28 January 2014 News Roundup
28 January 2014
Turkey’s domestic agenda this week has been dominated by legal developments. Amidst the draft bill and corruption allegations’ effects on the economy, the country has been discussing the reforms on Internet regulations and new information regarding the controversial Sledgehammer Case. Meanwhile, Turkey’s foreign policy has been dominated by its involvement in Syria.
The draft bill regarding the Supreme Board of Judges and Prosecutors created controversy in Turkey.
Following the 17 December graft probe the Supreme Board of Judges and Prosecutors (HSYK) draft bill aiming to restructure the board has continued to occupy Turkey’s agenda over the last week. The draft bill has been strongly opposed by the other political parties and the European Union. It was feared that the bill would undermine the principle of separation of powers as the proposed reforms of the AKP had granted extensive authorities to the President of the HSYK and had increased the influence and responsibilities of the Ministry of Justice over the commission. How these discussions will affect Turkey’s path to membership of EU will be seen when and how chapters 23 and 24 will (focusing on the judiciary) be opened. The government announced that it has been partially frozen on 24th January. According to Prime Minister Erdogan, 22 articles of the bill will remain to be passed in the parliament, but the articles related to the Justice Academy will be suspended. According to Anadolu Agency and daily Radikal, 96 judges and prosecutors plus 5000 police officials have so far been relocated by the government following the 17 December graft probe.
Leader of Hizmet (Gulen) Movement Fethullah Gulen expressed his views regarding these developments in Turkey. Preacher Fettullah Gulen, gave an interview to BBC. Gulen denied influence on the recent corruption probe, however, argued that corruption claims are certainly valid.
Corruption and judicial independence in Turkey was also a significant topic for Europe this week.
The latest corruption probe against the government, and the subsequent removal of hundreds of policemen and prosecutors have certainly damaged the governing party, thus Turkey’s international image as a transparent and fair democracy. The European Commission had expressed its concerns about the proposed Court of Accounts Law and law regarding the Supreme Board of Judges and Prosecutors (HSYK as well as the removal of prosecutors. Thus, during his trip to Brussels PM Erdogan was expected to persuade the European commission of the state of Turkey’s democracy.
After the trip, the head of the Venice Commission Gianni Buquicchio stated that Turkey evaded a serious threat by freezing the bill regarding judicial reforms. Furthermore, Director for Enlargement of the European Commission Alexandra Cas Granje had defined the new law regarding the HSYK as disregarding the rule of law and the separation of powers as well as eliminating judicial independence.
Corruption allegations have impaired investor confidence in Turkey.
Turkish economy has been facing problems since the first talks of US tapering in late May. The country’s economic performance during the last decade has been shielded by the structural problems not least as a widening current account deficit and lack of savings. Foreign investors have always expressed their doubts on the weaknesses stemming out of these structural problems. The immediate consequences of investors’ concerns seem to be exacerbated by the recent social unrest in June and graft probe revealed by the public attorneys, who are claimed to be followers of Gulen movement. It is said that the lira has lost 30 percent of its value since May with no major improvement in inflation or in current account deficit. The effects of these recent events on Turkish economy were assessed by the minister of Treasury, Ali Babacan, in an interview in Davos, Switzerland, World Economic Forum.
In his statement, Babacan said that the recent graft probe has incurred different types of costs that were to be assessed distinctively from each other. The minister announced interest rates have increased 0.98 percent which raises the cost of borrowing of the Treasury. The depreciation in the currency has incurred extra costs on the private sector debt of 255 USD billion. According to the minister, however, the volatility in the currency has no major impacts on the household and the public borrowings as they are nominated in the local currency. Further, banking sector is solid due the structural reforms made since 2002. Babacan sees only the loss of value in company stocks in Istanbul Stock Exchange as a major problem. Indeed he claims that this is the only effect of graft probe in 17 December. He stated that between 17 December and 17 January there has been a loss of almost 47 billion USD in the corporate values, approximating a 17 percent. He defines this capital outflow from stock exchange as a loss of wealth of Turkey.
The graft probe increased concerns over the independence of judiciary as well as rule of law. Even though these concerns inflicted upon investors’ concerns over Turkish economy and increased the retreat of capital, Babacan has a different take on the issue. He said that there is no capital outflow from Turkey on the long-run. What we see here is temporary reaction due to the recent events. The government planned change in the structure of judiciary should be seen as sending a message to foreign investors that there is only one state and one government in Turkey, whose anchor in law and economics is the European Union.
Despite hard attempts from Minister Babacan in Davos, not to forget the minister of Finance, Mehmet SImsek’s investors trip to New York and London, in placating the markets and talking the foreign investors out of their concerns, Turkish economy and especially the lira are opening up every day to a new record low. The markets woke up to the 27th January with a severe decline in the value of currency, where lira hit bottom to 2.39 against the US dollars. This was the point where the Central Bank of the Republic of Turkey stepped in after three years and announced an extraordinary meeting to be held on the 29th evening and apparently its decisions will be released at midnight. No one knows what this mystery meeting will bring about but the markets reversed the decline of the lira with an expectation of an increase in interest rates at least about 300 basis points from the tomorrows midnight decisions. The lira appreciated back around 2.30 after this unexpected meeting announcement.
The Turkish Industrialists and Businessmen’s Association (TUSIAD) also warned against economic instability in the country due to concerns over corruption allegations.
It seems even if Turkish government ceases the current political turmoil that had a major impact on the economy, they still need to work on structural problems, such as current account deficit and lack of savings that are waiting to be resolved to restore confidence of foreign investors.
On a different note…
Proposed reforms to Internet regulations highlighted the issue of freedoms in Turkey.
Another controversial bill last week was the internet usage law put forward by the government. The measure would allow the government to keep records of internet users for up to two years and block access to websites deemed to be illegal or violate privacy. Protests took place Istanbul and Ankara against this bill and riot police dispersed the protestors with water cannons.
TUBITAK declares key evidence in Sledgehammer Case has been tampered with.
Scientific and Technological Research Council of Turkey (TUBITAK) suggested in a report that one of the key evidence, date and time of files on a hard disk, in Sledgehammer (Balyoz) Case had been amended. Sledgehammer Case was a coup plot case against the government in which prominent military officials were convicted. TUBITAK’s report might lead a retrial of some military officials.
| On a different note…
Turkey has been blamed for supporting Islamist rebels in Syria.
After the release of the report revealing the extent of tortures, executions and similar violent means employed by the Syrian regime, the Geneva II conference formed one of the highlights of the week. As the world looked to see if any meaningful changes would emerge from the conference, Turkey’s foreign policy was significantly challenged by both Syrian and international actors. The Syrian Foreign Minister Walid Muallim accused PM Erdogan of “training terrorists” in Turkey. Referring to the armed rebels in Syria as “terrorists” Moallem demanded that Turkey stopped supporting them.
Meanwhile a similar accusation had been made by British newspaper The Telegraph. After interviewing a member of the Al-Qaeda affiliated Islamic State of Iraq and the Lavent, Journalist Ruth Sherlock alleged that Al Qaida affiliated organizations had a network of safe houses in Turkey.
Meanwhile, the mystery surrounding the contents of multiple trucks remained a controversial item in Turkey’s agenda. While, the Turkish National Intelligence (TNI) Organization continued to prevent certain trucks being searched near the border, an investigation has been launched into the prosecutor and the gendarmes that were responsible for the investigation of the trucks.
The gendarmes had searched the trucks travelling to Syria, after receiving a tip that they were carrying arms. The contents of three trucks were quickly defined as belonging to the TNI and declared confidential. The opposition parties have used the incident to highlight the possibility that Turkey is sending arms to Syria under the ruling party.
On a different note…
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