Thursday, July 26th, 2007
Election Victory is Good for Turkey’s Economy, Not so Good for U.S. Investors With Domestic-Only Focus
By Mike Caggeso
Turkey Prime Minister Recep Tayyip Erdogan retained his post with a landslide victory in the country’s Sunday election that saw an 80% voter turnout.
Erdogan, 53, amassed 47% of the vote while facing competition from two major political parties and several smaller ones. The conservative-centrist prime minister secured the largest share of votes in a Turkish election since 1965.
Such a strong showing may provide Erdogan with the clout needed to dissipate the influence of a military that attempted to short-circuit his bid for the nation’s presidency, and possibly even to bring Turkey into the European Union.
For the transcontinental Turkey — which borders Greece, Syria, Iran, Iraq and the Mediterranean and Black seas — the election solidifies the economic growth that the country started to see in 2003, the year Erdogan was first elected prime minister.
One might expect that such a landslide victory in a region that for years has experienced political turmoil and religious strife would bode well for U.S. interests.
But that’s not the case, here.
In fact, Erdogan’s victory is yet another piece of evidence underscoring the need for U.S. investors to focus on overseas profit opportunities.
Just last week, for instance, Turkey announced its intent to talk with Iran about building an oil corridor that would carry oil to Europe (Turkey imports almost all of its gas and oil).
And Turkey continues to bolster its military presence in the south, where a 23-year border war with Iraq’s Kurdish rebels has claimed tens of thousands of lives. Turkey said it will cross the border if U.S.-Iraq talks don’t produce measures against the Kurdish guerillas.
Turkey’s sheer number of neighbors has caused the country to forge an independent streak in its international relations. Though its political tendencies align with those of the West, Turkey is the only country that is a member of both NATO and the Organization of Islamic Conference, the BBC reports.
But unlike its Middle Eastern neighbors, the country has been successful at separating mosque and state — largely because the military has broken up three civilian governments that straddled the line too heavily.
The country will take its next step in August when Parliament elects a new president, a position that carries a seven-year term. If the recent election is any indication, Turkey’s economy will continue to grow, but under the microscope of its many neighbors.
“The balance of power in Turkey is shifting toward a new Turkey, empowering conservatives who are more open to democracy and the global economy than their secular counterparts,” Wolfango Piccoli, an analyst at the political-risk consulting firm Eurasia Group in London, told Bloomberg News.
Turkey’s GNP grew an average annual pace of 4% from 1981 to 2003. Economic reforms in the 1980s spurred inconsistent growth, in part because of recessions and financial crises. Turkey rounded the corner at the start of the 21st century under then-Finance Minister Kemal Dervis, by attacking such problems as inflation and unemployment, and by boosting foreign-investor confidence.
Turkey’s economy has subsequently enjoyed five-straight years of growth. In 2005, GNP grew 7.4%. And last year, foreign investment in Turkey hit a record $20 billion, according to Bloomberg.
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