Turkey’s new course

Situated between Europe and Asia, Turkey is in the perfect position to be the partner of choice for both regions

Turkey has recently been at the forefront of international economic and political debates. On the one hand, Turkey remains the world’s second-fastest growing economy, after China. On the other hand, there is almost no issue on the global agenda on which Turkey is not playing a visible role. This is a rather new phenomenon. Until a decade ago, Turkey was regarded as no more than a staunch NATO ally. That began to change in 2002, when an era of political stability dawned, giving rise to a vision for a stronger Turkey – and a firm commitment to realising that vision.

To this end, Turkey’s governments since 2002 implemented bold economic reforms that paved the way for sustainable growth and provided a firewall against the financial crisis that hit in 2008. As a result, in less than a decade, GDP has tripled, making Turkey the world’s 16th-largest economy. Moreover, the country benefits from strong public finances, prudent monetary policy, sustainable debt dynamics, a sound banking system, and well-functioning credit markets.

At the same time, we expanded the scope of individual rights, which had long been subordinated to security concerns. We streamlined civil-military relations, guaranteed social and cultural rights, and attended to the problems of ethnic and religious minorities. These reforms transformed Turkey into a vibrant democracy and a more stable society.

A change in the wind
Quite simply, we stopped viewing our geography and history as a curse or disadvantage. On the contrary, we began to regard our location at the crossroads of Europe, Asia, and the Middle East as an opportunity to interact with multiple players. As a result, we began to reach out to countries in our region and beyond. We tried to expand political dialogue, enhance economic interdependence and strengthen cultural and social understanding.

And, while ten years is too short for a definitive assessment of such an ambitious policy, we have undoubtedly covered considerable ground. For example, we have quadrupled our trade volume with our neighbours alone.

On several occasions, we have also been instrumental in facilitating peace and reconciliation. But, what is more important, Turkey has become a model of success that many countries around us now seek to emulate.

And yet, until a year or two ago, some political pundits were asking, “Who lost Turkey?” or “Whither Turkey?” – the assumption being that Turkey had shifted its foreign-policy axis away from the West. In fact, Turkey’s external orientation has remained constant, because it rests on the values that we share with the free world. What has changed is our increased assertiveness in our efforts to ensure greater stability and human welfare in our region, evident in our advocacy of freedom, democracy and accountability.

Aid and assist
This approach has been reflected in the Arab Spring, which Turkey ardently supported from the outset. We have not hesitated in siding with those fighting for their rights and dignity. Indeed, in countries like Tunisia, Egypt, Libya, and Yemen, which are now attempting to institutionalise change, Turkey is their most active partner, sharing our own experience and providing tangible assistance in the form of economic cooperation and political capacity building.

In Syria, on the other hand, the revolution has not yet come to fruition, owing to the regime’s brutal repression of its opponents. Turkey is doing all that it can to alleviate the Syrian people’s suffering. Unfortunately, the international community as a whole has so far performed poorly in providing an effective response to the crisis.

Turkey’s position on Iran’s nuclear programme has been similarly clear: we are categorically opposed to the presence of weapons of mass destruction in our region.

Attempts to develop or acquire WMDs might well trigger a regional arms race, leading to further instability and threatening international peace and security. That is why we have always called for the establishment of a WMD-free zone in the Middle East, including both Iran and Israel.

We support Iran’s right to use nuclear energy for peaceful purposes. But Iran’s programme must be transparent, and its leaders must assure the international community of its non-military nature. The key is to close the confidence gap and pave the way for meaningful dialogue. In April, we hosted the inaugural round of revived talks between the international community and Iran. Let us be clear: there is no military solution to this problem. Military intervention would merely further complicate the issue, while creating new layers of conflict in our region and beyond.

Becoming a key player
In this and other matters, Turkey strives to act as a ‘virtuous power,’ which requires us to align our national interests with values such as justice, democracy and human dignity: to achieve our foreign-policy goals through mutual cooperation rather than coercion.
Effective multilateralism is a key facet of this vision. Turkey served as a member of the United Nations Security Council in 2009-2010, and is now seeking another term in 2015-2016. Given the crucial importance of developments in our part of the world, Turkey’s contribution to the Council’s work promises to be highly valuable.

In 2015, moreover, we will assume the presidency of the G20, and we are committed to using our means and capabilities to make it a more effective organ of global governance.Turkey’s internal transformation over the past decade has placed it in an ideal position to benefit the region – and thus the global community. While we have accomplished much already, more is required of us. Given the challenges of our neighbourhood, and the region’s central role in global affairs, Turkey will not refrain from taking on new responsibilities.

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The May – June 2013 Issue

Highest corporate tax
rates in Europe

European countries are scrambling to raise every last penny of funds through taxes. But some countries may have gone too far...

Belgium

Though all business taxes in Belgium can be paid online with little effort and preparation, the rates are still sky-high at 57.7 percent, including a staggering 50.8 percent total rate on profits only in social security contributions.

Belarus

In Belarus, a company spends up to 338 hours annually preparing for and paying ten different taxes and duties. The total tax rate has incredibly been lowered to 60.7 percent, from 117.5 percent in 2008.

France

A company in France pays seven different taxes and duties, the sum of which can amount to 65.7 percent of profits; though President François Hollande has announced a wave of business tax rate cuts coming up.

Estonia

A business in Estonia pays 67.3 percent of profits in tax, 37.2 percent exclusively in social security contributions. The country has gone against the grain in Europe by raising businesses taxes from 48.6 percent in 2008 to the current rates.

Italy

While corporate income tax (IRES) in Italy is limited to 38 percent of taxable profit, a company operating in Italy can expect to pay 14 other taxes and duties, including social security contributions, bringing their total payable tax to 68.7 percent of profits, according to the World Bank.

Norway

Norway taxes motor fuels twice, with a road use tax and a CO2 emissions tax. Combined with strikes in the energy sector that have curbed output, the price of gas at a local pump has soared to $10.12 per gallon.

Turkey

Though Turkey sits on the Suez Canal and neighbours many oil rich countries, the price of a gallon of average gas clocks in at $9.41 in Turkish pumps, because of a 60 percent share of taxes. 

Israel

Like Turkey, Israel is surrounded by oil-rich neighbours, but drills very little itself. Gas prices are controlled by the government, so about half of the $9.28 per gallon goes to taxes.

Hong Kong

There are few gas stations in Hong Kong, but the ones available charge up to 76 percent more per gallon than mainland China, where the government caps the cost of fuel. A gallon at the pumps will cost around $8.61 on the island.

Netherlands

Expensive labour costs make the Dutch petrol prices the dearest in Europe, at $8.26 per gallon; though the 57 percent tax add-ons don’t help.

The credit crisis

8 February 2007
HSBC warns of subprime mortgage losses

2 April 2007
New Century goes bus

14 September 2007
Wholesale markets have dried up

17 March 2008
Rescue of Bear Stearns

7 September 2008
Rescue of Fannie Mae

15 September 2008
Lehman Brothers file for bankruptcy

3 October 2008
US congress approves $700bn bailout

14 February 2009
$787bn stimulus approved by congress

 

The effects of the current financial crisis are global and irrefutable. With the collapse of Lehman Brothers, the domino effect of irresponsible public monetary policies, huge levels of unsustainable debt, and a deregulated financial sector, has escalated to the point where no corner of the globe has been left untouched.

1973 oil crisis

October 1973
Syria and Egypt launch an attack on Israel on Yom Kippur and set off a twenty day war;

1977
US President Carter creates Department of Energy, which develops the US strategic petroleum reserve

 

The Organisation of Petroleum Exporting Countries (OPEC) used their oil reserves as a weapon with the Arab Oil Embargo against those who supported Israel. By January 1974, world oil prices were four times higher than they were at the start of the crisis, especially in the US, and the shock led to a huge drop in the stock market with NYSE losing $97bn in just six weeks.  The embargo lasted five months, and the effects are still seen today.

German hyperinflation

1922-1923

Hyperinflation
1923 – 1924
Stabilisation

 

The trouble began when Germany missed a repatriation payment, worth about one third of the German deficit in this period. Inflation was already high but by 1923 it was raging. Prices doubled within hours, and by late 1923, it cost 200bn marks to buy a single loaf of bread. People burned money as it was cheaper than buying firewood. Germany eventually regained control of its economy when it introduced the Rentenmark into circulation in 1923, and then the Reichmark in 1924.

The Great Depression

1929-1933
The Great Crash
1934-1939
Recovery and Recession

 

After the decadence of the Roaring Twenties, the 1930s saw the biggest economic slump of all time. The stock market crashed on 29 October 1929, and optimism and decadent living tumbled along with the figures. The GDP fell from $103.6bn in 1929, to $66bn in 1934 and the subsequent years of recovery were the most dramatic in US history.

1907 bankers’ panic

1907
Otto Heinze and his brother Augustus Heinze bought shares of United Copper.

 

The stock market was already cautious over the tight money supply, but the US was thrown into a depression after the stock market fell nearly 50 percent from its peak in 1906. The Heinze brothers thought they could influence market shares but ended up bankrupting lenders that provided the financing to buy the stock. A chain reaction left nine institutions bankrupt. By February 1908, the panic was over and the government created the Federal Reserve system, to prevent banks from exercising too much control over the economy.