A Second Bosporus . . . ?

IMAGE from Hurriyet Daily News

The Turkish government's plans to build a second canal right through the heart of Istanbul have raised more than a few eyebrows. The government first talked about this last fall, but yesterday announced a two-year study plan, after which construction would begin. Jenny White gives a summary of the project and asks a couple of really good questions at Kamil Pasha:

There will be a two-year “study period”. Then they’ll start digging. Goal to finish is 2023. Expected cost, a mere $10 billion. Istanbul will become an island and two half-islands. The canal site will be on state-owned land, but there will also be expropriations.

The idea is to allow the biggest tankers to go through the city in the new canal instead of along the Bosphorus, thereby avoiding potential environmental catastrophe in case of a ship crash, oil spill, floods, etc on the Bosphorus. Because the Bosphorus is an international waterway there are all kinds of hazardous materials traveling unhindered through the middle of the city. But the ships in the new canal would still be going through the middle of the city, admittedly without the treacherous currents that afflict Bosphorus traffic. The canal, unlike the Bosphorus, would be fully under Turkish control. Can Turkey legally ban ships from using the Bosphorus? What if the ships prefer that route instead of using the canal (especially if the canal is more expensive)?

Canal length: 45-50km. Depth: 25 meters. Width: 145-150 meters. The soil will be used to build a new harbor and a new airport. (click here)

Maybe it’s me, that I just can’t think big enough. But I also don’t trust the government’s reasons, rationale, and ability to do this properly with sufficient study and technical expertise. (eg what effect would this have on Istanbul’s earthquake susceptibility?)

Hmm, yeah? . . .


UPDATE I (4/30) -- Aengus Collins asks some more good questions of his blog Istanbul Notes.

Mr Erdoğan clearly wants to present himself as a visionary leader who is ready and willing to stamp the power of his imagination on the most significant city in his country. But there are many more imaginative things that he might have chosen to do, many other ways in which he might have sought to improve the lives of the city’s millions of inhabitants had he wanted to.

How about a serious attempt to remedy Istanbul’s criminal unpreparedness for the major earthquake that everyone knows is coming and that everyone knows will kill thousands upon thousands? How about an overhaul of the planning system to incorporate some awareness of the fact that the built environment isn’t an end in itself, but a means of furthering a wide range of human needs? How about overcoming the insanity that passes itself off as driving on Istanbul’s roads? How about a public library worthy of one of the world’s great cities? How about a commitment to retain what little green space is left here and perhaps recover some that has been lost? How about a concerted attempt to deal with the various countrywide factors that are driving crippling and unsustainable increases in the city’s population?

I think Jenny and Aengus have this covered, and so I will leave it at that.

Erdonomics?

PHOTO from Hurriyet Daily News

A recent report by TurkStat, the Turkish government's statistical arm, reveals a growing division between rich and poor despite the high growth percentages and foreign direct investment numbers the government has been posting. While the rich have indeed been getting richer, the poor have gotten poorer. From Hurriyet Daily News:

The people in Turkey’s highest income group are 8.5 times richer than those in the poorest, up from 8.1 times in the previous survey, according to the “2009 Income Distribution and Living Conditions” report recently released by the Turkish Statistical Institute, or TurkStat.

The overall poverty rate in the country likewise increased from 16.7 percent in 2008 to 17.1 percent in 2009, the report said. This means a total of 12.97 million people living in poverty, up from 11.58 million a year earlier. According to TurkStat, the monthly income set as the official poverty line for a four-person household in Turkey was increased from 767 Turkish Liras in 2008 to 825 liras in 2009.

. . . .

According to TurkStat’s figures, the richest 20 percent of people in Turkey earned 47.6 percent of the country’s total income in 2009, while the poorest 20 percent had a share of only 5.6 percent.

“Of course, as the statistics demonstrate, the gap of more than eightfold is a sign of inequality. But compared to Western Europe, this ratio is better and I don’t see a worse deterioration,” Professor Seyfettin Gürsel, the director of Bahçeşehir University’s Economic and Societal Research Center, or BETAM, told the Daily News. He said increasing income taxes in an equitable way would enable the social transfer of wealth needed to help solve the problem of income inequality.

TurkStat’s survey showed that poverty rates increased in both urban and rural areas, to 15.4 percent and 16.1 percent, respectively. The 7.09 million urban poor in 2008 went up to 7.51 million, while the total in rural areas went up from 3.2 million to 3.49 million.

. . . .

Wages constitute the largest income source for the Turkish population, 42.9 percent, compared to entrepreneurial income, at 20.4 percent, the survey said. The breakdown of statistics by region and province showed that Istanbul residents continued to have the highest levels of disposable income in 2009, with an average of 12,795 liras annually in 2009, followed by the Western Anatolia region with 11,501 liras. Southeast Anatolia had the smallest amount of disposable income, an average of 4,655 liras. The number of poor people in Southeast Anatolia increased from 895,000 in 2008 to 999,000 in 2009, or 13.7 percent of the regional population.

For the report, click here.

The numbers come at the helm of an election year in which the CHP is challenging the government on its failure to grow the economy for everyone. Moving back to a social democratic agenda, CHP leader Kemal Kilicdaroglu has promised to work to bridge the wealth divide and provide better social services. The AKP, on the other hand, has put the emphasis on traditional welfare systems and pursued a neoliberal economic policy that has kept Turkey from pursuing another IMF loan while at the same time largely failing to adequately address income inequality, poverty, and the country's significant informal sector.

Part of the problem here is that Turkey lacks a proper tax infrastructure that would progressively address income inequalities and help solve for the growing inequality brought by high interest rates and an elite-oriented growth policy. From my post last February:

According to data from the Organization for Economic Cooperation and Development (OECD), the revenue Turkey collects from personal income taxes and profits stands at less than six percent of the total GDP, and has been declining steadily since 2000. (See "Public Finances" at the bottom of Turkey's OECD statistical profile.) This is the lowest among all OECD countries. As the Anatolia News Agency pointed out in its report Monday, a decline in personal income tax collections likely shifts the burden to workers and more vulnerable members of society. Though the Agency cites no sources, I would very much like to see more analysis of the problem.

Also worth taking note of are the remarkable revenues taken in on cigarette sales, which no doubt hit the families of smokers quite hard. (And, in Turkey, smoking is not only an "upper-class" addiction.)

According to the United Nation Development Program's Gini index calculations, Turkey stands between Peru and Ecuador in terms of economic inequality. All European Union member countries rank far ahead of Turkey according to Gini's equality measures, in addition to Croatia and Macedonia, the two other countries that have accession partnerships with the EU.

Kudos to the AKP for bringing the Turkish economy out of a sad time, but it is time to balance neoliberalism with economic and social rights and democracy that delivers. Perhaps the CHP can shake things up a bit. A counter-cyclical fiscal policy would also help -- some lessons from Chile? Finally acting like a social democratic party while paying significantly less heed to the nationalist/laicist rhetoric . . . actually focusing on democracy that delivers . . . what a concept!

Istanbul as Weimar Berlin?

Claire Berlinski has an extended essay in City Journal comparing Istanbul to Weimar Berlin. From her piece:

What is a Weimar City? It is a city rich in history and culture, animated by political precariousness and by a recent rupture with the past, vivified by a shocking conflict with mass urbanization and industrialization; a city where sudden liberalization has unleashed the social and political imagination—but where the threat of authoritarian reaction is always in the air.

Weimar Cities are not freaks of nature. They may be expected to arise under certain social, political, and historical circumstances. World War I destroyed both Imperial Germany and the Ottoman Empire. The remnants of both entities succeeded in imposing alien new social orders on themselves, fragile experiments in democracy. The Turkish Republic has lasted far longer than the Weimar Republic, but the stories do not differ in the fundamentals; they have merely been telescoped or expanded by contingent events.

With the rise to power in 2002 of the Justice and Development Party, or AKP, the Turkish Republic has experienced a fresh convulsion. The AKP opened the Pandora’s box of political Islam. It has presented its reforms as an exercise in liberalization. In a sense, this is true: religion as a political force had, since the founding of the Republic, been repressed. In another sense, it is not true at all: this particular political force is one that, by its nature, tends ultimately to erase liberal reforms. “Democracy is like a streetcar,” Recep Tayyip Erdoǧan, now prime minister, said infamously in 1995. “When you come to your stop, you get off.”

Turkey is now in the throes of two revolutions. The social transformations over which Mustafa Kemal Atatürk presided have not yet been assimilated; simultaneously, something new—and old—has rushed up to challenge them. The ancient order is thus disappearing doubly. Cultures, it would seem, react in particular ways to the disappearance of ancient orders. The febrile characteristics of Weimar Cities appear at just such times—the in-between times. As fever is a sign of disease, so it is a sign of social dislocation.

I offer this essay not so much because I agree with it in its entirety, but for the different reactions it provokes.

Istanbul Thrives . . .

Leaving Istanbul in August and moving to Washington required a lot of adjustment, and memories of the city still loom clear in my mind. My first venture to Turkey placed me in Izmit as an English teacher, and though Izmit will always be a special place for me, short trips to Istanbul always supplied a boost of energy. I think this is the case for anyone coming from any city, be it in Turkey or elsewhere. Andrew Finkel captures this energy in a recent piece in The Guardian, in which the Today's Zaman columnist and long-time Istanbul resident writes of the city's transformation over the years.

"Istanbul is a country, not a city," says its mayor, Kadir Topbas, and the explanation of its modern boom is buried in the history of the past 30 years. In 1980 Istanbul could not afford the electricity to illuminate that famous skyline. The city, along with the rest of Turkey, was under martial law and there were midnight curfews and even shortages of Turkish coffee.

Since then the city has elbowed its way into the global economy. The backstreet clip joints in the European neighbourhood of Beyoglu have turned into boutique hotels, fusion eateries and world music clubs. The smoke-filled coffee houses whose patrons once scrounged for the price of a glass of tea, now serve lattes – and if you try to light up, there is a £30 fine.

At the end of the second world war, when the iron curtain came down to isolate Istanbul from the rest of Europe, only a million people lived here. Since then, the city has increased its population by that amount every 10 years. "Today's Istanbul is above all an immigrant city," says Murat Guvenc, city planner and curator of Istanbul 1910-2010, a remarkable exhibition that explains the pace of change. It is housed in santralistanbul – a converted power station more brutally chic than London's Tate Modern.

Though Orhan Pamuk writes of its romantic, melancholy feeling in Istanbul, documenting the city's malaise after the collapse of the Ottoman Empire, a recent study of cities around the world conducted by the Brookings Institution recognized it as the "best-performing" city in the world. Though many of its neighborhoods are still plagued by poverty as city authorities struggle to cope with the large numbers of newcomers that have arrived from Anatolia, Istanbul has weathered the financial crisis well in comparison to cities in Western Europe and the United States.

Standing in the Way of Economic Growth?

Tekel workers clash with police in Ankara on Thursday, April 1. AA Photo from Hurriyet Daily News

Tekel workers won an important victory at the Council of State at the end of last month when the Administrative Division of the Council of State's General Commission ruled that the government's relegation of their employment status to 4-C temporary worker status exceeded its powers and violated the rights of the former tobacco-industry workers. The Council applied to the Constitutional Court to annul the legal validity of the status.

A few days later, Tekel workers again took to the streets to stage a one-day demonstration in Ankara on April 1. However, police would not allow them to re-occupy their previous position in front of the Confederation of Turkish Labor Unions, or Türk-İş, headquarters in Ankara’s Kızılay district and clashes followed as demonstrators were pushed into other sectors of the city. Prime Minister Erdogan had strong words for the protestors: "Who are they? They are overshadowing the current positive developments in the country. The growth rate in the last quarter is 6 percent. We should focus on this. We can’t allow illegal actions."

For more on the Tekel stand off, see March 7 and Feb. 9 posts.

Rising Unemployment and Inflation

According to numbers released by the Turkish Statistical Institute (TurkStat) this week, Turkey's unemployment rate has jumped to 14 percent, a 3 percent increase from last year. Of course, the unemployment rate is probably much higher given Turkey's large informal sector and that several Turks have simply given up attempting to find work. TUIK reports unemployment rates are even higher among ban populations and youth. TurksStat also released numbers of inflation, which has risen dramatically in the past few. According to TurkStat, among European countries Turkey had the highest consumer price index.

The Tax Discourse (Or, Lack Thereof)

I sometimes think of Turkey as the Texas of Europe, and Turkey's regressive tax policies give me all the more reason to draw the comparison. Liam Hardy at American Anatolian Viewpoint takes a look at Turkish tax structures, writing that taxes here are not as widely debated as in the United States. I wonder why this is so, particularly when Turkey's reliance on regressive taxation disadvantages workers. Is this one more result of the lack of a viable Turkish left? Are there studies providing more concrete information about how Turkey's tax system affects social inequalities? Who is empowered by Turkey's tax system, and who all is hurt?

According to data from the Organization for Economic Cooperation and Development (OECD), the revenue Turkey collects from personal income taxes and profits stands at less than six percent of the total GDP, and has been declining steadily since 2000. (See "Public Finances" at the bottom of Turkey's OECD statistical profile.) This is the lowest among all OECD countries. As the Anatolia News Agency pointed out in its report Monday, a decline in personal income tax collections likely shifts the burden to workers and more vulnerable members of society. Though the Agency cites no sources, I would very much like to see more analysis of the problem.

Also worth taking note of are the remarkable revenues taken in on cigarette sales, which no doubt hit the families of smokers quite hard. (And, in Turkey, smoking is not only an "upper-class" addiction.)

According to the United Nation Development Program's Gini index calculations, Turkey stands between Peru and Ecuador in terms of economic inequality. All European Union member countries rank far ahead of Turkey according to Gini's equality measures, in addition to Croatia and Macedonia, the two other countries that have accession partnerships with the EU.

Will the Chinese Fund Ilisu?

PHOTOS of Hasankeyf, which the dam would destroy, from the Atlantic.

Yigal Schliefer at Istanbul Calling has posted a stirring report by Peter Bosshard, policy director at International Rivers, an NGO in California, on possible Chinese funding for the Ilisu damn project in the southeast. I wrote an extensive post on the troubled development project and the politics surrounding it back in July (see July 26 post). From Bosshard:

Turkey is so indebted it cannot finance the dam from its own resources. Reliable sources have told us that the Turkish government is currently discussing support for the Ilisu Dam with China. For years, the Turkish and Chinese governments have strongly disagreed over the treatment of the Uighur population, which is ethnically Turkic, in China’s Xinjiang Province. Yet in June 2009, Turkey’s President visited China and signed several cooperation agreements, including in the energy sector.

Under a plan which is currently being discussed, Andritz Hydro, the main contractor for the Ilisu hydropower project, would manufacture the turbines for the project in China rather than in Austria. Sinosure, an insurance company set up and owned by the Chinese government, would insure the bank loans for the contract. In a new twist in its emerging role, China would thus not enable its own dam builders to go abroad, but would underwrite the exports of Western dam builders which have shifted part of their manufacturing base to China.

For Bosshard's full report, click here.

Ilısu Dam Project in for Hard Times Despite Government Plans

PHOTOS of Hasankeyf from the Atlantic

On July 7, the German, Swiss, and Austrian governments announced plans to withdrawal from the Turkey's 1,200 megawatt Ilısu dam, an ambitious engineering project designed to generate 3.8 billion kilowatts/hour of electricity to the country per annum. The dam is part of Turkey's larger Southeast Anatolia Project, commonly referred to as GAP. Plans for GAP date to the 1970s, and the total project is estimate to cost an estimated €32 billion of which the Ilısu project was expected to cost €1.2 billion. From Amnesty International:

In March 2007 the German, Swiss and Austrian governments agreed to support companies from those countries to supply equipment and engineering services for the construction of the Ilısudam. This support was provided through ECAs [export-credit agencies], which arepublic or semi-public institutions thatgrant government-backed loans, guarantees and insurance to domestic companies that seek to do business overseas. Germany's Euler Hermes Kreditversicherungs-AG, Austria's Oesterreichische Kontrollbank Aktiengesellschaft(OEKB) and Switzerland's Swiss Export Risk Insurance(SERV) agreed to disburse a total of 450 million Euros in export risk guarantees.

When the three ECAs granted their support, a committee of independent experts was set up to evaluate and monitor the implementation of an agreement between the governments of Switzerland, Germany and Austria and the Turkish government on the impacts of the dam, including the social and environmental impacts. The agreement required the Turkish government to put in place mitigating measures, adequate compensation and a comprehensive scheme for the resettlement of affected communities. Following repeated breaches of this agreement, the governments of Germany, Switzerland and Austria put the contracts of national companies on hold for 180 days at the end of 2008. On 7 July 2009, when the Turkish government had not met the agreed standards, they decided to withdraw their support to companies involved in the project.

Had the ECA support not been withdrawn,Germany, Austria and Switzerland, as well as the companies receiving export credit guarantees, would be at risk of complicity in human rights violations and/or profiting from a project involving serious human rights violations.

The holds were ordered on Jan. 6 and the social and evironmental impacts referred to involved the expropriation of land from villagers who live on the proposed site and the failure of the Turkish government to conduct environmental impact assessments adequate to the demands of the ECAs. Since the Turkish government did not meet the 153 funding criteria placed on the project by the German government, Germany suspended funds and Switzerland and Austria followed suit. The German share of the project was €450 million. The funding criteria reflected World Bank environmental and heritage standards.

Ilısu would have been constructed on 300 square kilometers of expropriated land, involved the displacement of some 80 villages (mostly Kurdish) and 55,000 people (though Hürriyet reports it would have displaced 65,00 people), and flooded heritage sites, in particular the village of Hasankeyf, a city dating to Roman times and said to be home of over 20 cultures. The town was destroyed by the Mongols, but rebuilt by Selcuk Turks in the eleventh century. I posted on Hasankeyf in December.

Despite the withdrawal of foreign investment, Turkish Environment and Forestry Minister Veysel Eroğlu has said Turkey will continue to the poject. Particularly disconcerting, Eroğlu chalked opposition of the project up to From the AFP via Hürriyet:

"We have successfully carried out some important work in order to realize the project in accordance with international standards . . . The criticism is untrue. This is the work of foreign powers that do not want Turkey to become a regional power," he added.

An article in TDZ made no reference to Eroğlu's combative remarks, but did note the minister's insistence to carry on with the project for the economic good of the country's east and southeastern regions.

This claim is up to debate and figures into what has long been a debate about both the Ilısu project and Southeast Anatolia Project (GAP)as a whole. As Gareth Jenkins pointed out in an article last year, GAP is a long-standing project that has heightened tensions in the region for over thirty years. Though AKP has been quick to tout the project as benefitting the southeast, this is a dubitable claim. Additionally, it is largely seen by many Kurds and observers of Turkish politics as part of what Ece Temelkuran has termed Turkey's "Islamist banana" poltiics. (For Jenkins and "banana politics," see my post from last March.

So far, Turkey has invested an estimated total of $20 billion in GAP, and though GAP's irrigation projects have increased yields two to three times, it is reported to have left many of those whose lands were expropriated in an even greater state of poverty. Yigal Schleifer, in an article for Eurasianet last June notes a recent study by the Turkish Confederation of Young Businessmen (TÜGIK). According to TÜGIK, despite the investment in GAP, "the region’s share in the national income is lower today than it was 40 years ago. While the 2007 per capita income in the region around Istanbul was $14,500, in Turkey’s southeast it was only $5,200." The Ilısu dam project made up a significant sum of the $12 billion Prime Minister Erdoğan promised on May 27, 2008, and which he spoke of on his visit to Diyarbakır last summer. As for Ilısu, Schleifer points out little attention was paid to building local manufacturing jobs or to food processing facilities, industries that would have seen a real benefit for economic development in the largely Kurdish southeast. In the same piece, Schleifer writes that not all of those forcibly removed in previous phases of GAP received compensation and interviewed some of the displaced who were now working as loaborers on the farm lands they had once inhabited on the fertile Harran plains.

The Ilısu project was slated to be completed in 2013, but the ECA withdrawals -- despite the claims of Minister Eroğlu -- leave its completion up in the air. It is not at all clear, especially amidst the havoc of the financial crisis, that Turkey has the funds it needs to complete the project. However, as the Guardian reports, the dam, first planned in the 1980s, "has a history of troubles." The British construction company Balfour Beatty scrapped plans for a £200m investment in 2001 under pressure from environmentalists and human rights groups." Will the Turkish government complete the project, or will it look for funding elsewhere?

Gül Vetoes Private Labor Employment Bill

From Bianet:

The International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) lodged strong protest early this week demanding Turkey President Abdullah Gül veto a bill giving "Private Labour Offices" broad rights to place temporary workers in enterprises. On 9 July, President Gül did veto the bill, and now the ICEM demands the Turkish Parliament not bring it back.

. . . .

Mustafa Kumlu, President of the Confederation of Turkish Trade Unions (Türk-İş), said accurately it would render existing mechanisms between unions and government useless. Kumlu, an ICEM Executive Committee member, said "social rights, social security, and other benefits" would disappear under this legislation.

For full article, click here. For coverage of ICEM's meeting in TDZ, click here.

Child Labor Persists in Turkey, Deepens Gender Divide

The International Labor Organization (ILO) published its annual report on child labor last month. From Bianet:

According to the report, Turkey is the third among the sixteen countries studied in terms of the hours that child labourers work. Only following Mali and Senegal, girls in Turkey aged 5-14 work around 30 hours a week, while boys work over 25 hours.

The average for the sixteen countries is 20.2 hours for girls and 19.2 hours for boys.

According to 2006 data published by Bianet, around one million children in Turkey are working.

Child labor in Turkey has long been considered a problem (click here for an article from Today's Zaman), and the report is significant in drawing specific attention to the gender divide in childhood education. While Turkey is a member of the Organization for Economic Cooperative Development (OECD), the eastern regions of the country lag far behind the much more developed west. While attempts have been made in recent years to address persistent poverty in Turkey's eastern regions, especially the Kurdish southeast, more could be done from a human rights angle in terms of ensuring that children be sent to school, especially young girls. Conditional cash transfers have proved moderately effective in addressing social problems associated systemic poverty, and hopefully the policy suggestions of the ILO will lend policymakers additional guidance.

A report published in Turkey on 11 June, produced by the Educatino Reform Initiative (ERG), there are 220,000 children aged 6 to 13 who are not registered for education in Turkey. Of these, 130,000 are girls, and 90,000 boys. Around 100,000 of the children not being educated are from central Anatolia and the southeast of the country. In addition, there are children who are not even registered as born, and have thus not been counted.

If a household is attached to a social security institution through work, this increases the probability of a child attending middle school (years 6-8) by 15 percent. However, around 54 percent of urban families have no steady income. This rate is at 84 percent in Gaziantep and 91 percent in Diyarbakır, in the southeast of the country.

At higher levels of schooling, the number of girls drop. While there are 96 girls to every 100 boys in primary 1, there are only 91 girls in 8th grade.

According to the child labour report of the Turkey Statistical Institute (TÜİK), six percent of Turkey's 6-17-year-old population is working. 66 percent of these are boys, and 34 percent girls. 41 percent work in agriculture, 28 in industyr, 23 in trade and 9 percent in the service industry.

The TÜİK report also warns that forcing children to work obstructs their education and calls for an integration of all children into the education system. (TK/AG)

DTP MP Sevahir Bayındır from Şırnak (in the southeast) recently proposed a parliamentary investigative commission be set up in response to the report. According to Bayındır,

As long as children are pushed out of education, child labour will continue. Because there are no up-to-date data showing that child labour in Turkey is decreasing, there is no wide-ranging data on child labour. There need to be policies and programmes created to solve the problem, and there needs to be research to obtain indepth information.

Child labour needs to be treated as a social problem, and mechanisms to collect data and monitor child labour need to be created urgently. The worst kinds of child labour need to be abolished, and an investigative committee needs to be formed in order to solve the problems of children working under the worst conditions in industry and agriculture.

Rural-urban migration, related adaptation problems and the industrialisation of agriculture have all put child labour onto the agenda. Families let their children work in the streets in order to raise their income. The underlying reasons for child labour are poverty, migration, traditional family structures, lack of education, unemployment, demand for cheap labour, insufficient work regulations and lack of implementation of existing regulations.

The ILO report can be downloaded here.

Rakı & Meyhane Culture in Jeopardy

From the Guardian:

Mass job losses and a government attempt to secure a £17bn IMF loan were signs that Turkey's economy was wilting in the global recession. Now the traditional meyhane - tavern - is providing proof that hard times have indeed arrived.

Raki, the aniseed-flavoured aperitif central to Turkish culture and a favourite tipple of the modern state's founder, Ataturk, has been displaced by beer as the favourite drink.

Bar owners in Istanbul's fashionable Nevizade market, a warren of taverns and restaurants that once finished off 100 crates of raki a day, have seen sales plummet by 30% in a year as customers order cheaper alternatives. Tough economic conditions have combined with a private consumption tax to price raki increasingly out of the market, traders say.

Even Beyoglu district's more bohemian establishments, which have tried to uphold Turkish drinking traditions, have recorded a 20% drop. At the same time there has been a 40% jump in beer sales, mostly benefiting the popular local brewer Efes. Half a litre of Efes sells for 80p in some supermarkets, while the same amount of raki costs 10 times as much.

"People have turned to lower-priced alcoholic beverages," Tulay Ece Guneysu, president of the Nevizade artisans' association, told Hurriyet Daily News and Economic Review. "Today the consumption of raki has dropped to 80 crates per day. The consumption of beer is at about 10 50-litre barrels a day on Fridays, Saturdays and Sundays."

For more in Hürriyet, click here.

The Pleasures and Guilts of Wealth: New Money and What to Do With It

One of New York Times correspondent Sabrina Tavernise's recurring themes is that of Turkey's emerging religious middle classes, and her insight into this new elite is on full display in this article from today's NYT. From the article:

Money is at the heart of the changes that have transformed Turkey. In 1950, it was a largely agrarian society, with 80 percent of its population living in rural areas. Its economy was closed and foreign currency was illegal. But a forward-looking prime minister, Turgut Ozal, opened the economy. Now Turkey exports billions of dollars in goods to other European countries, and about 70 percent of its population lives in cities.

Religious Turks helped power that rise, yet for years they were shunned by elite society. That helps explain why many are engaged in such a frantic effort to prove themselves, said Safak Cak, a Turkish interior designer with many wealthy, religious clients. “It’s because of how we labeled them,” he said. “We looked at them as black people.”

Mr. Cak was referring to Turkey’s deep class divide. An urban upper class, often referred to as White Turks, wielded the political and economic power in the country for decades. They saw themselves as the transmitters of the secular ideals of Mustafa Kemal Ataturk, Turkey’s founder. They have felt threatened by the rise of the rural, religious, merchant class, particularly of its political representative, Turkey’s prime minister, Recep Tayyip Erdogan.

“The old class was not ready to share economic and political power,” said Can Paker, chairman of the Turkish Economic and Social Studies Foundation, a liberal research organization in Istanbul. “The new class is sharing their habits, like driving Mercedes, but they are also wearing head scarves. The old class can’t bear this.”

“ ‘They were the peasants,’ ” the thinking goes, Mr. Paker said. “ ‘Why are they among us?’ ”

Ms. Aydin, 40, who wears a head scarf, encountered that attitude not long ago in one of Istanbul’s fanciest districts. A woman called her a “dirty fundamentalist” when Ms. Aydin tried to put trash the woman had thrown out her car window back inside.

“If you’re driving a good car, they stare at you and point,” Ms. Aydin said. “You want to say, ‘I graduated from French school just like you,’ but after a while, you don’t feel like proving yourself.”

She does not have to.

Her father started by selling curtains. Now he owns one of the largest home-appliance businesses in Europe. Ms. Aydin grew up wealthy, with tastes no different from those of the older class. She lives in a sleek, modern house with a pool in a gated community. Her son attends a prestigious private school. A business school graduate, she manages about 100 people at a private hospital founded by her father. Her head scarf bars her from employment in a state hospital.

Her husband, Yasar Aydin, shrugged. “Rich people everywhere dislike newcomers,” he said. In another decade, those prejudices will be gone, he said.

The businessmen describe themselves as Muslims with a Protestant work ethic, and say hard work deepens faith.

“We can’t lie down on our oil like Arab countries,” said Osman Kadiroglu, whose family owns a large candy company in Turkey, with factories in Azerbaijan and Algeria. “There’s no way out except producing.”

Tavernise also briefly touches on how this newly emergent middle class is dealing with their new money status, and religious dictates that one should not consume more than one needs. Tavernise observes many wealthy and religious Turks justify the purchasing of extravagances by complementing such acquisitions with generous donations to religious charities (like Deniz Feneri). For full article, click here.

In my mind is Dutch painter Pieter Aertsen's juxtaposition of sinful meats and mussels alongside less lavish foods of piety, like bread and fish. For more on Islamic Calvinism and Turkey's religious classes, see the European Stability Initiative's 2005 report on the subject. For more on class politics in Turkey, see my June analysis of a 2005 law prohibiting newly arrived "black Turks" -- by no means the Islamic Calvinists referred to by Tavernise as buying fancy sinks and curtains -- from swimming in their underwear.

Turkey's Debtors

From the New York Times' Mark Landler as part of a series on global credit card debt:

In Turkey, where borrowing money was until very recently a family affair, being in debt carried a fearful stigma. Some here even likened it to the disgrace that drives people to commit the honor killings that still occur in parts of this society.

“People who would kill their sisters or daughters for bringing shame on the family would do anything to avoid being labeled a debtor,” said Nazim Kaya, the president of Consumers Union, an advocacy group that helps those who fall into debt.

But in a cultural shift that has swept aside centuries of tradition, credit cards have become commonplace here. Only three decades ago, Turkey had fewer than 10,000 cards; today it has more than 38 million.

As the American blessing of credit cards became widespread, so did the American curse of debt. Outstanding card debt here ballooned to nearly $18 billion last year, six times the level five years earlier. Default rates spiked and consumer groups protested sky-high interest charges. Newspapers were filled with stories of desperate card holders killing themselves or others.

In 2006, a fierce outcry prompted Turkey to pass a law clamping down on credit card marketers.

“We did not listen to our ancestors’ proverb,” Mr. Kaya said. “ ‘Stretch your leg only as far as your blanket.’ ”

For the whole article, click here.

Islamic Calvinists and the Anatolian Tiger

Having taken a tour of a prominent AKP politician's home, I am prompted to say, "Islamic Calvinism indeed."

From Nicolas Bich at EurasiaNet.org:

"Tell me where Allah is and I will give you an orange. Tell me where Allah is not and I will give you an orange grove." This particular Koranic phrase graces a whiteboard at the entrance to the third biggest company in Gaziantep, a city of 1 million close to Turkey’s border with Syria.

Naksan Holding exemplifies what Turks call the "Anatolian Tiger" economy. Set up 40 years ago by a successful local tradesman, it is now the largest producer of plastic bags anywhere in the Balkans or Middle East. Its rise has been phenomenal, dwarfing even the 7 percent per annum growth of Turkey’s economy between 2001 and 2007. A decade ago, Naksan was the country’s 480th largest company, according to statistics from the Istanbul Chamber of Industry. Now, with a turnover of US$450 million, it ranks 136th.

"We’ve done very well, and our future looks bright", says Taner Nakiboglu, 35, describing how the company has just invested US$300 million to build a power station in western Turkey.

Plump and loquacious, the US-educated Nakiboglu is representative of the new generation of Anatolian businessmen: he is as pious as the "thought of the day" posted at the corporate offices’ main entrance.

. . . .

Coinciding with the growth of conservative political parties, the rapid rise of industrial Anatolia has attracted widespread attention, not least because its apparent combination of piety and worldly success contradicts a perception held by many Westerners’ and westernized Turks.

Highlighting the recent trend in Anatolia, one Berlin-based think-tank titled its 2005 study of the wealthy Anatolian city of Kayseri "Islamic Calvinists," a reference to the German sociologist Max Weber’s theory that capitalism sprang from Protestantism. "Economic success has created a social milieu in which Islam and modernity co-exist comfortably," the European Stability Initiative (ESI) concluded. "It is the Anatolia shaped by these values that is now pressing its case to join the European Union."

A sociologist in Konya, a conservative city 500 miles west of Gaziantep, Yasin Aktay agrees that the growth of conservative capital has changed religious life-styles. "Frugality has been replaced by what you could call ’comfortable’ religiosity," he says. "Consumerism used to be seen as extravagance. Now, owning a big house isn’t a luxury, it’s a display of [God’s] blessings."

A doctor in Islamic theology whose spare parts factory in Konya now has an annual turnover of US$50 million, Huseyin Ciftci has seen the transformation closer to home. "Look at my family: two brothers married to Europeans," he says. "Just 20 years ago, that would have been out of the question around here."

Yet ESI’s talk of "Islamic Calvinism" pushes it dangerously close to the cliché it seeks to correct -- of an Anatolia united in its religious conservatism.

That is far from true. While Konya and Kayseri have long been strongholds of political Islam, both Gaziantep and the western Anatolian textile hub Denizli have traditionally voted for secularist parties. If AKP won 51percent of Gaziantep’s votes at general elections last July, it is because "people here vote with their pockets," says Murat Ozguler, owner of an ultra-chic pastry shop in the city centre.

For the analysis from ESI, click here.

Executive summary of the 2005 ESI publication:

Among Europeans who are sceptical of Turkish membership of the European Union, it is common to hear the view that Turkey has two souls, only one of which is Western. They contrast the cosmopolitan outlook of Istanbul with the vast Turkish interior, which is seen as backward, impoverished and 'non-European' in its values.

Central Anatolia, with its rural economy and patriarchal, Islamic culture, is seen as the heartland of this 'other' Turkey. Yet in recent years, it has witnessed an economic miracle that has turned a number of former trading towns into prosperous manufacturing centres. This new prosperity has led to a transformation of traditional values and a new cultural outlook that embraces hard work, entrepreneurship and development. While Anatolia remains a socially conservative and religious society, it is also undergoing what some have called a 'Quiet Islamic Reformation'. Many of Kayseri's business leaders even attribute their economic success to their 'protestant work ethic'.

This report explores these social and economic changes in the Central Anatolian province of Kayseri, home to one million people. It presents detailed case studies of a number of strategic sectors: the emergence of Kayseri as Turkey's leading cluster of furniture manufacturers; the rise of Orta Anadolu, producing one percent of the world's denim; and the success of the Kayseri sugar refinery and its impact on local agriculture. These case studies illustrate how industrial capitalism emerged from a predominantly rural and merchant society within a single generation. They also demonstrate how policy failures by successive governments caused the 1990s to be a 'lost decade', and how the economic crisis of 2000/01 and the structural reforms which followed it have marked a decisive turning point for the Turkish economy.

The report also explores how over the past decade individualistic, pro-business currents have become prominent within Turkish Islam. It looks closer at Kayseri's most successful small town, the industrial district of Hacilar, whose 20,000 inhabitants have given birth to 9 out of Turkey's top 500 companies. It finally examines the position of women in this evolving Anatolian society, and why this could prove to be the Achilles heel of continued rapid development.

Today's governing party, the Justice and Development Party (AKP) of Recep Tayyip Erdogan and Abdullah Gul (Kayseri's most prominent politician), and its political philosophy of 'democratic conservatism', are very popular in Central Anatolia. AKP's Kayseri headquarters was one of its first to be established, and in the 2004 municipal elections in Kayseri it won an overwhelming majority of 70 percent, its highest in the country. Democratic conservatism embraces many goals reminiscent of centrist political parties across Europe.

The report concludes that economic success and social development have created a milieu in which Islam and modernity coexist comfortably. It is the Anatolia shaped by these values that is now pressing its case to join the European Union.

Souring Economy Does Not Bode Well for AKP

Bad news for the ruling party (esp. in the southeast) . . .

From Today's Zaman:

Increasing energy and food prices worldwide and drought conditions at home have started to impact the living expenses of households in Turkey.

With the prices of food staples rising in local markets and grocery stores, Turkish families are being forced to foot ever-increasing food bills. What is troublesome to many, however, is that personal income has not risen in parallel to offset the high cost of living in Turkey.

According to trade groups, the prices of basic food and consumer goods have shot up 45 percent compared to last year, more than the official inflation figures released by government agencies.

The Turkish Statistics Institute (TurkStat) has revealed that the consumer price index (CPI) for May returned to double-digit figures, hitting 10.74 percent for the first time since April 2007. Analysts say the higher global commodity prices are driving inflation in Turkey, which imports 95 percent of its natural gas and oil.

The Central Bank of Turkey, which raised the benchmark interest rate twice in the last two months, is trying to curb inflation by increasing interest rates. In a written statement last week, the central bank said it is ready to continue raising rates in a "measured" way to counter the risk of rising inflation caused by high oil and food prices. Central Bank of Turkey Governor Durmuş Yılmaz explained on Wednesday that the bank would take the necessary measures if inflation rises above new inflation targets. Earlier this month the bank nearly doubled its inflation consumer price inflation target to 7.5 percent from 4 percent.

Unemployment Numbers Do Not Bode Well for AKP

More children when unemployment is rising is a very bad idea. Simple as that.

From Gareth Jenkins:

The latest employment figures released by the Turkish Statistical Institute (TURKSTAT) suggest that, despite six years of robust macro-economic growth, Turkey is failing to create enough jobs for its growing population.

On March 17, TURKSTAT reported that, at the end of 2007, the unemployment rate in Turkey stood at 10.6%, only marginally above the figure of 10.5% at year-end 2006. The unemployment rate among young people is reported to have risen from 20.3% at the end of 2006 to 20.6% at the end of 2007. However, a closer scrutiny of TURKSTAT’s data suggests that the true rate of unemployment is considerably higher, particularly among young people.

. . . .

One of the main reasons is a dramatic decline in female participation in the workforce. Female representation has increased in some of the professions. For example, in Turkey, women now account for 36% of all university teaching staff, 31% of architects, 29% of doctors, and 26% of lawyers (Dunya, March 8). However, overall female participation in the workforce stood at 22.2% at end-2007, less than half the rate for the population as a whole and down from 34.1% in 1990 (Anka Haber Ajansi, March 6).

There is little question that many in the ruling Islamist Justice and Development Party (AKP) believe that a woman’s place is in the home rather than the workplace. The current Council of Ministers has only one female member and, perhaps predictably, she is State Minister Responsible for Women’s Affairs. Very few of the wives and daughters of the leading members of the AKP have careers. On March 7, Prime Minister Recep Tayyip Erdogan infuriated women’s groups by calling on Turkish women to have at least three children (Radikal, Hurriyet, CNNTurk, March 8).

However, such conservative attitudes are not, by themselves, sufficient to explain the decline in the number of women in the workforce. The main reason appears to be urbanization. Traditionally, most of the agricultural work in Turkey has done by women, usually on small, family-owned plots of land. Even today, 58.5% of all working women are believed to be employed in agriculture (Dunya, March 8). However, urbanization has meant that a higher proportion of the Turkish female proportion than ever before now live in cities. Although men may have been prepared for their womenfolk to do most of the work in the relative privacy of the family fields, they are often less keen for them to work outside the home in the cities; where most of the paid manual labor is, in any case, done by males.

But the latest TURKSTAT statistics suggest that the AKP’s failure to create sufficient jobs for more than a small proportion of the young people entering the job market each year could also have other social and political repercussions. Although the Turkish political agenda is currently dominated by the case before the Turkish Constitutional Court for the AKP’s closure (see EDM, March 17), the government is nevertheless aware that ultimately its political future probably depends more on its ability to deliver on the economy, particularly by creating jobs. For the moment at least, there is no question that it is failing.