A new bill granting extensive powers to the police, dismissal of the parliamentary commission to investigate corruption allegations against the former government and discussions over the Kurdish resolution process with contradictory statements by government officials occupied Turkish domestic news last week. As the battle in Kobane against ISIS advancement intensifies the US military air-dropped arms to Kurdish fighters and Turkey has allowed the Peshmerga to transit through Turkey to join fight against ISIS. This week, on the economy news, it is reported that unemployment data, current account deficit and the downward pressure on growth caused decline in economic growth and increase in unemployment.
[tabby title=”Domestic Politics”]
The police to be granted further powers
A new bill that has been discussed by the government over the last week has caused controversies before it is approved by the parliament. The bill will grant further powers to the police. Although the extent of powers remain vague, if the bill is accepted;
- reasonable doubt will be sufficient for search warrants
- confiscation of property will be possible in investigations involving crimes such as violation of the constitution, crimes against the legislative body, crimes against the government, armed revolts against the government, armed organisations, providing weapons to armed organisations and making an agreement to commit a crime.
The police currently has to have reasonable doubt based on tangible facts for a search warrant and can only confiscate property of individuals involved in crimes of armed organisations or providing weapons. Critics have claimed that this bill will undermine fundamental rights and freedoms protected under the constitution. The government defended the bill and assured that it will be in line the European Union acquis. The police could use arms during protests and protestors could be detained without a court order if the bill is approved.
Before the new law has actually been passed in parliament, the police forces have started implementing new powers. A judge in Adana in southern Turkey has granted the police permission to search a journalist’s premises based not on factual evidence but relatively good doubt.
No ‘paid exemption from military service’
PM Davutoglu dismissed the possibility of paid exemption from military service. He explained that no men poor or rich can be exempt from military service in Turkey’s current situation with neighbours in conflicts and protests occurring in several parts of Turkey.
Corruption allegations
A parliamentary commission formed to investigate corruption allegations against four former ministers have not been able to review summary of proceedings within the four months that it had. The commission has requested a 2 months extension, however, over the last week, the prosecutor who has been appointed by the Ministry of Justice to deal with corruption allegations of 17 and 25th December 2013 operations has decided to drop all corruption cases including the allegations against the sons of former ministers. The prosecutor claimed that the evidence for the case is problematic and no criminal elements have been found. This decision means that all allegations against the former ministers, their sons and businesspeople who had dealings with the government have now been dropped without going to court.
Kurdish Resolution Process
The government has assured that it will persevere with the Kurdish resolution process. Justice and Development Party (AKP) Deputy Chair Besir Atalay stated that discussions with the People’s Democracy Party (HDP) and the Kurdistan Worker’s Party (PKK) are held. The road map for the process is said to be at the ‘negotiations step’, for which the HDP demands betterment of PKK leader Ocalan’s prison conditions so that he can meet civil society organisations and journalists. President Erdogan and PM Davutoglu asserted that no amendments will be applied to Ocalan’s conditions, although Interior Minister Efkan Ala and Deputy PM Yalcin Akdogan stated that improving Ocalan’s conditions could be re-assessed. PM Davutoglu claimed that Ocalan is not the chief negotiator for the process, but all related parties are involved.
PM Davutoglu met the ‘Wise People Committee’ to discuss the Kurdish Process. The Wise People Committee of academics, journalists, artists and intellectuals travelled several cities last year to assess public opinion on the peace process and to bolster the Kurdish issue. Davutoglu asserted that the process is a historical step for Turkey which will crash terrorism and unify the country.
President Erdogan highlighted once more that the Democratic Union Party (PYD) in Syria and the PKK are both terrorist organisations and that Turkey will not support either of them. The HDP accused him of hypocrisy as Erdogan’s government has been in peace talks with the PKK over the last few years.
[tabby title=”Foreign Relations”]
International coalition against ISIS
Whilst the fight against Islamic State (ISIS) is intensifying, Turkish government continues talks with the US regarding their cooperation as part of the international coalition against ISIS. It is reported that US-led warplanes kept their airstrikes on the ISIS fighters which assisted resistance of the Kurdish fighters in Kobane. President Erdogan and US President Obama assured their alliance against ISIS on a phone conversation on the weekend.
PM Davutoglu asserted that Turkey cannot consider a unilateral intervention as this would mean that Turkey will have to take on the entire burden of war and its consequences. He added that the international coalition’s strategy should target the whole of Syria and the al-Assad regime, rather than ISIS only. French President Hollande expressed their support for Turkey’s proposal of creating safe havens for Syrians. Turkey is expecting the UN to designate and set up the safe havens, however, Syrian officials oppose the move.
Germany and the US were reported to have considered sending arms to the Kurdish fighters, the PKK and the PYD, in Kobane. Minister for EU Affairs, Volkan Bozkir, asserted that Turkey strongly opposes such action. PM Davutoglu on Sunday, 19th October, stated that Syrian fighters are free to cross into Syrian border to fight, however, he added, Turkey cannot be expected to allow its citizens to join the fight in Kobane. On Monday, 20th October, US Military reported that it has air-dropped arms to Syrian rebels fighting ISIS, which can be used by the Kurdish fighters. PM Davutoglu and Foreign Minister Cavusoglu said that the government that it would allow Kurdish Peshmerga forces from Iraq to transit through Turkey in order to reach Syria and join the resistance against ISIS. The government soon confirmed that Turkey has already allowed Peshmerga cross into Kobane through Turkey.
Turkey’s new EU strategy
Minister for EU affairs, Volkan Bozkir, announced Turkey’s new EU strategy to accelerate Turkey’s accession to the EU. According to the report by the ministry, Turkey will carry out political and socio-economic reforms and will propel communication between the EU and Turkey. Bozkir indicated that the government will encourage NGOs and civil society organisations to improve perceptions of the EU and Turkey of each other and communicate with one another.
Cyprus negotiations
Turkish Republic of Northern Cyprus (TRNC) President, Eroglu, sent a letter to the Head of UN to request re-launch of negotiations with the Greek Cyprus counterparts. The Greek Cypriot administration suspended talks after Turkey sent a warship to monitor oil and gas exploration of the Cyprus coast on 8 October 2014.
[tabby title=”Economy”]
Budget realisation for September
Ministry of Finance announced the budget realisation for September last week. According to the data, central government’s expenditures increased by 13.5% while revenues increased by only 0.7% compared to last year. This has peaked the budget deficit from TRY 4.7 billion to TRY 9.2 billion. In the first nine months of 2014, expenditures increased by 10.4 % while revenues increased 8.1 %. In this sense, budget deficit for the first nine months increased from TRY 4.5 billion to TRY 11.9 billion.
Current account deficit
The current account deficit continues to improve. The current account deficit in August was announced less than market expectations of USD 3.2 billion as USD 2.8 billion. In the first eight months of 2014, the current account deficit increased to USD 29.6 billion, however, this is 35.4% less than last year’s figure. The improvement in the deficit derives from the increasing returns in service sectors thanks to increasing exports and decreasing imports.
Unemployment data
Another important data in Turkey was on unemployment. According to the Turkish Statistical Institute (TURKSTAT), unemployment rate increased to 9.8% in July. Unemployment increases to 12% excluding agricultural employment, while youth unemployment increased to 18.2%.
Finally, the results of the survey of expectations was announced by the Central Bank of the Republic of Turkey (CBRT). Compared to the results of the previous results, attendees from financial and real sector left their USDTRY expectations same as 2.283, increased inflation expectations from 8.89% to 9.16%, decreased GDP growth from 3.21% to 3.15 and current account deficit from USD 48.4 billion to USD 47.8 billion.
Taking into account of data released on unemployment, current account deficit and the downward pressure on growth as revealed in the expectations, it would not be wrong to say that the balancing of current account deficit caused decline in economic growth and increase in unemployment. The policy recipe for Turkey is surely left to the economists and politicians while the markets will watch three important event this week, which might have an impact on the gears of Turkish economy:
1) Chinese economic growth
2) Inflation in the USA
3) Industrial Production in Europe
These all indicate more or less the health of the global economy, and the reaction of central banks to these data. A continuation of expansionary monetary policies by the major central banks would directly favour emerging countries, especially Turkey.
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