27 May 2014 News Roundup

 Photo credit: Middle East Eye, http://www.middleeasteye.net/


Inspections into the conditions of the Soma mine and the search for those responsible for the tragic disaster have been continuing, while a new bill that could expand the use of subcontractors is being drafted by the government. The controversial deaths of Ugur Kurt and Ayhan Yılmaz in Istanbul during a memorial for Berkin Elvan have dominated the headlines this week. The central bank has decreased the one week repo rate despite an increase in headline inflation and new data shows real estate sales have been decreasing.

Following to Soma Mining disaster, new information regarding Soma Holding and ineffective regulations and inspections by the government has been unfolding in the last week.

It is reported that Soma Holding won bids worth of 70bn TL in the last 7 years. The small company began winning bids from 2005 onwards and some mine sites were given without any public bidding by the Turkish Coal Enterprises (TKI).Reports of processes of recruitment and working conditions in mines revealed a case of modern slavery in 2014 Turkey.

A group of miners called for resignation of mining union officials, which resulted in one official’s resignation, however the miners expect more resignations. Also, miners urged the state to take over the management of mines from private companies. The owners of the Soma Holding have been released, only general manager and two engineers and two supervisors have been charged with manslaughter. Nobody from the government has resigned so far. PM’s aide Yusuf Yerkel who kicked a Soma miner during PM’s visit a day after the explosion in the mine has finally been removed from his post.

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Protests and clashes with the police continued.

Two men, Ugur Kurt and Ayhan Yilmaz, were killed by gunshots in clashes with the police during a memorial for 15 year old Berkin Elvan who was killed during Gezi protests in 2013 and for the Soma miners. Ugur Kurt was said to be a bystander and be attending a funeral at a Cemevi in Okmeydani, a district in Istanbul.

PM Erdogan commented that the police could not stand idly by when protests took place whereby Molotov cocktails were used. He added that he did not comprehend the reason for holding memorials for Berkin Elvan who died in March as, he stated, his death has become ‘a thing of the past’.

Residents of the district where Ugur Kurt died, have claimed that they witnessed the shooting against the Cemevi, however the prosecution has not requested their statements.

PM Erdogan visited Germany.

Amid intensive criticism from German media and politicians regarding restrictions of rights and freedoms in Turkey, PM Erdogan called the Turkish-Germans to integrate, but not to assimilate.

An earthquake occurred in western Turkey.

An earthquake originating from the Aegen Sea striked Western Turkey. The regions of Istanbul, Izmir and Antalya have felt the tremors. 270 people were hospitalized with minor injuries.

A new bill is being proposed by the Economy Coordination Commission that may expand the use of subcontractors in Turkey.

The new bill is being prepared by the Ministry of Finance, the Ministry of Employment and the Treasury jointly. According to the new bill, employers will be able to use subcontractors (Turkish term: taşeron) for all the work that is required by their company, including the main job responsibilities. Thus, it will be possible to employ subcontractors in factories, hospitals, even the media. The bill also states that illegally employing subcontractors will be allowed once the employer pays the subcontracted employee as much as a normal employee’s salary. If the bill is confirmed by the cabinet, it will be put to the parliament for debate.

It is alleged that a Syrian woman has been killed by the Turkish military forces in the south-eastern border of Turkey.

According to the news sources, the security forces were trying to prevent four people from entering Turkey from Syria’s Rojova, when this woman protested against the detaining of these four people. It is being alleged that she has been wounded from her chest. On May 18th, a 28 year old woman was killed in front of her husband and two children, and a 14 year old child was wounded from his head and lost two of his eyes, both while trying to cross into Turkey from Rojova.

The parliament finds it difficult to form a ‘Corruption Commission’, which was expected to be established by May 5th.

The commission, which is to investigate corruption amongst the ministers was to be formed by members of all the parties in parliament. The Republican People’s Party (CHP), the Nationalist Movement Party (MHP) and the People’s Democratic Party (HDP) had presented their list 20 days ago, however the Justice and Development Party (AKP) is yet to present its list of candidates for the commission. A special commission formed by the AKP has investigated the candidates of the opposition parties, and determined that only 2 of the 18 candidates were fit for membership to the commission. The investigations included statements of the MPs as well as their tweets on social media.

On a different note…

  • Mayor of Ankara, Melih Gokcek, asked the police to remove a protester during an election rally. The police removed the protester at this unlawful request.
  • 6 employees of a company providing improvements to a village’s grid circuit in the eastern city of Ağrı have been kidnapped. Three cars of the company have been burnt.

The assessments of international credit rating agencies on the Turkish economy and the interest rate cut by the Central Bank of the Republic of Turkey (CBRT) were prominent economy news last week.

On the side of global financial market, the expectations that the European Central Bank may support the economy with further monetary easing and the positive interpretation of the FED’s April meeting increased the global appetite for higher risks.

The week started with Moody’s announcement that the inflation increased more than the expectations of the central banks of some countries, including Turkey and Russia, and this would risk the financial structure of public and private companies in terms of credit ratings. Moody’s maintained the credit rating of Turkey at Baa3, but downgraded its outlook to negative in April.

Standards&Poor (S&P) also maintained the credit rating for Turkey at BB+ and the outlook as negative. BB+ is not below the investment grade. In its report, S&P noted that despite improvements in exports and contributions in the rebalancing of the economy, the risks on the Turkish economy still persists. Moreover, it is claimed that the political prospects in Turkey is less foreseeable, which creates risks in the economy.

CBRT cut the policy rate (one week repo rate) 50 basis points despite the increase in core and headline inflation.

The lower and upper bound of the interest rate corridor did not change, but the policy rate

was changed to 9.5% to 10%. In their announcement, the monetary policy committee emphasised the diminishing uncertainty and risk premium as well as decreasing interest rates in money markets. CBRT also added that they will closely watch the movements in the inflation and until any significant improvement in the price stability, CBRT will continue its tight monetary policy.

Fitch reacted to CBRT’s rate cut decision as confusing and added that the decision would affect the credibility of the bank adversely. Fitch listed a number of conditions for a better credit rating: a permanent improvement in current account deficit, better external financing and lower inflation rate.

Turkey Statistics Institute (TUIK) announced this week statistics on real estate.

In the first 4 months of this year, real estate sales decreased 7.5% compared to the same period last year. The retreat in the sales is reflected by a 33.5% decrease in sales by mortgages. TUIK expects that diminishing sales would incur an extra supply of a million real estates.

CEFTUS Insights Editors