25 February 2014 News Roundup
Legislative changes were high on Turkey’s agenda as the internet bill was approved and a new intelligence bill proposed by the government was passed by the Parliament’s Internal Affairs Commission. News related to Gezi protests, police re-allocations and the tension between the AKP and the Gulen Movement continued to occupy the media. Effects of a slowdown were reflected broadly in the economy as another credit rating agency downgraded Turkey.
A new voice recording of five different phone conversations between PM Erdogan and his son Bilal Erdogan allegedly discussing their plan to hide $1 billion cash stashed at several houses has been leaked online. The conversations took place on 17 December 2013 when the first graft probe commenced. The authenticity of the recording has not been verified. Prime Ministry has condemned the tape as “product of montage” and vowed to sue those responsible for this “dirty plot”.
Wiretapping scandal revealed
Turkish Star and Yeni Safak dailies revealed a wiretapping scandal on 24 February 2014. According to the allegations that have been confirmed by the government, thousands of people including PM Erdogan, some ministers, opposition MPs, journalists, academics, business people, civil society representatives and even MIT members were wiretapped by the police for almost 3 years as part of various probes. One claim suggests that two prosecutors named by Star daily carried out the wiretapping as part of an investigation on ‘Selam’ terrorist organisation. Also, the numbers are currently variable; Yeni Safak daily claims that it is 3064 people, Star daily 7000 people, and CNNTurk 300 thousand people including family members. Deputy Prime Minister Arinc confirmed that 2280 phone numbers were found part of this investigation. Prosecutors in question dismissed the allegations. The wiretapping has been associated with Gulen (Hizmet) Movement and existence of ‘parallel state’ by the AKP government.
Turkey’s president approved the controversial internet bill.
The highly criticised internet bill was almost hastily signed into a law by President Gul although he pointed out two problematic items of the bill which needed to be modified. The parliament made the required amendments in the bill the next day. One of the amended measures requires the head of the Telecommunications Directorate (TIB) to send his/her decision of blocking access to any website on the grounds of breaching the right to privacy to court within 24 hours. The initial measure gave the full authority to the head of TIB to block access to a website within four hours and without a court order. The other amended measure now requires TIB to obtain a court order to access to information on internet traffic which internet providers are obliged to retain for two years. The new law amid concerns over independence of judiciary and TIB’s recently acquired special immunity against any criminal investigation is considered to be a serious breach of freedom of expression in Turkey.
Protests against censorship on internet followed in Istanbul and Ankara. Police used tear gas and water cannons to disperse the protestors in Istanbul. Gezi Park was closed by the police and several protestors were detained.
Europe’s concerns regarding the state of democracy in Turkey increased with the Turkish President’s approval of the new Internet bill.The Christian Democratic Union, ruling party in Germany, reacted to the approval of the bill by saying that such legislation has no place in Europe. The speaker of the party Michael Stübgen demanded that Turkey’s negotiations for EU accession be frozen.
Turkey’s silicon valley under threat due to new internet bill.
The project on building a software valley, similar to Silicon Valley in the USA, in Bursa is now at risk due to the recently passed internet bill. The project was built around foreign direct investment from major software and telecommunication technology companies around world. However, in an environment where liberties on internet and weak judicial protections, it is expected that foreign investors might lose their appetite to settle in Turkey. This would cost both Bursa and its young unemployed and also Turkey in the medium to long-term.
Parliament’s Internal Affairs Commission passed the intelligence bill to increase authorities of the Turkish National Intelligence Organisation (MIT) which was proposed by the AKP government.
According to the bill,
- MIT will be able to directly contact all national and international institutions, organisations, agencies and persons;
- MIT will able to collect any data concerning certain matters which vary from national defence to international crimes and will have the authority to access data from public institutions, banks and any telecommunication channel with several means including wiretapping;
- No criminal investigation for any unlawful act will be sought against MIT;
- Any media agency leaking / publishing an MIT document will be sentenced to a minimum of 3 years to 12 years.
The bill will prevent any investigation or criminal complaint regarding MIT’s acts by the public courts and any attempt to search vehicles operated by MIT, and it will also create a legal framework for peace process negotiations.
The democratisation package of judiciary reforms passed the parliament last week.
Please see here for an outline of the package. The opposition parties welcome the reforms, however, concerns remain with regards to government’s extensive control over judiciary.
The government’s re-allocation of police officers continued this week.
The government changed duty posts of 34 policemen in the southern city of Kahramanmaras as well as 120 policemen in the south-eastern city of Gaziantep.
Echoes of the Gezi protests continue to dominate the country’s agenda.
Prosecutors demand 3 years for tweeting on Gezi protests. Tweeters are accused of causing trouble and damage to public buildings and AK party headquarters in Izmir although the indictment does not contain any evidence of damage by the suspects in question.
Family of Abdullah Comert who was killed during Gezi protests filed a new complaint to the Hatay Prosecutor’s office. A footage that reportedly shows a gas canister was shot from a police vehicle at Comert was revealed by a TV station. The family stated that the police had used excessive force against peaceful protestors.
The city of Kirklareli saw hundreds of people charged for their participation in Gezi protests. 1309 people were sued for their participation in Gezi protests in the Turkish city of Kırklareli. Out of the 1309, 122 have now been charged with violating the Law of Assembly and Demonstrations. Meanwhile, The Kırklarerli Chamber of Physicians has received 35 different lawsuits against them for members’ participation in the Gezi protests. The trials have not been concluded yet.
The police were given extraordinary powers for fifteen days in the country’s capital city Ankara.
The police forces were given the right to search civilians with no prior court ruling in six provinces in Ankara. However, due to the widespread reaction against the ruling, the extraordinary power to search person, vehicle and documents of an individual were removed on the 21st of February, before the 15 days were completed.
The uncertain future of the “dershane”, the private tutoring schools, in Turkey have come back to the country’s agenda.
The parliamentary talks regarding the first draft of the bill that will incorporate these institutions into the Turkish Ministry of Education have begun. The parliament’s National Education Commission started its first round of talks regarding the controversial nationalisation of the institutions that had symbolized one of the first rifts between the ruling AK Party and the Gulen Movement.
On a different note…
Another credit agency downgrades Turkey’s outlook from positive to negative.
Rating and Investment Information (R&I), a Japanese credit rating agency that is closely watched in Asian markets, downgraded the outlook of Turkey from “positive” to “negative”. The ground for the decision was placed on the changing liquidity conditions, the increasing political risks curbing the capital flows into Turkey and triggering a potential economic slowdown. Despite the strong monetary and fiscal stance by the central government and the central bank, respectively, the agency noted that it would take longer to maintain economic stability and high growth.
The slowdown in Turkey’s growth is reflected in statistics of unemployment, foreign assets and international investment position amongst other indicators.
Last week, we announced the unemployment rate increased to 2.8 million – as 9.9 percent in November 2013 according to Turkey Statistical Institute (TUIK). CHP, the main opposition party, criticised the figure for not accounting those who lost hopes for finding a job, house wives, and those who do not seek for jobs but are ready to work if they find one. Including those who are excluded from calculation by TUIK, CHP claims that the real unemployment would increase to 4.7 million.
In addition, the Central Bank of Turkey released the statistics for International Investment Position for Turkey. As of end of 2013, Turkey’s foreign assets (to be received) increased by 5.6 percent to USD 224.8 billion while her foreign liabilities (to be paid) increased by 2.9 percent to USD 614.7 billion. The net international investment position decreased from USD 420.5 Billion in 2012 to USD 390 billion in 2013.
Meanwhile, the volatility in Turkish currency increases concerns over the rising foreign borrowing of private sector. In 2013, private sector raised USD 39.3 billion from sources resident outside of Turkey similar to 39.9 billion in 2007. Of this 39 billion 22.2 billion corresponds to short-term liabilities. The concerns are focused on the indebtedness of non-financial corporation who have open foreign exchange positions and who are the most prone to the risks out of currency volatility.
However, the government holds its strong stance in the economy despite deteriorating country risk profile since the graft probe. Turkish Treasury finalised today (24 February 2014) two auctions to borrow out of 10 in the next two weeks. According to a plan published on January 31 Turkey is going to pay off 15.6 billion of domestic debt this month and the Treasury already raised 5.7 billion liras of this today already. According to Bloomberg, the demand was the highest in more than 12 months, reflecting an improving sentiment for risk.
Turkey’s export sector has been performing well in the long term.
It seems Turkey had a better performance in the longer-term than the last couple of years. In the past twelve years, Turkey increased its exports from 36 billion USD to 152 billion USD. This corresponds to a 15 percent increase on average per year. The record increase in exports places Turkey as one of the three countries that has the highest acceleration. The Ministry of Economy, Ali Babacan, also noted on a TV interview that the recent period can be described as volatile and yet Turkey is not in an economic crisis where a reform package is needed. He added that due to the specific monetary policy, majority of foreign investors in Turkey have long-term investments rather than short-term. This can probably be ascribed to the strong emphasis on private sector in the economy and government support since 2003. For example, the Ministry of Development announced that USD 87.5 billion equivalents of 167 infrastructural projects have been outsourced to private sector in 28 years since 1986. Based on four model that are Built-Operate (BO), Transfer of Operating Rights, Built-Rent (BR) and Built-Operate-Transfer (BOT), private-public partnership remained only USD 9 billion until 2003 but hiked to USD 78.5 Billion that corresponds to 90 percent of the total between 2003 and 2013.