoroughly enjoying. Another egg on Turkey’s face last week was the statement from the Israeli Foreign Ministry that said "No decision has been made on resuming talks with Syria under Turkey mediation, but if these remarks represent Turkey's desire to improve relations with Israel and contribute to the advancement of peace in the region, then it is obviously a welcome aspiration," after Erdoğan told reporters in Saudi that Israel has accepted Ankara's offer to mediate the talk and the stalled talks may begin again at "any minute".Abdul Islam or Abdul Malik? Erdoğan received the King Faisal International Prize for having "rendered outstanding service to Islam” from the Saudi King Abdullah. It would be good to know whether has yet handed over the 200-gram gold medal and $ 200,000 that he received as part of the prize to the Treasury yet as he should have under the ethics rules.
Someone definitely needs treatment. In an interview with the daily Hürriyet, State Minister Aliye Kavaf said “I believe homosexuality is a biological disorder, a disease. I believe [homosexuality] is something that needs to be treated.”
Oh, freedoms! Reporters Without Borders issued its annual report on countries least tolerant of Internet freedoms. While Burma, China, Cuba, Egypt, Iran, North Korea, Saudi Arabia, Syria, Tunisia, Turkmenistan, Uzbekistan and Vietnam were listed under the category of ”Enemies of the Internet”, Turkey was listed among the countries “Under Surveillance” together with Australia, Bahrain, Belarus, Eritrea, Malaysia, Russia, South Korea, Sri Lanka, Thailand, and United Arab Emirates.
Economic Developments
Cut the BS! The IMF told the Government to stop fooling the markets with “an imminent agreement” with the Fund that lasted for almost two years. In a statement, IMF said on Tuesday that talks between the International Monetary Fund and Turkey on a possible loan "are no longer taking place." The IMF noted that the Article IV consultation that typically took place annually with all members was long overdue - the last was in 2007 – and a mission would travel to Turkey in the first half of May for annual consultations. One of the prominent columnists and TV commentator wrote last week that “he was not surprised when the IMF negotiations ended as he had a gut feeling of 50 percent failure for over a year.” What an impressive insight!
Not so quick. Reuters reported that Turkey is unlikely to get an investment grade rating in the near term due to fault line between its secularist military and Islamic-leaning government, a Fitch analyst said on Tuesday. "Even if things were to go reasonably well it is unlikely we would get to investment grade this side of elections until we are relatively confident that constitutional reform that will be needed can pass through without serious political unrest," Fitch’s senior director Edward Parker said at a conference on sovereign risk. "This fault line is going to be with us for the foreseeable future and it's going to generate a lot of noise and something that an assessment of Turkish risk has to take in," Parker added.
Debunking myths. One of the key concerns about the capacity for making economic policy in Turkey is whether the AKP leadership is any clue about what is going on in the rest of the world. A day does not go by without Erdoğan proclaiming that Turkey is the least affected economy from the global crisis or Turkey will be fastest recovering country and so on. Erdoğan himself is unable to access facts and data in other languages, therefore, he must depend on the information flow fed to him by his aides. Unless these aides do not understand the world they live in or they distort information that they provide up, Erdoğan is perfectly capable of twisting the facts himself and continue to live in the bubble he creates. Data and analysis provided primarily by OECD – data for the BRICs have been added by EPA - show where Turkey stands on a number of indicators:
Turkey had the second highest unemployment rate after Spain in 2009 and is projected to have the second highest in 2010.
Turkey also ranked fifth in terms of inflation in 2009.
Turkey’s GDP decline was the fourth from the bottom after Russia, Ireland, Iceland and Hungary in 2009. OECD’s projection for GDP growth in 2010 is on the high side; it is more likely to be closer to the OCD average:
Finally, Turkey ISE-100 performed significantly below the average for emerging markets in terms of year-to-date and 5-year returns:
Briefly:
· The Treasury sold a net TL 579.6 million ($377 million) in a tap of a fixed-coupon bond on Tuesday at an average compound yield of 10.82 percent. While the cost of borrowing in lira has gone up, Turkey on Thursday sold $1.0 billion of 11-year bonds, said IFR, a Thomson Reuters service. The 5.625 percent bonds were priced at 98.986 to yield 5.75 percent, or 202.7 basis points over comparable U.S. Treasuries, according to IFR.
· Korea Electric Power Corp. signed a cooperation agreement with Turkey's Elektrik Uretim to build a nuclear energy reactor on the Black Sea coast. Korea Electric Power Corp. will bid along with a Enka group in a partnership to build the four-reactor, 5,600-megawatt facility in northern Turkey.
· This year’s Forbes magazine’s list of billionaires included 28 Turkish billionaires, up from 12 last year, but below 35 reported two years ago. The richest Turk was Hüsnü Özyeğin, with a net worth of $3 billion. Özyeğin was followed by Mehmet Emin Karamehmet, with $2.9 billion and Şarık Tara, at $2.6 billion. Mustafa Latif Topbaş who ranked 937th with $1 billion is the biggest shareholder of BİM, a fast-growing supermarket chain. He has a 17.98 percent share in the chain, which has 2,665 supermarkets in Turkey and a market value of TL 5.3 billion. He seems to be first devout AKP supporter who made the billionaires list.
· Sberbank, Russia's biggest lender, is lining up a bid for the 20.85 percent stake in Turkey's Garanti Bank being sold by General Electric Co. The stake in Garanti, the most actively traded stock on the Istanbul stock exchange, is worth almost $3.7 billion at current market prices. U.S. conglomerate General Electric is selling the stake as part of its strategy to scale back its finance arm. Turkish media have also reported Spain's Banco Santander, Italy's Intesa Sanpaolo and a Gulf-based investment fund as among the potential bidders for the stake. A market source in Turkey told Reuters in February that HSBC Holdings Plc and Standard Chartered Plc were also potential bidders.
