What would be Iran’s reply to Turkey?
Nihat Ali Özcan, PhD
30 August 2012
It won’t be a surprise to see that Iran would give a start to its covert operations, waking its “sleeper cells” and activating its old networks. Turkish-Iranian relations have been facing the most strained days of the last decade. The clues of this tension can be seen from politicians’ explanations on both sides.
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Trying to avoid the damage
Fatih Özatay, PhD
30 August 2012
Government bonds and collateral the ECB received for similar operations will decrease in value and thus the ECB’s capital will shrink. Right after the 2001 crisis, the Central Bank of Turkey (CBT) purchased large amounts of government bonds. This operation was possible mainly because the government back then had initiated the stability program which focused on fiscal and monetary discipline and planned a substantial and favorable change in the banking sector. The program was supported by a large IMF funs with suitable terms. The ECB asks for guarantees
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Lessons to be learned from the Samsung versus Apple lawsuit
Güven Sak, PhD
28 August 2012
It is for a purpose that the justice system of the US is considered functional while that of South Korea is considered functional-to-be. Last week, the jury of an American court reached the verdict that South Korean Samsung was overly inspired by the products of American Apple Company. The jury, after comparing the patents and a group of products of both Apple and Samsung, ruled that Samsung shall pay around $1 billion in damages to Apple. Actually, it is not yet certain how Samsung will be affected by this trial exactly. Also, Samsung can appeal against the court’s ruling. But we still can make some observations on the innovation process on the basis of the lawsuit. I believe that a dysfunctional justice system is like a vampire, while a functional justice system is an indicator of invest
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Fearing the inevitable
Fatih Özatay, PhD
28 August 2012
In that case, Europe would fall into an even bigger trouble. If so, who will reimburse the damage done to the ECB? Why the European Central Bank (ECB) doesn’t initiate an operation similar to the overnight bond purchase the Central Bank of Turkey (CBT) carried out right after the introduction of the 2001 stability program? Why it cannot end the high interest rate phenomenon that was caused by high risk perception and has the potential to destroy the budget disciplining policies of countries including Italy and Spain?
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What can the ECB learn from the CBT?
Fatih Özatay, PhD
25 August 2012
The operation economist have for long been asking from the ECB resembles that the CBT had launched in 2001. One of the main pillars of the economic program initiated after the 2001 crisis was the operation to rescue and strengthen the banking sector. A significant part of the operation was targeted at public banks. During the 1990s, public banks extended loans to farmers or artisans, depending on the preference of the government, at rates significantly below the cost. Such support mechanisms following from natural political preferences should have been involved in the public budget. However, the loans were delivered via public banks, which therefore recorded high amounts of losses. In exchange for the loss, the Treasury did not transfer any funds to public banks. Therefore, public budget b
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South Africa beats Turkey in Palestine
Güven Sak, PhD
25 August 2012
Turkey is talking, South Africa acting for Palestine. That is an ongoing discussion between South Africa and Israel. I see two types of countries in the world: those who do things and those who just enjoy talking about things. When it comes to resistance against the Israeli occupation in Palestine, South Africa belongs to the first group, while Turkey is still in the second. As of now, I see South Africa acting on the ground while Turkey only does the talking. Let me explain.Last week, the South African government labeled Israeli exports originating from the factories in Israeli settlements in Palestine as products of the “occupied Palestinian territories.” This was designed as a disclosure rule to allow consumers to take their own ethical positions on the Israeli occupation. Isra
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Turkey is not at the center of the world
Güven Sak, PhD
24 August 2012
As the center of the world is changing, has Turkey made any effort to secure itself a seat in this new geographical center? The trend of self-pity has returned in Turkey. Just as it did in the 1970s and the 1990s. Do you remember what happened when we shut our eyes to the world and focused exclusively on our own problems in the 1990s? What happened was that China woke up and we were never able to understand how the world had changed. Thus, we failed to take action and became rooted to the spot. We have been left alone in the middle of nowhere.
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Lessons to learn from Turkey’s experience
Fatih Özatay, PhD
23 August 2012
Expectations can severely impact the economic outlook even if economic fundamentals are stable. I mentioned that a multiple equilibria can arise depending on how expectations will be shaped: even if economic fundamentals, namely the key indicators including the budget deficit, current account deficit and public debt and monetary and fiscal policies do not change, the economy can move to a bad equilibrium as expectations deteriorate, or vice versa. If expectations are positive, the outlook of the economy can improve even if economic fundamentals did not enhance.
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On the strategy in the fight against the PKK
Nihat Ali Özcan, PhD
23 August 2012
We have to acknowledge that without providing security, other economic, social and diplomatic tools will not yield any results. After the collapse of negotiations with the Kurdistan Workers’ Party (PKK) in May 2011, the Justice and Development Party (AKP) government explained its strategy on the PKK problem as “negotiating with politicians and fighting terrorism.” It was an attractive slogan, but its implementation proved to be difficult. The politics and security environment has been changing not only in Turkey, but also in the region. Unfortunately, there is a security meltdown going on in southeastern Turkey, in which the protracted Şemdinli conflict, the car bombings in Gaziantep, and the abduction of Republican People’s Party (CHP) deputy Huseyin Aygün have been prominent re
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Finland adding fuel to the flames
Fatih Özatay, PhD
22 August 2012
I am wondering if Finnish doesn’t have an idiom standing for “adding fuel to the flames.” I wish you all a happy Bairam, free of “bad equilibria.” The headline of a news story on the Daily Telegraph dated August 16th: “Finland prepares for break-up of Eurozone.” It was chosen in reference to some remarks by Finland’s foreign minister. And an interesting detail: On his desk, the minister had a copy of the Economist that had a picture of Angela Merkel, reading a fictitious report titled “How to break up the euro?”
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