The Great Debate UK
The Turkish government has been in the news for all of the wrong reasons in recent weeks. Corruption scandals, accusations of a potential coup and fears that the government is trying to erode the independence of the judiciary have led to widespread protests. Prime Minister Erdogan’s reputation at home has undoubtedly been eroded in recent months; however the bad news could be spreading further afield.
Financial markets are a good gauge of international sentiment towards a country and right now they are dumping Turkish assets by the bucket load. The Turkish lira plunged to another record low against the US dollar this week and the Istanbul index has bucked the global trend and has fallen nearly 20% in the past 12 months.
The IMF recently published a note on how Turkey can try and reduce its increasing financial imbalances, which threaten its growth. When the IMF is writing blogs on how a country can improve, you know it means business. While Turkey isn’t exactly in bailout territory, its 10-year government bond yield is above 10%, which is higher than Greece’s 7.70%.
The post on the IMF blog entitled “Turkey: how to boost growth without increasing imbalances”, suggests that raising the domestic savings rate, both private and public, becomes a priority as this would lower Turkey’s dependence on external financing. This is important as tapering by the Federal Reserve can hurt countries like Turkey as they rely on external financing (and cheap money from central banks like the Fed) to fund their deficits. Practical steps to try and boost the savings rate include more incentives for pension savings and more ambitious public savings targets over the next few years, according to the post.
from The Great Debate:
You may have thought the Geneva deal struck last month between Iran and the P5+1 nations (the five permanent members of the United Nations Security Council plus Germany) was a sweet one for Tehran -- getting billions in sanctions relief in exchange for mere promises to halt its nuclear program.
But Turkey may be an even bigger winner. It just needs to open its doors and wait for Iranian funds to pour in.
from David Rohde:
Alper, a 26-year-old Turkish corporate lawyer, has benefited enormously from Prime Minister Recep Tayyip Erdogan’s rule. He is one of millions of young Turks who rode the country’s economic boom to a lifestyle his grandparents could scarcely imagine.
from The Great Debate:
The crisis in Syria and the confrontation with Iran over its nuclear program have highlighted the renewed importance of one of the oldest and most enduring relationships of the United States: its alliance with Turkey. The U.S.-Turkey partnership was forged during the Korean conflict and the Cold War, and Washington and Ankara stood shoulder-to-shoulder to confront the Soviet challenge. Now, the two countries have an opportunity to work together to help shape the Middle East, ensure the stability of Iraq, contain Iranian ambitions, end the Assad regime in Syria and ensure reliable energy supplies to Europe.
In the past decade, Turkey has become the 17th-largest economy in the world and undertaken far-reaching political reforms. It has gone from being a cautious actor in international affairs to being an influential player in its neighborhood and beyond. In a new Council on Foreign Relations report, a bipartisan panel we chaired makes the case that the two countries should define a new partnership of close coordination in confronting today’s challenges.
This Thursday, Turkey's new central bank governor Erdem Basci will chair his first monetary policy meeting. What can we expect from the man who is seen now as the architect of the country's novel monetary policy? Most analysts predict there will be no change this month to interest rates and banks' reserve requirement ratios. But could the bank, which shocked markets with an out-of-the-blue rate cut in December and a big further rise in short-term RRRs last month, throw another curveball?
ING Bank is among those which believes the central bank could again surprise markets this week. Using Turkish banks' net off-balance sheet currency positions as a proxy, ING analyst Sengul Dagdeviren reckons short-term capital inflows are on the rise again. Banks' net off-balance sheet FX positions had halved between Nov 5 to March 4 to just over $12 billion, as the central bank drastically widened the gap between the overnight borrowing and lending rates -- a move that discouraged short-term swap positions. But these positions have risen back over $21 billion in the month to 8 April, Dagdeviren says, noting this coincides with a 5 percent gain in the Turkish lira against the dollar.
Part of the problem trying to figure out what Egypt's Muslim Brotherhood or Tunisia's Ennahda party would do if they got into any future power structure in their countries is knowing what kind of Islamists they are. The label "Islamist" pops up frequently these days, in comments and warnings and (yes) news reports, but the term is so broad that it even covers groups that oppose each other. Just as the Muslim world is not a bloc, the Islamist world is not a bloc.
If President Hosni Mubarak bows to the clamor of the street and goes, Egyptians and other Arabs seeking to turn a page on autocratic government may look at Turkey for some clues on marrying Islam and democracy.
from Davos Notebook:
Jim O'Neill, the Goldman Sachs economist who coined the term BRICs back in 2001, is adding four new countries to the elite club of emerging market economies. But does his new edifice have the same solid foundations?
In future, the BRIC economies of Brazil, Russia, China and India will be merged with those of Mexico, Indonesia, Turkey and South Korea under the banner “growth markets,” O'Neill told the Financial Times.
from Afghan Journal:
Afghan President Hamid Karzai has supported a proposal to open an office for the Taliban in a third country such as Turkey. Such a move could help facilitate talks with the insurgent group on reconciliation and reintegration of members back into society, and Kabul was happy for Turkey to be a venue for such a process, he said last week, following a trilateral summit involving the presidents of Turkey and Pakistan.
The question is while a legitimate calling card for the Taliban would be a step forward, the insurgent group itself shows no signs yet of stepping out of the shadows, despite the best entreaties of and some of his European backers. The Taliban remain steadfast in their stand that they won't talk to the Afghan government unless foreign troops leave the country. More so at the present time when U.S. commander General David Petraeus has intensified the battle against them and the Taliban have responded in equal measure.
Muslim creationism is back in the news. There's been a spate of articles in the U.S. and British press recently about the spread of this scripture-based challenge to Darwinian evolution among Muslims, mostly in the Middle East but also in Europe. The fact that some Muslims have embraced creationism, a trademark belief of some conservative American Protestants, is not new. Reuters first wrote about it in 2006 -- "Creation vs. Darwin takes Muslim twist in Turkey" -- and this blog has run several posts on the issue, including an interview with Islam's most prominent creationist, Harun Yahya. What's new is that these ideas seem to be spreading and academics who defend evolution are holding conferences to discuss the phenomenon. (Photo: Portrait of Charles Darwin, 12 Feb 2009/Gordon Jack)
There are too many recent articles about Islamic creationism out there now to discuss each one separately, so I'll have to just link to them in the ... New York Times ... Washington Post ... Boston Globe ... Slate ... Guardian ... National ... Beliefnet ... ... Many of these articles highlight the role of Harun Yahya, the once secretive Istanbul preacher and publisher who has gone on a PR offensive in recent years and turned very media-friendly (as Steve Paulson describes in that Slate article). But as Michael Reiss, a London education professor and Anglican priest told the Guardian, "what the Turks believe today is what the Germans and British believe tomorrow. It is because of the mass movement of people between countries. These things can no longer be thought of as occurring in other countries."