December 20, 2009

Turkey – Review of Political and Economic Developments

December 20, 2009

Political Developments

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BDP In - DTP Out. Parliamentarians from the Kurdish Democratic Society Party (DTP) who earlier intended to give up their seats after their party was banned by the Constitution Court, decided on Friday to remain in parliament as members of another party. DTP leader Ahmet Türk said that the group will join the Peace and Democracy (BDP), a small Kurdish group that was founded recently. He added that DTP supporters and jailed leader of the outlawed Kurdistan Workers' Party (PKK) Abdullah Öcalan have urged them not to give up their mandates. Since two of the DTP representatives were banned from politics for five years, with the remaining 19 representatives, BDP will need another member to be able to form a group in the parliament, but Ufuk Uras, an independent from İstanbul is expected to join BDP. The Court’s decision, delayed for nearly two years, comes at a time when reconciliation with Kurds has dominated the headlines. The Kurdish politicians' decision averts the possibility of interim elections in several cities in Turkey's mainly Kurdish southeast, an outcome that Erdoğan must have welcomed so that he does not face voters in the midst of the economic crisis. It also plays down the view, as the Economist put it, that “Banning the DTP has reinforced the belief of many Kurds that they can get change only through bullets, not the ballot box.” The party's closure has sparked violent street demonstrations in several towns and cities across Turkey and two Kurds died in the small town of Bulanık in the south-east, after a shopkeeper fired on protesters. Ethnic strife remains as a serious risk while the Government ponders what to do next. Turkey, however, still needs to grow out of banning political parties and politicians.

Don’t piss Sultan Ahmet off. The Turkish ambassador to the United States Nabi Şensoy quit a day after Erdoğan met Obama in Washington. While Şensoy’s abrupt resignation sparked speculation in Turkey of a dispute between the ambassador and the prime minister who reportedly was dissatisfied with the White House meeting, the Hürriyet Daily News reported that the resignation stemmed from an argument between Şensoy and foreign minister Ahmet Davutoğlu who was offended because he was excluded from the one-on-one meeting at the White House. The foreign minister is said to have accused Şensoy of not fulfilling the request his request that Davutoğlu be part of the meeting. Some observers noted that Davutoğlu wanted to have some face time with Obama to enlighten him with his vision of the world as he was not sure Erdoğan would be able to do it.

Everybody goes to Mersin¹… According to a government press release, elimination of visas for Turkish citizens visiting Syria, Jordan, Albania and Libya paved the way for a vast geography to become available for visa-free vacations and business! Last week, Brussels lifted visa requirements for citizens of Serbia, Montenegro and Macedonia while keeping similar requirements in place for Turkey. That seems to have been a wake-up call for the government. "It's unacceptable that certain Balkan countries that are in the initial stages of the membership process and have not begun negotiations have been given the Schengen privilege, while Turkey, considering the level that Turkish-EU relations have reached, has not," Davutoğlu said at a news conference.

Need to pay more than lip service? Hürriyet Daily News reported that Ankara has been shaken by remarks from Patriarch Bartholomew, who said he feels "crucified" and "second class" in Turkey. The patriarch complained about "discrimination" in Turkey in an interview he gave to U.S. television network CBS in May and aired last night on “60 Minutes.” Davutoğlu criticized the remarks of Orthodox Christianity’s spiritual leader as unacceptable. "We regard the use of the crucifixion simile as extremely unfortunate,” he said. Denying that the ruling AKP, discriminates among its citizens on religious grounds, Davutoğlu said, “If Patriarch Bartholomew I has complaints on this issue, he can convey them to the relevant authorities who will do whatever is necessary." Bartholomew said in the interview that he conveyed his concerns to the Prime Minister in person but no action was taken.

Temel and Hamdi were once running an airline… The Anatolia news agency reported that Hamdi Topçu was elected as the company's chairman of the board of directors to replace Karlıtekin.who resigned last week citing disagreements with the CEO, Temel Kotil. Topçu who has been on the board of the airline is a CPA and hails from Rize. Turkish Airlines has been expanding its network and buying more planes. Passengers volume grew 10.1 percent to 18.6 million in the first nine months of the year, while other carriers have scaled back flights.

Economic Developments

Towards recovery. Third-quarter gross domestic product contracted by 3.3 percent y-o-y, Turkstat reported. As EPA expected, Turkstat also reported that figures were revised downwards for the second quarter from previous estimate of 7 percent to 7.9 percent. In the first nine months of the year, the economy shrank 8.4 percent. The government has forecast the economy will shrink 6.0 percent while EPA expects the decline in the fourth quarter to be 0.3 percent and 6.5 percent for the year reflecting weak investment expenditures, slow consumer spending and shrinking profits in the banking sector. Many observers, however, believe that growth will turn positive in the fourth quarter mostly reflecting the base effect and better than expected industrial production figures.

To a jobless one? Unemployment figures released by Turkstat shows that unemployment rate remained unchanged in September, holding at 13.4 percent, the same figure recorded in August, which still represents a 2.7 percentage point rise over the same month of last year. Non-agricultural unemployment rate, monitored by EPA, declined to 16.9 percent in September from 17 percent in August. According to a report published by the Center for Economic and Social Research (BETAM) at Bahçeşehir University, TurkStat data indicate a moderate recovery in employment; however, the report asserts, when removing seasonal effects this recovery disappears. As a result, BETAM found that the non-agricultural unemployment rate increased from 18.3 percent in August to 18.5 percent in September.

Low sentiment. Consumer confidence index decreased to 78.4 in November from 80.5 in the previous month, Turkstat reported on Wednesday. The sub-index measuring the general economic situation at present slid to 69.5 in November from 72.6 in the preceding month while the sub-index measuring the expectations for general economic situation in the next three months fell to 73.5 from 76.2.

¹ from the Turkish saying: “Everybody goes to Mersin, we go in the opposite direction.”