Problems of change and security in Turkey’s Syria policy
Nihat Ali Özcan, PhD
23 May 2013
Before his visit to the U.S., Prime Minister Recep Tayyip Erdoğan stated that Syrian President Bashar al-Assad was using chemical weapons against the opposition. He believed this argument could convince U.S. President Barack Obama to engage in a limited military intervention. Now he seems to have understood that he won’t be able to change Obama’s Syria policy, which leaves out the possibility of military intervention.Although Erdoğan still hopes that al-Assad will be overthrown and the Baathist regime will be replaced, he realized this won’t happen fast and soon. Today the Syrian civil war is a problem for both foreign and domestic affairs. There are three elections in 2014, all prone to the effects of the Syrian problem.As the settlement of the Syrian conflict becomes more unlik
[More]
Our elephant now has company!
Güven Sak, PhD
21 May 2013
Today, the common problem of people rolling in dough is where to invest their money. Turkey paid off its debt to the IMF. Good news? It depends on your perspective. From that of politics, it is new material to serve up to the voters. In technical terms, it is not the most cautious attitude to pay off the lowest-cost debt of a country with a total debt stock of $85 billion. Following Fitch’s decision in December, Moody’s upgraded Turkey to the investment rating. Good news? Also depends on the perspective. Good news if you have a game plan or a sector strategy to attract foreign direct investments. If you are planning to carry on with the current court system and limited patent protection, you can only become a bigger object for portfolio investors in search of new prey. Let me tell you what
[More]
You only die once, but...
Fatih Özatay, PhD
21 May 2013
You only die once. The danger of this policy is that it might temporarily erode Turkey’s competitiveness. Low interest rate policy and generous liquidity injections of developed countries put developing countries including Turkey into big trouble. Turkey also has a special condition: it was upgraded to investment level by two different rating agencies, Fitch and Moody’s, which accelerated foreign fund inflows. This movement might be reversed on two conditions: first, if a crisis similar to that in Cyprus is recurs in Europe, fund inflows come to a halt. In fact, such a development might even lead to a net capital outflow. Fund inflows might be affected negatively also if the turmoil in Syria increasingly bounces to Turkey’s territories.
[More]
Does the CB need an alternative policy?
Fatih Özatay, PhD
18 May 2013
A second rating agency upgrading Turkey’s rating is a positive development concerning both the cost and volume of borrowing. Two positive developments we heard this week: Turkey paid off its debt to the IMF and Moody’s upgraded Turkey to the investment grade. Following Fitch, a second rating agency upgrading Turkey’s rating is a positive development concerning both the cost and volume of borrowing. Developed countries carry on with the low interest rate policies and quantitative easing. Latest, Japan joined the team. Over the last months, Turkey enjoyed high volumes of foreign capital inflow. The rating upgrade implies that inflows might accelerate in the period ahead, provided that the international risk appetite is not reversed.
[More]
Nous l’avons tant aimée, la révolution égyptienne
Güven Sak, PhD
18 May 2013
Moody’s upgraded Turkey to investment status this week. The same institution downgraded Egypt in March of this year for the sixth time since January 2011, the start of the revolution. That is why the Egyptian revolution nowadays reminds me of the title of Daniel Cohn-Bendit’s biography, roughly translated as “We loved it so much, the Revolution.” Cohn-Bendit did not deny his role in the Paris student revolt of 1968 when explaining his move to a more centrist political position. I wonder whether the Egyptians are of the same opinion when it comes to their revolution. It might have been good, but perhaps it is better to leave revolutionary zeal in the past. They’ve had their fun since January 2011. It’s time to get back to work.I get the same sense of frustration out of the new Pew
[More]
How is Manhattan able to preserve Central Park?
Güven Sak, PhD
17 May 2013
Turkey completed the first stage of the capital accumulation process two centuries after the US. Currently I am reading Helene Wecker’s one and only novel, The Golem and the Jinni. I have to say that it has been a delightful reading adventure. The story takes place in the second half of the nineteenth century. It is about the first immigrants to New York. While reading, I have realized that New York’s giant Central Park enters the story constantly, like one of the characters. Naturally, I have been wondering how Americans built and more importantly have preserved that giant park at the center of Manhattan Island, New York. After all, the park is located in one of the hottest spots of the world, probably worth 2500 dollars per square meter. How, I wondered. Let me tell you how.
[More]
Disequilibrium should not become the norm
Fatih Özatay, PhD
16 May 2013
In a country like Turkey, which has to choose between low growth and high current account deficit; what does it mean if interest rates are lower than inflation rate? The other day I chatted with an economist from Georgia. He had his PhD in the US and has been working there for a long time now. He worked in Georgia for a couple of years too. He complained that many economists in his country stuck to simplistic paradigms on many issues. Life was quite simple for them, he complained: leave it all to the market, cut tax rates and reduce the share of the state in the economy etc.
[More]
Perhaps avoiding multi-objective policies should be the objective
Fatih Özatay, PhD
14 May 2013
Short-term capital inflows have gradually increased, but exchange rate is not volatile. Real exchange rate has reached 121. Central banks that implement inflation targeting regimes enjoy a certain advantage. They have only one target to meet: the inflation target. But they focus not only on inflation, but on at least two indicators. On the one hand they try to ensure that inflation is close to the target and on the other hand they try to prevent any possible divergence of growth rate from the potential. Fulfilling the inflation target alone is not enough. They have to keep growth rate in check and reduce the interest rate if it is below the potential, for instance.
[More]
Please don’t forget Dilek Özçelik’s problem
Güven Sak, PhD
14 May 2013
Who do you think might want to prevent Turkey from becoming a high-tech economy? Just take a look at the parliament’s meeting minutes. I have never been able to forget something I once heard from a statesman: that the state is doing a thing well at the time being does not necessarily mean that thing is done right. A problem will transpire eventually, defects unveil. Take the current health policy and the public sector’s drug pricing policy. I have been calling it the legacy of the 1930s for a reason. Let me illustrate my argument with an example and then you decide.
[More]
The end of the beginning in the Kurdish Apertura
Güven Sak, PhD
11 May 2013
Remember the famous words of Winston Churchill right after the first victory against Nazi Germany in the 1942 Battle of Egypt at El Alamein? There was contentment in his voice at the Mansion House on Nov. 10, 1942, but he was also adamant in restraining his happiness. “This is not the end,” he said. “It is not even the beginning of the end, but it is, perhaps, the end of the beginning.” The military disengagement process that led to the withdrawal of Kurdistan Workers’ Party (PKK) armed elements from Turkey may just be the end of the beginning or perhaps the beginning of the beginning in the Kurdish Apertura, take two. It is definitely not the end itself. The current military disengagement process is part and parcel of the confidence building measures needed to start the Kurdish A
[More]
