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bne Turkey Daily ListExecutive Summary:
This is bne's Turkey daily newsletter, a list of the top stories in the country this morning. To manage your delivery options: click here: | ||
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| 1. CIA said helping to steer arms to Syrian opposition |
| bne |
| June 22, 2012 Central Intelligence Agency officers, in covert operations in southern Turkey, are helping steer arms to opposition fighters to fight the Syrian government, The New York Times reported Thursday, quoting American officials and Arab intelligence officers, Xinhua reported. "The weapons, including automatic rifles, rocket-propelled grenades, ammunition and some antitank weapons, are being funneled mostly across the Turkish border by way of a shadowy network of intermediaries including Syria's Muslim Brotherhood and paid for by Turkey, Saudi Arabia and Qatar," the paper said. The CIA officers, small in number, have been in southern Turkey for several weeks, "in part to help keep weapons out of the hands of fighters allied with al-Qaida or other terrorist groups," the report said. The Obama administration has said it is not providing arms to the opposition fighters in Syria, but is supplying non-lethal such as medical supplies and communications equipment. "By helping to vet rebel groups, American intelligence operatives in Turkey hope to learn more about a growing, changing opposition network inside of Syria and to establish new ties," the report said. "CIA officers are there and they are trying to make new sources and recruit people," one Arab intelligence official was quoted as saying. American officials and retired CIA officials said the administration was also weighing additional assistance such as providing satellite imagery and other detailed intelligence on Syrian troop locations and movements. In addition, the administration is considering whether to help the opposition set up a rudimentary intelligence service. Washington and its Western allies want to see a political transition in Syria with the departure of President Bashar al-Assad. Russia and China, meanwhile, call for a negotiated settlement to the 15-month-old violence in the Middle East country, voicing opposition to any forced regime change by outside interference. |
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| 2. Turkey central bank keeps rates on hold and softens hawkish tone |
| TEB |
| June 22, 2012 The CBRT left its policy rates unchanged and increased the amount of TRY reserve requirements that could be held in FX and gold Accordingly, 1-week policy rate was kept at 5.75% and o/n lending to primary dealers at 11.0%. The CBRT increased the amount of TRY reserve requirements that could be held in FX from 45% to 50%, and in gold from 20% to 25%. The banks will have to keep 1.7x the required TRY amount in foreign currency and 1.5x the required TRY amount in gold for the additional 5pp increases. The CBRT noted that this decision would increase the official reserves by around USD 5bn and release TRY 5.6bn of TRY liquidity to the market. Minimum and maximum repo limits were left unchanged The CBRT announced that the daily one-week repo-funding limit would remain the same at TRY 1-5bn until the next MPC meeting on 19 July. The maximum limit for one-month repo auctions was left unchanged at TRY 5bn as well. The CBRT softened its policy stance from "tight" to "cautious" The CBRT's assessment on economic activity was broadly unchanged, and the bank envisaged a modest recovery in Q2, following a significant slowdown in Q1. The statement also argued that energy and unprocessed food prices were on a more favourable course than envisaged earlier. Nevertheless, the CBRT noted that as inflation would continue to stay above the target for some time, pricing behaviour would be closely monitored and additional monetary tightening could be implemented if deemed necessary. The CBRT has softened its assessment of inflation risk We agree with the CBRT's assessment regarding inflation outlook. The decline in energy prices, supported further by the stable TRY and benign unprocessed food prices will continue to limit inflationary pressures looking onward. We believe the CBRT's 6.5% inflation forecast for 2012 is now within reach. If the capital flows recover, the CBRT could lower the cost of its funding, as inflation risks are visibly lower. Nevertheless, cost-push pressures are likely to be sustained and reducing inflation down to 5% by mid-2013 will remain challenging For example, the recent legislative changes as to excises on alcohol and tobacco brought along a risk of a new specific tax on these items. The legislation authorised the Council of Ministers to initiate new specific excise on alcohol and tobacco that would be capped at 20% of the current minimum specific tax. The tax can be introduced in 2012, contrary to our prior understanding. This would correspond to a 5% increase on alcohol and tobacco prices, which in turn could add 0.2-0.3 pp to the inflation rate. The legislation also indexed the excises to PPI. The indexation will be effective from January 2013. The CBRT continues to accumulate FX reserves by changing the reserve requirement regulations The regulation changes are encouraging the banks to continue to borrow abroad as we explained in detail in Turkish Banks' Flow of Funds report on 18 June. The recent changes would possibly encourage the banks to do more of the same. The CBRT is likely to keep TRY liquidity tight by reducing its repo-funding amount. Nevertheless, the total cost of funding is likely to decline for banks, as they will need to rely less on expensive TRY funding. |
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| 3. Turkey, EU set to launch negotiations on visa exemption |
| bne |
| June 22, 2012 Turkey and the European Union have agreed to start negotiations that Turks hope will eventually guarantee them visa-free travel to EU countries, Trend News Agency reports. The move follows EU members' authorization of the European Commission to launch talks and Turkey's acceptance of an initial readmission agreement that is considered critical for the union in combating irregular migration. The Commission is expected to present a visa exemption action plan this autumn and the implementation of the action plan is likely to be realized in a minimum of two-and-a-half years. Diplomatic sources say actual visa-free travel for Turks visiting the EU could be possible within four to six years and would require a majority of votes in the EU. Turkish Foreign Minister Ahmet Davuto_lu said on Thursday that the beginning of negotiations marked "a historic step." "The first synchronized move will be made and the process will start. I believe this is a very historic step," Davuto_lu said in a televised interview with a private Turkish news channel. |
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| 4. Turkey minister says talks ongoing with Ukraine over Black Sea LNG deliveries |
| bne |
| June 22, 2012 Talks between Turkey and Ukraine over LNG deliveries via the Black Sea are "ongoing," Turkish Energy Minister Taner Yildiz told Platts. "We remain sensitive on certain issues, but we believe there are a number of projects that we can develop in cooperation with Ukraine," Yildiz said, when asked about Turkey's position on the possible delivery of Qatari LNG to Ukraine via the Black Sea. In mid-May a Turkish official said that talks between the two countries would focus on the possibility that Turkey may import Qatari LNG to its main terminal at Eregli on the Sea of Marmara, before transiting it to Ukraine via pipeline. The existing TransBalkan gas pipeline currently used to export Russian gas through Ukraine and the Balkans to Turkey could be reversed with minor modifications and used to carry gas from Turkey back to the Ukraine. Ukraine is planning to build an LNG terminal near Odessa, at an estimated cost of $1 billion, and an estimated capacity of 10 billion cubic meters/year of gas, according to the government. |
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| 5. Cyprus signals freeze of reunification talks |
| bne |
| June 22, 2012 Ten days before it takes over the rotating EU presidency, Cyprus said it would "put on the back burner" the long-standing reunification talks with Turkey to focus instead on a complex Union agenda, EurActive reported. Andreas Mavroyannis, deputy minister to the president of Cyprus for EU affairs, insisted that his country would not mix the "Cyprus issue" with presidency business. "But at the same time we cannot accept that Turkey comes and tells us the first of July is the absolute deadline for the solution of the Cyprus problem because then we have a plan B," he said at a public event organised by the Centre for European Studies, the European People's Party think tank. "So it's not us who are establishing a link [between the presidency and the reunification talks], it's Turkey." Mavroyannis was alluding to threats by Turkey to consider annexing northern Cyprus, which is technically EU territory, if talks between Greek and Turkish Cypriots fail to reach a reunification deal before the start of the presidency. |
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| 6. Turkey Erdemir says Russian, Ukrainian steel imports hurting prices |
| bne |
| June 22, 2012 An executive at Erdemir, Turkey's largest flat steel maker, told Reuters that Higher sales of Russian and Ukrainian steel in Turkey are putting downward pressure on steel prices and affecting domestic steelmakers' margins. "Our regional competitors, Ukraine and Russia, are having difficulties in other markets so they are trying to dump their production into Turkey," Kemal Ozden, senior advisor to Erdemir's chairman, told Reuters. He said steel producers in Russia and Ukraine benefit from lower-cost domestic supply of raw materials. |
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| 7. ZEW-Erste economic sentiment indicator finds pessimism in CEE returns |
| Erste |
| June 22, 2012 Economic expectations for Central and Eastern Europe including Turkey (CEE) have decreased by 14.6 points in June 2012. The ZEW-Erste Group Bank Economic Sentiment Indicator currently stands at a balanced level of 0.0 points. A large part of the indicator's decrease (down 10.3 points) was caused by the experts' responses after the release of the Greek election results. The economic sentiment indicator for the CEE region and further financial market data have been surveyed monthly by the Centre for European Economic Research (ZEW), Mannheim, with the support of Erste Group Bank, Vienna, since 2007. The assessment of the current economic situation for the CEE region has slightly decreased by 2.8 points to a level of minus 0.1 points in June. Economic sentiments for the Eurozone have decreased significantly by 19.2 points to a level of minus 10.1 points. This decline is mostly due to experts' responses before the Greek election vote. Experts' assessment of the current economic situation for the Eurozone has deteriorated in June. The respective indicator has decreased by 14.5 points to a value of minus 66.7 points. Information concerning further indicators of the CEE region, the Eurozone, individually analysed CEE countries or Austria can be found in the table at the end of the press release. The answers of all survey participants are taken into account for the calculation of the indicators for the CEE region, the Eurozone and Turkey. The answers of the Turkish survey participants are not taken into account for the calculation of the indicators for the individual CEE countries and Austria as their high participation share in the survey could cause significant biases in the survey results. |
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| 8. Turkey estimates 30,000 Syrian refugees have now crossed border |
| bne |
| June 22, 2012 A further 150 Syrian citizens on Thursday crossed the border into Turkey, bringing the total number to 30,000, most of whom are women and children, the Anadolu news agency reported. Most of the women and children refugees will be transferred to the province of Sanliurfa, while the soldiers who have deserted the Syrian army will be taken to the southern province of Hatay, said Anadolu. |
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| 9. A frozen conflict heats up |
| bne |
| June 22, 2012 Nine soldiers were shot dead in a series of clashes on the border between Armenia and Azerbaijan in June, in the deadliest few days the troubled region has seen in four years. While the situation is now calmer, it has raised fears of an escalation in the frozen conflict over the disputed enclave of Nagorno-Karabakh. The recent violence took place during US Secretary of State Hillary Clinton's visit to the South Caucasus. Three Armenian soldiers were killed and several soldiers from both countries injured in a shootout on June 4, which Armenia's Defence Ministry said was caused by an "invading" group from Azerbaijan. The following day, five Azeri soldiers were killed in two separate incidents. A statement from Azerbaijan's Ministry of Defence said that a group of Armenian "saboteurs" tried to "infiltrate a position of the Azeri armed forces" early on June 5, and four Azeri soldiers died in the ensuing battle. A fifth soldier died in a nearby skirmish later in the day. The shootings on June 4 and 5 took place on the border between Armenia proper and Azerbaijan, rather than on the de facto border dividing Azerbaijan from Nagorno-Karabakh, which has seen numerous clashes in the last 15 years. Since then, there have been no further deaths, but there are reports from the unrecognised Nagorno-Karabakh Republic's Defence Ministry of a higher level of activity on its de facto border with Azerbaijan. On June 18, the Ministry said that Azeri soldiers had violated the ceasefire agreement signed in May 1994 no less than 1,000 times between June 10 and June 16. Despite the signing of a ceasefire agreement in May 1994, Armenia and Azerbaijan have never signed a peace settlement to end the war that broke out in the early 1990s over the tiny Nagorno-Karabakh enclave, which was part of the Soviet republic of Azerbaijan, but had a mainly ethnic Armenian population that declared its independence in 1991. When Baku tried to regain control of the republic by force, Azeri forces were driven out by Karabakhis supported by the Armenian army. While Nagorno-Karabakh is now de facto independent and closely integrated with Armenia, under international law it remains part of Azerbaijan, and Baku shows no sign of giving up its claim on the territory. All-out war Incidents on the Armenian-Azeri border and the dividing line between Azerbaijan and Nagorno-Karabakh are not uncommon; more than 60 people have been killed in skirmishes between Armenia and Azerbaijan since the beginning of 2011. But the June incidents were the deadliest for several years. There are growing concerns that rather than being isolated incidents, the recent clashes could escalate into a full-scale war between Armenia and Azerbaijan. Another frozen conflict also in the South Caucasus exploded into all-out war in August 2008 when a similar series of incidents on the border between Georgia and the self-declared republic of South Ossetia took place in the first half of 2008, before erupting into a five-day war between Georgia and Russia, which had consistently supported the breakaway South Ossetian republic. Both Armenia and Azerbaijan have steadily increased military spending in recent years. Azerbaijan, which has considerably greater spending power thanks to its oil and gas revenues, has embarked upon a massive military build-up, with the implicit threat that it might try to re-take Nagorno-Karabakh by force. Azerbaijan almost doubled its defence budget from $1.59bn in 2010 to $3.1bn in 2011, equivalent to 6.2% of GDP. In fact, Azerbaijan's military budget for 2011 was around 30% higher than the entire Armenian budget for all sectors of the economy, allowing Baku to invest in cutting edge Russian and Israeli military hardware. But even with Azerbaijan's financial advantage, Armenian and Nagorno-Karabakhi forces are considered to be at least a match for Azerbaijan, which also would have more to lose from a new outbreak of war. "The possibility of a larger-scale conflict is relatively low. There would be huge pressure on both Baku and Yerevan, especially from the US, to prevent a wider conflict. Despite the spending on the Azerbaijani military, it is not yet as strong as the Armenian army, and Baku wouldn't want to risk losing even more territory," Anna Walker, senior analyst for Central Asia and the South Caucasus at Control Risks Group, tells bne. "An escalation would also put Azerbaijan's oil and gas export potential at risk. During the Russian-Georgian war, oil and gas transport was halted even though no pipelines were directly attacked." Past experience has shown it is not unusual for both sides to up the ante when there is a high-profile visitor in the region, as during Clinton's visit in early June. The change of leadership in Russia and to a lesser extent France - the third co-chair country of the OSCE Minsk Group, which is working towards a settlement of the conflict - has also created a higher than usual level of uncertainty about the settlement process. Efforts by the international community to bring about a peace deal between Armenia and Azerbaijan appeared to progress in recent years following the election of new presidents in both countries - Ilham Aliyev in Azerbaijan and Serzh Sargsyan in Armenia. Both Aliyev and Sargsyan have been more amenable than their predecessors to opening talks, and for the first time since 1994 a series of meetings have taken place between the two presidents. Every meeting took place under the aegis of Russia's former president Dmitry Medvedev, who was replaced by Vladimir Putin in March 2012. "Dmitry Medvedev made a lot of effort to bring the two sides together. There are concerns that with Vladimir Putin back in charge, Russian engagement may weaken," Walker points out. Clinton's initial warning in Yerevan on June 4 that the incidents could lead to "a much broader conflict" has been followed by more international efforts to calm the situation, with the presidents of the US, France and Russia meeting during the G20 summit on June 18 to discuss the issue. The foreign ministers of Armenia and Azerbaijan, Edward Nalbandian and Elmar Mammadyarov, met in Paris on the same day in a "positive, constructive atmosphere," with both ministers agreeing to continue working with the Minsk co-chairs and to carry out confidence building measures. But the meeting was short on concrete progress, and came just four days after Nalbandian had flatly turned down an appeal from OSCE chairman Eamon Gilmore for the Azeri army to withdraw its snipers from the border. |
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| 10. A shot rings out in Romania's fight against corruption |
| bne |
| June 22, 2012 In terms of marking a turning point in Romania's fight against corruption, it was certainly dramatic. The police arrived at Adrian Nastase's house four hours after a court sentenced Romania's former prime minister to two years in prison for a party funding scam on June 20. Affable as ever, Nastase reportedly asked the police officers to wait a moment while he fetched some books. When he did not return after a few minutes, the police followed him inside to find the 61-year-old brandishing a Smith & Wesson pistol, which he turned on himself, firing a single shot. He underwent minor surgery for injuries to his neck and collarbone soon after. His doctors said his life was never in danger, but he is expected to stay in hospital for five days and his lawyers have asked to delay the start of his sentence by three-months. Good behaviour could see him released after eight months. Nastase's government from 2000 to 2004 is widely seen as among the most corrupt in Romania's post-communist history, but after an eight-year trial involving 972 witnesses, he was sentenced for the relatively minor crime of concealing his donations to his party, the Social Democrats. The trick he used is not only commonplace in Romania. Though the trial was long-winded and the conviction relatively minor, his sentencing, the first of such a senior politician, is a sign that Romanian courts are now functioning, argues Alina Mungiu-Pippidi, a professor at Berlin's Hertie school of governance. Until now, she says, senior judges in higher courts have tended to be particularly favourable to Social Democrats, having taken their positions under the party's communist forbears. This time, the judges have revealed a nest of corruption and nepotism, operating on the basis of punishment and reward. Nastase is appealing a separate three-year sentence brought in March. But despite his ongoing legal troubles, Nastase remains popular. Nastase's mentor, the 82-year-old former president Ion Iliescu spoke of an unjust verdict. His political protg Prime Minister Victor Ponta, meanwhile, visited Nastase in hospital, despite coming under formidable pressure this week over claims he copied a large chunk of his doctoral thesis. Domestically the scandal over Ponta's alleged academic misdemeanour is likely to fade fast, according to Mungiu-Pippidi. This is not through lack of evidence, but that it is such common practice among Romania's ruling elite that no-one is much surprised. Academic standards at least were better under communism, she says. The electorate may well judge all established parties negatively in this autumn's election, with those allied to Traian Basescu's centre left position also deeply unpopular. An entirely new party is needed to provide Romanian voters with a viable choice, experts say. Rising through the ranks Nastase's self harm seems to be the end of a career marked by self-promotion. As the son of an officer in the royal army, he courted the daughter of a foreign minister who died in a plane crash, only to drop her once the posthumous esteem of her late father faded. In 1985, the Young Communist married the daughter of the minister of agriculture, a key position. Nastase was able to hang on to the power and wealth he accrued in communist times after the revolution took place four years later. Anyone in any doubt need only see his neoclassical villa in the diplomatic district of Bucharest or the even-more grandiose country estate on the edge of the Carpathian mountains. Nastase's four-year government was one of the most corrupt in recent Romanian history, with tales of astonishing greed and graft. Romania's Consul to Shanghai was allegedly asked to procure expensive Chinese furniture for Nastase's villa in return for advancement. There was also the case of "Aunt Tamara" in which the Anti-Corruption Authority opened a file on Nastase's wife, Dana, after she opened a bank account with $400,000. Nastase promptly replaced the head of the authority and the dossier on his wife disappeared. Nastase subsequently told a court that the money had come from his wife's aunt, Tamara. The case, however, was dropped in December for lack of evidence. For all the scandal surrounding him, Adrian Nastase was true to one principle: loyalty. The party awarded resources and recipients were expected to reciprocate. Nastase did not invent the system. It was the guiding principle of the Communist Party through which he rapidly rose. Post-1989, other parties have merely copied what was a winning formula. Bucharest judges have now shown how parties manage to keep their grip on power, but no Social Democrat has distanced themselves from their sponsor. The electorate might yet recoil, however, if presented with a viable alternative come November at the next elections. |
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| 11. Putin calls for G20 to take lead in global affairs |
| bne |
| June 21, 2012 Russian President Vladimir Putin's speech at the St Petersburg International Economic Forum on June 21 was aggressive on international issues, while offering concessions on the domestic front. He also repeated the call for transforming the Russian economy, lifting it up the World Bank's "Doing Business" ranking to become one of the "best" places to do business in the world. He kicked off by taking another shot at the traditional world leaders of and calling for the G20 to take the lead in global affairs. Putin has made steady progress away from wanting to cooperate with the West: he was the first leader to reach out to then-president George W. Bush in 2003 after the 9/11 attack and was genuinely interested in becoming a partner. However, he was rebuffed at every turn and relations got steadily worse. A speech in Munich in 2007, where he warned the West that Russia was losing its patience, could be taken as the start of a process that culminated today with a speech openly calling for the G8 to step aside and for the G20, which includes the traditional leaders but also the rising ones in the BRICS and their peers, to become the top international body. To highlight the point, he emphasised the chaos that reigns in Europe and also had a sideways swipe at the "country that issues the currency held as a world reserve currency." It was this theme of stability and instability that peppered the section on international relations, with Putin drawing a clear line between the "stable" countries (ie. his BRIC peers) and the "unstable" ones (the West). Specifically, he said the BRICS were going to contribute $75bn to the International Monetary Fund's war chest (and Russia $10bn), but they should have more say in how the organisation is run if they do. Later in the speech, he said that Russia was willing to invite foreign investment "even into our strategic sectors," but for this investment to happen it must be mutual. "Russian companies that wanted to invest in other countries have faced a wall and seen artificial pretexts that prevented this investment," said Putin. "This is far from being a partnership." All this marks Russia's steady decay in relations with the "international community" while it becomes increasingly aggressive in asserting its interests, leading some to start talking about the return of the Cold War - which only highlights the bad relations and the lack of understanding there is on both sides. Putin also stressed the need for "accountability", which was an implicit dig at the poor governance in the US that brought the global economy to its knees. "We must end the petty populism of the politicians and the unrestrained fiscal speculation, as it is dangerous," said Putin, laying the blame for the world's crisis and its inability to emerge from it on the US. Home truths Putin then moved on to cover the domestic agenda and rattled off the economic achievements of the last years that included 20-year low inflation and unemployment rates. He made the interesting point that one of the reasons unemployment is so low (5.4%) is because existing capacity in the economy has been exhausted. This means Russia needs heavy investment to create new jobs - and specifically Russia is targeting hi-tech sectors. Putin reeled off previous promises to boost the share of hi-tech industry in the economy from the current 20% of GDP to 27% by 2018, as well as move Russia up the World Bank's "Doing Business" index. It is becoming increasingly likely that a lot of effort will go toward achieving the latter, as he then rattled off a list of changes that need to be made to lift Russia up from 120th spot in 2012 to 20th place - changes which also happen to be the individual factors that go into making up this index. There is a bit of jiggery-pokery here, as even Belarus has moved up the "Doing Business" ranking: you can target the factors that the list is calculated on and so dramatically improve your score without actually making a big difference to doing business on the ground. But at least if Russia does pull off a fast rise in the ranking, it will be pretty much the first time the Kremlin has attempted some PR on the investment climate front, which in itself is progress. Former regional governor Boris Titov has been appointed an ombudsman for business and will be tasked with making sure doing business in Russia gets easier. More radically, Putin promised there will be a new budget rule "soon" that will prevent the budget from being set on the basis of the oil price forecast. Currently, if oil rises, the Duma has more money to spend. But Putin suggested that the price of oil will be capped and said any "windfall" revenues from higher oil will be channelled into the various reserve funds. The key question here is what level the price will be capped at. Only last week, chief strategist at Citigroup Kingsmill Bond called for Russia to cap the oil price prediction in the budget at $80, which would ensure the budget was run on a more stable basis. Civil talk Finally, Putin made some concessions to the opposition movement, which has been holding demonstrations since December. He committed himself again to the need for developing civil society in Russia. "We have seen a civil society start to emerge in Russia and this is due to a decade of growth. This is healthy and we understand that a mature economy can't become a developed country without a civil society. The state must move towards this so that we have not only a legitimate government, but also one the people trust. Minorities' interests must be respected and accommodated where it is possible," said Putin. Taken at face value, this is all very liberal sounding and flies in the face of the constant carping that Russia is repressive. But the issue is one of the pace of change - Putin has always said he will go slowly and wants to remain in charge of the process. He went on to warn that any change must be done "within the framework of the law," where the Kremlin holds all the cards. However, in a surprise move he announced that any Russian citizen who collects over 100,000 "authorised" signatures can now propose a law that will have to be considered by the (Kremlin-controlled) Duma. Although this initiative will probably not lead to a lot of change, it does provide the nascent opposition with a real tool to propose policy and laws; the Kremlin's intention is probably not to allow citizens to make law, but to create a channel of input from the public and adopt elements of these suggestions. This is a carrot to take some of the sting out people's anger, but is more than matched by the bigger stick the Kremlin has recently given itself in the form of a new law on holding demonstrations. All in all, this was a confident speech and stands in dramatic contrast to the bumbling speech the president gave at the start of the year at the Troika Dialog/Sberbank conference, where many of these ideas were first sketched out. Putin looked confident and on top of his brief. As always the rhetoric is fine, but it's the implementation that's key. On moving up the World Bank ranking, observers are confident this will happen; on the promise to get the state out of the economy through open and transparent privatisations, they are less confident. But as ever, Russia will continue to make its bumbling way forwards. |
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| 12. Poll finds terror is regarded as the biggest problem in Turkey |
| Hurriyet Daily News |
| June 22, 2012 A majority of Turks have indicated that they consider "terror" to be Turkey's most important problem for the first time, putting the issue ahead of economic difficulties, according to a survey conducted among 3,000 people. Some 67.1 percent of Turkish people consider terror to be Turkey's biggest problem, while only 17.2 percent find economic problems more important, according to a survey recently conducted by the Sonar Research Center. Unemployment ranked in third place at 8.7 percent, while 6.1 percent say Turkey's biggest problem is education. The results of the report, "Political Approaches in Turkey," also showed that 61.2 percent of Turkish society objected the idea of negotiations between the state and the Kurdistan Workers' Party (PKK) or its jailed leader Abdullah calan to solve the Kurdish question. Only 10.2 percent of participants said negotiations should definitely be held, while 10.8 percent said it was possible to negotiate if the PKK lays down its arms. Click to read more on Hurriyet Daily News |
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| 13. EU says no plan B for Cyprus |
| Hurriyet Daily News |
| June 22, 2012 Greek Cyprus' rotating presidency of the EU Council will not hinder reunification talks, EU Commissioner for Enlargement Stefan Fle said June 20, following a meeting with top Turkish Cypriot officials. "This visit provides me with an opportunity to express my belief that Greek Cyprus' EU post will not contradict with the continuation of reunification talks," Fle told reporters in Nicosia during the inauguration ceremony of an EU-funded marketplace, while insisting that there is no alternative to reunification. "The worst scenario is the halt of negotiations. There is no 'Plan B,' and the benefits of a possible solution are greater than the concessions the leaders would make," the commissioner said, urging both sides to carry on with reunification talks during the Cyprus presidency. The EU Council presidency will positively affect works designed for the solution of the Cyprus problem, Fle said. "Reunification of Cyprus means a united Europe. And it is not a dream but an opportunity to be seized." The Greek Cypriot administration will assume the EU term presidency on July 1. Fle met with several politicians and opposition parties, including Turkish Cypriot President Dervi_ Ero_lu and Prime Minister _rsen Kk, after earlier talks in Greek Cyprus. |
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| 14. Turkey to lift sanctions on France |
| bne |
| June 22, 2012 Ending what were considered only symbolic sanctions in the first place, Turkey agreed to lift sanctions against France that were adopted after the French Senate passed in January a bill which made it illegal to deny as "genocide" the killing of over one million Armenians by Ottoman Turks in 1915. Turkish Foreign Minister Ahmet Davutoglu said on CNNTURK that Turkey will lift the political and military sanctions after a meeting between Turkish Prime Minister Recep Tayyip Erdogan and French President Francois Hollande. "Turkey-France relations are strong enough to overcome certain difficulties," said the minister. |
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| 15. Caterpillar keen to produce in Turkey |
| Hurriyet Daily News |
| June 22, 2012 U.S.-based construction and mining equipment firm Caterpillar is preparing to invest in Turkey, Industry Minister Nihat Ergn said yesterday during his trip to Boston. "After I come back to Turkey, Caterpillar's president is going to come ... We believe they are very serious about investing in Turkey. Caterpillar's president will conduct a study about the production of construction equipment. Maybe they will search for a local partner," said Ergn. "Caterpillar's coming to Turkey means that they will be able to export to many other countries in the region. Caterpillar's investment in Turkey will probably not be around $50-100 million. It could even be an even larger investment like $1 billion," he said, adding that Turkey had suggested that they not only invest in production, but also in Research and Development (R&D). Ergn said Turkey was not only attractive to investors like Caterpillar because of its new incentive scheme, but also due to its stable economy. "Incentives are important, but they alone aren't enough. If Greece were to offer ten times more incentives than us, investors still wouldn't come. Incentives are only important when they are coupled with sustainability," he told the Anatolia. Click to read more on Hurriyet Daily News |
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| 16. Turkish MPC eases slightly, but rates to remain high |
| Capital Economics |
| June 22, 2012 The Turkish MPC shifted slightly towards easing mode at today's meeting. Nonetheless, with the current account deficit still large and a sharp rise in short-term external debt, we expect monetary policy to remain tight for the foreseeable future. |
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| 17. Eurochamber says Turkish economy experiencing two-pronged positive period |
| Hurriyet Daily News |
| June 22, 2012 The Turkish economy is experiencing a two-pronged positive period in terms of its economy, the president of the Association of European Chambers of Commerce and Industry (Eurochambres) Alessandro Barberis said yesterday. "First of all, the Turkish economy is performing well and secondly, there are countries in Europe going through an economic crisis. European countries with troubled economies have a positive impact on Turkey. We should not, however, forget that 10 years ago European countries were doing well economically while Turkey had a bad economy. There are always ups and downs," he said. Around 2,000 chambers of trade and industry from 45 European countries are members of the Eurochambres. More than 20 million companies are members of such chambers of trade and industry in Europe. The Union of Chambers Commodity Exchanges of Turkey (TOBB) President Rifat Hisarcklo_lu also serves as the vice president of the Eurochambers. Click to read more on Hurriyet Daily News |
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| 18. Turkey central bank survey sees year-end CPI at 7.38% |
| bne |
| June 22, 2012 Turkey's central bank on Thursday announced the following results from its twice-monthly survey of business leaders' and economists' expectations: LATEST PREVIOUS End-2012 CPI (pct change) 7.38 7.47 CPI in 12 months (pct change) 6.93 6.95 End-2012 GDP (pct change) 3.6 3.7 End-2012 c/a deficit ($ bln) 64.62 64.70 End-2012 lira-to-dollar rate 1.8091 1.8114 June CPI forecast (pct) 0.09 0.13 Repo rate in 3 months 5.75 5.75 Repo rate in 6 months 5.75 5.75 Repo rate in 12 months 5.83 5.92 |
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| 19. Turkey central bank net reserves flat at $92.2bn |
| TEB |
| June 22, 2012 As of 15 June, consumer loan growth lost pace and declined to 21% on a wk/wk annualised 4-week moving average basis, and remained at 18% on 13-week moving average basis. In the same week, CBRT's total reserves remained broadly flat at $92.2 billion, whereas net reserves increased by $400 million to $48.3 billion. Foreign investors' bond holdings increased by $1.1 billion adjusted for foreign exchange and market price effects, in the week ending with 15 June. Their total bond stock stands at $42.9 billion including repos amounting $7.6 billion. |
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| 20. Erste lists Turk Telekom to 'accumulate' |
| Erste |
| June 22, 2012 Valuation/Recommendation: We upgrade Turk Telekom from Hold to Accumulate, as the share price has corrected sharply since our last report. We lower our target price from TRY 8.7 to TRY 8.0, considering our lower estimates for 2003e onwards. The recovery of the Avea (mobile) EBITDA margin has been slower than expected and this is unlikely to change, given the continuous strong competition. We raise our CAPEX estimates for 2013e onwards, as TTKOM is investing in its 3G and FTTH/FTTB network. Catalysts: We expect a strong set of 2Q12e results, driven by price increases in ADSL of ~7.5% as of April 1, 2012, and in PSTN of ~5.5% as of June 1, 2012, as well as strong mobile revenue growth. In addition, TTKOM should report an FX gain, due to the strengthening of the TRY against the EUR (+4% q/q). We estimate net income in 2Q12e to increase 52% y/y to TRY 768.7mn. Growth drivers: Fixed broadband and mobile are the current growth drivers. They grow at 17.3% y/y and contribute 48.9% to unconsolidated revenues in 2011. We expect them to grow their revenues at 13% y/y and to contribute 52% to unconsolidated revenues in 2012e. Next driver: We see high potential in the IPTV market, as there were only 1.26mn cable TV and 3.88mn satellite TV subscribers in 4Q11, compared to 19mn households in Turkey. TTKOM, with its ADSL network and future FTTH/B network, could rise as a strong player in this field. Cost saving potentials: There are opportunities to integrate the TTNET and Avea distribution channels, which could lower selling costs and intensify cross-selling fixed/mobile products. |
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