Wednesday, May 5, 2010

U.S-Turkish Business Ties Relatively Unaffected by Diplomatic Setbacks

Foreign Direct Investment, or FDI, in Turkey coming from the U.S. will fully recover to pre-global financial crisis levels, according to the chairwoman of the American Business Forum in Turkey, or ABFT.

“Recovery started in 2009, but in 2010 it’s going to be much, much better. We will reach the 2007 figures in 2011,” Rahşan Cebe, chairwoman of the board at ABFT, told the Hürriyet Daily News & Economic Review in a Tuesday interview.

After a steady increase in both FDI and the number of American businesses operating in Turkey over the past decade, numbers fell drastically in 2008. Cebe said she believes this was almost completely due to the global financial crisis, discounting the idea that recent diplomatic problems between the two countries had affected business ties.

“Misunderstandings can occasionally occur between all countries, but business is business. These misunderstandings haven’t been catastrophic,” said Cebe.

The bilateral diplomatic relationship has suffered in recent months as U.S. officials have voiced concern over Turkey’s deteriorating relationship with Israel.

In early March 2010, the Turkish government recalled its ambassador to the U.S. for consultations after a resolution passed a U.S. House Foreign Affairs Committee calling on President Barack Obama to recognize the killings of Armenians in the collapsing Ottoman Empire in 1915 as “genocide.”

Cebe said the business relationship is susceptible to diplomatic setbacks, but said these were not major issues. “They were small misunderstandings between countries that have been sorted out,” she told the Daily News.

The U.S. exports a great deal of defense equipment and technology to Turkey. Some in the U.S., however, have been warning of Turkey’s “shifting” geopolitical role as one that is moving closer to the “East,” particularly as Turkey is no longer a bulwark against the Soviet Union.

Turkey refused to let the U.S. open a second front from the north against Iraq in 2003; now, many point to its deteriorating military relationship with Israel. However, Cebe does not believe that Turkey is turning its back on the West and is confident that trade, including in the defense sector, will continue to prosper between the U.S. and Turkey.

“I don’t think that Turkey is moving away from the West. It’s just opening up to the East. We’re still as close as we’ve been to the West and now we’re opening up to the East as well,” said Cebe.

Bureaucratic, but progressing

“This government is quite good. But it can be better,” said Cebe, speaking of the Justice and Development Party, or AKP, government. “I personally think the Turkish government needs to be less bureaucratic. They made one good thing, by forming Investment Support and Promotion Agency in Turkey, or ISPAT, which reports directly to the prime minister.”

ISPAT works with foreign businesses and investors who need help entering the Turkish market. Led by Alparslan Korkmaz, it offers investment advice, as well as legal and bureaucratic assistance.

“They’re doing a fantastic job,” said Cebe. “Now if they could have something like that for companies that have already invested in Turkey and have less bureaucracy, that would be fantastic.”

One thing that such FDI-friendly policy can help with is attracting small and medium-sized businesses to Turkey from the U.S.

“One of the negative things I see is that American businesses don’t know Turkey very well. I mean medium-sized businesses. I think there is a huge potential for medium-sized businesses to do trade with Turkey. It would be fantastic if we could promote that,” said Cebe. “We’ve got the American conglomerates in Turkey but not the smaller, medium-sized businesses.”

Overall, Cebe said she is pleased with the progress being made by the current government to encourage investment and value business relationships with countries like the U.S. as priorities.

“They’ve now started to be more active. After Obama’s visit, they formed working groups to increase trade between Turkey and America, so all that is very good,” said Cebe.

(This article was first published in the Hürriyet Daily News)

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