2 December 2014 News Round-up


Constitutional Court’s announcement of a possible lowering of the 10% electoral threshold shook the domestic agenda, as well as the Russian President Putin’s visit and its lower priced natural gas offer. Alongside new figures on trade and capacity utilisation, the CBRT’s announcements were watched by the economic circles last week.

[tabby title=”Domestic Politics”]

Hasim Kilic, the head of the Constitutional Court, has stated that if the court decides that the 10% threshold is a violation of rights, then the threshold may be removed and that this would be applied in the upcoming parliamentary elections. His statements have re-launched debate on the topic. AKP Deputy leader Mustafa Sentop criticised Kilic’s remarks, claiming that the Constitutional Court could not change the threshold, but that it could call on parliament to lift it based on the claim that it violates rights. Nevertheless, he added, it would not be in place for the 2015 Parliamentary elections. The Republican People’s Party (CHP) and the Peoples’ Democratic Party (HDP) both welcomed Kilic’s remarks.

A media ban will be imposed on the work of the parliamentary investigation commission which will deal with four former ministers who have allegedly been involved in corruption until 27 December 2014, which is the final date for this investigation. An Ankara court ruled the order on the commission’s demand for this.

Turkish media has generally been banned from reporting on the following issues:

  1. the graft investigation
  2. the ISIS raid on Turkey’s Mosul consulate
  3. the wire-tapping of the Turkish Foreign Ministry
  4. the 11 May 2013 Reyhanli terrorist attack
  5. the wire-tapping of Erdogan’s office
  6. trucks carrying weapons from Turkey’s National Intelligence Organisation (MIT) bound for Syria
  7. the October attacks on Turkish security forces
  8. the Uludere air strike
  9. the May 2014 Soma mining disaster
  10. the football match-fixing scandal

Erdogan Bayraktar, the former Environment and Urbanisation Minister, has dismissed new accusations of malpractice and influence peddling as baseless. Bayraktar, along with three other ministers, resigned from their posts due to claims that they were receiving bribes from the Iranian businessman Reza Zarrab. An investigation was launched into how Bayraktar’s family fortune increased from 17.5 million liras to 58.2 million liras in the period 2010 – 2013.

A student protest in front of Turkey’s new presidential palace, as well as one in front of Turkey’s Higher Education Board, saw harsh crackdown by law enforcement. In the first case, a policeman was filmed punching a student, while in the latter protesters were hit with tear gas and pepper spray. Students were protesting against the current tuition system. A total of 22 students were arrested.

The HDP has declared that a draft negotiation frame on which the Kurdish peace process will be based has been achieved, resulting from talks with Abdullah Ocalan. This frame consists of three main titles: proposals for a solution, negotiation chapters and action plan. Both the HDP and Ocalan have urged the ruling party to reach a settlement within four or five months, before June’s parliamentary elections.

Turkey has pledged, as a part of its National Action Plan for EU Accession, to implement reforms in order to provide cleaner air to its citizens. EU Minister Volkan Bozkir stated that these reforms would take place in two stages, the first in 2015, and the second in the period 2015-19, which will focus on maintaining political reforms and socio-economic transformations. Firms that infringe on the new reforms will no longer be able to get away. Bozkir reiterated that Turkey’s plans for EU accession was the product of a constant strategic approach.

422 workers have been resisting against the privatisation of thermo and coal plants and have begun protesting against the tenders that are to be released on December 2nd. Approximately 4,000 workers present in the area fear a possible increase in sub-contractors.

Halil Ibrahim Dincdag, Turkey’s first openly gay referee, has received the Respect Award from the Berlin-based Alliance against Homophobia NGO. Dincdag was dropped by the Turkish Football Federation after coming out, lost his job on a sports radio station and was threatened by Black Sea mafia. He received the award from Berlin Mayor Klaus Wowereit, who said he supported Dincdag in the legal battle he was currently facing. Dincdag has further denounced widespread discrimination within the Federation, especially towards minorities.

LGBT groups in Turkey, including KaosGL and Pembe Hayat, have launched a petition against the Red Crescent for refusing blood donations from gay donors. These groups claim that the fact that diseases such as AIDS is also present in heterosexual individuals is ignored by the authorities. They further state that such policies go against the European Human Rights Convention and the Turkish Constitution.

[tabby title=”Foreign Policy”]

Turkey had high level visitors last week, with Pope and Russian President Vladimir Putin’s visits.

On Saturday, Pope Francis visited the Sultanahmet Mosque and the Hagia Sofia in Istanbul. He was met by Islamic religious leaders, discussed prayer with Rahmi Yaran, the Mufti of Istanbul, and became the second Catholic pontiff to pray inside the Sultanahmet Mosque, facing east.

During the Pope’s visit to Turkey, he signed a joint declaration with Bartholomew, the Orthodox Patriarch of Constantinople, calling on the strengthening of ties between the two Christian denominations, as well as closer cooperation and dialogue with Muslims. The two Christian leaders emphasised the importance of Christian unity, especially in light of the suffering of Christians currently in the Middle East. They also called on the cessation of violence in the Ukraine. The statement was signed after the Divine Liturgy in a mass attended also by the leaders of the Armenian and Assyrian Orthodox Churches in Turkey, Greek Foreign Minister Evangelos Venizelos and chief rabbi Itzhak Helava.

Russia’s President Putin paid a high-level visit to Ankara, in order to discuss ways in which to deepen economic and energy cooperation, as well as increase trade between the two countries, who have pledged to increase trade volume between the countries to $100 billion by 2020. This would make both countries each other’s biggest trade and economic partner. Despite the differences in foreign policy, especially in regard to the current conflict in the Middle East, the two countries seem keen to continue improving their bilateral economic relations. The meetings culminated with the Russian GAZPROM offering a 6% discount on a new natural gas deal between the two countries, and the Russians announcing that they will halt a pipeline project that would carry natural gas to Europe via Ukraine, but instead will build a new one via Turkey and Greece.

Jens Stoltenberg, the NATO Secretary-General, has called on Turkey to join the EU in imposing sanctions on Russia over its annexation of the Crimean peninsula and its aggressiveness in eastern Ukraine. Turkey has previously refused to do so on principle, and these statements come in light of the high level meeting between Erdogan and Putin, aimed at increasing economic cooperation between the two countries. Stoltenberg also stated that NATO would be ready to support Iraq, but reiterated that the international coalition was US-led, and not NATO-led.

The Dutch and Turkish Foreign Ministers have held a phone conversation regarding the integration of Turkish and Muslim immigrants into the European country, a topic which has increased tensions between the two countries. Turkey is worried by what it sees to be the rise of xenophobia within the Netherlands, while the Dutch Foreign minister has claimed any interference by Turkish into Dutch matters would be unacceptable. Both have agreed, nonetheless, that a thriving Turkish community in the Netherlands would be a positive for both countries. Recently, the Dutch Party for Freedom (PVV) called for the closure of all mosques in the Netherlands, something immediately dismissed by Deputy Prime Minister Lodewijk Asscher, and two lawmakers of Turkish descent were expelled after they refused to sign a party declaration supporting an increased surveillance of four organisations criticised for promoting of Turkish and Islamic identity.

EU Minister Volkan Bozkir has criticised Denmark for reporting Turkey to the EU over the release of the suspected shooter of Danish writer Lars Hedegaard. He claimed that the suspect was released by a court decision, and that it was not right to blame Turkey for the matter. There have been claims that the man was released as part of a prisoner swap between Turkey and ISIS, but documents released to Hurriyet show that the man was released two months before the prisoner swap.

[tabby title=”Economy”]

The governor of the Central Bank of the Republic of Turkey (CBRT), Erdem Basci, made a presentation to the government last week. Basci emphasised that the contribution of domestic demand to growth was increasing as external demand factors were weakening. He stated that the CBRT expects inflation to decrease further in 2015 due to its tight monetary stance and its opinion that the slowdown in the leading growth indicators seen in the second quarter of 2014 were only temporary. Basci also noted that Turkey will gradually meet its growth potential with the implementation of a structural transformation programme.

  • In the financial stability report, the CBRT demonstrated via an interest rate shock scenario that the interest rate risk in the Turkish banking system was limited and added that the banking system retained its healthy and strong structure. Despite the uncertainties and volatilities in global financial markets, Turkish banks were able to roll over their foreign borrowings and were resistant to possible foreign exchange shortages.
  • The bank also emphasised the improvements in household financial positions; meaning the gradual deceleration in personal credit cards and car loans despite the steady course in personal and house loans.
  • On the other hand, there is clear improvement in household savings in Turkish Lira especially after the incentives given for private pension funds.

Despite the ongoing problems in Turkey’s export markets, October exports date demonstrated a 7.3% increase from last year. The increase in the first ten months compared to the same period last year became 5.6%. Imports, on the other hand, decreased further 1.5% in October due to tumbling oil prices. The decrease in the first ten months even furthered to 3.9%, which amounts to 18.2% decrease compared to last year. Therefore, the ratio of export coverage to imports increased from 61% to 66%.

Finally, capacity utilisation in November decreased 0.4 points to 74.5%. Capacity utilisation indicates the health of the manufacturing sector. Capacity utilisation has seen a flat course in the past four months.

Meanwhile, OPEC decided, after its meeting in late November to keep oil production at the same level despite the 35% decrease in oil prices since June. The decision even furthered the decrease, where the Brent crude oil saw below $70 but stabilised at around $72 at the time of writing.

What is ahead of us? This Friday, 05 December 2012, the international credit rating agency Moody’s will revise Turkey’s credit note. Moody’s currently grade as “Baa3” and the outlook as “negative”, which indicates investment eligibility.


Photo credit: © Deutsche Welle Türkçe