From Bloomberg this morning:
Turkey to Cut Spending, Lower Target for Budget Gap
By Steve Bryant
Aug. 1 (Bloomberg) -- Turkey cut planned government spending this year by 3.1 billion liras ($2.4 billion) as it seeks to meet budget targets agreed with the International Monetary Fund and open the way for interest rate cuts.
The government cut its spending target for the year to 148.9 billion liras, and also lifted its revenue target by 2.8 percent to 193.3 billion liras, the Finance Ministry in Ankara said in a report on its Web site today. The revisions mean the country targets a budget deficit of 1.3 percent of gross national product this year, compared with a 2.7 percent target in the original budget announced in October last year, the ministry said.
Turkey loosened budget discipline in the first half of the year as tax income rose more slowly than planned and the government spent on farms and infrastructure ahead of parliamentary elections on July 22. The higher spending may delay cuts to the central bank's benchmark interest rate, governor Durmus Yilmaz said on July 27.
The revisions are ``positive, but we need a detailed statement on how they'll achieve them,'' said Sertan Kargin, economist for TEB Investment in Istanbul. ``We've seen an explosion in pre-election spending on agriculture and municipalities and they'll have to rebalance the spending side.''
The Justice and Development Party won re-election after campaigning on its record of budgetary discipline and economic growth. The government reduced the budget deficit last year to 0.7 percent of economic output from more than 14 percent when it was first elected in 2002.
`Non-Priority Activities'
The spending reductions this year will come from ``determined implementation of cuts and savings on non-priority activities and projects,'' the ministry said in its statement.
Tax income for the year will be 157.9 billion liras, lower than the 158.2 billion originally targeted in the budget, the statement said. The revenue increase will come from sales of assets such as the phone company Turk Telekomunikasyon AS, it said.
Turkey's IMF accord demands a budget surplus, not including interest payments, of 6.5 percent of economic output every year. The IMF doesn't include one-off items such as asset sales income when it calculates Turkey's budget performance.
The central bank may lower interest rates in the last quarter of the year ``if we see that measures have been taken'' to trim the budget, Governor Yilmaz said in Ankara on July 27.
The bank raised its benchmark interest rate by 4.25 percentage points to 17.5 percent, the highest in Europe, in three moves in June and July last year.
Wednesday, August 01, 2007
Tuesday, July 31, 2007
Turkish Trade Gap Widens
From Bloomberg:
Turkish June Foreign Trade Gap Widens for 2nd Month
By Steve Bryant
July 31 (Bloomberg) -- Turkey's trade deficit widened 18 percent in June from a year earlier, the second consecutive increase, as industry drew in raw materials for manufacture of products to export.
The trade gap grew to $5.5 billion from a revised $4.7 billion in the year-earlier period, the statistics agency in Ankara said on its Web site today. The deficit was forecast to be $4.8 billion, according to the median estimate of 13 economists surveyed by Bloomberg.
Today's figures follow a widening in the trade gap in May for the first time since November and suggest Turkey's current-account deficit, the widest measure of trade in goods and services, may be rising again after six months of stabilization.
``Turkey is addicted to intermediate goods,'' said Sengul Dagdeviren, an economist for Oyak Bank AS in Istanbul. ``It's clear that if the economy picks up, we'll start seeing even larger problems in the trade deficit.''
Exports increased 14.2 percent to $8.9 billion in June, after hitting a record $9.1 billion the previous month, the statistics agency said today. Imports increased 15.6 percent to $14.4 billion in June from the year-earlier period, the agency said.
Imports of raw and unfinished goods, which include oil, steel and machinery, rose 15.8 percent over the period to $10.4 billion. Consumer imports were little changed from the previous year at $1.5 billion, the agency said.
European Goods
Growth in Europe is boosting Turkish exports of goods such as washing machines as cars. The country needs to import raw materials to fuel its export industries.
``The high import dependence of Turkish exports implies that any export strength is accompanied by higher imports,'' Yarkin Cebeci, economist for JPMorgan Chase & Co. in Istanbul, wrote in a note to investors.
Crude oil prices rose to more than $70 a barrel at the end of June from $64.50 at the start of the month.
Turkey imports most of its energy, and higher oil prices mean the current-account deficit may widen this year as a percentage of gross domestic product, Moody's Investors Services Inc. analyst Kristen Lindow said in an interview on July 23. Last year's deficit was 7.9 percent of GDP.
The lira gained as much as two percent against the dollar in June and stood 8 percent higher than its Jan. 1 value at the end of June.
Current-Account Gap
Rising energy costs and a possible increase in demand for imported consumer goods means an increase in the current-account deficit in the second half of 2007 would ``not be surprising,'' the central bank said on July 27.
The gap reached a record $31.6 billion in 2006, 37 percent up on the previous year. It narrowed in May for the third consecutive month and stood at $31 billion in the 12 months to May.
Concern for the country's ability to finance the deficit led to a slump in the value of the lira in May last year. The central bank responded by increasing its benchmark lending rate by 4.25 percentage points to 17.5 percent in three moves in June and July last year.
Turkish June Foreign Trade Gap Widens for 2nd Month
By Steve Bryant
July 31 (Bloomberg) -- Turkey's trade deficit widened 18 percent in June from a year earlier, the second consecutive increase, as industry drew in raw materials for manufacture of products to export.
The trade gap grew to $5.5 billion from a revised $4.7 billion in the year-earlier period, the statistics agency in Ankara said on its Web site today. The deficit was forecast to be $4.8 billion, according to the median estimate of 13 economists surveyed by Bloomberg.
Today's figures follow a widening in the trade gap in May for the first time since November and suggest Turkey's current-account deficit, the widest measure of trade in goods and services, may be rising again after six months of stabilization.
``Turkey is addicted to intermediate goods,'' said Sengul Dagdeviren, an economist for Oyak Bank AS in Istanbul. ``It's clear that if the economy picks up, we'll start seeing even larger problems in the trade deficit.''
Exports increased 14.2 percent to $8.9 billion in June, after hitting a record $9.1 billion the previous month, the statistics agency said today. Imports increased 15.6 percent to $14.4 billion in June from the year-earlier period, the agency said.
Imports of raw and unfinished goods, which include oil, steel and machinery, rose 15.8 percent over the period to $10.4 billion. Consumer imports were little changed from the previous year at $1.5 billion, the agency said.
European Goods
Growth in Europe is boosting Turkish exports of goods such as washing machines as cars. The country needs to import raw materials to fuel its export industries.
``The high import dependence of Turkish exports implies that any export strength is accompanied by higher imports,'' Yarkin Cebeci, economist for JPMorgan Chase & Co. in Istanbul, wrote in a note to investors.
Crude oil prices rose to more than $70 a barrel at the end of June from $64.50 at the start of the month.
Turkey imports most of its energy, and higher oil prices mean the current-account deficit may widen this year as a percentage of gross domestic product, Moody's Investors Services Inc. analyst Kristen Lindow said in an interview on July 23. Last year's deficit was 7.9 percent of GDP.
The lira gained as much as two percent against the dollar in June and stood 8 percent higher than its Jan. 1 value at the end of June.
Current-Account Gap
Rising energy costs and a possible increase in demand for imported consumer goods means an increase in the current-account deficit in the second half of 2007 would ``not be surprising,'' the central bank said on July 27.
The gap reached a record $31.6 billion in 2006, 37 percent up on the previous year. It narrowed in May for the third consecutive month and stood at $31 billion in the 12 months to May.
Concern for the country's ability to finance the deficit led to a slump in the value of the lira in May last year. The central bank responded by increasing its benchmark lending rate by 4.25 percentage points to 17.5 percent in three moves in June and July last year.
Monday, July 30, 2007
Blog Under Construction
Please note I am simply playing round with this site at the present time. The Blog proper will start in the near future.
Wednesday, July 25, 2007
Turkey's Balancing Act
Well, the financial markets are happy at any rate. The Turkish stock market jumped 5% on Monday while the lira closed at a two-year high against the US dollar. Tayyip Erdogan (leader of the victorious Justice and Development party, the AKP) was also a happy man: “The new government will bring peace and stability" he informed us. I guess we had all better hope he is right.
Indeed there are plenty of reasons for satisfaction with the outcome of Sunday's elections in Turkey, and despite the very large number of outstanding problems still to be addressed, things could, at the end of the day, have turned out far, far worse. However, given the complex and tangled web of relations which surround Turkey's political life right now, there are also reasons, and plenty of them, for being at least a little nervous.
Before getting down to the nitty gritty, it is worth noting that in general general press and internet coverage of the Turkish election has been quite systematic and fairly informative. Manuel Alvarez of Election Resources has a summary of the results here, and a background briefing here. Among the many articles that caught my eye M K Bhadrakumar had a very insightful piece in the Asia Times over the weekend, with the rather provocative title of Turkey's Election has no losers (I will return to this below) , Bloomberg in the days before the election was full of information about how Tayyip Erdogan was busy flooding rural Anatolia - the AKP's heartland - with water and public money. Back in June the Financial Times had a useful background article on the city of Sivas, onetime stronghold of the main opposition Republican People’s party (CHP).
So now for the "nitty gritty". Well, basically, as we emerge from the initial bout of post-election fever there would seem to be three important issues facing the new government:
i) The Turkish Presidency
ii) Negotiations with the EU
iii) The Kurdish issue, and the tense relations which exist with the North of Iraq
The most immediate challenge facing Prime Minister Recep Tayyip Erdogan is clearly the need to settle the choice of a new state president. After all, it was the Turkish Parliament's earlier rejection of Erdogan's candidate, Foreign Minister Abdullah Gul, which precipitated the elections in the first place. Supporters of the secularist opposition party CHP distrusts Gul, a practicing Muslim whose wife attracts a lot of attention due to the fact that she wears a head scarf in public. For supporters of the CHP - and in increased measure for supporters of the right wing Nationalist Action Party (MHP) - this is seen as a symbol of Islamic militancy. If Erdogan were simply to resubmit Gul's name this could well lead to a new deadlock, as the AKP lacks the two-thirds majority needed to push the nomination through, and even if they did have the necessary majority, any move to impose a president without some sort of consensus with the CHP would be pretty divisive.
However, there have been signs that the AKP leadership, fresh from the electoral triumph is eager to avoid yet another confrontation. "God willing, we will end the presidential election process without giving rise to any tensions,'' Prime Minister Recep Tayyip Erdogan was reported as saying after leaving his meeting on Monday with Turkey's current president, Ahmet Necdet Sezer.
Which brings us more or less directly to the second challenge facing the new Turkish governmernt, the need to continue the process of legal and administrative reform which will equip Turkey for European Union membership. Noises coming out of Brussels this week have already signaled the desire there that Ankara regain the lost momentum associated with Turkey's accession process. EU Enlargement Commissioner Olli Rehn is widely quoted as saying that he expects a new Turkish government to be formed quickly and that "It is essential that the new government will relaunch the legal and economic reforms with full determination and concrete results". In fact the EU froze talks with Turkey last December on eight of the 35 policy chapters which form the basis of the accession process, largely because of Ankara's reluctance to open ports and airspace to Cypriot ships and planes. It is to be hoped that the Cyprus situation is one which the new government in Turkey will now feel freer to address more directly and more constructively.
In fact both Brussels and Ankara have been busy trying to keep talks going on a largely formal and technical level in the meantime (by negotiating on the four chapters which have already been opened). One point of interest in the statements being made by Commissioner Rehn is the way they reveal the complex web of issues we are all involved in here, since he explicitly expressed the hope that Turkey will make "concrete progress" on freedom of expression and religion. Now this may be seen as being a reference to a whole battery of questions (to the Pamuk case for example, or to the case of politicians in Western Turkey who face legal threats for the mere fact that they argue for a new federal structure) but it could be read as saying that the EU, in a country where the majority of the population are of the muslim faith, would find nothing strange about the wife of a President wearing a headscarfe, indeed this could be thought to be only normal and proper in the same way as the pretender to becoming British head of state might be at one and the same time divorced and nominal head of the Church of England. In other words religious freedom can mean a lot of things, although this reality is likely to do little to mollify many of the supporters of the CHP.
So what we would seem to have here are the seeds of what essentially is quite a fragile dialogue, where in fact the two parties at the end of the day actually need each other. On the one hand the EU needs Turkey, in the sense that our idea of religious tolerance should expand to include the idea that there is nothing wrong, or out of order, with the wife of the President of a member state wearing a muslim headscarfe, and the AKP need support from within the EU in order to "anchor expectations" among those who come from the secular tradition that the reform process as it is evolving in Turkey is not set straight down the road towards the creation of an Islamic Republic.
The third major challenge facing the new Erdogan government is, of course, the Kurdish question, and the delicate relations with the new autonomous region in the North of Iraq. Even here there are some promising signs. For the first time in many years, the new parliament will include deputies with explicitly Kurdish affiliations. These politicians will have the rather onerous task of persuading the rest of Turkey that the Kurdish conflict can be settled by dialogue and negotiation.Obviously the whole situation is complicated by the emergence of the autonomous Kurdish region in northern Iraq, which many Turks fear may spur increasing Turkish Kurdish demands for eventual independence. Turkish troops are currently massed along the Iraqi border, in preparation for a possible incursion in pursuit of guerrillas based there. But Tayyip Erdogan is unlikely to bend to the military here - in particular since he takes the view that that the Turkish military has already made 29 incursions into Iraqi territory since the 1990s, without dislodging the guerrillas - and is far more likely to use his sweeping election victory to open a dialogue with the Kurdish insurgents. Part of the reasoning behind this assessment lies in the little detail that the AKP scored a remarkable victory in the Kurdish south-east itself, doubling their support in these largely Kurdish areas, and obtaining an absolute majority of the vote there (52%). The main Kurdish party inside Turkey, the DTP, took 23 seats, putting it in the new parliament for the first time since 1994. The first indications are not discouraging. According to the Toronto Star, a "jubilant" Aysel Tugluk, one of the 23 Kurdish politicians who won parliamentary seats, declared from the Kurdish city of Diyarbakir that "We want to turn a new page...We want to start a process of dialogue and reconciliation in parliament to resolve the (Kurdish) problem......We will not be a source of tension ... We will act in a spirit of tolerance and understanding."
Problems and possibilities abound. On the one hand, given the fact the AKP lacks the desired two thirds majority, the DTP deputies could offer an interesting point of support (shades of the Spanish PSOE, and its recent alliance with the "separaratist" Esquerra Republicana de Catalunya - ERC - here). But any such "alliance" would be fraught with danger, since the DTP is not the Catalan pacifist ERC, but far more akin to the outlawed Basque Batasuna, insofar as the DTP is widely considered to be the political wing of the PKK. However, the long term stability and prosperity of the Turkish state passes down the road of resolving once and for all the "Kurdish issue", and Erdogan well knows this. So we should expect to see some sort of tightrope balancing act emerging, and again the EU can well play an active and constructive role here.
Of course the other part of the picture here is the regional government of Kurdistan, which is situated just to the south of Turkey's border. Officially, Turkey does not recognise the government led by Massoud Barzani. But there have been continuing rumours of attempts to set up a secret meeting between the Turkish foreign minister, Abdullah Gul, and Barzani, who it might be useful to remember, when he was leading the Kurdish insurgency against Saddam Hussein, was in the habit of travelling on a Turkish diplomatic passport. There are already signs that this kind of meeting may now officially take place. Clearly the Turkish army has emerged from the elections rather bruised and battered, and they are unlikely to be in the mood for a highly risky gamble, and in particular one which would meet with virtually universal condemnation and disapproval. Indeed as M K Bhadrakumar argues, in the above cited article, there may be reasons for doubting that the invasion threat was ever more than politically oriented sabre rattling:
The interest of the Turkish military in the outcome of these elections are also wider than simply political ones. As Vincent Boland noted in the Financial Times, there are also economic interests at stake:
All of this lead Manuel Alvarez (in e-mail comment) to point out to me that, rather than a simple mapping of the Spanish transition process, events in Turkey have an additional Mexican "feel" about them:
So, in conclusion, are there grounds for optimism? I think so, and many of these are economic ones. The Turkish economy has been booming in recent years. In the past five years, growth in gross domestic product has exceeded 7% annually, and exports more than tripled to over $95 billion for the year ended June 30. Despite the recent "correction blip" last summer, Turkey would appear to have remained on course, and Morgan Stanley's Sehan Cevik is even arguing that Turkey has the potential to become a trillion dollar economy in the next ten years. Against this background the AKP would seem to have the cards well stacked in their favour, and the old corporatist elements in the Military and the CHP would appear to lack any significant external support, either strategically or financially.
Stronger growth hasn't however substantially reduced Turkey's unemployment rate. Unemployment has remained stubbornly high, and is currently running at about 10% according to the Turkish Statistical Institute. And in the cities, where hundreds of thousands of rural workers flock each year in search of jobs, unemployment was at 12.6% in 2006. So far the voters have stayed with the AKP, but this patience will reach a limit, and in this sense doing something to substantially raise the living standards of its electoral base will become an important priority of the AKP in the coming years, and it is this need which can constitute a powerful leverage instrument for those who know how to use it.
Among these we are unlikely, it seems, to find M. Nicholas Sarkozy, who interestingly enough would seem to share far more with the thinking of the trounced CHP than ever he does with the so-called neo-liberal AKP. Sarkozy has put the whole Turkish entry process into question, and has most notably been widely quoted as saying that Turkey has "no place" in Europe. So was the defeat for the CHP also the first substantial defeat for Sarkozy as French President? Well lets certainly hope so. Clearly there are indications from the statements of people like Rehn that calmer heads will prevail, and it is not without interest that Portugal, who holds the current EU presidency has been a staunch supporter of Turkey's EU ambitions, and has expressly stated the aim of moving ahead with negotiations during their coming six-month term. Could we be seeing more than one party onto a sound thrashing here? Definitely one to watch.
Indeed there are plenty of reasons for satisfaction with the outcome of Sunday's elections in Turkey, and despite the very large number of outstanding problems still to be addressed, things could, at the end of the day, have turned out far, far worse. However, given the complex and tangled web of relations which surround Turkey's political life right now, there are also reasons, and plenty of them, for being at least a little nervous.
Before getting down to the nitty gritty, it is worth noting that in general general press and internet coverage of the Turkish election has been quite systematic and fairly informative. Manuel Alvarez of Election Resources has a summary of the results here, and a background briefing here. Among the many articles that caught my eye M K Bhadrakumar had a very insightful piece in the Asia Times over the weekend, with the rather provocative title of Turkey's Election has no losers (I will return to this below) , Bloomberg in the days before the election was full of information about how Tayyip Erdogan was busy flooding rural Anatolia - the AKP's heartland - with water and public money. Back in June the Financial Times had a useful background article on the city of Sivas, onetime stronghold of the main opposition Republican People’s party (CHP).
So now for the "nitty gritty". Well, basically, as we emerge from the initial bout of post-election fever there would seem to be three important issues facing the new government:
i) The Turkish Presidency
ii) Negotiations with the EU
iii) The Kurdish issue, and the tense relations which exist with the North of Iraq
The most immediate challenge facing Prime Minister Recep Tayyip Erdogan is clearly the need to settle the choice of a new state president. After all, it was the Turkish Parliament's earlier rejection of Erdogan's candidate, Foreign Minister Abdullah Gul, which precipitated the elections in the first place. Supporters of the secularist opposition party CHP distrusts Gul, a practicing Muslim whose wife attracts a lot of attention due to the fact that she wears a head scarf in public. For supporters of the CHP - and in increased measure for supporters of the right wing Nationalist Action Party (MHP) - this is seen as a symbol of Islamic militancy. If Erdogan were simply to resubmit Gul's name this could well lead to a new deadlock, as the AKP lacks the two-thirds majority needed to push the nomination through, and even if they did have the necessary majority, any move to impose a president without some sort of consensus with the CHP would be pretty divisive.
However, there have been signs that the AKP leadership, fresh from the electoral triumph is eager to avoid yet another confrontation. "God willing, we will end the presidential election process without giving rise to any tensions,'' Prime Minister Recep Tayyip Erdogan was reported as saying after leaving his meeting on Monday with Turkey's current president, Ahmet Necdet Sezer.
Which brings us more or less directly to the second challenge facing the new Turkish governmernt, the need to continue the process of legal and administrative reform which will equip Turkey for European Union membership. Noises coming out of Brussels this week have already signaled the desire there that Ankara regain the lost momentum associated with Turkey's accession process. EU Enlargement Commissioner Olli Rehn is widely quoted as saying that he expects a new Turkish government to be formed quickly and that "It is essential that the new government will relaunch the legal and economic reforms with full determination and concrete results". In fact the EU froze talks with Turkey last December on eight of the 35 policy chapters which form the basis of the accession process, largely because of Ankara's reluctance to open ports and airspace to Cypriot ships and planes. It is to be hoped that the Cyprus situation is one which the new government in Turkey will now feel freer to address more directly and more constructively.
In fact both Brussels and Ankara have been busy trying to keep talks going on a largely formal and technical level in the meantime (by negotiating on the four chapters which have already been opened). One point of interest in the statements being made by Commissioner Rehn is the way they reveal the complex web of issues we are all involved in here, since he explicitly expressed the hope that Turkey will make "concrete progress" on freedom of expression and religion. Now this may be seen as being a reference to a whole battery of questions (to the Pamuk case for example, or to the case of politicians in Western Turkey who face legal threats for the mere fact that they argue for a new federal structure) but it could be read as saying that the EU, in a country where the majority of the population are of the muslim faith, would find nothing strange about the wife of a President wearing a headscarfe, indeed this could be thought to be only normal and proper in the same way as the pretender to becoming British head of state might be at one and the same time divorced and nominal head of the Church of England. In other words religious freedom can mean a lot of things, although this reality is likely to do little to mollify many of the supporters of the CHP.
So what we would seem to have here are the seeds of what essentially is quite a fragile dialogue, where in fact the two parties at the end of the day actually need each other. On the one hand the EU needs Turkey, in the sense that our idea of religious tolerance should expand to include the idea that there is nothing wrong, or out of order, with the wife of the President of a member state wearing a muslim headscarfe, and the AKP need support from within the EU in order to "anchor expectations" among those who come from the secular tradition that the reform process as it is evolving in Turkey is not set straight down the road towards the creation of an Islamic Republic.
The third major challenge facing the new Erdogan government is, of course, the Kurdish question, and the delicate relations with the new autonomous region in the North of Iraq. Even here there are some promising signs. For the first time in many years, the new parliament will include deputies with explicitly Kurdish affiliations. These politicians will have the rather onerous task of persuading the rest of Turkey that the Kurdish conflict can be settled by dialogue and negotiation.Obviously the whole situation is complicated by the emergence of the autonomous Kurdish region in northern Iraq, which many Turks fear may spur increasing Turkish Kurdish demands for eventual independence. Turkish troops are currently massed along the Iraqi border, in preparation for a possible incursion in pursuit of guerrillas based there. But Tayyip Erdogan is unlikely to bend to the military here - in particular since he takes the view that that the Turkish military has already made 29 incursions into Iraqi territory since the 1990s, without dislodging the guerrillas - and is far more likely to use his sweeping election victory to open a dialogue with the Kurdish insurgents. Part of the reasoning behind this assessment lies in the little detail that the AKP scored a remarkable victory in the Kurdish south-east itself, doubling their support in these largely Kurdish areas, and obtaining an absolute majority of the vote there (52%). The main Kurdish party inside Turkey, the DTP, took 23 seats, putting it in the new parliament for the first time since 1994. The first indications are not discouraging. According to the Toronto Star, a "jubilant" Aysel Tugluk, one of the 23 Kurdish politicians who won parliamentary seats, declared from the Kurdish city of Diyarbakir that "We want to turn a new page...We want to start a process of dialogue and reconciliation in parliament to resolve the (Kurdish) problem......We will not be a source of tension ... We will act in a spirit of tolerance and understanding."
Problems and possibilities abound. On the one hand, given the fact the AKP lacks the desired two thirds majority, the DTP deputies could offer an interesting point of support (shades of the Spanish PSOE, and its recent alliance with the "separaratist" Esquerra Republicana de Catalunya - ERC - here). But any such "alliance" would be fraught with danger, since the DTP is not the Catalan pacifist ERC, but far more akin to the outlawed Basque Batasuna, insofar as the DTP is widely considered to be the political wing of the PKK. However, the long term stability and prosperity of the Turkish state passes down the road of resolving once and for all the "Kurdish issue", and Erdogan well knows this. So we should expect to see some sort of tightrope balancing act emerging, and again the EU can well play an active and constructive role here.
Of course the other part of the picture here is the regional government of Kurdistan, which is situated just to the south of Turkey's border. Officially, Turkey does not recognise the government led by Massoud Barzani. But there have been continuing rumours of attempts to set up a secret meeting between the Turkish foreign minister, Abdullah Gul, and Barzani, who it might be useful to remember, when he was leading the Kurdish insurgency against Saddam Hussein, was in the habit of travelling on a Turkish diplomatic passport. There are already signs that this kind of meeting may now officially take place. Clearly the Turkish army has emerged from the elections rather bruised and battered, and they are unlikely to be in the mood for a highly risky gamble, and in particular one which would meet with virtually universal condemnation and disapproval. Indeed as M K Bhadrakumar argues, in the above cited article, there may be reasons for doubting that the invasion threat was ever more than politically oriented sabre rattling:
This is where outsiders run into a problem in appreciating the range of the Turkish military's political agenda. It is very simplistic to view the military's opposition to the AKP as the manifestation of a straightforward struggle between the forces of secularism and Islamism. The military's political agenda is multi-layered. It is so apparent that "terror" replaced "secularism" as the hot-button issue for the Turkish military, even as the election campaign got under way in recent weeks.
That's because the military saw that the only way the AKP could be stopped in its tracks, despite its impressive record of reform and economic growth, would be by making Erdogan appear to be "weak on terror". The Jerusalem Post commented, "Threatening to attack the PKK [Kurdish Workers' Party] in northern Iraq has [proved] a powerful propaganda tool for the Turkish military ... the military has pushed security concerns to the forefront in order to reinforce an image of the AKP as indecisive and soft on terrorism and to benefit the nationalist and secular parties with which they have close ties." The military's muscular intervention in the political scene in the past few weeks actually generated electoral support for the ultra-conservative MHP.
The interest of the Turkish military in the outcome of these elections are also wider than simply political ones. As Vincent Boland noted in the Financial Times, there are also economic interests at stake:
There is no question that the military has a huge stake in the outcome of this election, for political, ideological, and even commercial reasons. Its huge economic interests, from automotive to insurance, held through the armed forces pension funds, are a pillar of the secular business establishment.
All of this lead Manuel Alvarez (in e-mail comment) to point out to me that, rather than a simple mapping of the Spanish transition process, events in Turkey have an additional Mexican "feel" about them:
In many ways, it seems to me that Turkey is more like Mexico, which underwent a revolution around the same time as Turkey, featuring - like Turkey's - a strong secularist (or if you will, anti-religious) component, although in both countries there is a large underclass that has remained fairly religious, official policies notwithstanding. In that regard, Erdogan's AKP is not entirely unlike Mexico's National Action Party (PAN) - which regards itself as a Christian Democratic party.
To be certain, there are major differences: Mexico's PRI remained in office for half a century after CHP was voted out of power in Turkey, the Mexican armed forces have played no role in the political process for a long time, there's no major far-right party, and the Mexican government came to terms with the Roman Catholic Church in the last years of PRI rule (an event made possible by the transformation of the Church in the years following the Second Vatican Council, which contributed to defuse the old Church-state conflict in Spain as well).
So, in conclusion, are there grounds for optimism? I think so, and many of these are economic ones. The Turkish economy has been booming in recent years. In the past five years, growth in gross domestic product has exceeded 7% annually, and exports more than tripled to over $95 billion for the year ended June 30. Despite the recent "correction blip" last summer, Turkey would appear to have remained on course, and Morgan Stanley's Sehan Cevik is even arguing that Turkey has the potential to become a trillion dollar economy in the next ten years. Against this background the AKP would seem to have the cards well stacked in their favour, and the old corporatist elements in the Military and the CHP would appear to lack any significant external support, either strategically or financially.
Stronger growth hasn't however substantially reduced Turkey's unemployment rate. Unemployment has remained stubbornly high, and is currently running at about 10% according to the Turkish Statistical Institute. And in the cities, where hundreds of thousands of rural workers flock each year in search of jobs, unemployment was at 12.6% in 2006. So far the voters have stayed with the AKP, but this patience will reach a limit, and in this sense doing something to substantially raise the living standards of its electoral base will become an important priority of the AKP in the coming years, and it is this need which can constitute a powerful leverage instrument for those who know how to use it.
Among these we are unlikely, it seems, to find M. Nicholas Sarkozy, who interestingly enough would seem to share far more with the thinking of the trounced CHP than ever he does with the so-called neo-liberal AKP. Sarkozy has put the whole Turkish entry process into question, and has most notably been widely quoted as saying that Turkey has "no place" in Europe. So was the defeat for the CHP also the first substantial defeat for Sarkozy as French President? Well lets certainly hope so. Clearly there are indications from the statements of people like Rehn that calmer heads will prevail, and it is not without interest that Portugal, who holds the current EU presidency has been a staunch supporter of Turkey's EU ambitions, and has expressly stated the aim of moving ahead with negotiations during their coming six-month term. Could we be seeing more than one party onto a sound thrashing here? Definitely one to watch.
In the Turkish Heartland
From Bloomberg:
Erdogan Floods Turkish Heartland With Development Aid
July 19 (Bloomberg) -- In the Turkish town of Afsar, a new pipeline brings water from a nearby mountain. Farmer Suleyman Er says it has transformed his life.
The seven-kilometer (4.3-mile) pipe, finished two months ago, symbolizes the way Prime Minister Recep Tayyip Erdogan is putting development at the center of his strategy to keep power in July 22 elections.
While Erdogan's rivals court secular, more affluent, urban Turks by stressing suspicions about his Islamic background, the prime minister is pinning his hopes on the conservative, religious voters in Turkey's rural areas and shanty towns. Many of these voters say they've never had it so good.
``Water means life, and thanks to the prime minister, ours is getting better,'' Er, 60, said in an interview at a coffee house in Afsar, which nestles on the arid plains of Turkey's Anatolian heartland, 550 kilometers southeast of Istanbul. ``Arguments over Islam and ideology just won't get us anywhere.''
Erdogan's Justice and Development Party, which is rooted in a movement outlawed in 1998 for mixing religion with politics, called early elections after the army, which regards itself as the guardian of the modern, secular Turkish state, objected to his Islamist-leaning candidate for president. Erdogan, 53, says that while Justice is conservative and Muslim, it bases its policies on democracy and economic development rather than ideology.
A Road and a School
Afsar, a town of 5,000 farmers and laborers who typically earn less than half the national yearly average wage of $5,500, has received about 2.7 million liras ($2 million) over the past two years to build the water pipeline, a 20-kilometer road to a nearby highway and the town's first-ever high school.
The aid to Afsar is part of a wider government strategy to modernize the Anatolian heartland, where Erdogan's secular rivals have traditionally held sway. The government has spent $3.5 billion on the program in the past three years.
``Villages are now using washing machines for the very first time because of these projects,'' Nihat Ergun, the deputy chief of Justice responsible for local government, said in a telephone interview. ``We are giving people a better standard of living in places where water systems and roads have never existed.''
Turkey's economy expanded for 21 straight quarters, the longest period of uninterrupted growth in the nation's history, allowing the government to increase spending on such projects. Income per person has more than doubled since Justice took power in November 2002, while unemployment has remained at about 10 percent even as 1 million teenagers have joined the workforce each year.
A Lead in the Polls
A Genar poll carried out July 9-17 gave Justice 40 percent support, more than the 34 percent it won in 2002 and enough to secure between 297 and 310 of the 550 seats in parliament. The Republican People's Party, Justice's nearest rival, had about 21 percent. A Konda poll conducted July 14-15 found 48 percent support for Justice and 19.5 percent for the Republicans.
``Turkish voters seem to think that no other party can deal with issues such as unemployment, agricultural dislocation and inequality between the haves and have-nots,'' Mark Parris, U.S. ambassador to Turkey from 1997 to 2000, said in an interview in Washington.
Erdogan's efforts aren't limited to the countryside: His party is also targeting less affluent city-dwellers. In the capital of Ankara, the Justice-controlled municipality provides more than 500,000 of the city's 4 million inhabitants with 60 kilograms (132 pounds) of food and household supplies each a year at a cost of 200 million liras. Most of the city's budget comes from national-government transfers to local administrations, which more than doubled last year to 6 billion liras.
Backtracking
The Republicans accuse Erdogan of using the free handouts to buy support for an Islamist agenda. Over the past five years, Justice, under pressure from the Republicans and President Ahmet Necdet Sezer, backtracked from plans to outlaw adultery and to move bars from city centers.
``Don't sell your votes for free wheat and rice,'' Republican leader Deniz Baykal told voters at a rally in the southern city of Igdir on July 17. ``Turkey is at an important crossroads.'' Erdogan, a graduate of a school that trains Islamic clergy, pledges allegiance to Turkey's secular principles.
Justice is focusing on Ankara's poorest neighborhood, Mamak, where three-quarters of the 600,000 inhabitants live in illegal squatter settlements. Such dwellings have ballooned in the past two decades as millions of people moved to cities from the countryside to seek better standards of living.
Apartment Blocks
Since Justice came to power, Mamak has been the focus of a 300 million-lira project to tear down the illegal houses and replace them with modern apartment blocks with daycare facilities and children's playgrounds.
``Some people in Ankara are surviving purely because of the aid we provide,'' Avni Kavlak, an aide to Mayor Melih Gokcek, said in a telephone interview. ``Otherwise, there would be a social explosion.''
Selva Gur, 37, wears the Islamic headscarf banned in government buildings, hand-sews cotton and silk garments at home to help put her two children through school. She is one of hundreds of Mamak residents who queue up each morning for free bread delivered by Gokcek's trucks.
``Justice is giving priority to economic development so my family's vote is with them,'' Gur said. ``Living standards are most important, not ideology.''
Erdogan Floods Turkish Heartland With Development Aid
July 19 (Bloomberg) -- In the Turkish town of Afsar, a new pipeline brings water from a nearby mountain. Farmer Suleyman Er says it has transformed his life.
The seven-kilometer (4.3-mile) pipe, finished two months ago, symbolizes the way Prime Minister Recep Tayyip Erdogan is putting development at the center of his strategy to keep power in July 22 elections.
While Erdogan's rivals court secular, more affluent, urban Turks by stressing suspicions about his Islamic background, the prime minister is pinning his hopes on the conservative, religious voters in Turkey's rural areas and shanty towns. Many of these voters say they've never had it so good.
``Water means life, and thanks to the prime minister, ours is getting better,'' Er, 60, said in an interview at a coffee house in Afsar, which nestles on the arid plains of Turkey's Anatolian heartland, 550 kilometers southeast of Istanbul. ``Arguments over Islam and ideology just won't get us anywhere.''
Erdogan's Justice and Development Party, which is rooted in a movement outlawed in 1998 for mixing religion with politics, called early elections after the army, which regards itself as the guardian of the modern, secular Turkish state, objected to his Islamist-leaning candidate for president. Erdogan, 53, says that while Justice is conservative and Muslim, it bases its policies on democracy and economic development rather than ideology.
A Road and a School
Afsar, a town of 5,000 farmers and laborers who typically earn less than half the national yearly average wage of $5,500, has received about 2.7 million liras ($2 million) over the past two years to build the water pipeline, a 20-kilometer road to a nearby highway and the town's first-ever high school.
The aid to Afsar is part of a wider government strategy to modernize the Anatolian heartland, where Erdogan's secular rivals have traditionally held sway. The government has spent $3.5 billion on the program in the past three years.
``Villages are now using washing machines for the very first time because of these projects,'' Nihat Ergun, the deputy chief of Justice responsible for local government, said in a telephone interview. ``We are giving people a better standard of living in places where water systems and roads have never existed.''
Turkey's economy expanded for 21 straight quarters, the longest period of uninterrupted growth in the nation's history, allowing the government to increase spending on such projects. Income per person has more than doubled since Justice took power in November 2002, while unemployment has remained at about 10 percent even as 1 million teenagers have joined the workforce each year.
A Lead in the Polls
A Genar poll carried out July 9-17 gave Justice 40 percent support, more than the 34 percent it won in 2002 and enough to secure between 297 and 310 of the 550 seats in parliament. The Republican People's Party, Justice's nearest rival, had about 21 percent. A Konda poll conducted July 14-15 found 48 percent support for Justice and 19.5 percent for the Republicans.
``Turkish voters seem to think that no other party can deal with issues such as unemployment, agricultural dislocation and inequality between the haves and have-nots,'' Mark Parris, U.S. ambassador to Turkey from 1997 to 2000, said in an interview in Washington.
Erdogan's efforts aren't limited to the countryside: His party is also targeting less affluent city-dwellers. In the capital of Ankara, the Justice-controlled municipality provides more than 500,000 of the city's 4 million inhabitants with 60 kilograms (132 pounds) of food and household supplies each a year at a cost of 200 million liras. Most of the city's budget comes from national-government transfers to local administrations, which more than doubled last year to 6 billion liras.
Backtracking
The Republicans accuse Erdogan of using the free handouts to buy support for an Islamist agenda. Over the past five years, Justice, under pressure from the Republicans and President Ahmet Necdet Sezer, backtracked from plans to outlaw adultery and to move bars from city centers.
``Don't sell your votes for free wheat and rice,'' Republican leader Deniz Baykal told voters at a rally in the southern city of Igdir on July 17. ``Turkey is at an important crossroads.'' Erdogan, a graduate of a school that trains Islamic clergy, pledges allegiance to Turkey's secular principles.
Justice is focusing on Ankara's poorest neighborhood, Mamak, where three-quarters of the 600,000 inhabitants live in illegal squatter settlements. Such dwellings have ballooned in the past two decades as millions of people moved to cities from the countryside to seek better standards of living.
Apartment Blocks
Since Justice came to power, Mamak has been the focus of a 300 million-lira project to tear down the illegal houses and replace them with modern apartment blocks with daycare facilities and children's playgrounds.
``Some people in Ankara are surviving purely because of the aid we provide,'' Avni Kavlak, an aide to Mayor Melih Gokcek, said in a telephone interview. ``Otherwise, there would be a social explosion.''
Selva Gur, 37, wears the Islamic headscarf banned in government buildings, hand-sews cotton and silk garments at home to help put her two children through school. She is one of hundreds of Mamak residents who queue up each morning for free bread delivered by Gokcek's trucks.
``Justice is giving priority to economic development so my family's vote is with them,'' Gur said. ``Living standards are most important, not ideology.''
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