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TURKEY: THE NEW OTTOMANS
Jonathan Head
Management Today
http://www.managementtoday.co.uk/channel/Fin ance/news/992253/turkey-new-ottomans/
March 31 2010
How the Islamist government is making Turkey a force to be reckoned
with on the international stage.
We were an hour late leaving Istanbul, cutting it tight to catch a
meeting with Hillary Clinton. None of this seemed to bother Ahmet
Davutoglu as he bounded up the stairs of the chartered aircraft that
was taking him, and us, to London.
The man who has almost single-handedly redefined Turkey's foreign
policy was ebullient. He had just pulled off a successful summit
on Afghanistan, and was dashing to the plane from a last-minute
tete-a-tete with his Chinese counterpart.
These are heady days to be a foreign minister in Turkey. Not since the
heyday of Ottoman power in the 17th century has this country walked
so tall on the world stage. By adroitly re-engaging with its eastern
neighbours while simultaneously trying to stay on good terms with
the west, Turkey is cannily carving out a higher profile for itself
in the global marketplace.
The twin pillars of economic liberalisation and deregulation, plus
Turkey's controversial official candidacy for membership of the
EU, have been behind much of the progress to date. The government,
in which an overtly Islamic party holds a majority of the seats in
parliament for the first time in Turkey's history, has driven both
these processes forward with enthusiasm.
It has been an uphill struggle. The period following the fall of
the Soviet Union in 1989 was particularly grim, as the country
staggered from one coalition government to another, and economic
growth weathercocked between minus 6% and plus 9%. But more recently,
the economy has stabilised, and Turkey is now a big exporter of white
goods and commercial vehicles, as well as of more traditional produce
such as textiles and soft fruit.
At one point, this resurgence was called 'Neo-Ottomanism', harking
back to the days when the word of the Ottoman sultans was law from the
gates of Vienna to the shores of the Persian Gulf. But that did not go
down well with countries such as Serbia, once under the Ottoman yoke.
So, these days, Davutoglu likes to give his policy the rather less
catchy title 'Zero problems with our neighbours'.
The pace of Davutoglu's diplomacy has been breathtaking. In three
years he has turned a frosty relationship with Syria into a blossoming
friendship. Iraq, once shunned as a hotbed of Kurdish separatism, has
been embraced. Two years ago, Turkish troops went over the border in
pursuit of Kurdish rebels. Today, 70% of investment and 80% of the
products sold in the Kurdish region are Turkish. Fences are being
mended with Armenia, although their disputed history remains a thorn.
Even Iran, a historic rival whose Islamic revolution was anathema to
Turkey's old, secular elite, is suddenly a friend. Indeed, when prime
minister Tayyip Erdogan used the F word last October before a landmark
state visit to Tehran, eyebrows shot up among Turkey's western allies.
Could someone who called Iran's firebrand president Ahmadinejad a
friend be trusted? Was the West in danger of losing Turkey, now that
it was governed by a bunch of pious, provincial Muslims?
But, regardless of his religion and outlook, Erdogan is an economic
pragmatist. Among the 200 people in his Iranian delegation were
representatives of 80 Turkish businesses, and, mostly, what they
talked about was business: the possibilities of a joint airline,
a joint banking venture, a Turkish-Iranian industrial park near the
border... When I asked one of the prime minister's foreign policy
advisers how the high-profile visit had helped Turkey, he replied:
'We got a great deal on Iranian gas.'
The party that has governed Turkey for the past seven years is often
described as Islamist, but what really drives it is business. And its
modern track record is a tale of commercial triumph over adversity
unrivalled in the region. No wonder its new friends in the Middle
East look to Turkey for economic leadership.
To explain this, we need to go back half a century. The year 1961
was a bad one for Turkey - the military had just taken over in the
first of what would be four coups, and the economy was a shambles.
That was also the year when the first Ford Transit was built, in
Germany, then in Britain. In 2001, the five millionth Transit rolled
off the assembly line in Southampton. It was the panel van of choice
for decorators and delivery-men, a utilitarian British icon. By
2011, though, the only Transits manufactured in Southampton will be
custom-built chassis cabs, a maximum of 35,000 a year. The rest will
be made in Turkey, in Izmit, next to the Marmara Sea, in a world-class
factory with a capacity of 300,000 vehicles a year.
This hive of modern manufacturing efficiency had the hardest imaginable
beginning. On the morning of 17 August 1999, the scene that confronted
Nuri Otay and other Ford managers was calamitous. At 3am, an earthquake
measuring 7.4 on the Richter scale struck the area, killing more
than 17,000 people. The fault-line ran right through the middle of
the Ford plant, which was under construction at the time, swallowing
a security guard and damaging some of the structure.
'It was tough,' recalls Otay, who has just been made general manager
for Ford in Turkey. 'The buildings were not badly damaged, but we
had to reconsider everything.'
It was a critical moment. Ford had for the first time taken an equal
stake in its Turkish venture, Ford Otosan, which until then had been
merely a local assembly operation run by the giant Koc Group. Turkey's
entry into the EU Customs Union in 1996 changed the rules, exposing
its manufacturers to European competition, but also opening potential
new markets for it in the EU. Ford clearly believed expansion was the
way to go, jointly investing $650m in the new plant, the biggest ever
in Turkey's automotive sector.
Otay and his team adapted their engineering skills to make a seismic
assessment of the area. They concluded that an earthquake on that
scale would happen only once every 150 years or so. With a few safety
adaptations, they resumed construction, opening the factory just two
months late in 2001. Today, it is one of Ford's most efficient plants,
even exporting Transit Connect vans to the US. And manufacturing
quality is high too. This year it won the prestigious North American
Truck of the Year award, beating all those V8-powered behemoths. 'Of
course, if you compare us to many European countries, we have cost
advantages, but this is not the main one,' says Otay. 'People are
dedicated in Turkey. What matters is: how much is the cost per
vehicle? You need a more efficient structure on the labour side for
success in the auto industry.'
With basic pay starting at $500 a month, the cost advantages are
significant, especially as the 1,800 different body configurations
on a Ford Transit assembly line make it more labour-intensive than
the equivalent for cars. Southampton's loss is Turkey's gain.
By contrast with giants like Ford Otosan, few people have ever bought
anything from Malkan Machines, despite a slogan claiming that 'Malkan
irons the world'. Yet this company is far more representative of
the new Turkey: driven by a rising class of small-scale Anatolian
entrepreneurs, many of them pious Muslims like Erdogan, firms such
as Malkan are reaching out to new markets beyond Europe and the US.
It began humbly enough in a small Istanbul workshop in 1971. There,
metalworker Mustafa Alkan decided to try his hand at making the
industrial ironing machines used in hotels, dry-cleaners and Turkey's
burgeoning textile industry. He takes pride in never having borrowed
from a bank.
Today, Malkan sells its machines in 76 countries, and is run by
Mustafa's daughter, Mutlu. She wears a headscarf, and sits on the board
of the governing Justice and Development Party (AKP, in Turkish),
which puts her clearly on one side of the secular/Islamic rift. The
biggest business interests, such as Koc, generally sit on the other,
secular side.
'I don't think of the AKP as an Islamist party,' she says, 'but as
a party that respects all ways of life, including an Islamic way of
life. Turkey is unique. My closest friend is a very good Muslim, but
doesn't wear a headscarf; she fasts during Ramadan, but every Friday
goes out drinking. We don't have any problem with each other. She
has her lifestyle, I have mine.'
Mutlu is certainly hard-working. She agreed to meet me just a week
after giving birth to her second child, and was already planning to
make a number of business trips with her son. Her father took her to
trade fairs in Europe; she says her daughter has visited 60 countries
with her. She is a staunch supporter of Turkey's bid to join the EU,
yet she applauds the government's new focus on the Middle East.
'Turkey is a big country, and I think those years we kept away from
our neighbours were lost years. But our democracy and republican
system have created space for people to improve themselves, and
now our government is making neighbouring countries aware that our
products have strong quality and competitive prices.'
It is Turkey's youthful population that makes the country appealing
as a new recruit to an ageing European Union; and yet the poverty and
conservative religious habits of much of the population put many off.
They would feel more comfortable with a Turk like Cem Yegul, one
of the three founders of Babylon, the club preferred by Istanbul's
music cognoscenti.
Istanbul has a terrific music scene. There is an abundance of
home-grown talent in jazz, rock, rap, grunge and experimental music,
blending contemporary genres with tradi- tional Turkish instruments.
Babylon was the pioneering venue for these musical explorations.
Today, there are dozens of clubs in the winding streets of upmarket
Beyoglu, opening and closing with bewildering frequency. So are Yegul
and his friends worried about the puritan instincts of Erdogan and
his party?
'Not at all,' says the club-owner. 'I find it more of a
social-democratic government than governments in the past. Coming
from a very Islamic background, these guys were not familiar with the
world. Once they got power, they cultured themselves; they grasped
what was going on, that people were hungry for these new experiences.
In future, the party will evolve - it will not hinder the nightlife.'
Not everyone shares Yegul's confidence. Plenty of people fear that the
freedoms they enjoy in modern Turkey - unprecedented in the Muslim
world - will be eroded as Erdogan tightens his grip. The military,
historically the guarantor of Turkish secularism, is in retreat.
Institutional checks on power are weak. Already the government
has shown a disturbing intolerance of media criticism. One of the
big secular businesses, the Dogan Group, has been crippled by a
suspiciously large fine imposed by the tax department. Modern Turkish
women, in particular, worry that they will face pressure to dress
and behave more conservatively.
Tellingly, it's becoming a lot harder to get a drink in some Turkish
towns. Not such a big deal in a country where 97% of the population
is nominally Muslim. But a bigger deal when you consider that the
first factory to be constructed by Kemal Ataturk, the country's great
20th-century moderniser, in Ankara, his new capital, was a brewery.
This was a gesture of defiance to the religious establishment,
which he thought was holding Turkey back. Ataturk's legacy remains
inviolable - officially at any rate. All still a long way from sharia
law, however. No-one really thinks Erdogan has that kind of agenda,
or could get away with it if he did.
The most powerful bastion of the old secular business elite has for
the past 39 years been the Turkish Industrialists and Businessmen's
Association, TUSIAD - of which the Koc and Dogan families are prominent
members. Its new chair - only the second woman to occupy the seat - is
an athletic, blond mother-of-five whose family owns Turkey's largest
clothing retailer. Umit Boyner's lifestyle and business background
would seem to put her firmly in the secular camp. Yet in her opening
speech as chair, she backed the government on a range of issues that
usually divide secular and religious Turks. She called for reform of
the judiciary and of the military-drafted constitution, for the armed
forces to stop threatening to launch coups, and for reconciliation
with the Kurdish minority. It was a speech that might have come from
the lips of one of Erdogan's ministers.
Boyner was simply facing facts: that for all its flaws, this government
has pushed harder to modernise Turkey's economy and institutions than
any other; that it is an enthusiastic proponent of EU membership,
a cause long championed by the business elite; and that with the
opposition in disarray, the AKP could be in power for many years,
continuing to dominate the pace and direction of Turkey's development.
Those businesspeople who don't climb aboard and share the journey
risk being abandoned by the roadside instead. And neither party really
wants that to happen.
Jonathan Head
Management Today
http://www.managementtoday.co.uk/channel/Fin ance/news/992253/turkey-new-ottomans/
March 31 2010
How the Islamist government is making Turkey a force to be reckoned
with on the international stage.
We were an hour late leaving Istanbul, cutting it tight to catch a
meeting with Hillary Clinton. None of this seemed to bother Ahmet
Davutoglu as he bounded up the stairs of the chartered aircraft that
was taking him, and us, to London.
The man who has almost single-handedly redefined Turkey's foreign
policy was ebullient. He had just pulled off a successful summit
on Afghanistan, and was dashing to the plane from a last-minute
tete-a-tete with his Chinese counterpart.
These are heady days to be a foreign minister in Turkey. Not since the
heyday of Ottoman power in the 17th century has this country walked
so tall on the world stage. By adroitly re-engaging with its eastern
neighbours while simultaneously trying to stay on good terms with
the west, Turkey is cannily carving out a higher profile for itself
in the global marketplace.
The twin pillars of economic liberalisation and deregulation, plus
Turkey's controversial official candidacy for membership of the
EU, have been behind much of the progress to date. The government,
in which an overtly Islamic party holds a majority of the seats in
parliament for the first time in Turkey's history, has driven both
these processes forward with enthusiasm.
It has been an uphill struggle. The period following the fall of
the Soviet Union in 1989 was particularly grim, as the country
staggered from one coalition government to another, and economic
growth weathercocked between minus 6% and plus 9%. But more recently,
the economy has stabilised, and Turkey is now a big exporter of white
goods and commercial vehicles, as well as of more traditional produce
such as textiles and soft fruit.
At one point, this resurgence was called 'Neo-Ottomanism', harking
back to the days when the word of the Ottoman sultans was law from the
gates of Vienna to the shores of the Persian Gulf. But that did not go
down well with countries such as Serbia, once under the Ottoman yoke.
So, these days, Davutoglu likes to give his policy the rather less
catchy title 'Zero problems with our neighbours'.
The pace of Davutoglu's diplomacy has been breathtaking. In three
years he has turned a frosty relationship with Syria into a blossoming
friendship. Iraq, once shunned as a hotbed of Kurdish separatism, has
been embraced. Two years ago, Turkish troops went over the border in
pursuit of Kurdish rebels. Today, 70% of investment and 80% of the
products sold in the Kurdish region are Turkish. Fences are being
mended with Armenia, although their disputed history remains a thorn.
Even Iran, a historic rival whose Islamic revolution was anathema to
Turkey's old, secular elite, is suddenly a friend. Indeed, when prime
minister Tayyip Erdogan used the F word last October before a landmark
state visit to Tehran, eyebrows shot up among Turkey's western allies.
Could someone who called Iran's firebrand president Ahmadinejad a
friend be trusted? Was the West in danger of losing Turkey, now that
it was governed by a bunch of pious, provincial Muslims?
But, regardless of his religion and outlook, Erdogan is an economic
pragmatist. Among the 200 people in his Iranian delegation were
representatives of 80 Turkish businesses, and, mostly, what they
talked about was business: the possibilities of a joint airline,
a joint banking venture, a Turkish-Iranian industrial park near the
border... When I asked one of the prime minister's foreign policy
advisers how the high-profile visit had helped Turkey, he replied:
'We got a great deal on Iranian gas.'
The party that has governed Turkey for the past seven years is often
described as Islamist, but what really drives it is business. And its
modern track record is a tale of commercial triumph over adversity
unrivalled in the region. No wonder its new friends in the Middle
East look to Turkey for economic leadership.
To explain this, we need to go back half a century. The year 1961
was a bad one for Turkey - the military had just taken over in the
first of what would be four coups, and the economy was a shambles.
That was also the year when the first Ford Transit was built, in
Germany, then in Britain. In 2001, the five millionth Transit rolled
off the assembly line in Southampton. It was the panel van of choice
for decorators and delivery-men, a utilitarian British icon. By
2011, though, the only Transits manufactured in Southampton will be
custom-built chassis cabs, a maximum of 35,000 a year. The rest will
be made in Turkey, in Izmit, next to the Marmara Sea, in a world-class
factory with a capacity of 300,000 vehicles a year.
This hive of modern manufacturing efficiency had the hardest imaginable
beginning. On the morning of 17 August 1999, the scene that confronted
Nuri Otay and other Ford managers was calamitous. At 3am, an earthquake
measuring 7.4 on the Richter scale struck the area, killing more
than 17,000 people. The fault-line ran right through the middle of
the Ford plant, which was under construction at the time, swallowing
a security guard and damaging some of the structure.
'It was tough,' recalls Otay, who has just been made general manager
for Ford in Turkey. 'The buildings were not badly damaged, but we
had to reconsider everything.'
It was a critical moment. Ford had for the first time taken an equal
stake in its Turkish venture, Ford Otosan, which until then had been
merely a local assembly operation run by the giant Koc Group. Turkey's
entry into the EU Customs Union in 1996 changed the rules, exposing
its manufacturers to European competition, but also opening potential
new markets for it in the EU. Ford clearly believed expansion was the
way to go, jointly investing $650m in the new plant, the biggest ever
in Turkey's automotive sector.
Otay and his team adapted their engineering skills to make a seismic
assessment of the area. They concluded that an earthquake on that
scale would happen only once every 150 years or so. With a few safety
adaptations, they resumed construction, opening the factory just two
months late in 2001. Today, it is one of Ford's most efficient plants,
even exporting Transit Connect vans to the US. And manufacturing
quality is high too. This year it won the prestigious North American
Truck of the Year award, beating all those V8-powered behemoths. 'Of
course, if you compare us to many European countries, we have cost
advantages, but this is not the main one,' says Otay. 'People are
dedicated in Turkey. What matters is: how much is the cost per
vehicle? You need a more efficient structure on the labour side for
success in the auto industry.'
With basic pay starting at $500 a month, the cost advantages are
significant, especially as the 1,800 different body configurations
on a Ford Transit assembly line make it more labour-intensive than
the equivalent for cars. Southampton's loss is Turkey's gain.
By contrast with giants like Ford Otosan, few people have ever bought
anything from Malkan Machines, despite a slogan claiming that 'Malkan
irons the world'. Yet this company is far more representative of
the new Turkey: driven by a rising class of small-scale Anatolian
entrepreneurs, many of them pious Muslims like Erdogan, firms such
as Malkan are reaching out to new markets beyond Europe and the US.
It began humbly enough in a small Istanbul workshop in 1971. There,
metalworker Mustafa Alkan decided to try his hand at making the
industrial ironing machines used in hotels, dry-cleaners and Turkey's
burgeoning textile industry. He takes pride in never having borrowed
from a bank.
Today, Malkan sells its machines in 76 countries, and is run by
Mustafa's daughter, Mutlu. She wears a headscarf, and sits on the board
of the governing Justice and Development Party (AKP, in Turkish),
which puts her clearly on one side of the secular/Islamic rift. The
biggest business interests, such as Koc, generally sit on the other,
secular side.
'I don't think of the AKP as an Islamist party,' she says, 'but as
a party that respects all ways of life, including an Islamic way of
life. Turkey is unique. My closest friend is a very good Muslim, but
doesn't wear a headscarf; she fasts during Ramadan, but every Friday
goes out drinking. We don't have any problem with each other. She
has her lifestyle, I have mine.'
Mutlu is certainly hard-working. She agreed to meet me just a week
after giving birth to her second child, and was already planning to
make a number of business trips with her son. Her father took her to
trade fairs in Europe; she says her daughter has visited 60 countries
with her. She is a staunch supporter of Turkey's bid to join the EU,
yet she applauds the government's new focus on the Middle East.
'Turkey is a big country, and I think those years we kept away from
our neighbours were lost years. But our democracy and republican
system have created space for people to improve themselves, and
now our government is making neighbouring countries aware that our
products have strong quality and competitive prices.'
It is Turkey's youthful population that makes the country appealing
as a new recruit to an ageing European Union; and yet the poverty and
conservative religious habits of much of the population put many off.
They would feel more comfortable with a Turk like Cem Yegul, one
of the three founders of Babylon, the club preferred by Istanbul's
music cognoscenti.
Istanbul has a terrific music scene. There is an abundance of
home-grown talent in jazz, rock, rap, grunge and experimental music,
blending contemporary genres with tradi- tional Turkish instruments.
Babylon was the pioneering venue for these musical explorations.
Today, there are dozens of clubs in the winding streets of upmarket
Beyoglu, opening and closing with bewildering frequency. So are Yegul
and his friends worried about the puritan instincts of Erdogan and
his party?
'Not at all,' says the club-owner. 'I find it more of a
social-democratic government than governments in the past. Coming
from a very Islamic background, these guys were not familiar with the
world. Once they got power, they cultured themselves; they grasped
what was going on, that people were hungry for these new experiences.
In future, the party will evolve - it will not hinder the nightlife.'
Not everyone shares Yegul's confidence. Plenty of people fear that the
freedoms they enjoy in modern Turkey - unprecedented in the Muslim
world - will be eroded as Erdogan tightens his grip. The military,
historically the guarantor of Turkish secularism, is in retreat.
Institutional checks on power are weak. Already the government
has shown a disturbing intolerance of media criticism. One of the
big secular businesses, the Dogan Group, has been crippled by a
suspiciously large fine imposed by the tax department. Modern Turkish
women, in particular, worry that they will face pressure to dress
and behave more conservatively.
Tellingly, it's becoming a lot harder to get a drink in some Turkish
towns. Not such a big deal in a country where 97% of the population
is nominally Muslim. But a bigger deal when you consider that the
first factory to be constructed by Kemal Ataturk, the country's great
20th-century moderniser, in Ankara, his new capital, was a brewery.
This was a gesture of defiance to the religious establishment,
which he thought was holding Turkey back. Ataturk's legacy remains
inviolable - officially at any rate. All still a long way from sharia
law, however. No-one really thinks Erdogan has that kind of agenda,
or could get away with it if he did.
The most powerful bastion of the old secular business elite has for
the past 39 years been the Turkish Industrialists and Businessmen's
Association, TUSIAD - of which the Koc and Dogan families are prominent
members. Its new chair - only the second woman to occupy the seat - is
an athletic, blond mother-of-five whose family owns Turkey's largest
clothing retailer. Umit Boyner's lifestyle and business background
would seem to put her firmly in the secular camp. Yet in her opening
speech as chair, she backed the government on a range of issues that
usually divide secular and religious Turks. She called for reform of
the judiciary and of the military-drafted constitution, for the armed
forces to stop threatening to launch coups, and for reconciliation
with the Kurdish minority. It was a speech that might have come from
the lips of one of Erdogan's ministers.
Boyner was simply facing facts: that for all its flaws, this government
has pushed harder to modernise Turkey's economy and institutions than
any other; that it is an enthusiastic proponent of EU membership,
a cause long championed by the business elite; and that with the
opposition in disarray, the AKP could be in power for many years,
continuing to dominate the pace and direction of Turkey's development.
Those businesspeople who don't climb aboard and share the journey
risk being abandoned by the roadside instead. And neither party really
wants that to happen.