Turkey’s unprecedented growth in the economic sphere combined with a meteoric rise on the international stage marks the significant maturity of a republic set to celebrate its 100th anniversary in 2023. In times of economic and political turmoil, the country is beginning to emerge as a significant player on the global stage. At the center of Turkey’s impressive recent success story is Recep Tayyip Erdoğan, arguably the country’s strongest leader since its founder Mustafa Kemal Atatürk. Wielding a third decisive victory in June 2011, Prime Minister Erdoğan’s Justice and Development Party (AK) Party has created an environment for steady growth. Turkey’s current political and economic stability today lies in stark contrast to the decades before, and the appetite of foreign investors reflects it handsomely. According to the A.T. Kearney FDI Confidence Index Turkey ranks as the world’s 13th most attractive country for FDI in 2012—the economy saw a boost of $15.9 billion in FDI over 2011.
While the AK Party won more than 50% of the vote and 326 seats in the June 2011 poll, it fell 41 seats short of securing a two-thirds majority in the Turkish parliament. Had the necessary 367 of 550 seats been achieved, the AK Party could have gone forward to re-write the Turkish constitution without a referendum. Without the absolute power to change Turkey’s constitution unhindered, however, the past year has been one of intense negotiations between the main opposition parties —the Republican People’s Party (CHP), the Nationalist Movement Party (MHP), and the Peace and Democracy Party (BDP). The existing version of the constitution has been in place since 1982, though it has been amended on numerous occasions over its 30-year life span.
The legislative branch of government takes its form in the Turkish Grand National Assembly (Türkiye Büyük Millet Meclisi). Members are elected via a proportional representation system across Turkey’s 81 provinces for four-year terms, with parties requiring a minimum of 10% of the national vote to gain representation through the electoral process. Under the current constitution, the president is elected once every five years and is not necessarily an elected member of parliament. The incumbent, President Abdullah Gül, has been in his position since 2007. However, since the law on presidential elections was put into effect on January 20, 2012, the next presidential polls will be held in 2014 instead of 2012, rendering President Gül the last indirectly elected president of Turkey.
Turkey’s stunning economic growth, second only to China, has enabled significant gains in Turkey’s position as a regional hegemon. Before the dust of the elections had time to settle, Prime Minister Erdoğan commenced a regional tour to Egypt, Libya, and Tunisia in September 2011, signaling support for their democratic transitions well as stepping toward establishing a more proactive foreign policy. Mastermind of Turkey’s “zero problems with neighbors” policy, Foreign Minister Ahmet Davutoğlu has recognized this shift. “The positive transformation process Turkey has undergone during the last decade has provided it with political stability, a strong economy, and a consolidated democracy, as well as giving it the opportunity to pursue a more proactive foreign policy,” Davutoğlu told TBY. The Foreign Minister argued “the country is now determined to take the necessary steps to mobilize its growing capabilities and provide peace, stability, security, and prosperity in its region and beyond.”
In the wake of the Arab Spring, new democratic eyes were focused firmly on Turkey’s strong secular system. Tunisia was the first country to throw off the shackles of dictatorial rule, and it quickly marked Turkey out as a potential role model for a new political system. As Tunisian President Mohamed Moncef Marzouki explained to TBY, “the political, secular, and religious components of Tunisia can learn from Turkey, a country that was able to maintain a secular and republican state, whilst guaranteeing individual liberties, a multi-party system, and a stable model for economic development.”
Turkish-Arab trade is flourishing despite the regional unrest in 2011. Turkish business streamed back to Libya in the wake of the revolution, and Turkish contractors are high on the list of those rebuilding key infrastructure. Another example is Turkey’s two-way trade with Egypt, which reached a record level of $4.15 billion in 2011, and providing $1.4 billion trade surplus. This represents an increase of about 30% from the 2010 figure of $3.2 billion. Furthermore, the first quarter of 2012 total trade volume between the two countries hit $1.26 billion, up from $780 million in the same period in 2011. The trade surplus for Turkey also increased from $214 million to $572 million.
These successes indicate that the government has been making significant inroads in cementing its trade relationships away from its traditional EU partners. As the quintessential “bridge,” Turkey is moving far beyond its neighbors in its economic development. The Turkish Exporters Assembly (TİM) registered record exports in 2011, and the organization is looking to diversify exports away from the US and EU markets, marking a significant shift. While the most popular export routes continue to be dominated by the EU, new and exciting channels are developing, especially in South America (Brazil) and North Africa. Exports reached $135 billion at the end of the year, an 18.2% increase over 2010. The national airline, Turkish Airlines, is expanding at a breakneck pace connecting Turkish businesses globally, most notably in Asia. Turkey’s economy is seeing increased interest from large Indian, Japanese, Chinese, and South Korean investors across the board, but especially in the ICT and energy sectors. In conjunction with Turkey’s desire to tackle the nation’s energy deficit by building 23 nuclear plants by 2023, Asian investors are showing considerable interest and strengthening bilateral ties.
Yet, Turkey’s reliance on the import of foreign energy imports, especially oil and gas until the nuclear solution is achieved by no means belittles the country’s diplomatic power in the region. Turkey is by all standards a regional hub and a strategic bridge between its energy-rich neighbors—such as Azerbaijan and Iraq—and the ever-hungry European market. Azerbaijan’s enormous gas reserves are set to find their way to Europe through Turkey, and northern Iraq’s natural resources will easily find a way through the port terminal of Ceyhan.
Indeed, Turkey’s role as an energy broker has underlined the country’s global strategic significance. US Deputy Secretary of Energy Daniel Poneman branded energy as a key point of the Turkish-US relationship at the 31st annual conference of the Turkish-American Council (ATC) in Washington D.C., stating “if security and economy are the pillars of partnership between the US and Turkey, energy lies at the heart of the partnership.” Bilateral trade between the US and Turkey reached a record level of $20 billion in 2011, and both countries are looking to double this figure by 2014.
Turkey’s relationship with the US and the Obama administration has been in the spotlight in 2012, not least given the country’s proximity to Syria. Istanbul has further strengthened its reputation as a location for global power talks, having hosted Hillary Clinton for talks with Syrian opposition groups and Iranian nuclear negotiations. The former Ottoman capital was visited by hundreds of young entrepreneurs as well as US Vice-President Joe Biden for the second annual Young Entrepreneurship Summit, launched in 2009 by President Obama. In addition, former Secretary of State Madeline Albright and Stephen Hadley, Senior Advisor for International Affairs at the US Institute of Peace and former US National Security Advisor, topped the US bill at the Atlantic Council’s Black Sea Economic Energy Conference.
A PLACE FOR EUROPE
Turkey remains committed to its ambition of EU accession, notwithstanding the ongoing eurozone crisis. Despite being one of the first countries to become a member of the Council of Europe in 1949 and a founding member of the Organization for Economic Cooperation and Development (OECD) in 1961, and the Organization for Security and Cooperation in Europe (OSCE) in 1973, Turkey has been overtaken by numerous last-minute candidates. Turkey signed a Customs Union agreement with the EU in 1995 and was officially recognized as a candidate for full membership on 12 December 1999, at the Helsinki summit of the European Council. With 18 of 22 chapters to be opened—most blocked for political reasons—the road ahead is destined to be long. However, according to Minister for EU Affairs and Chief Negotiator Egemen Bağış, 2012 and 2013 will introduce a number of reforms necessary to bring Turkey closer to the crucial seat at the EU table. He told TBY that it is not by any means a one-way street, commenting that, “It is clear that the EU needs Turkey as much as or even more than Turkey needs the EU.” Turkish businesses are certainly making the most of a weaker lira as the country is rapidly emerging as Europe’s automotive production hub. External support for accession is growing with Italy’s Prime Minister Mario Monti coming out in Turkey’s favor in May 2012 alongside long-time cheerleader Prime Minister David Cameron of the UK. September 2011 saw the visit of a UK Secretary of State for Business to Turkey for the first time in a decade as well as a state visit of President Gül to the UK, underlying the strengthened ties between the two countries. This relationship is more than diplomatic, with the UK strongly encouraging British business to invest in the Turkish economy, marking a decisive next step.
But while Turkey lacks full acceptance in the EU, 2012 marks the 60th year of its membership of NATO. Speaking in recognition of Turkey’s long-time commitment to the alliance, NATO Secretary General Anders Rasmussen said: “Turkey brings together East and West, North and South. Its strong heart beats where Europe, Asia and the Mediterranean all meet… that is a great advantage for Turkey, and for us all.”
© The Business Year