It was not the most auspicious day to be talking about investment portfolios and new agreements.
The European Bank for Reconstruction and Development (EBRD) President, Sir Suma Chakrabarti’s two-day long visit to the bank’s largest country of operations could not have come at a worse time.
Meetings with government officials and company representatives went according to plan and an agreement to make Turkey a benefactor of social projects was duly signed in the presence of President Recep Tayyip Erdoğan.
President Chakrabarti’s long-awaited visit coincided with the start of Turkey’s assault on the Afrin region of neighbouring Syria.
As the cross-border shelling intensified, with the Syrian government warning that Syrian air defenses would target the Turkish army, and the NATO partners began expressing their strong disapproval; Sir Suma’s talk of bringing more foreign investors to Turkey somewhat lost its luster.
Still, everyone put on a brave face and repeated their confidence for Turkey to remain as one of the top investment markets in the coming years.
As President Erdogan reminded at the signing ceremony, Turkey has been a founding member and a shareholder of the EBRD since 1991. It became a country of operations in 2009, and the EBRD has become a major investor in Turkey. It has been investing €10 billion across various sectors of the Turkish economy since then.
Turkey is now the EBRD’s largest country of operations by annual investment volume. With an optimistic growth forecast of 3.5 percent in 2018, a strong level of investment is expected to continue.
During his two-day visit to Turkey, the EBRD President repeatedly emphasized the importance of predictability, and the need for a stable and well-implemented legal and regulatory framework. He urged further structural reforms and strengthening the good governance at corporate and state organizations.
In an interview with Ipek Yezdani of Hurriyet Daily News , Sir Suma listed stability, consistency, the rule of law and development of democratic institutions as important criteria for potential investors.
I do not know what was going through Sir Suma’s mind when President Erdogan complained about credit agencies having an ideological approach towards Turkey and that their actions were always politically motivated.
The EBRD officials would not publicly air their concerns about their shareholders. The summary of the President’s visit to Turkey, predictably, referred to “a new chapter in what already is an important relationship”.
The EBRD was originally established with a clear mandate to promote democracy in former Eastern Bloc countries. It has modified its priorities considerably. Since 2013, it sees its main mission as supporting open market economies, with a strong emphasis on good governance.
However, a London- based banker who spoke to a group of journalists including Firdevstalkturkey.com, on strict condition of anonymity, said that the big financial organizations still had a considerable amount of ‘checks and balances’ in their relations with their partner countries. “They may not be in the business of democratization, but they have learned valuable lessons from their experience of dealing with the Transition countries of the former Soviet bloc. They know how easily investments can go badly wrong and how growth can be stunted when reforms are abandoned” he said.
This post is also available in: Turkish