WarSclerotic

Turkey’s Tightrope Dance, Frontpage Magazine, Robert Ellis, May 26, 2017

Turkey’s economy is in the doldrums and foreign investors, not surprisingly, are heading for the door. Growth is stagnant, there is double-digit inflation and unemployment is rising, particularly among young people. There is desperate need for foreign capital to reduce the growing current account deficit, which is why Turkey has been badly hit by the drop in the number of foreign, particularly European visitors. Erdoğan’s vitriolic attack on various European countries, for example, accusing Germany of “Nazi methods” and calling the Dutch “Nazi remnants” and “fascists,” hasn’t helped either. 

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Turkey’s president Recep Tayyip Erdoğan, who was recently in Washington in search of “a new era” in Turkish-U.S. relations, was also out with the begging bowl. At a meeting with 40 prominent U.S. investors, Erdoğan urged them to increase investments in Turkey and shared recent developments regarding Turkey’s investment environment and economic agenda. What he did not share was the increasingly repressive environment that Erdoğan himself has created in search of absolute power.

But the true nature of Erdoğan’s regime did not go unnoticed when his bodyguards attacked a group of demonstrators, which seems to be a constant feature of the president’s foreign trips. Senator John McCain even suggested that the U.S. should “throw their ambassador the hell out.” Once safely home, Erdoğan reassured the Turkish Industry and Business Association (TÜSIAD) that the state of emergency, where he has ruled by decree since the failed coup last July, was no hurdle for business.

According to Erdoğan, Turkey is preparing for “a new leap in democracy,” but there are no signs that this is true. On the contrary, Turkey has plans to build 174 new prisons to accommodate the thousands who have been purged since last July. At the beginning of April Interior Minister Süleyman Soylu said that 113,260 had been detained and 47,155 had been arrested, including over 10,000 police officers, 7,631 from the military and 2,575 judges and prosecutors. These numbers have since increased, not to forget the 231 journalists who have been arrested. In addition, over 140,000 have been dismissed from public employment, so that they and their families are now ‘non-persons’ in the new Turkey.

Turkey’s economy is in the doldrums and foreign investors, not surprisingly, are heading for the door. Growth is stagnant, there is double-digit inflation and unemployment is rising, particularly among young people. There is desperate need for foreign capital to reduce the growing current account deficit, which is why Turkey has been badly hit by the drop in the number of foreign, particularly European visitors. Erdoğan’s vitriolic attack on various European countries, for example, accusing Germany of “Nazi methods” and calling the Dutch “Nazi remnants” and “fascists,” hasn’t helped either.

Turkey’s economy minister, Nihat Zeybekci, has launched a campaign involving 17 global companies to restore investor confidence in Turkey. Potential investors are invited to “Come to Turkey and discover your own story,” but given the political situation, a number of multinationals, for example, Switzerland’s Nestlé and the Swiss pharmaceutical group Novartis, are having second thoughts.

Three years ago, the president of TÜSIAD, Muharrem Yılmaz, warned: “A country where the rule of law is ignored, where the independence of regulatory institutions is tainted, where companies are pressured through tax penalties and other punishments, where rules on tenders are changed regularly, is not a fit country for foreign capital.” Erdoğan denounced Yılmaz as a traitor and he was forced to resign.

President Erdoğan will brook no opposition nor tolerate any criticism and now his control of the legislature and the judiciary has been reinforced by the constitutional amendments narrowly approved in April’s referendum. Since the failed coup 879 companies, including large conglomerates, have been seized  by the Turkish government and the assets of dozens of businessmen have been confiscated.

The security of any registered foreign investment should be guaranteed by the rule of law and according to the U.S.-Turkey Bilateral Investment Treaty (BIT), “Investments shall at all times be accorded fair and equitable treatment and shall enjoy full protection and security in a manner consistent with international law.”

However, as Işıl Karakaş, a Turkish judge who is also the vice-president of the European Court of Human Rights, has pointed out, Turkish judges are ignorant of international law. Instead, they wear “ideological glasses” and believe that protecting the state is their fundamental job.

In which case, a foreign investor who is a victim of fraud or other malfeasance stands little chance in a Turkish court. The only recourse is arbitration by the International Center for Settlement of Investment Disputes (ICSID] and legal fees which can amount to several million dollars.

Anti-American sentiment is prevalent in Turkey, as Erdoğan has claimed the abortive coup was not planned in Turkey but orchestrated abroad. He even accused CENTCOM’s commander General Joseph Votel and Director of National Intelligence James Clapper of siding with the plotters and told them: “Know your place.”

President Trump’s approval of the Pentagon’s plan to supply weapons to the Kurdish militia in northern Syria has not improved U.S.-Turkey relations, and Trump’s invitation to President Erdoğan was intended to paper over the cracks. It hardly had that effect, and now Trump is beleaguered by the appointment of Robert Mueller as special prosecutor. Back home, Erdoğan is confronted by an increasingly divided and unstable Turkey.

There is a Turkish proverb: iki cambaz bir ipte oynamaz (two acrobats can’t dance on the same tightrope). What remains to be seen is whether one or both will fall off.