Three years after Prime Minister Recep Tayyip Erdogan stormed out of the World Economic Forum in Davos, vowing never to return, he has invited the organization to Istanbul as part of Turkey’s bid for regional leadership.
Erdogan abandoned a panel with Israeli President Shimon Peres in January 2009, protesting the invasion of the Gaza Strip. The move won him regional acclaim, adding a reputation for political forthrightness to the allure of Turkey’s booming economy. At the forum’s conference on the Middle East, North Africa and Eurasia this week, Erdogan will be seeking to expand Turkey’s influence as host, rather than absentee guest.
“The premier had an outburst in Davos, fine, but isolating Turkey from events like this isn’t a solution,” said Suhnaz Yilmaz Ozbagci, a professor of international relations at Koc University in Istanbul. “As the host, you’re the lead actor, which is what Turkey wants: to be a global power.”
Since Erdogan’s Davos walkout, political unrest in the Arab world and the debt crisis in Europe have brought upheaval to Turkey’s neighborhood. That poses challenges for Erdogan’s management of the $800 billion economy, as Europe’s contraction hits exports, and to his diplomacy after efforts to cultivate ties with Syria’s Bashar al-Assad backfired.
For Turkish companies, crisis may bring opportunities. The country’s benchmark stock index has added 11 percent this year, outperforming all European peers and trailing only Egypt’s EGX-30 among Middle Eastern benchmarks.
‘Balkans to Afghanistan’
Ersin Ozince, chairman of the biggest listed bank, Turkiye Is Bankasi AS, said last month that lenders have an historic opportunity to expand outside Turkey. He said his own bank is looking at opportunities “from the Balkans to Afghanistan.”
Billionaire Ferit Sahenk, due to speak at a forum panel tomorrow on emerging markets as financial hubs, has announced plans to invest as much as 300 million euros ($373 million) in Greek marine assets. Sahenk sold shares in Turkiye Garanti Bankasi AS, the most valuable company on the Istanbul bourse, to Spain’s Banco Bilbao Vizcaya Argentaria SA last year as part of a $2.1 billion deal.
Guler Sabanci, chairwoman of Haci Omer Sabanci Holding AS, is one of the co-hosts of the forum’s Istanbul event. The group’s cement units, Akcansa Cimento Sanayi & Ticaret AS and Cimsa Cimento Sanayi & Ticaret AS, are seeking acquisitions abroad to continue growing. They have 20 percent of Turkey’s market and regulations cap their share at 25 percent.
“The business community sees a broader role and opportunity” that’s reflected in Turkey’s decision to host the forum, said Varel Freeman, vice president of the European Bank for Reconstruction & Development, in an interview in Ankara on May 30, when the lender opened its second office in the country.
Erdogan has presided over growth averaging about 5.5 percent a year since his party came to power in 2002, and stated his aim of lifting the economy into the world’s top 10 by 2023.
The expansion of the past two years, though, has sucked in imports and left Turkey with the world’s second-biggest current-account deficit, equal to about 10 percent of gross domestic product. The crisis in Europe, Turkey’s main trade partner, and the conflict in Syria, where the government has pushed for expanded commercial ties, are making it harder to close the trade gap through increased exports.
Erdogan was feted during a tour of Egypt, Tunisia and Libya in September. The premier’s Justice and Development Party is cited as a model by the Ennahda movement in Tunisia and the Muslim Brotherhood’s Freedom and Justice Party in Egypt, which won post-revolt elections.
Elsewhere in the region, Erdogan’s policy of “zero problems” with neighbors has stumbled. He cultivated ties with Assad and opened the border to boost trade, before reversing course months into Syria’s violent crackdown on protests, which has left more than 10,000 dead.
Turkey now shelters leading members of Syria’s political and military opposition. The break with Assad has strained ties with Iran, a Syrian ally and one of Turkey’s main energy suppliers. Turkey, like most Western countries, has expelled Syrian diplomats and called for an end to Assad’s rule without saying how it can be brought about.
That suggests a cap on Turkey’s regional aspirations, said Naz Masraff, a London-based analyst at Eurasia Group, which monitors political risk.
“Turkey is unable to act and doesn’t want to act unilaterally,” she said. “There’s a major gap between rhetoric and reality.”