THE
Introduction and Policy Recommendations
To learn more about MIEPA, click here
Several foreign born students living in California have completed a study of their home country governments' economic policies as compared to the MIEPA list of policies as outlined above. The study on Turkey is shown below. The ratings herein are based on the following rating scale:
RATING SCALE
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2003. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
TURKEY:
Comparison of Turkey's economic policies to MIEPA criteria as prepared by native student of Turkey, Mr. Brian Darwan, studying in San Francisco in Fall, 2003.
RATING SUMMARY
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 1.1 3.3 15.0 22%
2 0.6 1.8 15.0 12
3 0.8 2.4 15.0 16
4 2.5 7.5 15.0 50
5 2.0 6.0 15.0 40
6 2.5 7.5 15.0 50
7 1.9 5.7 15.0 38
8 2.2 6.6 15.0 44
9 1.8 5.4 15.0 36
10 1.1 3.3 15.0 22
11 1.0 3.0 15.0 20
12 1.3 2.6 10.0 26
13 1.6 3.2 10.0 32
14 1.3 2.6 10.0 26
15 1.5 3.0 10.0 30
16 1.9 3.8 10.0 38
17 1.2 2.4 10.0 24
18 1.4 2.8 10.0 28
19 2.5 5.0 10.0 50
20 1.7 3.4 10.0 34
21 1.6 3.2 10.0 32
22 1.6 3.2 10.0 32
23 2.7 5.4 10.0 54
24 2.8 5.6 10.0 56
25 1.9 3.8 10.0 38
26 4.1 8.2 10.0 82
27 1.5 3.0 10.0 30
28 3.8 7.6 10.0 76
29 2.0 2.0 5.0 40
30 2.0 2.0 5.0 40
31 1.5 1.5 5.0 30
32 1.2 1.2 5.0 24
33 1.0 1.0 5.0 20
34 3.0 3.0 5.0 60
TOTAL 62.6 132.0 375.0 35.2%
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1. Freedom of Internal Control: (1.1)
Turkey is a country with out a freedom. Kurds are not the only one who doesn’t have a freedom in Turkey. There is no such thing freedom of Speech, expression or any other types of freedom. If especially you are Kurdish, there isn’t even freedom of living. In any chance they get you will end up death in some corner or you have to deny your own identity. Turkish Secret Service, Army and Turkish Gangs are in control. For example you can not say anything about the founder of Turkey (Ataturk) you will be given Jail time, if you disrespect him in anyway like to give you an example of Leyla Zana, who was elected congress woman in Turkish parliament and she got arrested and sentenced for 16 years in the jail, her crime was, she sworn in Kurdish and she had cultural cloths on her. She is still currently serving in the Jail.
Source: Personal
2. Freedom of Speech (0.6)
Freedom of speech is included in the human rights laws. When we consider the freedom of speech we have to also consider the other human rights issues. These range from tortures to treatment of humans. Turkey does not have a good report when it comes to human rights issues. There are many cases reported about the violation of human rights and majority of them come from the Eastern Turkey where there is a Kurdish population in majority. The government disputes the allegations against them but the human rights commission does not seem to agree with the Turkish government.
There are a lot of examples of Human right violations and I personally have been through in few of them. I like to give you two examples which I think will help to understand what is the freedom of Speech and how does it affect people. I am from Eastern part of Kurdistan (which is under the Turkish rule) I was arrested for listening Kurdish Music and not to mention the torture I went through while I was in the jail. My crime was listening Kurdish cassette. In my second visit after settling in United States, I went back to my home town with my video cam. I started to take some shots where I have forgotten for almost 11 years and that was my first experience after a while, I started my shooting and in about five minutes I was stopped by an undercover and he was asking me stupid questions, like why am I taking pictures and if there is a human rights violation in United States. No where in the world you go to jail for listening music in anywhere in the world. For that reason only Turkey is a very unique country.
Source: Personal
3. Effective, Fair Police Force: (0.8)
Turkish Police force is the most brutal Police force ever. If you want to see some of the police brutality examples than I suggest that you watch the Midnight express. Police force is the main bribery sources in Turkey. Sometime they will stop you for no reason and ask you if you could give them enough money to buy a pack of cigarette, or cup of hot soup. Not only are they the beneficiary of bribery system. They are also involved all kinds of torture and brutality. They recently assassinated one of the top Police officer, whom loved the idea of cleaning police force as much as he can. He was the one of the kind, however he got killed during the middle of the time and no one has caught the suspects, which believed to be an inside job.
Source: Personal
4. Private Property: (2.5)
Turkey has no restriction on buying or selling property other than sales tax. However if you are buying property for business, sometimes favoritism could take place or maybe some bribery could involve. There are laws that clearly show how property should be sold or bought, following is totally different issue. Here are some laws that involve private property.
Real estate law in Turkey: Principles of ownership of immovable objects are in general identified in the Property Law section of the Civil Code. Property law includes not only ownership, but also acquiring and transfer of ownership, leasing the property and factors limiting property rights. Ownership law in Turkey According to the provisions of the Civil Code, every piece of real estate will be recorded in the title deed register of the place where it is located. The title deed is the official document which shows who has ownership rights over the real estate and upon which the owner's name and photograph appears. Any restrictions which were placed on the real estate while it belonged to previous owner may be applied to the new owner after the transfer. Purchase by foreigner’s law in Turkey Ownership of real estate by foreigners in Turkey is governed in general by the principles of political and de facto reciprocity. According to the provisions of Title Deed Law no.2664, enacted 22 December 1934, a foreigner may purchase real estate in Turkey in keeping with the restricting provisions of this law and on condition of reciprocity between Turkey and his country of origin. It is also necessary to obtain permission from the General Directorate of Title Deeds, Cadastre and Military. Sales law in Turkey: According to the provisions of the Civil Code, every piece of real estate will be recorded in the title deed register of the place where it is located and a real estate sale will be legalized only by being recorded in this register. The title deed, which is issued in the new owner's name, will show that the property has changed hands. Any restrictions which were placed on the real estate while it belonged to the previous owner may be applied to the new owner after the transfer.
Sales by foreigner’s law in Turkey In order for foreign nonresidents to sell real estate which they own in Turkey, the sale price of such real estate must first be calculated by the tax assessment commission. The actual sale price lowers than neither this value nor more than a predetermined per cent higher. Monies received as a result of a sale are subject to taxes and blocking. However, provisions, brought on by the Foreign Capital Promotion Law, are reserved.
Rental agreement law in Turkey: Leases are governed in general by the Law of Obligations and in specific by Real Estate Rentals law no. 6579 of 18 May 1955. The following points must be clearly specified in a lease: The names and addresses of the lesser and lessee, the address and location of the rented property, the purpose for which it will be used, the amount of rent, the date the lease will become effective, and the period for which it is valid. In practice, printed lease forms are usually filled in by the parties. Attention must be paid that there are two copies of the lease, both signed, one copy to remain with each party. Leases may also be drawn up by a notary public, but this is not mandatory.
Building construction law in Turkey: Under the provisions of the reconstruction law no. 3194 of 3 May 1985, a building construction license must be obtained for all buildings from the Municipality, the Province, or an authorized private architecture of engineering bureau. In order to obtain the license, application will be made to the above-mentioned authorities by submitting the title deed, the architectural drawings, the structural drawings, and the electrical and mechanical installation drawings. If the application is complete, the authorities will grant the permit whit at most thirty days. If the application is incomplete or irregular in any way, the permit will be issued only after the deficiencies or errors have been eliminated. A specific fee will be charged for the construction permit.
Source: www.Milliyet.com.tr/economy/property
5. Commercial Banks: (2.0)
In Turkey Commercial Banks do collect deposit and give loans with high interest rate. Turkey has inflation rate of 45.2% as of 2002. High inflation some times cause for Banks to go into bankruptcy. Overall Commercial banking works normal. Banks gives loans and collects deposit. Turkey's banks were happy to leave a difficult year behind in 2000, only to stumble upon a more chaotic one in 2001. A severe liquidity crunch in November 2000 and a worse one in February 2001, the latter combined with steep market devaluation, undermined the country's banking sector. Although firms in every sector of Turkey's economy were hard hit by the multiple crises, the banking sector was unique. Not only did it sustain the greatest damage, but it was also seen to be one of its causes. As a result, it was placed at the forefront of the government's efforts toward economic reconstruction. However, blame was not spread evenly across the sector, but was concentrated on two particular groups; firstly, the country's over-sized public banks that had long been used as a trough for Turkey's politicians and, secondly, certain second-and third tier private sector banks that had been run either corruptly, incompetently, or in some cases, both. It is in these two groups that the major focus of reform has been concentrated.
Turkey's banking network at the end of 2000 consisted of 79 banks with 7837 branches and 170 401 employees. Averaged out, these figures would imply that each bank operated with just fewer than 100 branches and nearly 22 employees per branch. In actuality, commercial banks- both state-owned and privately-owned- together accounted for only 40% of the total number of banks, but well over 80% of both branches and employees.
Banks operating in Turkey collectively registered a net loss of $4bn in 2000. The net loss reported on the sectoral income statement was attributable to a $4.9bn loss generated by the 11 banks under state receivership and a $264m loss by the state banks, while the 28 privately-owned commercial banks managed to put together a modest net income of $787m. The banking sector ended 2000 with combined assets of $155.2bn- a figure more easily associated with the typical medium-sized multinational bank than with an entire sector. Commercial banks accounted for 95.6% of total assets, while investment and development banks constituted the remainder. State-owned commercial banks and privately-owned commercial banks dominated the sector with an 81.6% share of total assets. A swelling in the number and size of banks under state receivership brought the share of insolvent banks in total assets from 5.6% at the end of 1999 to 8.5% at the end of 2000. Foreign banks claimed just over 5% of total assets. The only four state-owned commercial banks and the top four privately-owned commercial banks together contributed roughly 60% of total assets in the sector. It took all 28 privately- owned commercial banks to give the private sector an edge over the public sector in total assets as well as in separate balance sheet accounts, including deposits, loans, and marketable securities.
This was the latest accounting information released as of May 2001, and it did not reflect the financial burden of the liquidity crisis and devaluation taking effect starting in February. Soaring interest rates in the overnight borrowing market slashed the value of marketable securities portfolios, while depreciation of the local currency brought significant foreign exchange losses.
Source: Personal/ www.oxfordbusinessgroup.com/p1-2.asp - 92k
6. Communication System: (2.5)
Tusiad and other sources indicate that there is an upward trend in the essential area of communication for business and social life. Tusiad states “very rapid development has taken place in the area of communication services." The number of telephone lines reached 7, 02,647 in 1990 and this figure was 10,684,500 in 1992. This figure was estimated to reach 11,825,845 in the year 1994. The other sector of communication is broadcasting, as the most important media of communications at present, followed a very fast pace. The one channel black and white televisions has been replaced by 15-20 channels in color. Radios are another example to this rapid development where now many private bands are broadcasting. According to the department of commerce in the US telecommunications equipment and services are big emerging sectors where there is a potential of $3.950 billion worth of future market. As we can see the market is developing at a very high speed. Here are statistics on the communication systems: 1- Radio: AM 15, FM 94, Short-wave 0 2- Televisions: 357 broadcast stations 3- Telephone Communications: no of Tel. 3.4 million System Condition: Fair the performance of the PTT communication company is clear and it is in my opinion a very good sector and a promising one.
Source: www.turkey.gov/economy/communication
7. Transportation: (1.9)
Turkey has Air, Naval, Rail and Land Transportation almost all over the Turkey. Accept some area of East and South East. Airways and Ships are sufficient enough to provide necessary services, however Land Roads are not sufficient and they are not in good conditions. There are some Land roads are built widely, however they are extra cost to businesses and usually public avoids these roads, because of its coast. The alternative roads are very dangerous and cost a lot of lives.
This is a very dynamic sector in which the government spends significant efforts to renew and develop their existing system. There were amazing improvements in transportation since the 1980's and this resulted in an urge to use these systems. This can be justified by the increased amount of automobiles in the country which increased by 60% from 1980 to 1988. Then the country took on the challenge of improving the highways which has resulted in autobahns as good as the ones in Germany. This is not the only improvement since 1980 also the maritime fleets capacity increased from 2,000,000 Grw to 5,014,004 Grw which is over 100% of change. Railroads, airports, ports and all the other means of transportation systems improved accordingly since that time making the public reach their destination at a quicker pace enhancing efficiency.
Source: www.turkey.gov/transportation
8. Education: (2.2)
For long time Turkey was denying to take the education to Eastern and South Eastern regions. Behind it were political reasons, because they didn’t want Kurds to have education. Their reasons were very simple; uneducated nation would not be able to rise against them. Other than Kurds, Turkey has provided education to all over and they had European style of education. They have brought teachers and professors from out of Turkey in order to give a good education and because of that we can say matches to European style of education. There were new solutions to solve educational problems.
Problems of the education system are on their way to solution upon the decisions taken in the 15th National Education Council on May 13th-17th 1996 titled "Orientation in Primary Education, Restructuring in Secondary Education, Transition to Higher Education" and in the 16th National Education Council on February 22nd-26th 1999, titled "Vocational and Technical Education". In line with these decisions, the Ministry of National Education has been working on the following topics.
- Increasing the quality of education; development of education programs, education management and techniques
- Expanding primary education
- Emphasizing continuing education
- Encouraging individuals to be educated in line with their abilities and interests
- Developing measurement and assessment tools
- Restructuring the secondary education system with emphasis on vocational technical education
- Planning school guidance and orientation services
- Planning the education services to be provided to those needing Special education
- Rearrangement of transition to higher education
- Planning the services related to the establishment of education-employment relation
- Training individuals as people who know, apply and improve technology.
- Providing the financial resources needed by vocational technical education.
- Training the administrators and teachers needed by vocational technical education.
The work performed by the Ministry of National Education as part of the above mentioned decisions involves revision of goals and duties of secondary education, plans for establishing balanced student distribution among academic education and vocational technical education; and Law no. 4702 constitutes the framework for integrating formal vocational education and non-formal vocational education, focusing within the system on vocational technical secondary education institutions as well as general secondary education institutions.
In that context; Secondary education shall be restructured with emphasis on vocational and technical education.
- A flexible structure shall be formed to enable horizontal and vertical transition between these programs
- Vocational and technical training centers shall be established where formal and non-formal vocational technical education programs are implemented together, with the opportunity to get a certificate or diploma.
- Horizontal and vertical transition and equivalence among formal education, non-formal education and apprenticeship training shall be ensured.
- The experienced apprentices, masters and general high school graduates who attend the make-up training programs prepared by the Ministry of Education shall receive a diploma for vocational high school.
IN-SERVICE TRAINING
In-service training activities are given in six in-service training institutes, teacher houses, vocational high schools for hotel management and tourism and schools with pension in co-operation with such institutions and organizations as provincial and Overseas organization units and associated institutions and organizations, Higher Education Institute, universities, TODAÝE, MPN, TÜ;SSÝDE, TÜ;BÝTAK, TÝKA, Atatürk Supreme Council of Culture, Language and History, Foreign Language Training Center for Government Officers.
In 2001, through central planning, 400 in-service training activities are scheduled in 80 areas. 329 training activities held up to August 31st 2001 were attended by 16.257 personnel (directors, director candidates, teachers and other personnel).
January 1st -June 30th 2001, 6.215 in-service training activities have been organized at local level and attended by 225.490 personnel.
The Ministry of National Education provides in-service training courses covering Computer Operation, Internet Operation, Author ware, Macromedia Dream Weaver, Data Entry, Web Design, Adobe Premier, Adobe Photoshop, Across Data Base, PowerPoint, Windows 98, Word, Excel, Microsoft Office and Ýlsis software in order to a) expand computer and other technology assisted education practice, b) make use of computer in education, teaching and management services, c) establish communication between central and provincial organizations and education institutions.
Source: Personal/ www.turkey.gov/Education
9. Social Stability: (1.8)
TUSIAD has been given positive details on social stability in Turkey, but it is far away from truth and that is why I have rated low. Turkey has such system you have to know some one in order to get a good job. If you have good skills, you will be able to survive, yet these will not give any warranties that you will have a good job, but you might be able to live one notch above being financially challenged. Almost 99 % if you don’t know someone, you will not good job and your skill will not help you. Sometime people give bribe in order to find a decent job in Turkey.
Here are some figures that have been created by TUSIAD
TÜSÝAD has concentrated its research effort on the legal and institutional framework of a market economy during 1990s. Its publications dealing with electoral systems and medium-term stabilization policies reveal the desire for political and economic stability. The impotent and shaky coalition governments made clear that the quest for political and economic stability should be reconsidered in a new frame of reference. A liberal economic system needs genuine democratic rules to strengthen its legal and institutional infrastructure.
Political stability
the political stability ought to be the result of an election system that reflects the consensus of the politicians and public opinion. In the multiparty era the history of election systems started with the simple majority rule in 1946 which was replaced by proportional representation in 1960. After 1983, ever-changing types of proportional d'Hont systems with regional and national barriers ushered in an era of weak governments. The half-life of election systems has been shortened in the last decade in such a way that no two successive elections were held with the same rules. Turkey was unable to devise a consensus for an appropriate election system. A TÜSÝAD report commissioned to two respected academicians presented a general theory of election systems. The "Majoritarian Compromise" has the power to simulate all the election system varieties by referring to "second choices" of the voters. A more complete analysis of two-round election system was also published by TÜSÝAD. But the truth of the matter is that no election system could ever create a stable government in a country, if that country lacks consensus over major political choices. However, recent political surveys demonstrated that, "second choices" are surprisingly stable when the nature of the political regime is at stake. Indeed, today the Turkish political system has no predominant political party. Parallel to the economic and social imbalances, Turkey has strong multi-cultural cleavages along different lines: secular/non secular, west/ east, andthe traditional right/left. Consequently, the political infrastructure for a multi-party, multi-voice pluralistic political system is fully present in Turkish society. On the other hand, the actual election system helped the islamicist RP to be the dominant partner in a coalition government with DYP. The conclusion is that the deepening of the Turkish democracy by the liberalization of the political system is a necessity. The promotion of individual and collective freedoms, the respect for human rights will nurture the building of a national consensus and appear to be the preconditions of political stability.
Economic stability
For 6 years, TÜSÝAD has advocated a medium-term stabilization program to establish economic stability. Several quarterly and annual TÜSÝAD reports indicated that the day-to-day management of the economy should always closely monitor macro-economic imbalances to avoid further painful adjustment processes that seriously deteriorate the distribution of national income. During the 1990-96 period, the strong cyclical fluctuations of the national income with high levels of budget deficits, kept the inflation rate at 60 percent with sporadic peaks at 90-120 percent in the last 3 years related to overproduction and foreign exchange crises. The Governments should be able to adjust variables such as domestic and foreign debt stocks, instead of relying on their expansion to overcome short-term economic difficulties. The structural reform of the tax system, social security and privatization programs need to be supported by long-term efforts. Clearly, the economic stability depends heavily on the political stability.
Democracy
TÜSÝAD, in its 25 years of history has contributed to the promotion of a liberal economic system in a democratic society. Although, all the democratic institutions are in place and elections take place regularly, the relations among the legislative, executive and judiciary powers are not properly defined and the individual and collective freedoms are not fully guaranteed under the existing 1982 Constitution. The power of the state and the central authority overrule the rights and freedoms of the ordinary citizen, put important limits on the respect of human rights, question the independence of the judiciary and finally endanger the secular structure of the state. The unresolved Kurdish issue,- with the exception of its terrorist dimension-, attests to the deficiencies of the Turkish democracy. The objective of joining the EU also calls for further progress in the issue of democratization. The new TÜSÝAD initiative comes in this new context. A new report on "Democratization Perspectives in Turkey" undertakes a detailed analysis of the constitution to review the areas of possible improvements and to develop concrete proposals. To build a consensus and a spirit of dialogue in the country with the participation of all the non-governmental organizations appear to be the only way of making progress for a stable Turkish Democracy.
Source: Personal / TUSIAD yearly report (Turkiye Sanayiciler ve Isverenler Dernegi) Turkish Entrepreneurs and Business Group.
10. Freedom from Outside Control: (1.1)
The reason I give low score in these is because Turkey is controlling some land forcefully and rightfully is not belong to Turkish government.
As long as Turkey keeps using force on Kurds, they will have problems in the big part of the country. The promises has given to Kurds by founder of Turkish republic hasn’t been completed, yet they have tried to assimilate the Kurdish population. Kurds are the rightful owner of their land and Turkey has no business there and there would always be revolutions in that region. Turkey also is occupying some part of Cyprus and they have some problems in Cyprus. Not to mention these issues are delaying the entrance of Turkey to European Union, which they are eager to enter.
Source: Personal
11. Foreign Currency Transaction: (1.0)
At the Organization for Security and Cooperation in Europe (OSCE) summit meeting held in Istanbul on November 18-19, 1999, the Charter for Security and Cooperation was signed. Also during the summit, related parties signed the agreements on the projects on Baku-Ceyhan oil pipeline and Tran Caspian gas pipeline from Turkmenistan.
At the EU Summit held in Helsinki on December 10-11, 1999, Turkey was recognized as a candidate for full EU membership without any preconditions and on the basis of equality with other candidate countries.
In December 1999, Turkey and IMF signed a three year stand-by arrangement. Within the framework of this arrangement, Turkey was provided with $ 4 billion financial assistance of which, $ 1.5 billion for 2000, $ 1.5 billion for 2001 and $ 1 billion for 2002.
A special three-year loan facility with a ceiling of Euro 600 million was provided from the European Investment Bank for the reconstruction of Turkey after the earthquake on 17 August. Earthquake assistance worth $ 500 million from the IMF was transferred to Turkey on October 28, 1999. Turkey also received earthquake loans worth $ 758 million from the World Bank.
Turkey became a member of the Group of 20 (G-20) which was established in the G-7 meeting on September 25, 1999. G-20 consists of G-7, 11 major emerging economies and two institutional representatives, namely EU and IMF/World Bank.
Meanwhile, in 1999, Turkey and USA signed an agreement on bilateral investments and improvement of commercial relations. In addition, USA increased the import quotas for Turkey in some textile categories for two years.
Source: Personal/ www.turkey.gov.tr /currency
12. Border Patrol: (1.3)
Turkey has a total of 2627 km of land boundaries and 7200 km of coastline. This is a very large area to protect or to regulate. Turkish Republic do have problems controlling these borders and because they do, drug trafficking to European countries, illegal entries of goods in to the country and illegal entry of people in and out of the country is evident. The country is working on this problem by buying hi-tech equipment to monitor border areas. This Hi-tech equipment like surveillance cameras and so on will not be in effect for some time to my knowledge and because of this they will have these existing problems continue until they have this aiding equipment to control their borders. Turkey has been facing the biggest treat that might jump in to their-own border. Kurds after collapse of Saddam has been close to declaring their-own state right in the border of Turkey and lately Turkish government have been having insecurity issue among them. That is why they were pushing United States to send some their troops to the North of Iraq in order to prevent any declaration of Independent Kurdish State in their Southern border. Their reason for that is, if the Kurds declare their independence in the North of Iraq, than Kurds of Turkey (about 25 to 30 million) will try to declare their rightful independence as well.
Source: Personal/ www.hurriyet.com
13. Currency: (1.6)
Since the value of Turkish Lira is going down everyday more and more, people have almost no trust in Turkish money and they often use dollars, German Mark and Euro. Even though people are getting paid with Turkish money, most people try to exchange their Turkish Liras with foreign exchange and in daily they often use foreign exchange, that is why I rated low.
In February 2001, a mixture of high inflation (over 80% in 2001), dramatic loss of value of the Turkish Lira in the wake of the floating of the exchange rate as well as high interest rates (over 90%), combined with a continuing high budget deficit, led to a new, severe financial crisis. The IMF and the international community responded by increasing their pledges of conditional funds by US $ 8 billion to a total of US $ 19 billion. On 4 February 2002, the IMF adopted a new stand-by arrangement for the period 2002-2004 with new conditional pledges to the tune of US $ 12 billion. The overall IMF programme for the years 2000-2004 thus comprises loans totaling US $ 31 billion. Additional funds (up to US$ 6.2 billion for a 3-year strategy) are being made available by the World Bank. The Turkish government hopes, through a strict austerity policy within the framework of the IMF-monitored adjustment programme, to lower public spending, increase revenue, close down state-owned enterprises which are beyond rehabilitation and to push ahead with privatization in order to tangibly reduce inflation in 2002 and restore confidence for domestic and foreign investors. The financial markets reacted optimistically to the announcement of early parliamentary elections to be held on 3 November 2002 because the two parties leading in the polls (moderate Islamist AKP and Kemalist CHP with Mr. Dervis as its economic spokesman) are in favor of continuing the austerity policy and the IMF programme.
Source: Personal/ www.turkisheconomy.com
14. Cultural, Language homogeneity: (1.3)
The population in Turkey is some where close to 70,000,000 and is dived between Turks and Kurds. Kurds are about 30,000,000 and they make up about 40% of the whole population. Kurds have their own language and culture, yet most of the Kurds do speak Turkish language as well as their own language. Through out assimilation population Turkish government has pressured Kurds to speak only Turkish and Kurdish language was forbidden. Even though Turkish government has put so much hostility over Kurds and persecuted them in every chance they got, including burning down over 4500 villages, killing over 36,000 people in the last decade and forced them to migrate to western cities, somewhere around 3,000,000 people has fled their home land and push them into poverty in the big cities. Almost 70 percent of Kurds do speak Turkish, yet not even 10 Turkish intellectual could speak Kurdish language and they always seem to deny the existence of Kurds. Recently they came up with a law that supposedly allows Kurds to have some sort of right, such as given Kurds chance to speak their own language among each other, yet they still refuse the letters of “X’ “W” and “Q” which exists in the Kurdish alphabet but not in Turkish alphabet. As of October 2003 they allowed people to have certain basic rights.
Source: Personal
15. Political Effectiveness: (1.5)
Turkish Politics is regulated by army and that is why it can not solve any problem and their always weak politically. Parties have no power what so ever. The army can control the country anytime they want to. That is why political parties are not effective at all and they can solve any problem or epidemic.
In order for a country to be effective politically, they have to have very strong and trustable background. Turkey is one of the countries, where its citizens have no trust in. Even citizens know the fact that government is not trust wordy yet they have no alternatives and they end up electing the same people. Until 2003 election and people were fed up with ex leaders and elected totally different political party to govern them, yet they seem following similar steps as their former successors did. No mater who becomes president in Turkey, rules and regulations are same. Elected parties usually favor their own followers and if there is job needs to be done by private sectors, they usually give the bid to their own people. As we mentioned, bribery to be main reason of the government obstacle, there are other favoritisms as well. Such as relatives, Party members or supporters are the main beneficiary of the assets.
Source: Personal
16. Institutional Stability: (1.9)
The reason I gave lower rating in this mater is because government can close the institution any time they want to and there are no warranties. Even though Mr. Ozal has tried to do some changes in the government, he couldn’t do it by himself and it cost him his life (one belief is that he was poisoned by mafia)
Although some of these institutions including political parties were closed down by the government during coup of 1980, some of them re-opened after 1987.
DISK is an example of an institution that was closed during the coup of 1980. DISK is a labor union and was established on February 13, 1967. This institution is a member of the European Unions Confederation and has 28 member unions from various fields of industry. The re-opening of DISK was done by the decision of the military court of appeal on July 16, 1991. Since the military coop under Kenan Evren the country saw many changes under the Ozal administration, it was these changes that allowed the closed institutions to re-open and new ones to be formed under stable conditions. Another example of this can be the TBMM which is the parliament of the country. Recently the country had general elections. A coalition government was formed after this election. An allegation against the coalition partner of the government has become evident today and this has forced one of the sides to resign. The consequences of this are to form another partnership, but because the situation between the political parties doesn’t allow this to happen they can not do this. So the solution to it is to have another general election. This is the law of the country and as we can see the ruling parties comply with the existing laws and respect and preserve the parliament which is an institution and has remained one since 1923.
SOURCE: Personal/Internet under Business Life, Http://inter.mfa.gov.tr/grupd/bussiness.htm
17 - Honest Government :( 1.2)
The reason I scored low is because Turkey is the last country in the entire world out there to be honest to its subjects.
Since the beginning of the Republic of Turkey up this very moment bribery and all sorts of illegal regulations is done by government and ex presidents. From the president, all the way to smallest ranked officer of government is involved in illegal regulations. Turkey is actually under the control of few people and few gangs which it ties back to political leaders. Some members of these gang members are Suleyman Demirel (ex-President and Vice President of the republic from DYP, AP) has established so much of personal benefit and of-shore accounts, no one actually knows the real amount of his wealth. Recently his nephew was in trial for trafficking and money laundering off shore. Alparslan Turkes is the other political leader who has involved many gang activities, money laundering, assassinations and forming his own followers, who terrorizes the whole region. They call themselves Grey wolves (bozkurt), Mehmet Agar, newly elected congressman and leader of True Path Party has involved drug trafficking, assassinations, bribery and so on. These are the high ranked mafia leaders, yet it is easy to see all these activities in all over. Even a simple traffic police takes bribe from individuals and most of the time it is very small amount.
Source: Personal
18 - Common Laws: (1.4)
Even though Turkey is governed with democracy, democracy hardly applies in Turkey. Wealth is distributed mostly on western side of Turkey. East-South East has almost no help from government. It seems like laws do not apply to these region of Turkey. Justice is not fair in all parts of Turkey. In the east and south east, there is a martial law, Police and a gendarme force applies the law the way they please to. When one travels from west to east they see these differences very clearly. For example one of the late law has been accepted because of the pressure from EU, is that allows Kurdish minorities to name their children names in Kurdish, yet until this very moment it is not in the process. People still get in to trouble if they name their children with Kurdish names.
Source: Personal
19 - Central Bank: (2.5)
Central bank can not act as an independent, the chairman always pointed by government and it is controlled by government.
The central bank performs many tasks in the country like setting the interest rates and controlling the money creating activities. This bank controls all the existing banks in the country through rules and regulations that they dictate. Another one of the many duties of the central bank includes currency rate protection by selling or buying our currency, although I cannot say that they do a good job in this, the fact remains that they do. The Central bank's duties do not include making profit from the transactions that they perform. They are solely interested in the well being of the nation and responsible to act accordingly. Central bank is not operated by political leaders and is independent from political control, making this organization a success in its founding. Bellow there are some facts about Central Bank activities.
A review of the Central Bank analytical balance sheet reveals that the banknotes in circulation increased mainly with the effect of increased funding by open market operations (OMO) in the third and especially in the fourth quarters, and hence the expansion in the banknotes in circulation was realized above the inflation rate in 1999. Net domestic assets which turned to negative in April 1999 and decreased to minus TL 1,540 trillion at the end of September, materialized at minus TL 932 trillion at end-1999 with the effect of Central Bank funding by OMO mainly during the last few months. Central Bank FX reserves and FX position surplus which recorded remarkable increases until October 1999, started to display a declining tendency towards the year-end with the effect of increased FX demands of banks for closing their positions. However, at the end of 1999, Central Bank FX reserves expanded by $3,420 million to $23,235 million and FX position surplus reached $5,735 million with an increase of $2,897 million.
Expansion in money supply accelerated. According to provisional figures released by the Central Bank, M1 reached TL4, 931,262 billion in 1999, increasing by 115.9% higher than the 65.7% growth in 1998. By the same comparison, M2, comprising time deposits (excluding official deposits) and certificates of deposits (CDs), reached TL22, 596,061 billion in 1999, increasing by 108.1% slightly above the 106.2% rise in 1998, and M2Y, which also includes the FX deposits belonging to residents, expanded by 106.5% in 1999 above the 79.4% rise in 1998.
Source: Http://inter.mfa.gov.tr/grupd/bussiness.htm
20. Domestic Budget Management: (1.7)
Starting this year, Turkey has embarked on an ambitious three-year program to disinflation its economy. I call it ambitious because Turkey has suffered from a high and persistent inflation for the past quarter of a century, and any program that hopes to correct such a long-standing problem needs to be ambitious. I will begin by reviewing this new program, especially the monetary side of it. But first I will give you some snapshots, from the past, of the Turkish economy, which I think will give a clear idea why this was the right time to take action. The history of Turkish inflation shows that for the last quarter century inflation has been gradually increasing, never falling below two digits. The average inflation rate for the whole period was 55 percent. During the last decade inflation has averaged 72 percent. Reflecting the uncertainties inflicted on the economy by this chronic inflation, growth has been volatile and at the low end of the range of comparable emerging market economies. Turkey's average growth rate over the last two decades was 4.2 percent. Average growth for the emerging markets of Asia, where inflation is not a problem, has been much higher. It is well known that the cause of Turkey's inflation is fiscal in nature. The last year in which Turkey had a budget surplus was 1970. The budget deficit increased steadily throughout the last decade, finally reaching double-digits in 1999. The fiscal imbalances have also caused difficulties in financing the deficit. Over the last couple of years the amount of external financing available for the budget deficit has declined, causing increased pressure on the domestic financial sector and an increase in the domestic debt. The ratio of cash domestic debt to GNP grew rapidly during the 1990s, finally reaching 24 percent of GNP in 1999.
The leaders of the three coalition parties met in the Prime Ministry building in Ankara on Thursday to discuss the economic situation and the budget for the year 2000.
It was later announced that the three leaders -- Prime Minister and head of the Democratic Left Party (DSP) Bulent Ecevit, Deputy Prime Minister and Nationalist Movement Party (MHP) leader Devlet Bahceli and Motherland Party (ANAP) Chairman Mesut Yilmaz -- had reached a consensus over the main aggregates for the year 2000 budget. After the meeting, Ecevit said: "The year 2000 budget is being prepared with careful consideration being given to the current state of the economy. A budget structure that would ensure stability and reduce inflation was the aim. Public employees will not be crushed by inflation. The budget will be presented to the Cabinet on Oct. 17."
"Public sector spending will be reduced as much as possible; certain priorities will be determined among investments; regulations for raising state revenues will be enacted evenly throughout society; privatization will be accelerated; encouraging measures will be taken for exports and the inflow of capital; and revenues and expenses related to the Aug. 17 quake will be put in order," declared Ecevit in reference to the decisions taken by governing party leaders.
In line with pledges made to the International Monetary Fund (IMF), it has been decided that the budget will give a non-interest surplus of 4-5 percent of Gross National Product (GNP) and place its inflation objectives at 25 percent. At the same time, the national output growth rate has been estimated at 5.5 percent for 2000. However, some economic officials indicate that an anti-inflationary policy and a 5.5 percent growth rate would be very difficult to maintain together. At the same time, there are worries that non-interest budgetary surplus could be reduced to 4-5 percent of GNP, and the government is conducting detailed work on increasing revenues and reducing expenses. The overall budget spending, however, can be cut down from TL 45-50 quadrillion to TL 43 quadrillion. At a Supreme Planning Board (YPK) meeting the government decided that tax revenues would be increased by 50 percent to TL 23 quadrillion and those personnel costs would total TL 10 quadrillion. TL 23 quadrillion would be spent on repaying the interest accrued on state debts.
However, there is optimism on the part of some officials. They say that the economic conditions are different from those in 1994 and that the IMF s support of the economic program will direct international capital to Turkey.
In the meantime, the IMF announced on Wednesday that $501 million in emergency assistance would be made available to Turkey. The lender issued a statement saying that the money is to "support the government's efforts to limit the adverse effects of the devastating earthquake."
The IMF indicated that the money would be made available immediately.
IMF directors were satisfied that Turkish crisis management following the quake included efforts to strengthen public finances and reduce inflation, IMF Deputy Managing Director Shigemitsu Sugisaki said in his statement.
"In this context, the directors welcomed the submission to Parliament of a revenue package to help diffuse some of the additional budget costs arising from the earthquake and encouraged its early approval," Sugisaki stated.
Source: Gazi ERÇEL Governor The Central Bank of Turkey JANUARY 25, 2000 Merchant Taylor’s Hall, London
21 Government Debts: (1.6)
The reason I gave low score to these is because Turkish government is under so much debt, even if they were to pay only interest, they wouldn’t be able to finish the debt in next 100 year.
Refraining from repeating the 2002 regular report on Turkey, we'll just note some facts surrounding Turkey's economy, which ranks among the worst economies globally. Persistently high inflation and unemployment, wide income disparity and low levels of investment are key characteristics of Turkey's economy. The Oxford Analytica risk factor associated with Turkish economy is very high (1200 points on July 2002) and the political turmoil of Turkey leaves little room for optimism. As we stated Turkey is among the biggest World Bank debtors and is very likely for her foreign debt to continue climbing. The income gap between Turkey and the EU as well as regional income discrepancies within Turkey have long been major concerns. At the end of 2000, Turkey's PPP-adjusted income level stood at 29% of the EU-15 average. On 2001, after declining to 24.5%, the income level barely reached 31.5% of the EU average. According to estimates from Morgan-Stanley economists, even with an optimistic average growth rate of 7.5%, Turkey will merely achieve an income level close to 47% of the EU average by 2015. This gap will have to be covered through special funding, resulting in less funds being allocated to existing and future members. Taking into account the size of Turkey and the influence Turkey will be capable of imposing to the EU parliament after her accession, it's fairly logical to expect that there will be a transposition of the EU funds towards Turkey that will be far greater than that towards the other applicant countries. Moreover, the demographics of Turkey, as we'll explain later, will give her such leverage on the EU decision making mechanisms that the smaller countries will never be able to confront. Hence, very democratically, if accepted as a full member Turkey will be the focus of the EU funding, leaving other countries in the shadow, while in the meantime the overall EU growth will present no significant amelioration.
Turkey’s foreign debt figures, released by the Undersecretaries of Treasury show that, as of end-1999, Turkey’s total foreign debt increased to $ 111,215 million, rising by 4.9% compared to end-1998 level. As of end-1999, the share of short term debts increased from 25.7% to 26.3% while that of medium and long term debts decreased from 74.3% to 73.7% compared to the previous year-end level. Meanwhile, an analysis of the breakdown of medium and long term debts with respect to total foreign debt reveals that, 36.5% belonged to the public sector, 28.2% to the private sector and 9% to the Central Bank.
In 1999, the Central Bank followed a monetary policy in accordance with the targets set by the Staff Monitored Agreement with the IMF signed in July 1998, and continued its implementations to provide stability in financial markets. In June 1999, Staff Monitored Agreement was adopted to bridge a programmed stand-by arrangement backed by financial assistance. Within this framework, on December 9, 1999, the Central Bank announced a three year monetary and exchange rate program which targets reducing the inflation rate to single digits. Following the announcement of this program a stand-by arrangement was signed with the IMF. The economic program which was also submitted to IMF rests on up-front fiscal.
Source: Personal / www.no2turkey.org/English/RejEconen.htm
22. Economic Statistics: (1.6)
Because Turkey has been trying to enter European Union, a lot statistic has been made and they are in some level accurate.
According to the Gross Domestic Product estimates by expenditure approach, in the second quarter of 2001, private final consumption expenditure has decreased 11.5% gross fixed capital formation has decreased 32.1 % in real term.
According to official statement made by State Institute of Statistics, Gross National Product figure for the second quarter of 2001 is “38 472 148 Billion Turkish Liras in current prices” and it is “24 714 Billion Turkish Liras in real terms”. The real growth rate is -11.8%, while current growth 40.5%.
According to the results of Gross Domestic Product estimates by cost components for 2000, the share of compensation of employees to Gross Domestic Product is 28.7%, the share of operating surplus is 51.3% and the annual growth rate of compensation of employees in current prices is 51.3 %.
Source: http://www.geoinvestor.com/statistics/turkey/economicdata.htm
23. Protection of Public Health & Safety: (2.7)
Unlike United States, Turkey has a decent Public Health System. Anyone in need of Health services can take the benefits of government owned hospitals freely. Most of the needy people can use these benefits and you don’t have to have health insurance to cover your hospital visits. Most of the medicines are either given with no cost or with small cost. There two health system in Turkey in order to give service to people. Preventive health centers: According to the health ministry there are 4200 health centers, 11966 village health centers, nine regional medical laboratories, 18 township laboratories, 20 leprosy dispensaries, 26 trachoma dispensaries and two mental diseases dispensaries (Istanbul-Bakirkoy and Elazig) in 76 provincial areas.
Other services are also undertaken by this department as providing medical services in remote areas by mobile units. These health centers main objective is to take preventative action against diseases. Effective immunization program have been the case through these health centers. Achievement of these centers is that the diseases which can be prevented by vaccination have been totally eradicated since 1989. 2- In the country there are a total of 941 hospitals and 616 of these hospitals belong to the health ministry. 616 of these hospitals belong to the health ministry while and the rest are owned by different agencies and private parties. The National Health Care system in Turkey is needed and many people tend use this service. For sixty thousand people living in the country the number of beds or even the hospitals don't seem enough to meet demand. This is why these places are over crowded and many doctors have to perform long hours of duty. This of course affects the quality of this service and the reputations of these places become a joke amongst the public. But the fact that the services that are offered by the Health Ministry being free is a very important when we think that everyone has the opportunity to have a healthy life.
Source: Http://inter.mfa.gov.tr/health
24. High Wage Policies: (2.8)
The Turkish workers and middle-class were the main losers of the liberalization policy launched in the eighties and nineties. While this policy brought the country rapid economic growth, it also entailed an increasingly uneven distribution of income. The majority of those working in industry, agriculture and crafts continue to draw a "minimum wage", an amount originally calculated per person on the basis of a "shopping basket". In practice, however, this minimum wage must feed a whole family. Since 1 July 2002, the net minimum wage has been approximately 111 euro (TL 184 million). Real income has not kept pace with inflation last year, meaning that in particular low-income wage earners live close to the poverty line. The rural population continues to migrate to the cities and industrial centers in search for work and better living conditions, adding both to social tension there and to the unemployment rate.
There are three labor Unions and one employers Union. TURK-IS, DISK, HAK-IS are the labor unions and TISK is the employers Union. TURK-IS is the largest of all the Unions in the country. Its obligations are stated under the article 3 of the regulations its confederation outlines and these are: To fight poverty and ignorance, to protect democracy, to attain a high level of the national democratic, secular and social state structure based on principles and the constitution. This Union has 32 member Unions in various industries and is a member of Free Trade Unions Confederation and the Union of Free World Asian Trade Unions Advisory Committee. Based on statistics released on 1992 this Union has 1,723,988 members. Especially under AKP this union is loosing some it’s power and it get regulated by government very often.
DISK is the Turkish Revolutionary Workers' confederation. It includes the Turkish Metal Workers, Tyro Workers, Press Workers, Foodstuffs Workers and the Turkish mine workers unions. It is a member of the European Unions Confederation and it has 28 member unions from various fields of industry. HAK-IS is the confederation of Turkish "hak" (rights) unions. Its aims are the same as the others and it has seven member unions attached to it.
In Turkey as we can see that there are over 2 million members to labor unions. This is a very large number of people and this puts the labor unions in a very strong position when it comes to disputes over government wage policies. There are many groups in Turkey do systematic demonstrations and them protests the governments wage policy and sometime they succeed in earning a compromise from the government. These types of persuasive action are not uncommon by these labor unions. The extents of which these unions protest usually are peaceful strikes. August of 2003 Doctors in Turkey made peaceful demonstrations, asking raise on their wages.
All these labor unions may be seen as a deterrent to businesses but the employers also have the right to form their own unions to cancel the negative effects of labor unions. In fact TISK is the name of the union they have established. As the labor unions they participate in many functions like, the supreme board of arbitration, the minimum wage determination commission, special expertise commission of the state planning organization, the social security board (SSK) the national productivity center and so on. This enables them to have a fair chance in competing against any unreasonable offers that may come from the labor unions. The system in Turkey enables both parties to operate at a gain and doesn't necessarily favor any, making the business environment fair. Although the government sometimes does make unreasonable decisions in wage policies these two parties help the government to correct that decision. This way the workers get the best available or affordable wages that they can from their employers, in an effort to make them more productive.
SOURCE: Http://inter mfa.gov.tr/grupd/business.htm
25. Environmental Protections: (1.9)
My reason on giving low score is the recent changes in Turkish Policies. AKP the leading party has declared to sell some where around 30,000 square hectare of forest to build Hotels and Motels in the south and south west of Turkey www.hurriyet.com daily news paper reported.
With the world becoming more and more aware of its environment, Turkey has taken some negative action towards environment. The 3 major cities (Istanbul, Izmir, Ankara), which is most populated, are having serious environmental issues. Even though, in the past government has spent billions of dollars on environmental issues, the new government seems to take less effort to save the planet. Contrary, they are selling forest to build brick walls as you wish (Hotels). In the past Turkey has spent 378 billion dollars on pollution control equipments, yet today they are destroying the natural pollution control of world forests.
Source: www.Hurriyet.com
26 - Strong Army (4.1)
Turkey has the one of the largest army in the region. Because of their relations with other countries and their treatment of their citizens, Turkey has the needs for big Army. The most important role of the army in this country is to protect the nation's independence. Turkey has big problems internal and external. Externally, they have big problems with Greece, Syria, and Bulgaria and Internally the Kurdish Minorities have been fighting for their independence and in last 10 years more than 36,000 people got killed as result. Because of these types of factors; Turkey keeps their army very largely.
SOURCE: I have served in the Turkish Navy for 18 months (drafted)
27. Foreign Trade Impacts (1.5)
Exports, which demonstrated a rapid growing trend with an increase of 13.1 percent in 1997, slowed considerably due to the negative developments in external demand, reaching $27 billion, and recording an increase of 2.7 percent in 1998. Continuing effects of negative world economic structure led exports to rise by only 1.4 percent, while imports decreased by 11.4 percent, due to a shrink of 6.4 percent in the economy in 1999. The ratio of exports to imports increased to 65.3 as a consequence of high decrease in imports. This is the first time that this ratio reached 65.3 in 1999, except the year of 1994 when a deep economic crisis took place. The volume of foreign trade dropped from $72.895 million to $67.275 million, decreasing by 7.7 percent in 1999. The trade deficit fell from $18.947 million to $14.099 million because of decrease in imports and a relatively low increase in exports.
Source: Http://inter mfa.gov.tr
28. Protection of Foreign Currency Earning Enterprises (3.8)
Turkey focuses its attention into Exporting and Tourism. Many incentives are given to promote Exporting and this is why we can see a constant rise in the Exports of this country and bring in tourists in to turkey. They have agencies all over the world. They also have exemption from VAT (SALES TAX) Taxes, duties and charges exemption. They offer special customs duties exemption during Importation of raw materials for Export items. In the late 1990’s Turkey also have been exporting energy and water to neighboring countries. They have signed treaties with Syria, Israel and Russia for water and energy. Turkey also has good relations with United States. In recent years economic and commercial relations between Turkey and the United States developed into a mutually beneficial partnership. The importance of Turkey vis-à-vis the United States has been steadily increasing not only as a lucrative market for US exports, but also as a reliable prospective partner for joint projects and investments in Turkey and in third countries. The U.S. Commerce Department designated Turkey as one of the world’s ten “Big Emerging Markets.” In 1999 Turkey was included in the newly established G-20 group along with other major dynamic emerging economies. Turkey is a full member of the EU Customs Union since 1996. The EU formally designated Turkey as a candidate for full membership in its Helsinki Summit in December 1999. Currently, the Government of Turkey is engaged in harmonizing its legislation and institutional basis to match EU standards and requirements. Both sides remain committed to further expanding and diversifying the scope and content of their economic and commercial relations. The Government of the United States expresses strong support and commitment to the implementation of the strategic Baku-Tblisi-Ceyhan oil pipeline, which will be an important component of the Euro-Asian energy transportation network in the 21st century. Turkey and the United States are exploring the possibility of creating “Qualified Industrial Zones”inTurkey with special investment and trade incentives to expand commercial relations between the two countries. The Turkish Government is implementing an ambitious structural reform and economic stabilization program with the support of international financial institutions including a stand-by agreement with the IMF. The Turkish Grand National Assembly approved numerous legislative changes, paving the way towards broader integration of the Turkish economy with the global economy.
SOURCE: http://www.turkey.org/businesseconomy/index.htm
29. Management of Foreign Currency Budget (2.0)
The Central Bank's gross foreign currency reserves fell $598 million to $28.040 billion in the week ending July 11, the bank announced on Thursday. Especially instability of economy and security of region makes money market and foreign currency budget becomes very insecure. Especially, after attacks to certain region hit the money market and dollar went way up to 1,550,000 TL, which it was 1,400,000TL a month ago.
Total foreign currency reserves of commercial banks and special finance institutions fell by $30 million and stood at $9.304 billion as of June 27, according to the most recent data available.
National foreign exchange reserves, including Central Bank foreign exchange reserves, commercial banks' and special finance institutions' foreign exchange reserves and Central Bank gold reserves rose by $678 million to $38.716 billion. If Turkey enters to European Union might help the country as far as managing foreign currency.
Ankara - Turkish Daily News
http://www.turkishdailynews.com/old_editions/08_15_03/econ.htm
30. Layers of Collective Action: (2.0)
Turkey is such country pretends to have democratic system in the country. However there are lots of ups and downs. There are only few enterprises is taking the most of the countries wealth. There is elected city council, however most of the school board is appointed by government and government usually appoints their own people.
In the Higher education council there are 24 members 14 of whom come from the universities and 10 are government representatives. The president of this council is elected by the president of the Republic. The committee's duties range from establishing new universities, to setting the curriculum in the universities. Their decisions on issues are the basis for the higher education and none of these representatives is elected by the general public.
City counsel elected by people usually are not successful, because they don’t get the support from the government to be successful, unless if they are linked to government somehow. There is almost no emotion or any hope left in the country. The only hope they right now is to be part of European Union. Koc Holding, Sabanci Holding and few ex-presidents (Alparslan Turkes and his family, Suleyman Demirel, Erbakan and their families) are getting most of the wealth. They usually transfer most of their money to off-shore Banks. Nevertheless, they have steadily supplied seasoned managers.
Source: Personal Interviews, Kutusi Caylak- Bursa, 1995 (Mali Musavir-Representative of Economical Office)
31. Pro Business climates: (1.5)
The reason I rated low is because of Turkish government business climate policy was not in favor of the majority who resides in the in the country.
Before we talk about pro business climate in Turkey, it will be wise to go back few centuries and analyze the past. From 12th century until 14th century Silk Road was passing through so called Turkish land today. Because of Silk Road many people intent to have more businesses. In those days business was fair and government (Ottoman Empire) was encouraging everyone to do the business. However, most of the profit was getting collected by government. If we look at today’s Turkey, we will see that mentality is same. The only thing has changed is that Turkey is being governed by individuals and rich societies rather than a president that has been elected by people. Of course there is more encouragement from the government, such as giving credit to businessman in order to getting back with higher interest rates. This credit system has caused a great amount of problems in last 10 years. Most of the businessman has taken their money to of shore banks and declared their wealth as they were bankrupt. The debt they have collected from government and people has flown away with them. As a result government has collected more tax from poor people, while these bankers have been walking all around the Turkey freely. There is another issue I want to mention. Laws and daily practices work differently. Even though laws require that people to be protected, no one follows the law. Turkey is a country where few people is having the most of the wealth and they are the one who decides who gets what and who can have a business. You can call them Mob of Turkey, but most of them have been ex-presidents of Turkey working with few generals in the army. If you want to have a business, you better know some one in the government, other wise there is none or little luck to open a business in Turkey. It is not what you know; it is who you know policy works in Turkey.
Source: www.ozgurpolitika.org (free politics) and my personal views.
Note: I have translated from Turkish to English, to my best knowledge
32. Government Enterprises: (1.2)
The reason I rated low is: Businesses owned by Turkish Government, are not technologically up-to-date and that itself creates great depth between private owned sectors and government owned businesses.
Almost every city of Turkey has at least one government business (Schools, Hospitals, Emergency Rooms, and some industrial companies). Since 1986 Turkish government has started to sell most of the government owned business to private sectors. Most of the businesses provide some sort of service to people and they are far away from making any profit. Most of the government owned business are either burden or they do not function right. Because of the government’s economical failure, government employees choose to accept briberies. For example: There are government owned hospitals and they provide free health care to people of low income or retired employees. These hospitals technologically are way behind the private sectors and not to mention hospital employees are not paid well enough to do their job properly. If you are ill and you end up in one of these hospitals, you would probably face this very common fact from doctors and they usually suggest you to go their own office. Even though they can provide you with similar service at the government hospital, they prefer making more money out of you. Since you know you do not have other alternatives you accept the offer. These situations repeat itself in every aspect of government owned businesses. Government businesses almost never make profit. A little money that comes in is not sufficient enough to pay employees or allowing technological advancement. That is why Government owned businesses are nothing more than a burden to Turkish economy.
Source: Personal experiences
33. International Security Agreements: (1:0)
Since, Ottoman Empire Turkish government holds strong feelings of animosity towards neighboring countries. Because, they believe each neighbor has taken something from them, dating back to WWI.
Turkish Republic shares 2627 km of land boundaries with 8 countries and they don’t have any relation with these countries. Even though Turkey is Part of N.A.T.O and very confident to its army, can not fight with every one of them. I thing even bigger issue is national problems in Turkey. Turks has spent 3/4th of its wealth on army. A country with such dark history is not safe to have business.
In the North they are neighbor to Russia, and recently they had a big disagreement between them. Russia believes that Turks are provoking Kazaks to rebel against them. They also believe that Turks are selling drugs through Azerbaijan to Afghanistan to the rest of the European countries. In the south they are also neighbored with Syria, in year 1998 they almost went to war with Syria, because Turkey was blocking the water that was important to Syrians. Finally they agreed on terms and Syria turned over the leader of Kurdish freedom-fighter. In the west they always had problems with Greeks. With Bulgaria were totally nationalistic problems. They couldn’t accept the fact that Bulgarians were dominating majority and they were assimilating. To my knowledge, Turks also tried and continued until this very moment is trying to assimilate Kurds.
Since the Turkish army is in charge in Afghanistan, I also believe the possibility of Turkish involvement. In the East they are neighbored to Armenians, whom they have killed 1.5 million in WWI and after WWI. It mentioned in almost every history book except Turkish government is still on denial of this fact. In the east also they are neighbored with Iran. Exception of this new government, which is governed by Yilmaz Tayib Erdogan (Prime Minister of Turkish Republic), they never had good relations with Iranians. In south-east they are neighbored with Iraq, the only reason they ever had a good relation with Saddam, it was because they both were killing Kurds, and since the Iraq war has started, Turkish interest also has doubled. They actually want to send troops to Iraq for 3 reasons. Reason number one is: To be able to kill more Kurds and have the control over Kurdish territory in order to eliminate there. “If I die before we get Musul and Kerkuk, my eyes will never shut and I will never be comfortable in my tomb” -quoted by Suleiman Demirel- former president of Turkey and the head of the mob.
Source: www.Hurriyet.com.tr September 3rd, 2003.
34. Protection of Domestic Enterprises from Government Mandated Costs: (3.0)
I scored this part high because government gives good credit to new businesses or existing businesses in order to expand. Most of the time government ends up loosing a lot of money, because of mismanagement of companies and money laundering, but it does encourage people to do business.
With the new laws, Banks refuses to give warranties to investment of over 5 billion TL. Not to mention they raised taxes on small businesses, while lowering big companies pay less taxes. New taxation is creating huge gap between classes. There is one positive result of all this. The government is selling out government owned businesses to private sectors. High coast companies after its release to public give government an extra income and lowers its debt, provides more businesses to public and lowers the unemployment rate.
Financial activities of capital corporations, associations and charitable foundations are subject to Corporation Tax Law No. 5422 of 3 June 1949. Fiscal activities of foreign states and foreign public agencies or operations connected them are also subject to Corporation Tax. From the legal standpoint, whether these organizations are non-profit or not are irrelevant. Furthermore, if the central office of a foreign commercial enterprise is not located in Turkey, then only that income which the enterprise earns in Turkey is subject to the tax.
Source: http://www.tapo.co.uk/taxes%20in%20turkey/default.asp#7
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