Accessibility links

Breaking News

Turkey's Economic Expansion Rivals Political Outreach

Turkey's population skews young, with a large, able workforce, Istanbul, 12 June 2010
Turkey's population skews young, with a large, able workforce, Istanbul, 12 June 2010

Turkey has been expanding its role in foreign affairs, trying to improve relations with once hostile neighbors in order to become a regional player. Its economic expansion is no less ambitious. But where Ankara seems to be staking its political outreach in often provocative stands, its economic base appears far more steady.

The inroads were on display earlier this week as top bankers and businessmen turned out in Cairo to celebrate the opening of a branch of Turkey's largest private-sector bank, Isbank. As they mingled in a Nile-side garden in wilting heat, a short film played in the background explaining Isbank's ambitions. Its tag line, "The Is brand now sets out to become the region's bank," could work for a wide array of other Turkish ventures.

Isbank CEO Ersin Ozince expressed enthusiasm about Egypt as a new market. It is conservative, by all estimates, which in an era of high-risk flame-outs suits his interests just fine. He noted the banking crisis came about because of unconventional practices, adding, "Fortunately in this kind of emerging market, we have enough conventional banking demands" to satisfy both the bank and its investors. Ozince said Isbank's approach is not very aggressive, citing the bank's "precious" capital.

Region-wide, it would be hard to describe Turkey's business and economic goals as retiring. At a Turkish-Arab Economic Forum in Istanbul earlier this month, leaders proposed a Middle East customs union, expanding current plans that include Lebanon, Jordan and Syria, to encompass much of North Africa.

As part of national policy, the government has streamlined investment procedures, lowered corporate taxes and taken other business-friendly measures to encourage foreign investment in Turkey, and Turkish investment in the region.

Saudi investor Sheikh Khaled Ali Reza has been doing business in Turkey for 25 years. At the Istanbul conference, Reza, who heads the Saudi Cable company, said "Things have moved immensely from the days when you could not transfer money out or in. You could not sell openly." He recalled that in the past, "You had to have 23 signatures to get products out. Now it is only three."

Turkey's appeal to Gulf states - with their massive, but monofocused energy-based economies - goes far beyond efficiency. It has long-standing industries, including textiles, services, and farming. The last is a crucial element as desert Arab nations face the issue of security in their food supply.

The energy of the Turkish work force also is vibrant, with an average age of about 28. Despite the youthfulness of its population, however, the nation has a high unemployment rate that is worrisome. Estimates place it as high as 14 percent.

Arda Aciksoz, the vice president of the Turkish government's investment agency, ISPAT, said the youth population provides some challenges. But he notes that Turks are, as a group, "not only young, also, we are hard workers. We do not leave our offices unless we finish our jobs."

Traditionally, excess workers have gone to Europe, which remains Turkey's main trading partner. But in addition to its new outreach to the Middle East, the country is looking to Central Asia and China, where millions share linguistic ties. And there is Russia, with which Turkey has had long and often contentious ties. Moscow is enthusiastic about several major investment projects in Turkey, including its South Stream pipeline, Russia's bid to secure an energy path along the underside of Eurasia.

For all the growth, Turkish diplomats and businessmen are quick to concede the nation has a long way to go before it has the economic presence of India or Indonesia, for example. But by combining high-stakes foreign policies with steady economic policies, Turkey hopes to give those nations a run for their money.