Turkey trapped in the middle
Güven Sak, PhD
15 December 2012
Turkey’s economy is trapped in the middle because of the persistent mediocrity of our education, tax and judicial systems. The title should sound familiar. It may seem to you that Turkey today finds itself trapped in the middle in many respects. I, for one, hear it often these days: We are trapped in the middle of the Iranian crisis, not to even mention the one between Baghdad and Arbil. How about the crisis in Syria? Measures have been taken, Patriots are coming to the rescue. However, I would like to point out a distinction. In none of the above cases is Turkey uncomfortably sandwiched in a situation of its own making. We simply happen to have crisis-prone borders. I see only one case in which Turkey is caught in the middle due to its own choices - that is the economy, as you mi
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Interest rent is illicit. Is land rent licit?
Güven Sak, PhD
14 December 2012
I believe that Turkey has been deindustrializing due to this second rent economy era. One type of rentier went and one other type of rentier has appeared in Turkey. Each is based on different structural defects. Let’s recall: in the past, the inability to ensure fiscal discipline forced the public sector to borrow extensively and thus to pay high interest. Today, the strategy is to flip-flop zoning regulations and raise land value via state decisions. In the past, we used to buy securities and wait for returns, without actually making an effort. Today, we purchase land and wait for its price to rise. And it actually does rise. Profits today are as unearned as they used to be. Turkey did not tax interest revenue. Neither does it tax unearned income from land today. In the end, however, Turk
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Credit growth rate or interest rate?
Fatih Özatay, PhD
13 December 2012
Interest rate cuts will not have much influence on growth rate unless the upper limit of credit growth rate is increased. Assume that Turkey wants to enhance growth rate. Which option do you think it must go with: to lower interest rate while keeping credit growth rate constant or to raise credit growth rate slightly?
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‘German Patriots’ and ‘the five-star hotel operation’ for Syria
Nihat Ali Özcan, PhD
13 December 2012
The sponsorship needs of the Syrian opposition will test the medium-term capacity of intelligence organizations, armies, countries and alliances. The Turkish government seems to have guaranteed the deployment of the air defense systems it demanded from NATO. The missiles will most likely be deployed at the beginning of the new year. Germany, one of the countries that will supply the missiles, has so far been careful not to be too conspicuous with respect to the Syrian crisis. However, it accepted the NATO plan without any objections. Considering the fact that Prime Minister Recep Tayyip Erdoğan is on the outs with Chancellor Angela Merkel, it is interesting to see that there are no objections coming from Germany. Behind this silent agreement probably lies the desire of German so
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If you cannot protect the İnci Patisserie, you cannot maintain your industry
Güven Sak, PhD
11 December 2012
Those who are not trying to protect İnci Patisserie cannot be considered conservatives. A conservative without tradition is like meat-free sausage or milk-free yoghurt. I was born in Bursa in the second half of the 1960s. Every now and then, my family would go to Istanbul. During these short visits, we definitely would stop by the famous İnci Patisserie. I ate my first profiterole there in the first half of the 1970s. Now the news has come that İnci has been closed down, as part of the urban transformation project the government is carrying out in Beyoğlu. I believe that a country unable to protect İnci Patisserie is unable to protect its industry. If not taxed heavily, urban rent will wash away a country’s industry. The reason why Turkey moved off the list of the world’s industrial giants
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No surprises so far, but how about the fourth quarter?
Fatih Özatay, PhD
11 December 2012
Fourth quarter will not be substantially different from the third, which implies that fourth growth will bring slow growth rather than economic contraction. After all the speculations and rumors at this column, we finally learned the gross domestic product (GDP) figures for the third quarter. My speculation was that GDP growth in the third quarter will be lower than it was in the first and the second quarters. I was correct, but not precise: growth rate was even lower than what I forecasted: 1.6 percent against my forecast at 2.5 percent. Hence, in the first nine months of the year, Turkey’s GDP grew by 2.6 percent year-on-year.
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Abandoning the conventional: is it sustainable?
Fatih Özatay, PhD
08 December 2012
The CB’s new policy either did not contribute to the process or made a negligible contribution. The Central Bank of Turkey (CB) introduced a new monetary policy in October 2010. One pillar of the policy aimed to lower domestic credit growth by raising the reserves banks are obliged to keep at the CB. Required reserve ratio was raised starting in October 2010. The latest major interventions were in January and March 2011. The process ended with a limited raise that covered a few maturity types in April 2011. Before the introduction of the policy, credit growth rates had reached significantly high, particularly in the second and third quarters of 2010. For instance, average annual credit growth rate for lira loans was 34.9 percent in the third quarter of 2011. Nevertheless, the rates did not
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Why Turkey wants Kurdish oil
Güven Sak, PhD
08 December 2012
Diversification is always good, but regional turbulence makes Turkey even more interested in Kurdish oil and natural gas. There are two types of countries in the world – those in which you get to your email as soon as you turn on your smart phone at the airport and those in which you do not. Arbil’s sleek International Airport in northern Iraq puts its country in the first type. It is part of our civilization. The airport was modernized in 2010, by a Turkish construction company of course. That didn’t mean, however, that Turkey’s energy minister was welcome. Baghdad did not allow his private jet to land, preventing the minister from participating at an oil and gas conference in the city.
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What happened at TÜBA happens at CERN
Güven Sak, PhD
07 December 2012
Losing space of autonomy, TÜBA has become an element of administrative organization during the rule of the current government. Science does not like politics. Positive science has no ideology and abhors politics. Why? Scientists draw conclusions on the subjects they study through experiments or existing evidence and take sides in discussions on the basis of those conclusions. Politicians by definition take sides from the very beginning. They consider a given issue from the perspective of their side and fabricate evidence accordingly. Science researches; politics produce materials for debate. This is why it is a bad idea to leave decisions on science policy and R&D expenditures to politicians alone. Politics likes producing policy-based evidence while science likes designing evidence-b
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Even if the policy worked…
Fatih Özatay, PhD
06 December 2012
Credit growth rate started to decrease almost a year after the CB’s interventions and two quarters after the latest intervention
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