Turkish President Recep Tayyip Erdogan attends a news conference during the Nato summit in Vilnius in July. EPA
Turkish President Recep Tayyip Erdogan attends a news conference during the Nato summit in Vilnius in July. EPA
Turkish President Recep Tayyip Erdogan attends a news conference during the Nato summit in Vilnius in July. EPA
Turkish President Recep Tayyip Erdogan attends a news conference during the Nato summit in Vilnius in July. EPA


Is Turkey finally breaking free of the East-West paradigm?


  • English
  • Arabic

August 22, 2023

Traditional powers are in turmoil, even decline, opening the way for a rising Turkey. These days one barely needs to squint to imagine Ankara’s favoured narrative coming to fruition.

The US overcame an attempted coup in 2021 and is now struggling with its highest levels of political violence in half a century. The fact that US neighbours such as Canada have reportedly begun planning for American democratic backsliding and a subsequently weakened Nato underscores the grave concern.

China is sliding into an economic slump. Property developer Evergrande just filed for bankruptcy, with $335 billion in debt, and another big developer may soon default. The yuan is at its lowest in 15 years, and after a record 21.3 per cent youth unemployment in June, Chinese authorities said they would stop publishing unemployment figures while they improve data collection.

Great Britain has been in a tailspin since Brexit, while France has been in the grip of frenzied protesters. Russia’s currency has collapsed and its military is stuck waist-deep in Europe’s largest land war in 80 years. Even so, last week The Economist wondered if Germany was “the sick man of Europe”.

When coined by Nicholas I in the 19th century, this term described the declining Ottoman Empire. So one might imagine some rejoicing in Ankara upon its being applied to Germany, particularly as the number of Turks emigrating there has spiked this year.

Sure, Turkey is mired in its own economic crisis, with sky-high inflation, a plummeting lira, and a potential brain drain as a result. But Ankara seems to be having its international moment, which is fitting given the prominence of nationalists in the May elections.

A Turkish Bayraktar TB2 combat drone is on view during a presentation at the Lithuanian Air Force Base in Siauliai in July. AFP
A Turkish Bayraktar TB2 combat drone is on view during a presentation at the Lithuanian Air Force Base in Siauliai in July. AFP
Turkey is mired in its own economic crisis, but Ankara seems to be having its international moment

Two years ago, I detailed how Turkish President Recep Tayyip Erdogan and his inner circle view their country as fighting for the world’s oppressed and reasserting its dominance, thanks to geographic centrality and military might, as global power shifts. Suddenly, every passing day seems to herald the arrival of this vision.

Consider Mr Erdogan’s recent Gulf tour. Many deals are still being finalised, so we can expect to learn of an array of defence, energy and tech agreements in the coming months. But the UAE and Turkey announced agreements worth a combined $50.7 billion. Saudi Arabia made a $3 billion deal with Turkey’s top defence contractor Baykar to build a drone factory in the kingdom.

The trip showed Turkey is now received warmly in the Gulf, following a period of tensions, and its defence industry has matured. Earlier this year, Mr Erdogan set a target of $6 billion in defence exports, up from last year’s $4.3 billion.

But following the Saudi deal, some analysts see Turkey nearly doubling last year’s tally and reaching $8 billion. After launching the world’s first drone carrier in April, for instance, Turkey is reportedly finalising its third regional sale of the new naval concept.

This military might is boosting Ankara’s international confidence, as seen in its pushback against Moscow after Russian forces raided a ship 60 kilometres from Istanbul last week. It’s also strengthened Turkey’s stance as champion of the world’s disadvantaged.

Last year, Ankara brokered a Russia-Ukraine grain deal that may have staved off famine. Now, weeks after Russia pulled out of that agreement, Turkey is in talks with Russia on a deal to start shipping Russian grain to Africa. Last week, in defiance of Russia’s blockade, Istanbul welcomed the first cargo ship from Ukraine, while this week Turkish Foreign Minister Hakan Fidan heads to Kyiv to discuss a grain corridor.

But to understand the shifting geopolitical winds, we need to rewind to Nato’s July summit in Vilnius. The big story out of that gathering was the Turkish president agreeing to support Sweden’s bid to join the alliance. Afterwards, we saw few denunciations of Mr Erdogan’s transactionalism or holding up of the bloc’s expansion.

Instead, major media outlets portrayed Turkey as mending ties with the US and tilting towards or recalibrating with the West. In response to this, one prominent Turkey watcher after another argued, just as Ankara might, that today’s Turkey should no longer be depicted as leaning this way or that, but accepted as a rising force with a foot in each camp.

Vessels including those that are part of Black Sea grain deal wait to pass the Bosphorus strait off the shores of Yenikapi in Istanbul. Reuters
Vessels including those that are part of Black Sea grain deal wait to pass the Bosphorus strait off the shores of Yenikapi in Istanbul. Reuters

In some of the most influential publications for Washington policymakers, leading experts argued that Turkey would never anchor itself to the West, that “Nato’s prodigal son” would not return, that Turkey had become post-western, neither enemy nor ally, but rather “a prototype of [a] middle power”.

The thrust seemed to be that the owner of Nato’s second-largest military would never be fully on-side because of misaligned interests. Thus, the US, with its nuclear weapons at Incirlik air base, would need to find new ways to make deals, because of threats posed by China and Russia and a possible Middle East powderkeg.

To put it simply: this independent, empowered Turkey is likely to be impossible while remaining invaluable. Fahrettin Altun, the Turkish presidency’s communications director, could have hardly said it better. The AKP-led government has of course taken troubling steps against free speech and the rule of law, but its diplomatic assertiveness, leavened with apparent humanity and nestled within an Islam-friendly society, has some observers hinting at an emerging Turkish exceptionalism.

A prominent Muslim-American blogger recently said he finds diverse, rainbow communities repellent and may leave the US for Turkey. Many British Muslims have already made the move, according to Turkey’s state broadcaster, and Islamic students and scholars have been arriving as well.

I recently heard that one of Mr Erdogan’s preferred Quranic references is Surah Al Imran 139, which broadly translates to: “Do not lose heart, for you will have the upper hand if you’re a believer.” The haters are gonna hate, the verse seems to suggest in this context, but come to Turkey, see the reality, and become part of something bigger and better.

RACECARD
%3Cp%3E5pm%3A%20Al%20Shamkha%20%E2%80%93%20Maiden%20(PA)%20Dh80%2C000%20(Turf)%201%2C400m%0D%3Cbr%3E5.30pm%3A%20Khalifa%20City%20%E2%80%93%20Handicap%20(PA)%20Dh80%2C000%20(T)%201%2C400m%0D%3Cbr%3E6pm%3A%20Masdar%20City%20%E2%80%93%20Handicap%20(PA)%20Dh80%2C000%20(T)%201%2C600m%0D%3Cbr%3E6.30pm%3A%20Wathba%20Stallions%20Cup%20%E2%80%93%20Handicap%20(PA)%20Dh70%2C000%20(T)%202%2C200m%0D%3Cbr%3E7pm%3A%20Emirates%20Championship%20%E2%80%93%20Group%201%20(PA)%20Dh1%2C000%2C000%20(T)%202%2C200m%0D%3Cbr%3E7.30pm%3A%20Shakbout%20City%20%E2%80%93%20Handicap%20(TB)%20Dh80%2C000%20(T)%202%2C400m%3C%2Fp%3E%0A

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

WE%20NO%20LONGER%20PREFER%20MOUNTAINS
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Inas%20Halabi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3ENijmeh%20Hamdan%2C%20Kamal%20Kayouf%2C%20Sheikh%20Najib%20Alou%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
The Vile

Starring: Bdoor Mohammad, Jasem Alkharraz, Iman Tarik, Sarah Taibah

Director: Majid Al Ansari

Rating: 4/5

The White Lotus: Season three

Creator: Mike White

Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell

Rating: 4.5/5

Key figures in the life of the fort

Sheikh Dhiyab bin Isa (ruled 1761-1793) Built Qasr Al Hosn as a watchtower to guard over the only freshwater well on Abu Dhabi island.

Sheikh Shakhbut bin Dhiyab (ruled 1793-1816) Expanded the tower into a small fort and transferred his ruling place of residence from Liwa Oasis to the fort on the island.

Sheikh Tahnoon bin Shakhbut (ruled 1818-1833) Expanded Qasr Al Hosn further as Abu Dhabi grew from a small village of palm huts to a town of more than 5,000 inhabitants.

Sheikh Khalifa bin Shakhbut (ruled 1833-1845) Repaired and fortified the fort.

Sheikh Saeed bin Tahnoon (ruled 1845-1855) Turned Qasr Al Hosn into a strong two-storied structure.

Sheikh Zayed bin Khalifa (ruled 1855-1909) Expanded Qasr Al Hosn further to reflect the emirate's increasing prominence.

Sheikh Shakhbut bin Sultan (ruled 1928-1966) Renovated and enlarged Qasr Al Hosn, adding a decorative arch and two new villas.

Sheikh Zayed bin Sultan (ruled 1966-2004) Moved the royal residence to Al Manhal palace and kept his diwan at Qasr Al Hosn.

Sources: Jayanti Maitra, www.adach.ae

Updated: August 24, 2023, 4:31 AM