The road map released by the Justice and Development Party (AKP) regarding the Kurdish issue and the Presidential Election August 2014 were the two main stories of the week. The continuing instability in Iraq has continued to risk Turkey’s economy, while the May inflation rates turned out to be higher than expected. The ban reporting on Mosul hostage crisis in Turkish media remains enforced whilst Turkish hostages are being held captive in the hands of ISIS. The issue of the state of child workers has also emerged in the media.
[tabby title=”The Peace Process”]
The government released the details of the Reconciliation Package (the road map for the solution of the Kurdish Issue) which will be discussed in Parliament this week;
- Numerous camps of the Kurdistan Workers’ Party (PKK) such as the Mahmur, Smile, Misuriye, Atruş will be cleared simultaneously
- Disarmament will be the priority of the first phase of the reconciliation process. Disarmament will be implemented with a deadline.
- The Criminal Code and the Civil Code will be amended in order to create legal framework for receiving the members of the PKK back into normal life in Turkey
- Members of the PKK who have not been involved in armed activity, who don’t have a search warrant on their behalf, who have not been implicated in any crimes and/or who are residing in Europe or Northern Iraq will be allowed to return to Turkey. Those leaving the armed PKK and returning to normal life in Turkey will be given deadlines depending on their status;
- Those who have not been involved in armed activity will be given one year
- Those returning from Europe and Northern Iraq will be given two years
- Those that have a red alert issued on their behalf by Interpol will be given three years
- The returnees will be helped by the Social Cooperation and Solidarity Support Fund. Those looking to start their own business will be directed to Diyarbakir, Mardin and Batman.
- Certain high profile leaders of the PKK will have different options for their future, mostly leaving Turkey and taking residency in either Europe, Australia or Northern Iraq
Ayla Akat Ata People’s Democracy Party (HDP) MP for Batman has proposed a bill to parliament where the party demanded that incomes from petroleum be distributed to local municipalities based on their contribution to the income. Akat stated that most exports of petroleum occurred in the city of Batman, however the city cannot take advantage of this income. Akat proposed that 50% of income should be given to the local authorities.
[tabby title=”Presidential Election 2014″]
The AKP has determined not to announce the new leader of the party until the results of the Presidential Election are released. This decision was announced after PM Erdogan held a meeting with the party’s municipal leaders.
Ekmeleddin Ihsanoglu, the joint presidential candidate of the Nationalist Movement Party (MHP) and the Republican People’s Party (CHP) has now been endorsed by more opposition parties. The following parties (other than the MHP and the CHP) have signed the joint declaration announcing Ihsanoglu’s candidacy;
- The Democratic Social Party (DSP)
- The Democrat Party (DP)
- The Independent Turkey Party (BTP)
Meanwhile, 32 civil society organisations in Yozgat have announced that they will support Recep Tayyip Erdogan in the election, rather than Ekmeleddin Ihsanoglu. Yozgat was Ihsanoglu’s first stop in his presidential campaign as it is his hometown.
Iraq continues to cast a shadow on economic developments
Beyond the deteriorating trade relations between Turkey and Iraq, the rising geopolitical risks in Iraq are now further affecting Turkey financially. The international credit rating agency, Moody’s, warned Turkey for negative effects of instabilities arising from Iraq on the balance of payments and growth. Moody’s will reassess the sovereign rate for Turkey and release the updates on 8th August.
The report on inflation by the Central Bank of Turkey (CBRT) also draws attention to the latest developments in Iraq. It was reported that;
Rising clashes in Iraq and on the border of Turkey will have downward risks on the contribution of exports into the GDP growth.
Political instability may slow down the improvements in the balance of payments through export and oil prices.
It is perhaps not a surprise that the war on the south of Turkey is reflected on the trade statistics. Turkey Export Assembly announced that after the occupation of Mosul by Islamic State of Iraq and the Levant (ISIS) the exports to Iraq decreased by %21 in June and Iraq moved down to the number three in the most exporting countries list.
Exports in May increased by 3.6% to $13.8 billion and imports increased by 10.3% to $20.9 billion. However, on annual basis, the imbalance between imports and exports narrowed by 28.7% to $7.1 billion. Further, Purchasing Managers Index (PMI) decreased to 48.8 reflecting the Iraq war. A PMI score more than 50 means that industrial growth is expanding. In this sense, renewed Iraq war as well as slower growth in domestic demand contracted Turkey’s industrial production. 48.8 is the lowest since August 2011.
[otw_shortcode_content_toggle title=”Why does Mosul matter for Turkey?” opened=”closed”]
CEFTUS Insights – Behind the Headlines
The crisis in Mosul, due to its strategic, economic and political significance for Turkey, is representative of the numerous issues that Turkey is facing. Even after the Turkish diplomatic personnel are freed from the Islamic State of Iraq and the Levant (ISIS), this assault will continue to highlight certain themes in Turkey’s foreign policy;
- The threat of conflicts becoming more sectarian around Turkey’s borders,
- The Turkish government’s sensitivity against rising Kurdish power near its borders (thus, directly or indirectly balancing power via other groups)
- The vital importance of trade – and its fragility with neighbouring countries for Turkey
- The delicate balance of different actors in the Middle East (Turkey’s contradictory relations with the Syrian, Iranian and Iraqi governments have disrupted the balance during this crisis, and may continue to do so)
Click here for more on the crisis in Mosul [/otw_shortcode_content_toggle]
High inflation may constrain the CBRT’s plans to gradually decrease interest rates
The CBRT cut the interest rates by 0.75 during its monetary policy meeting (MPC) on 24th June. The markets expect further cuts in the next MPC on 17th July but the latest inflation report revealed a higher than expected inflation for June, which might constrain the rate cut. According to Turkish Statistics Institute (TURKSTAT), consumer prices (inflation) increased by 0.31% in June. A Reuters survey measuring the markets sentiment expected no change in the inflation rate. With this increase, the annual inflation became 9.16% and halted the declining trend for the past six months.
[tabby title=”On a different note”]
Police officer Ahmet Şahbaz, who was on trial for the death of Ethem Sarısülük during the Gezi protests last year, has been arrested. However, this does not mean the trial has been concluded, it will resume on 3rd September 2014. Sahbaz’s lawyers had claimed that it was self-defence because of stones thrown at him by the protestors. The prosecutor demanded Sahbaz be charged with first degree murder as there was probably intention. A video was played to the court in the previous trial, in which a person was saying that they fired off three shots. Sahbaz is suspected to be that police officer.
In the meantime, the police officer suspected of being responsible of the death of Abdullah Cömert, another killed Gezi protestor, has not been arrested after the Court dismissed the demands of the family.
Ministry of Work and Social Security Faruk Çelik has responded to the parliamentary question proposed by the CHP’s Izmir MP Rıza Turmen regarding the fate of child workers in Turkey. According to the minister’s answer 3 children aged between 15 and 17 died in 2012. The data is not available for 2013. Meanwhile, the Istanbul Parliament for Worker’s Health and Safety announced that 34 child workers died in 2012, and 59 died in 2013.