Turkey has been called lately a country that shines brighter than the BRIC states. Besides, it is sort of a model of democracy for the countries of Northern Africa and the Middle East. But as recently as 10 to 15 years ago Turkey was called “sick man of Europe.” In an exclusive interview with The Day, Serhii KORSUNSKY, Ukraine’s Ambassador to Turkey, who took part the other day in a Kyiv conference of the heads of Ukrainian diplomatic missions, reflects on why Turkey recovered and achieved success without IMF loans and on the prospects of Ukraine-Turkey cooperation.
Mr. Ambassador, a book entitled Last Man Standing: Memoirs of a Political Survivor by the former British Foreign Secretary Jack Straw came out recently. In a chapter that deals with Turkey, he notes that the rule of the Justice and Development Party was the most successful in that country and adds: “The sick man (of Europe) has recovered. With economic power, Turkey has also achieved diplomatic power.” What will you say to this?
“Turkey was really called ‘sick man of Europe’ in the 1980s and 1990s. Why? That country was constantly going through some upheavals, governments changed one after another, not to mention economic and financial instability. The situation in the country was very difficult. Then the now ruling party came to power in 2002 and brought about radical changes. They carried first a financial and then a series of economic and political reforms. There has been stability in the past 10 years, without any coalition governments. The one-party government is steadily leading Turkey in a predetermined direction. The GDP has trebled in this period, while the per capita income is now 10,000 dollars and is expected to rise to 25,000 by 2023. It is now a totally different country. This period has seen the establishment of about 80 universities and dozens of science parks. Almost all the leading European producers have industrial facilities in Turkey. It is Europe’s 6th and the world’s 16th best economy. The government has set a goal to be among the world’s ten most developed countries. I am convinced that this will be done. Incidentally, the country has no large natural resources – neither oil nor gas. They pay 500 dollars for gas, as we do. Gasoline goes at 2.3 euros a liter at filling stations now – the world’s highest price after Norway. The grassroots are paying, and there is no revolution at all. Why? Because every Turk knows there is a possibility to earn. One and a half million jobs have been created in the country.”
You said the government is steadily leading the country in a predetermined direction. Could you be more specific: towards the EU or elsewhere?
“Next year Turkey will mark the 50th anniversary of signing an agreement on association. There have been negotiations on membership in the past five years. But the talks remain suspended at the moment due to a number of problems, including that of Cyprus. Indeed, the leading EU states opine today that Turkey should enjoy some status of a privileged or strategic partner. But Turkey says in reply: ‘we are prepared to join the EU tomorrow. You have problems with the aging population – we will solve them. You have problems with economic dynamics – we will revitalize your economy, but we will not kneel down and lament you if you don’t want us.’ For this reason, the membership question has somewhat gone off the newspaper pages and the party’s program documents, but European integration still remains because these are different things. European integration was and still is regarded as a powerful mechanism of reforming the country. There must be a political and economic reform and it is beyond any doubt that Turkey will follow this way. But membership has been temporarily shelved. At the same time, Turkey begins to understand, let us say it bluntly, not without our help, that regional hegemony in the Black Sea region should give way to cooperation between the countries that are more or less similar by their clout, territory, and population. Ukraine and Turkey are the two key states.
“Turkey receives 90 percent of investments from the EU, and the European Union accounts for 50 percent of its trade. For this reason, Turkey’s GDP is now growing by three percent instead of eight percent, as was the case before. This means that Turkey has reduced export to the EU. Therefore, the Turks and we are seeking some joint mechanisms of survival. First of all, we have introduced a reciprocal visa-free regime and are negotiating on free trade.”
“THE TURKS ARE DEFYING ALL DIFFICULTIES, FOR THEY KNOW THAT THERE ARE NO EASY MARKETS IN THE WORLD”
“There are many factors here. First of all, it is a very strong and effective banking system. In the summer of 2009, when I came to Turkey, dozens of US and European banks had gone bankrupt, while Turkish banks were showing record profits. I asked many bank owners: ‘what is the secret?’ They said: ‘we have a very good legislation and a clear-cut regulatory policy, we are expanding the range of services, we and the government share the same opinion about the economic policy aimed at domestic consumption.’ It is a right thing to do in a period of crisis – carrying out infrastructural projects and activating the domestic market is a way to survive.
“Another component is traditional for many Oriental countries, including Turkey. It is a specific holding-type system of business based on powerful family holdings of a very similar structure. Take, for example, Koc, Dogus, Sabanci, and Cukurova – they all comprise some industrial facilities, powerful construction companies, retail business, and, obligatorily, a bank. This holding-type system allows acting very flexibly if one of the sectors sags. The main thing is an inside bank of their own. But this bank is never confined to the holding’s affairs. On top of these pyramids are very professional people with an American or European education. The holdings have offices all over the world and work actively abroad. This is the foundation of Turkey’s economy, which allows the latter to survive even in difficult conditions.
“Whenever we negotiate with them (and I personally know most of the holding heads), for example, the project of a major ring road around Kyiv, they say approximately the following thing: ‘You need investment – we will do this. It is no problem to find 2 to 5 billion dollars in our holding because it is our own money. We don’t need to go to Europe for loans.’ The Turks do not borrow IMF loans. In 2009 the IMF besought Erdogan to borrow a 30-billion-dollar loan. Erdogan said: ‘I will take it on my conditions only,’ and, after all, he did not take it. And they announced at the congress that they would pay off the IMF debt and never again work with them.”
Why?
“Because the IMF imposes tough conditions on the way the economy should function. Turkey said: ‘we don’t need this, for we are marching down a road of our own.’ They have a brilliant national bank governor and a very efficient minister of finance. This means that Turkey has borrowed very much from Europe and the United States – they learned to work to high standards, still having an Oriental mentality. What can well illustrate the latter is what happened during the Prime Minister of Ukraine’s visit to Istanbul, when we met Turkish businessmen, some of whom complained about the conditions of work in Ukraine. It is a tradition when everybody complains no matter whether there is or there is no problem. One businessman said very aggressively: ‘there are endless problems, I am fed up with your customs service, and so on, I’ve been to Ukraine for 15 years…’ The premiere asked him about his plans. He answered: ‘I will stay on here. This is the mentality of Turkey.’ The Turks defy any difficulties, for they know that there are no easy markets in the world – neither American, nor European, nor any other markets are easy. It is always difficult to work. Money does not come easily to business. The Turks are extremely hardworking people: they are prepared to work with us and, at the same time, to be patient and try to resolve problems. It is on such people and such holding companies that the Turkish economy rests.
“This is why I am saying that the human potential, the structure of business, and a very clear-cut and strong financial system are the basic elements that make an economy stable.”
“Turkey’s economic successes are undeniable, but it is also true that there are some problems, such as unemployment that has reached 8 to 10 percent. In a situation when the average age is 28 and there are more men than women aged 65 and below, this presents a problem because it is traditionally considered here that a man should keep up the family. Besides, there are, of course, people who are dissatisfied with the living standards or some other sociopolitical conditions in the country. But I would like to point out that the number of migrants has noticeably gone down in the past few years. The Turks who currently reside in Europe moved there quite a long time ago, when the situation in Turkey was much worse.”
What do you think about the current position of Turkey in the face-off with Syria? Is the reaction of Ankara perhaps excessive? Can this further destabilize the situation in this region?
“In my personal opinion, Turkey is taking quite an adequate attitude to the situation in Syria. The Turkish territory is being shelled, and some people have been killed. How else should the country react? I think the Turkish government has been taking a patient attitude to the hostilities near its borders for quite a long time, trying to settle the conflict by diplomatic means. But this produced no results. There are 100,000 Syrian refugees on the territory of Turkey, but neither of the warring sides seems to intend to seek a peaceful settlement of the conflict. I am sure that Turkey does not need a war, which that country’s top officials have said more than once. But, naturally, the situation, when Turkey and Syria have been exchanging fire for a week, cannot but raise concern.”
Some experts believe that Turkey is trying to host all the energy routes and this may pose a threat to Ukraine which is also a transit country. What do you think?
“I have heard this opinion and I know a thing or two about energy. So I can say very confidently that the situation is absolutely different. We and the Turks are partners rather than rivals, and it is in the two countries’ interests that the projects, now being carried out with Turkish participation, will be completed.
“I mean first of all the new gas pipelines that will be built across the Turkish territory to carry Caspian gas to Europe. An international intergovernmental agreement has been concluded with Azerbaijan in the TANAP (Trans-Anatolian Pipeline) project. If implemented, the project will allow 16 billion cubic meters of Caspian gas to be pumped to Europe. This project, known as Southern Transport Corridor, is supported by the European Union.”
“THIS WILL BE THE END OF SOUTH STREAM EVEN IF IT STARTS”
But where is a place for Ukraine here?
“Turkey fully supports our intention to join this project. There are negotiations going on with the Azeri side because they own 80 percent of shares and we can enter at the expense of their quota. It is technically possible to supply our pipes, our equipment and compressors, and our specialists for the construction of pipelines. Besides, it is technically possible to practically obtain TANAP gas either by way of swap operations or by way of reverse pumping. Even if we do not get the gas, it will be still to our benefit that a gas market has been formed in Central Europe, which will eventually prevent Gazprom from dictating prices to Central European consumers. It is good for us because this will put an end to Gazprom’s monopoly and remove the sword of Damocles now hanging over us. In addition, I hope this will be the end of South Stream even if it starts because TANAP and South Stream are incompatible. This route does not need so much gas.
“We and Turkey have a complete mutual understanding about these matters and liquefied gas projects. We managed to persuade our Turkish partners that it is not some kind of politicking or a whim of Ukraine. It is an objective necessity. Otherwise, we will not be able to develop. We must diversify the supply of gas. Naturally, we are taking into account Turkey’s concern over the Bosporus, but we must do our best to find the ways of diversification. They are aware of this. They also have a similar problem. They also pay a very high price for gas – the same 500 dollars.”
You mentioned liquefied gas. Some experts are saying there will be no LNG terminal on either the Turkish or the Ukrainian shores.
“Let this remain on the conscience of these experts. It is not a case of guessing on tea leaves – will or will it not be? This project will of course be carried out, for the government of Ukraine has resolved to do so. This project will never be carried out if we keep turning back to hear somebody say something. Nobody is saying that liquefied gas is cheap. Nobody is saying that it is cheap and easy to implement this project. But we don’t have another option. That’s all.
“We are pinning some hopes on the sea shelf, but it is a remote prospect. An LNG terminal can be built sooner. The TANAP pipeline project will be carried out in 2017-18. We have to hold on until that time. So we are searching for all the possible options. But if something really happens to our benefit, it will be Turkey. This is why I suggested (and I am so pleased that this was supported at the level of the president, the Cabinet, and especially the Ministry of Foreign Affairs) that we and Turkey should form a package of joint projects which will allow us to be called strategic partners. This has finally happened. It is the greatest joy for me.”
