Wednesday, September 30, 2009

IMF comes to Istanbul

Istanbul is set to host the semiannual IMF and Worldbank meetings from October 4-7. Early preliminary meetings have begun to take place. Today the IMF presented its half-yearly Global Financial Stability Report, wherein it presented positive news about world economic recovery.

The meetings are being held Istanbul on Cumhurriyet Street between Taksim and Osmanbey, in the same complex as the Hilton hotel. Security can be seen all around downtown Istanbul.

Near Taksim, on Tarlabasi Street

Outside of the meetings

Even in Nisantasi, half a mile from the site, a public park was closed. Only bored policemen could be seen strolling within the confines they themselves had set up, sitting in benches across from busts of Ottoman rulers, and of course, Ataturk:

300 police are stationed around the area, but only about
100 people came out to demonstrate the meetings today. However, more are expected for the rest of the week and the weekend as the meetings continue. Five major labor unions rejected invitations from the IMF to attend.

The meetings come at a time when a possible IMF loan to Turkey looks like it may not take place. Ankara still has not signed on to the deal and last Saturday, Prime Minister Erdogan said that the IMF should not put any political conditions on a loan to Turkey. Others in the government have said that they don't need an IMF loan and that Turkey is performing well in the current global economic downturn. Economy minister Ali Babacan put forward a rather modest medium-term economic proposal on September 16th that intends to tackle public spending starting in 2011. The reasoning, Babacan said, was that a "premature exit from stimulus packages may risk the recovery." Many foreign observers view the proposal positively, although, it may have ultimately backfired as IMF chief Dominique Strauss Kahn said on September 20th that "there are no indications that Turkey's economy needs help for now. If in the future Turkey needs IMF help we will be happy to provide that."

Monday, September 14, 2009

U.S - Iranian policy and the Turkish factor

News Analysis

On Friday, the Obama administration notified Congress of a possible sale of missiles to Turkey, worth $7.8 billion. Two major reasons have been identified as motivating this deal. First, predictably, is to gain business from Turkey, which is also looking at potential missile purchases from Russian and Chinese arms manufacturers. However, the second reason is more interesting.

On July 26, speaking in Bangkok, Secretary of State Hillary Clinton said:

We want Iran to calculate what I think is a fair assessment, that if the United States extends a defense umbrella over the region, if we do even more to support the military capacity of those in the Gulf, it’s unlikely that Iran will be any stronger or safer, because they won’t be able to intimidate and dominate as they apparently believe they can once they have a nuclear weapon.

In line with this notion of a "defense umbrella", other large American arms deals in the region have been announced, including a "$220 million artillery rocket sale to Jordan and a possible $187 million sale of F-16 fighter-carried weapons to Morocco".

Of course, it is not clear that this approach is set policy. In fact, very little of the U.S policy is clearly defined. Questioned on Meet the Press, by David Gregory on her use of the term "defense umbrella" and overall U.S policy towards Iran, Mrs. Clinton went back and forth:

SEC'Y CLINTON: ...First, we’re going to do everything we can to prevent you from ever getting a nuclear weapon. But your pursuit is futile, because we will never let Iran–nuclear-armed, not nuclear-armed, it is something that we view with great concern, and that’s why we’re doing everything we can to prevent that from ever happening.

MR. GREGORY: All right, but let’s be specific. Are you talking about a nuclear umbrella?

SEC’Y CLINTON: We, we are, we are not talking in specifics, David, because, you know, that would come later, if at all. You know, my view is you hope for the best, you plan for the worst. Our hope is–that’s why we’re engaged in the president’s policy of engagement toward Iran–is that Iran will understand why it is in their interest to go along with the consensus of the international community

In the same program the Secretary (simultaneously) suggested pursuing diplomatic engagement, preventing nuclear weaponization at all costs ("we're going to do everything we can"), and a nuclear umbrella strategy. All three approaches are complicated by the Iranian government's lack of legitimacy after the disputed election as well as increasing pressure on the U.S from Israel's right-leaning government to take strong action on Iran.

However, with regards to the idea of a nuclear umbrella and its possible connection to the recent announcements of arms deals in the region, there is an additional problem. The missile sales were announced last Friday. On Sunday, Turkey's foreign minister, Ahmet Davutoglu was in Iran. In addition to the impressive growth in bilateral trade, (estimated at $11 billion in 2008), relations between the two countries seems to be at a high point in other areas. According to the Tehran Times, Iranian Foreign Minister, Manouchehr Mouttaki called the relations between his country and Turkey "strategic and comprehensive". At their meeting, the two ministers committed themselves to cooperating against Kurdish terrorists in Northern Iraq, implying a degree of military cooperation. Such cooperation between Turkey and Iran would surely hinder any U.S attempt to use Turkey in a "nuclear umbrella" strategy against Iran. This is especially true as Turkey believes that, according to Davutoglu quoted by the Tehran Times: "Access to nuclear technology for peaceful purposes is the right of all nations, including Iran" .

If Turkey is unlikely to take part in a U.S attempt at a "nuclear umbrella", designed to mitigate the problem of a nuclear-armed Iran, would it participate in a U.S-led international attempt to squeeze Iran with additional sanctions should talks (if they ever occur) fail? According to the Fars News Agency, Mr. Davutoglu told his counterpart "All our attempts are aimed at campaigning against potential sanctions and removing the existing barriers so that Iran will not remain outside the regional and global economy". This is particularly important as Turkey currently holds a seat on the UN Security Council.

There is one avenue of potential cooperation amongst all parties according to the Turks. During his visit to Iran, Davutoglu offered to host G5 +1 (China, U.S, Russia, Britain, France + Germany) discussions with Iran on its nuclear program, praising Iran's recent package of proposals. However, Iran's new proposals have not been received with much enthusiasm either by the EU or the U.S. It is clear that Ankara and Washington are not on the same wavelength in the current, pre-talks phase of the elaborate diplomatic minuet. It remains to be seen whether they draw closer or drift further apart if engagement should fail.