Turkey Watch: Week 50 (9-15 December 2019)

Future Party

Ahmet Davutoglu, the second-last PM of Turkey, announced the establishment of his political party. Gelecek Partisi, as announced in its manifesto, values various freedoms and overall, looks into the early days of AKP as some sort of belle epoque. (1) Party manifesto and the founding ceremony did not garner much attention from the press, and was mostly covered by independent news outlets. As Rusen Cakir notes in his weekly video, Gelecek Partisi will not have an easy time to have visibility in press. (2)
Gaining centre-right votes from AKP and MHP was also a failed dream for Meral Aksener, founder of Iyi Parti. Traditional media outlets like TV and newspapers are mostly in government hands, and this does not make it easy to reach to wider public. If Davutoglu’s plan is to reach to his voters through traditional media, he is very much likely to fail. 
Apart from drawing votes from AKP and MHP, Davutoglu’s and Babacan’s parties will be great indicators for the opposition within the AKP. According to Gazete Duvar, alarm rings have started ringing within the AKP circles. It should be kept in mind that Erdogan has weathered waves of opposition within his party quite well during 17 years of power, and him revising the ranks at such a rebellious time is within logic. Another interesting aspect of these new parties will be the possible information leaks this process will yield. Davutoglu and Babacan have been working with Erdogan for quite a while, and a fierce competition for votes could bring all those memories out to the public.

1-Gelecek Partisi: Ahmet Davutoğlu’nun yeni siyasi hareketi hakkında ne biliniyor?
2-Ruşen Çakır: Gelecek Partisi kuruluş toplantısından izlenimler
3-Former Erdogan ally establishes new party in Turkey
4-Duvar Arkası: AK Parti’de kırmızı alarm: 1 yılımız var

Acquittal in Ankara JITEM Case

All defendants who were tried in Ankara JİTEM Case were acquitted. People of Turkey have frequently heard the name of JITEM from time to time, and continually discussed the the idea of a deep state within Turkey. JITEM is allegedly a sub-branch of Gendarmerie, a branch that does not exist, according to the state. The name gained popularity after the unsolved political murders in the 1990’s. Ergenekon and Sledgehammer cases put JITEM under judicial inspection during last decade. The cases were recently dismissed as political plots to weaken the army by Fethullah Gulen, the US-based cleric who staged the failed putsch in 2016. It seems that JITEM will no longer be on our agenda for a while. Nevertheless, one question remains: ‘Who committed these unsolved murders?’

1-JİTEM davasında karar açıklandı
2-JİTEM Davası’nda tüm sanıklara beraat kararı

Eastern Mediterranean: War with Greece?

Short answer: No. 
As we reported last week, Libyan Sarraj Gov’t signed an agreement with Turkey, asserting that the two countries’ demarcation lines in the Mediterranean are adjacent. However, the deal totally left Crete out of the equation, which is situated just in between. Greece reacted through diplomatic channels. This week, Libya’s Haftar Gov’t met with Greek policymakers, and condemned Turkey’s and Sarraj’s actions. Tricky point to understand is that, Turkey signed with the half of Libya that UN recognizes, whereas Greece is left to the half that isn’t. Turkey is trying to muddle the waters as much as it can to get a share of the Eastern Mediterranean natural reserves.
According to experts, these conditions might bring Greece and Turkey to armed conflict. Both economies could benefit greatly from energy exports. Would this lead to war? We think not. An all-out war would be disastrous for Greece if it chooses to engage Turkey one-on-one, since Turkey is in possession of much bigger, and better funded army. Besides, Turkey obtained the upper hand by sending warships and drilling ships to the region, having the advantageous status quo conditions. Thus, Greece needs to act first to shift the current state of affairs. This is unlikely, as Greece and the EU opted to point out to the international law this week, which could mean they are instead striving for economic sanctions.

1-49. Hafta Özeti (2-8 Aralık 2019)
2-Head of Tobruk parliament says Libya-Turkey deal ‘invalid’
3-Turkey sends Libya maritime accord to UN for approval
4-Greece and Turkey closer to armed conflict, say experts
5-Turkey flexes muscle as Greece and EU stick to international law

War in Libya: Seems likely!

Okay then, war on Eastern Mediterranean seems unlikely. But how about Libyan deserts? The civil war in Libya is quietly raging on as international eyes are still fixated on Syria. 
Currently, the UN and the Government of Turkey recognizes Sarraj Regime as the valid government of Libya. As we wrote in the past few weeks, Turkey sells weapons to the Sarraj regime, and provides strategic support. The agreement signed last week for natural resources in the Eastern Mediterranean gives an idea on how close the two sides are. However, they can get even closer.
Sarraj government, although not through official channels, made a request for troops from Turkey. By providing troops to Sarraj Regime, Turkey would be helping them to withstand Haftar Government’s recent push towards Tripoli, where Sarraj is based. Another problem in this equation is the Russian involvement. Wagner Corporation, a private security company that is known to have presence in Syria is on the ground in Libya. Reports indicate that Wagner acts as an unofficial Russian Army branch, although Russia denies this. Erdogan, in a speech this week, asked that “Russia sends Wagner, why can’t we send our soldiers?”
What would this mean?
Turkey and Russia are cooperating in Syria, which is crucial for the stability in the northern regions. A possible confrontation between two countries in Libya can create a lot of complications in Syria. Erdogan seems to be aware of the situation, as according to a statement he made last week, he told Vladimir Putin that he “did not want a second Syrian file with Russia”. However, the interests of the two countries seem to be conflicting in Libya. Be ready to hear about Libya in the upcoming weeks.

1-49. Hafta Özeti (2-8 Aralık 2019)
2,4-Turkey and Russia vie for influence in Libya with troop deployments
3-Haftar calls on LNA forces to advance on Libya’s Tripoli in ‘final battle’
5-Pointing to Russian Mercenaries, Turkey’s Erdogan Weighs Joining Fight in Libya

Central Bank Lowered Interest Rates

On Thursday, CBRT cut the weekly repo rate by 200 basis points. The last figure was 12% interest. Expectations were down 150 basis points, but were exceeded.
Why are interest rates reduced?
Interest rates indicate credit costs in a country. It is theorized that economic growth will be faster if loans are cheap. Ankara wants to lower interest rates in order to accelerate the slowdown in growth under high interest rates. However, reducing the interest rates very quickly may start a wave of inflation.
What about other developing nations?
There are serious inflationary pressures among developing countries. Although due to different reasons, India and China in inflation in consumer products such as Turkey. This week the CBRT’s decision was similar to other developing countries. The Russian, Brazilian and Ukrainian CB’s also preferred to lower interest rates. In this period when global growth is still continuing and developed countries are working with low interest rates, developing countries are also moving towards rapid growth. The presence of inflationary pressure does not seem to scare these countries. It’s a dangerous gamble though. In the event of a global economic bottleneck, these countries’ positions are vulnerable to shock waves.

1-Turkey’s central bank surprises with another deep rate cut
2-It’s Getting More Expensive to Eat, and Economists Are Worried
3-Emerging Markets Cut Rates With Russia Following Turkey, Brazil

National Credit Rating Agency

Good news! Now, Turkey’s got a 85.05% national credit rating agency. JCR Eurasia, purchased from the Japanese, is a candidate to be our “Yerli ve Milli” (Domestic and National) rating agency, which Erdogan announced years ago. This is not a logical decision. Let’s explain why.
Credit rating agencies give ratings to countries, companies and other financial actors that denote their quality as credit receivers. Moody’s, Standard and Poor’s are two big examples. These institutions have a long history, and are trusted by the market. Thanks to this element of confidence, their ratings are taken seriously. Turkey’s rating agency, if it indeed favors Turkey, will not be taken seriously. It seems that JCR Avrasya is destined to be a rubberstamp for constructing a system that has great internal validity, but probably, little external confidence. After all, would you trust Amazon reviews if you’d know they were given by Amazon itself? We would not.

1-Türkiye JCR Avrasya’yı satın aldı
2-Turkey’s first ‘indigenous and national’ credit rating agency
This is all for this week. Please let us know your comments by emailing archeprojesi@gmail.com 
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