What is the cost of terrorism to Turkey’s economy?

I should say at the beginning that I won’t drown you in many complicated figures and calculations. The answer of the question in the title was already given by Finance Minister Mehmet Şimşek last December - though things have changed so much since then that a quick reminder seems necessary. In a country like Turkey where the agenda changes not in years, but in minutes, please don’t scoff at such reminders. 

Turkey has lost some $350 billion directly and $1 trillion indirectly over the last 30-40 years due to terrorism and its spillover effects, Şimşek said in a speech on Dec. 26, 2014.

“It is not easy to calculate how much terrorism costs Turkey. Turkey has lost around $350 billion over the last 30-40 years due to terrorism, according to several experts. We can say that terrorism has cost Turkey around $1 trillion overall,” he said.

Due to terrorism, Turkey’s eastern and southeastern regions have been unable attract direct investment, despite fertile agricultural soil and a young population, Şimşek also noted. 

“Terrorism and other unlawful actions, such as drug trafficking, fuel each other. Organized money laundering is the biggest problem here. The fight against these actions must be multilateral,” he added. 

As the minister pointed out at the time, under the shadow of terrorism Turkey’s eastern and southeastern regions could not see investments or tourist flows for many years. This is without even mentioning the thousands of people who lost their lives during the conflict. 

In the last couple of years, Turkey and its eastern regions seemed to finally be leaving the disastrous days behind them - on the way to flourishing with the peace process. 

For instance, the peace talks helped boost the tourist flow to eastern and southeastern Turkish provinces that were roiled by violence in previous years - a report issued by Turkey’s top tourism organization found. 

According to the “Resolution Process and Regional Tourism Report” released by the Association of Turkish Travel Agencies (TÜRSAB), the number of local and foreign tourists visiting the region reached 1.5 million in 2012 and surpassed 2 million in 2013.

Leading tourism authorities in the region, however, said a couple days ago in a joint statement that now they face dramatic losses with the rise in violence after the peace process was blocked. 

It is not only, of course, about tourism. There was also a moderate rise in investments in the region. A legal package was also announced in 2012 to attract investments to eastern and southeastern Turkey. The package included payments by the state of insurance charges for 10 years. Those moves came after armed clashes in the southeast impacted the development potential of the region, as thousands of people moved from their hometowns to larger cities to live in safer conditions and to find jobs.

Indeed, we had started to hear good news about rising employment opportunities in the region thanks to the calmer situation. However, we have all seen the blocking of this highly advantageous process - temporarily, we all hope - after the June election. Turkey is now entering yet another election cycle amid rising political and economic uncertainties and security concerns. 

In economic terms, just ahead of the expected rate hike by the U.S. Federal Reserve and amid deteriorating neighboring economies, the Turkish economy is most probably facing tougher times. 

Rather than seeking solutions about how to thwart these risks and mobilizing a comprehensive reform agenda, it is definitely not good for Turkey to apparently be returning to the bad old days.