Turkey needs investment
Turkish central bank has been releasing ODI to FDI figures. ODI means “outward direct investments” by Turks, and FDI stands for “foreign direct investments” from abroad into the Turkish economy. The ODI to FDI ratio was around 15 percent in 2002-2007. The ratio has risen to around 37 percent in 2012-2016.
For every $100 coming into Turkey, $36 goes out. That was $15 in 2002-2007, mind you. Both foreign and domestic investors just prefer to not invest in Turkey. That means they have no confidence in the country’s future.
I see three reasons for that. First, Turkey has a bad image. The administration has been looking less practical and more ideological for some time now. Turkey also made mistakes in the past, but investors always knew that it was trying to do the right thing. Its intentions were clear. That’s what the country has lost in the eyes of investors.
Second, Turkey has until recently been an island of security in a tumultuous region. It now looks like we’ve lost that sense of security and it will be some time before we regain it. What happened in Nice on Thursday night happened in Turkey many times. That is why I see the security situation in Turkey as a second deterrent of investments in the country.
Thirdly, there is an issue with rule of law in the country that lowers the appetite of investors. Both foreign and domestic investors need judicial impartiality. They need to know that they won’t have to court too many gangsters and politicians to be treated fairly. Turkey has been and still is doing its utmost to prove that there is no impartial judiciary in the country. How else you can explain a situation where judges are sacked by direct legislative action?
Despite all this, Turkey knows that it needs investment. Last week, two things happened in the country that can be taken more positively in this bleak environment. Mending fences with Israel and Russia attests to the fact that Turkey has not lost its flexibility and capacity to maneuver. This shows that President Recep Tayyip Erdoğan is still as pragmatic as he was before. That should boost investor morale, if you ask me.
Also, after the Islamic State of Iraq and the Levant’s (ISIL) heinous Istanbul Atatürk Airport attack, President Erdoğan recited Surah az-Zumer, a Quranic verse, when talking about radical ISIL terrorists. “İlâ cehennema zumera” he recited, “they will be driven to Hell in groups, they are not Muslims.” After the tragic attack in Nice, France’s president declared a state of war against ISIL. They are right. We are all together in this new war against radical terror. Turkey appropriately declared that its flags would fly at half-mast. I think this government recognizes that it has a pivotal role to play in this war, not only in defeating radical Salafist groups in the field, but in the ideological sphere. I see the remarks of President Erdoğan as preparation for that global role. A new Economic Policy Research Foundation of Turkey (TEPAV) survey indicates that despite all of Turkey’s exposure to radical, violent Salafism, only little more than one percent of its population has succumbed to its ideas. That is no coincidence. Turkey, with institutions such as the Directorate of Religious Affairs (Diyanet), and its history of empire will have to come up with creative steps to take the ideological battle to ISIL and similar groups in the near future.
In sum, yes, Turkey is in a grim state. But the country is more than the sum of its parts, and I believe that its pragmatic nature will come through in the end to save the day, as it has so often before.