G-20 chair Turkey faces tough choice over market reforms

A government pledge to speed up reforms and protect rights may fail unless Turkey takes the logical path towards structural economic reforms and ending intimidation against the business world, analysts explain.
As deep-seated social divides and harsh political rhetoric continue to threaten Turkeyand’s political stability, investors still doubt if the Nov. 1 election — which saw the ruling Justice and Development Party (AK Party) regain a majority — will help Ankara reverse from months-long pressure on critical holdings and NGOs.
Pressure on political dissidents has already dented investor and consumer confidence in Turkey while raising its weakness to potential global market shockwaves.
Turkey will host the leaders of the worldand’s 20 biggest economies (G-20) in Antalya between Nov. 15 and 16 and is expected to introduce the progress it made in its earlier announced top three priorities — namely, inclusiveness, implementation and investment — to visiting delegates. These priorities could hardly be implemented without reforms in the business environment as well as in the judiciary, market observers note. The G-20 summit will be the first global stage on which Turkeyand’s new government will be introduced.
Finance Minister Mehmet Simsek told the media last week that this gives Turkey a window of opportunity to push ahead with reforms. But it will depend on the shape of the new Cabinet, Simsek added. Underlying Simsekand’s statement is a brewing battle within the AK Party to choose whether the new economy management team will stick with a new economic model focused solely on growth or push for structural reforms in the first place. Simsek and Central Bank Governor Erdem Baiandci are both on the reformistsand’ side, vying for steps to reassure investors.
h2 Turkey needs a new economic storyh2 and”Global markets will be more interested in what the AK Partyand’s economic model will be than who runs it. andhellip At the end of the day, the ball is in their [the governmentand’s] court and investors want to see if they will take the reasonable path,and” former central banker and columnist Uiur Gandurses told Todayand’s Zaman.
According to Gandurses, Turkey needs to first reform its judiciary, which is criticized for bowing to political pressure, thus producing a botched legal pretext to clamp down on government critics. As part of this crackdown, the police raided companies owned by government critics, the assets of businesspeople were confiscated and media outlets were silenced while the government intensified tax inspections and levied heavy fines on many other firms.
A commitment to stick with financial and non-financial reforms has helped Turkey mitigate the side effects of the 2008 global financial crisis, Gandurses recalled. He added that the country needs a new story to tell foreign investors. Many of its emerging peers are struggling to do so at a time of hardship in attracting hot money due to the US Federal Reserve (Fed) tapering its stimulus and problems in such large exports markets as the EU.
The Nov. 1 election returned the country to single-party rule, but it is too early to comment whether the new economic team will steer Turkey towards an open market, economist Yaiar Erdinandc says. According to Erdinandc, the AK Party has no more excuses and must address key structural ecoit Chief Aydin Yilmaz with Feramuz etin a
A number of police chiefs who were assigned to critical positions in the Istanbul Police Department following the Dec. 17, 2013 corruption scandal were removed from their posts on Tuesday.
According to the Dogan news agency, Istanbul Police Chief Mustafa andcaliikan replaced Intelligence Unit Chief Edip Vural with Serdar Ali Sekkin, Crime Branch Unit Chief andOmer Burak Aktai with Gaffar Demir, Anti-Smuggling Unit Chief Aydin Yilmaz with Feramuz andcetin and Financial Crimes Unit Chief Hakan Sirali with andOmer Kumlu. The removed police chiefs are expected to be reassigned to various posts around Turkey in the coming days.
In a similar vein, Caner Coiar was appointed police chief of the Beiiktai district, Hakan Torun as police chief of Gaziosmanpaia, ismail Dinandcer andOiandut as police chief of Eyandup and ismail Kiliandc as police chief of the Beyoilu district.
The high-level police officers were appointed to their posts following the largest-ever corruption scandal in the country that erupted on Dec. 17, 2013 and implicated 53 people, including bureaucrats, prominent businessmen, four former Justice and Development Party (AK Party) ministers and people from the inner circles of then-prime minister and current President Recep Tayyip Erdogan. The four ministers resigned as a result of the investigation.
Thousands of police officers — including those who carried out the graft probe andndash were transferred, suspended or arrested as part of government-orchestrated operations against the police force.
Among the police chiefs who were removed from their posts, Financial Crimes Unit Chief Sirali is the most striking. Sirali gave the order for the Sept. 1, 2014 operation in which 33 police officers were detained as part of an investigation into those who were involved in a major corruption operation last year.
The officers had carried out the corruption operations of Dec. 17 and 25, 2013. In addition, they had investigated Iranian businessman Reza Zarrab, among other corruption suspects. Zarrab is accused of bribing Turkish officials to obtain his Turkish citizenship as well as laundering massive amounts of money. Eight of the police officers were eventually arrested and are currently awaiting trial.
Sirali, who was formerly chief of the Maltepe Police Department in Istanbul, was eventually appointed as the head of the financial crimes unit of the Istanbul Police Department after the major corruption and bribery investigation of Dec. 17.

SOURCE: TODAY’S ZAMAN

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