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On the Challenges and Opportunities we see in Turkey

By : Ziad K. Abdelnour| 15 May 2010
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Although Turkey is today at the center of the world with on one side Russia, on another side the Gulf countries, and on the other side the Central East Asian countries., it is without a doubt turning into a tourist and financial and investment center in the region second to none.

Having bounced back from its own profound financial crises in 1994 and 2000, Turkey is indeed well prepared today to ride out the current global economic storm.

With the bank’s capital adequacy ratios at more than 17% — it is clear that Turkish banks are today very liquid and stable, even despite the adverse global market conditions we are facing.

Because of the country’s political stability since 2003, its financial market stability, and the liquidity of its banks, investors are today flocking to Turkey to invest in there.

In the last 30 years for example, and up to 2003, Turkey had only $5 billion or $6 billion in foreign direct investments. Since 2003, the country have had more than $15 billion to $20 billion in direct investments as equity.

Other good news that play in favor of Turkey.

1. The country’s entrance into the European Union;

2. Strong demographics and productivity;

3. Very broad base of small and medium size companies;

As to the bad news….

1. Turkey recent “brotherhood” alliance with Iran and Syria along with its support of Hamas merging with the Palestinian Authority, insisting that the radical terrorist Islamist group be a full participant in any negotiations on Israel-Palestinian issues will with time become a huge problem for the nascent country if it ever needs to attract large foreign direct investments in the land. Obviously, bringing Hamas into negotiations or melding it together with the existing Palestinian Authority would guarantee the failure of any talks, and possibly result in Hamas takeover of the West Bank, anti-American Palestinian leadership, and the renewal of war in the region rather than peace….hence much more trouble for Turkey.

2. With Russia gaining sizable influence with the Turkish regime; which has obviously already moved much closer to Iran and Syria, we don’t see how stable can this secular Islamic country turn out to be; not only in the medium to long term but the short term as well.

3. Even after 10 years in the making, privatizations in Turkey didn’t yet give the expected boost to Turkish markets. Turkey still indeed owes a lot of money to the IMF. There is still not enough cash flow and the unemployment rate is still pretty high compared to countries of the same stature.

Looking forward to doing business with you and to continue being your resource for deals, capital, relationships and advice.

Your feedback as always is greatly appreciated.

Thanks much for your consideration.

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