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The new Ottomans 1 avril 2010

Posted by Acturca in Economy / Economie, Turkey / Turquie.
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Management Today (UK), April 2010, p. 44

Jonathan Head

For decades, Turkey has been shaped by the west – culturally, politically and commercially. Now the Islamist government is revitalising the economy and re-engaging with eastern neighbours Prosperity is making it a force to be reckoned with on the international stage, says Jonathan Head.

We were an hour late leaving Istanbul, cutting it tight to catch a meeting with Hillary Clinton. None of this seemed to bother Ahmet Davutoglu as he bounded up the stairs of the chartered aircraft that was taking him, and us, to London.

The man who has almost single-handedly redefined Turkey’s foreign policy was ebullient. He had just pulled off a successful summit on Afghanistan, and was dashing to the plane from a last-minute tete-a-tete with his Chinese counterpart.

These are heady days to be a foreign minister in Turkey. Not since the heyday of Ottoman power in the 17th century has this country walked so tall on the world stage. By adroitly re-engaging with its eastern neighbours while simultaneously trying to stay on good terms with the west, Turkey is cannily carving out a higher profile for itself in the global marketplace.

The twin pillars of economic liberalisation and deregulation, plus Turkey’s controversial official candidacy for membership of the EU, have been behind much of the progress to date. The government, in which an overtly Islamic party holds a majority of the seats in parliament for the first time in Turkey’s history, has driven both these processes forward with enthusiasm.

It has been an uphill struggle. The period following the fall of the Soviet Union in 1989 was particularly grim, as the country staggered from one coalition government to another, and economic growth weathercocked between minus 6% and plus 9%. But more recently, the economy has stabilised, and Turkey is now a big exporter of white goods and commercial vehicles, as well as of more traditional produce such as textiles and soft fruit.

At one point, this resurgence was called ‘Neo-Ottomanism’, harking back to the days when the word of the Ottoman sultans was law from the gates of Vienna to the shores of the Persian Gulf. But that did not go down well with countries such as Serbia, once under the Ottoman yoke. So, these days, Davutoglu likes to give his policy the rather less catchy title ‘Zero problems with our neighbours’.

The pace of Davutoglu’s diplomacy has been breathtaking. In three years he has turned a frosty relationship with Syria into a blossoming friendship. Iraq, once shunned as a hotbed of Kurdish separatism, has been embraced. Two years ago, Turkish troops went over the border in pursuit of Kurdish rebels. Today, 70% of investment and 80% of the products sold in the Kurdish region are Turkish. Fences are being mended with Armenia, although their disputed history remains a thorn.

Even Iran, a historic rival whose Islamic revolution was anathema to Turkey’s old, secular elite, is suddenly a friend. Indeed, when prime minister Tayyip Erdogan used the F word last October before a landmark state visit to Tehran, eyebrows shot up among Turkey’s western allies. Could someone who called Iran’s firebrand president Ahmadinejad a friend be trusted? Was the West in danger of losing Turkey, now that it was governed by a bunch of pious, provincial Muslims?

But, regardless of his religion and outlook, Erdogan is an economic pragmatist. Among the 200 people in his Iranian delegation were representatives of 80 Turkish businesses, and, mostly, what they talked about was business: the possibilities of a joint airline, a joint banking venture, a Turkish-Iranian industrial park near the border… When I asked one of the prime minister’s foreign policy advisers how the high-profile visit had helped Turkey, he replied: ‘We got a great deal on Iranian gas.’

The party that has governed Turkey for the past seven years is often described as Islamist, but what really drives it is business. And its modern track record is a tale of commercial triumph over adversity unrivalled in the region. No wonder its new friends in the Middle East look to Turkey for economic leadership.

To explain this, we need to go back half a century. The year 1961 was a bad one for Turkey – the military had just taken over in the first of what would be four coups, and the economy was a shambles.

That was also the year when the first Ford Transit was built, in Germany, then in Britain. In 2001, the five millionth Transit rolled off the assembly line in Southampton. It was the panel van of choice for decorators and delivery-men, a utilitarian British icon. By 2011, though, the only Transits manufactured in Southampton will be custom-built chassis cabs, a maximum of 35,000 a year. The rest will be made in Turkey, in Izmit, next to the Marmara Sea, in a world-class factory with a capacity of 300,000 vehicles a year.

This hive of modern manufacturing efficiency had the hardest imaginable beginning. On the morning of 17 August 1999, the scene that confronted Nuri Otay and other Ford managers was calamitous. At 3am, an earthquake measuring 7.4 on the Richter scale struck the area, killing more than 17,000 people. The fault-line ran right through the middle of the Ford plant, which was under construction at the time, swallowing a security guard and damaging some of the structure.

‘It was tough,’ recalls Otay, who has just been made general manager for Ford in Turkey. ‘The buildings were not badly damaged, but we had to reconsider everything.’

It was a critical moment. Ford had for the first time taken an equal stake in its Turkish venture, Ford Otosan, which until then had been merely a local assembly operation run by the giant Koc Group. Turkey’s entry into the EU Customs Union in 1996 changed the rules, exposing its manufacturers to European competition, but also opening potential new markets for it in the EU. Ford clearly believed expansion was the way to go, jointly investing dollars 650m in the new plant, the biggest ever in Turkey’s automotive sector.

Otay and his team adapted their engineering skills to make a seismic assessment of the area. They concluded that an earthquake on that scale would happen only once every 150 years or so. With a few safety adaptations, they resumed construction, opening the factory just two months late in 2001. Today, it is one of Ford’s most efficient plants, even exporting Transit Connect vans to the US. And manufacturing quality is high too. This year it won the prestigious North American Truck of the Year award, beating all those V8-powered behemoths. ‘Of course, if you compare us to many European countries, we have cost advantages, but this is not the main one,’ says Otay. ‘People are dedicated in Turkey. What matters is: how much is the cost per vehicle? You need a more efficient structure on the labour side for success in the auto industry.’

With basic pay starting at dollars 500 a month, the cost advantages are significant, especially as the 1,800 different body configurations on a Ford Transit assembly line make it more labour-intensive than the equivalent for cars. Southampton’s loss is Turkey’s gain.

By contrast with giants like Ford Otosan, few people have ever bought anything from Malkan Machines, despite a slogan claiming that ‘Malkan irons the world’. Yet this company is far more representative of the new Turkey: driven by a rising class of small-scale Anatolian entrepreneurs, many of them pious Muslims like Erdogan, firms such as Malkan are reaching out to new markets beyond Europe and the US.

It began humbly enough in a small Istanbul workshop in 1971. There, metalworker Mustafa Alkan decided to try his hand at making the industrial ironing machines used in hotels, dry-cleaners and Turkey’s burgeoning textile industry. He takes pride in never having borrowed from a bank.

Today, Malkan sells its machines in 76 countries, and is run by Mustafa’s daughter, Mutlu. She wears a headscarf, and sits on the board of the governing Justice and Development Party (AKP, in Turkish), which puts her clearly on one side of the secular/Islamic rift. The biggest business interests, such as Koc, generally sit on the other, secular side.

‘I don’t think of the AKP as an Islamist party,’ she says, ‘but as a party that respects all ways of life, including an Islamic way of life. Turkey is unique. My closest friend is a very good Muslim, but doesn’t wear a headscarf; she fasts during Ramadan, but every Friday goes out drinking. We don’t have any problem with each other. She has her lifestyle, I have mine.’

Mutlu is certainly hard-working. She agreed to meet me just a week after giving birth to her second child, and was already planning to make a number of business trips with her son. Her father took her to trade fairs in Europe; she says her daughter has visited 60 countries with her. She is a staunch supporter of Turkey’s bid to join the EU, yet she applauds the government’s new focus on the Middle East.

‘Turkey is a big country, and I think those years we kept away from our neighbours were lost years. But our democracy and republican system have created space for people to improve themselves, and now our government is making neighbouring countries aware that our products have strong quality and competitive prices.’

It is Turkey’s youthful population that makes the country appealing as a new recruit to an ageing European Union; and yet the poverty and conservative religious habits of much of the population put many off. They would feel more comfortable with a Turk like Cem Yegul, one of the three founders of Babylon, the club preferred by Istanbul’s music cognoscenti.

Istanbul has a terrific music scene. There is an abundance of home-grown talent in jazz, rock, rap, grunge and experimental music, blending contemporary genres with tradi- tional Turkish instruments. Babylon was the pioneering venue for these musical explorations. Today, there are dozens of clubs in the winding streets of upmarket Beyoglu, opening and closing with bewildering frequency. So are Yegul and his friends worried about the puritan instincts of Erdogan and his party?

‘Not at all,’ says the club-owner. ‘I find it more of a social-democratic government than governments in the past. Coming from a very Islamic background, these guys were not familiar with the world. Once they got power, they cultured themselves; they grasped what was going on, that people were hungry for these new experiences. In future, the party will evolve – it will not hinder the nightlife.’

Not everyone shares Yegul’s confidence. Plenty of people fear that the freedoms they enjoy in modern Turkey – unprecedented in the Muslim world – will be eroded as Erdogan tightens his grip. The military, historically the guarantor of Turkish secularism, is in retreat. Institutional checks on power are weak. Already the government has shown a disturbing intolerance of media criticism. One of the big secular businesses, the Dogan Group, has been crippled by a suspiciously large fine imposed by the tax department. Modern Turkish women, in particular, worry that they will face pressure to dress and behave more conservatively.

Tellingly, it’s becoming a lot harder to get a drink in some Turkish towns. Not such a big deal in a country where 97% of the population is nominally Muslim. But a bigger deal when you consider that the first factory to be constructed by Kemal Ataturk, the country’s great 20th-century moderniser, in Ankara, his new capital, was a brewery. This was a gesture of defiance to the religious establishment, which he thought was holding Turkey back. Ataturk’s legacy remains inviolable – officially at any rate. All still a long way from sharia law, however. No-one really thinks Erdogan has that kind of agenda, or could get away with it if he did.

The most powerful bastion of the old secular business elite has for the past 39 years been the Turkish Industrialists and Businessmen’s Association, TUSIAD – of which the Koc and Dogan families are prominent members. Its new chair – only the second woman to occupy the seat – is an athletic, blond mother-of-five whose family owns Turkey’s largest clothing retailer. Umit Boyner’s lifestyle and business background would seem to put her firmly in the secular camp. Yet in her opening speech as chair, she backed the government on a range of issues that usually divide secular and religious Turks. She called for reform of the judiciary and of the military-drafted constitution, for the armed forces to stop threatening to launch coups, and for reconciliation with the Kurdish minority. It was a speech that might have come from the lips of one of Erdogan’s ministers.

Boyner was simply facing facts: that for all its flaws, this government has pushed harder to modernise Turkey’s economy and institutions than any other; that it is an enthusiastic proponent of EU membership, a cause long championed by the business elite; and that with the opposition in disarray, the AKP could be in power for many years, continuing to dominate the pace and direction of Turkey’s development.

Those businesspeople who don’t climb aboard and share the journey risk being abandoned by the roadside instead. And neither party really wants that to happen.


1. Evelia Dake - 25 avril 2010

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