“Who lost Turkey?” has been a running question among Turkey watchers for years, a reference to fears that the supposedly secular Muslim-majority state would cut ties with the liberal-minded West and turn to the purportedly more closed-off, and Islamist, East. Today the question is largely a cliche and that’s mostly a good thing, since only Turkey is to blame for its orientation, which has rarely been static.
President Recep Tayyip Erdogan paid a visit to Azerbaijan last week, looking to claim his country's spoils after Turkey's military advisers, advanced drones and mercenaries provided crucial backing in the Azeri victory over Armenia in last year's war in Nagorno-Karabakh. In Shusha, a city retaken by Azerbaijan in the conflict, the Turkish leader promoted a plan to build a rail link from south-western Azerbaijan to its exclave, the Nakhchivan Autonomous Republic, which has been cut off by Armenia since the 1990s.
“With the implementation of this project,” Mr Erdogan declared, “a new middle corridor will be opened that everyone can benefit from, from East to West.”
Its first show of military might in former Soviet territory, Turkey's key role in Nagorno-Karabakh has already expanded its influence in the Caucasus and Central Asia. Mr Erdogan's comment suggests it may also serve as a springboard to revive Turkey's proposed Middle Corridor leg of China's Belt and Road Initiative, which aims to revive the Silk Roads.
Since 2015, Ankara has urged Beijing to embrace a middle route from China to Europe situated between the northern route, which involves Russia's Trans-Siberian Railway, and a southern route through Iran. Proponents argue that harsh Siberian winters and political tensions between Russia and Georgia raise questions about the former, while the 2018 renewal of US sanctions on Iran imperils the latter. With the Zangezur Corridor line linking Azerbaijan to its exclave and the Kars-Tbilisi-Baku link opened in 2017, Turkey's Middle Corridor could soon offer two newly developed routes.
For now, Nakhchivan remains separated from south-western Azerbaijan by a 25-kilometre-wide stretch of Armenia’s Syunik region. To get there, Azeri mainland shipments have, since the first Azeri-Armenian war in the 1990s, had to either fly or transit through Iran.
But as part of the November ceasefire, Armenia agreed to “guarantee the security of transport connections between the western regions of the Republic of Azerbaijan and the Nakhchivan Autonomous Republic”. The new railway would boost the economy of Nakhchivan and provide Turkey with a direct connection to the Caspian Basin that, according to some Turkish analysts, could also be used by Beijing.
“Transport, communications, infrastructure projects passing through Zangezur will unite the entire Turkic world,” Azeri President Ilham Aliyev asserted in March, a reference to the shared heritage of the people of Azerbaijan, Turkey and the Central Asian states. But it’s far from a done deal.
Weeks after Mr Aliyev broke ground on the last stretch of railway before the Armenian border, Armenian Prime Minister Nikol Pashinyan expressed support for the proposed railway, for which Armenia would in return be able to build a rail link to Iran. But widespread anger about the military defeat forced Mr Pashinyan to resign in April, and although he won Sunday's parliamentary election, he has waffled on the Zangezur Corridor plan in his capacity as the caretaker prime minister. His main challenger in the snap poll, former president Robert Kocharyan, had vowed to oppose the new railway, in an apparent renunciation of the ceasefire deal.
To top it off, a 2014 study by International Alert, an international peacebuilding organisation, estimated that rehabilitating the Kars-Baku route via Nakhchivan would cost more than $430 million. And even once it is built, Russian oversight of the rail corridor may limit its ability to serve as a geopolitical gamechanger.
Yet the momentum may be in Turkey’s favour. After the ceasefire, Turkey gave Azerbaijan “most favoured nation” trade status and Baku responded by awarding a series of contracts to Turkish firms: to develop the state lottery; operate three major mines; and build new Central Bank headquarters and new roads in areas retaken in the war.
Last week, Mr Erdogan and Mr Aliyev agreed on a new Turkish consulate in Shusha, increased security co-ordination, Turkish drone production in Azerbaijan and Turkey’s housing agency building homes for up to half a million displaced Azeris who may now return to Nagorno-Karabakh. There’s talk of a Turkish military base and Turkey’s far-right parliamentary partner, the National Movement Party, is expected to help build an arts school in Shusha.
Let’s not forget energy ties.
A year ago, Azerbaijan overtook Russia to become Turkey's top supplier of natural gas, thanks mainly to the Tanap pipeline completed in late 2019. In December, Ankara and Baku agreed to build a gas pipeline from Turkey's Igdir province to Nakhchivan, rerouting Azerbaijani gas sold to Turkey back to Azerbaijan's exclave and weaning Baku off its pricey reliance on Iran. Azerbaijan's state-owned energy firm Socar is the biggest foreign investor in Turkey, yet it has also been linked to a vast corruption web by Turkish mafia figure Sedat Peker, whose recent accusatory videos have gone viral.
Baku is not alone in its Turkish affinity. In February, Ankara agreed with Azerbaijan and Turkmenistan to transit gas from their joint Dostluk field to Europe. The next month, Turkey’s foreign and defence ministers paid visits to Central Asia, talking up partnerships, while Mr Erdogan called for a doubling of trade within the Economic Co-operation Organisation, which includes the Central Asian republics. A number of Central Asian states have expressed interest in Turkish drones and Ankara has detailed its plan to create a common market for goods, investment, labour and services by 2028.
As in Afghanistan, shared objectives in the Caucasus and Central Asia represent an opportunity for Ankara to work with Washington and Brussels
There are signs that Turkey's role in the Azeri victory may be bringing Beijing onside. Last December, trains from Turkey arrived in China via the Kars-Tbilisi-Baku line for the first time and the first freight train from Turkey arrived in China via the Trans-Caspian corridor. Now China looks set to become a major investor in the financially troubled Yavuz Sultan Selim Bridge and its connecting roads, and has offered to invest billions in the proposed Istanbul canal.
Looking to encourage greater Chinese investment amid a long-running economic crisis, Turkish officials have in recent years mostly refrained from commenting on Beijing’s reported persecution in Xinjiang province. Just weeks after Turkey approved a new extradition treaty with China in May 2019, Beijing provided a $1 billion cash infusion, its largest ever.
But Turkish-Chinese trade has fallen as Ankara has made import-related policy changes that have affected China more than any other country, according to monitoring group Global Trade Alert. Talks on a Chinese-built nuclear power plant in Turkey fell through after the Japanese-French consortium building Turkey’s Sinop plant saw costs skyrocket. For years, Turkey sought to get China to pay for its rail modernisation, but balked at Beijing’s insistence that the contracts go to Chinese firms. In 2018, Turkey reached a $40bn deal with a Siemens-led German consortium to build new railway lines and improve old ones.
This underscores one of the more intriguing elements of Turkey’s approach to the Caucasus and Central Asia, which is mainly as an alternative to China and Russia. Ankara’s position largely dovetails with that of its Nato allies: both seek to ensure stability in the Caucasus, carry Caspian gas westward and curb Central Asian dependence on Beijing and Moscow.
For instance, in late May, tensions remained high as Yerevan accused Baku of torturing Armenians in custody and encroaching militarily in Armenian territory. But the US and Georgia brokered an Azeri-Armenian deal, with Baku handing over 15 Armenian captives and Yerevan sharing maps of its mine placements. Top US diplomat Philip Reeker’s visit this month to Tbilisi underscored the Biden administration’s effort to use Georgia to counterbalance Russia, and Armenia and Azerbaijan seem willing to oblige.
As in Afghanistan, shared objectives in the Caucasus and Central Asia represent an opportunity for Ankara to work with Washington and Brussels. In the end, Turkey's latest turn to the East may be a route back to the West.
David Lepeska is a Turkish and Eastern Mediterranean affairs columnist for The National
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UAE currency: the story behind the money in your pockets
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Fifa Club World Cup:
When: December 6-16
Where: Games to take place at Zayed Sports City in Abu Dhabi and Hazza bin Zayed Stadium in Al Ain
Defending champions: Real Madrid
Race 3
Produced: Salman Khan Films and Tips Films
Director: Remo D’Souza
Cast: Salman Khan, Anil Kapoor, Jacqueline Fernandez, Bobby Deol, Daisy Shah, Saqib Salem
Rating: 2.5 stars
box
COMPANY PROFILE
Company name: Letstango.com
Started: June 2013
Founder: Alex Tchablakian
Based: Dubai
Industry: e-commerce
Initial investment: Dh10 million
Investors: Self-funded
Total customers: 300,000 unique customers every month
THE SPECS
2020 Toyota Corolla Hybrid LE
Engine: 1.8 litre combined with 16-volt electric motors
Transmission: Automatic with manual shifting mode
Power: 121hp
Torque: 142Nm
Price: Dh95,900
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
The details
Heard It in a Past Life
Maggie Rogers
(Capital Records)
3/5
Results:
2.15pm: Handicap (PA) Dh60,000 1,200m.
Winner: AZ Dhabyan, Adam McLean (jockey), Saleha Al Ghurair (trainer).
2.45pm: Maiden (PA) Dh60,000 1,200m.
Winner: Ashton Tourettes, Sam Hitchcott, Ibrahim Aseel.
3.15pm: Conditions (PA) Dh60,000 2,000m.
Winner: Hareer Al Reef, Gerald Avranche, Abdallah Al Hammadi.
3.45pm: Maiden (PA) Dh60,000 1,700m.
Winner: Kenz Al Reef, Gerald Avranche, Abdallah Al Hammadi.
4.15pm: Sheikh Ahmed bin Rashid Al Maktoum Cup (TB) Dh 200,000 1,700m.
Winner: Mystique Moon, Sam Hitchcott, Doug Watson.
4.45pm: The Crown Prince Of Sharjah Cup Prestige (PA) Dh200,000 1,200m.
Winner: ES Ajeeb, Sam Hitchcott, Ibrahim Aseel.
The specS: 2018 Toyota Camry
Price: base / as tested: Dh91,000 / Dh114,000
Engine: 3.5-litre V6
Gearbox: Eight-speed automatic
Power: 298hp @ 6,600rpm
Torque: 356Nm @ 4,700rpm
Fuel economy, combined: 7.0L / 100km
The%C2%A0specs%20
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UAE currency: the story behind the money in your pockets
The biog
Hobbies: Salsa dancing “It's in my blood” and listening to music in different languages
Favourite place to travel to: “Thailand, as it's gorgeous, food is delicious, their massages are to die for!”
Favourite food: “I'm a vegetarian, so I can't get enough of salad.”
Favourite film: “I love watching documentaries, and am fascinated by nature, animals, human anatomy. I love watching to learn!”
Best spot in the UAE: “I fell in love with Fujairah and anywhere outside the big cities, where I can get some peace and get a break from the busy lifestyle”
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
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.”
Profile
Name: Carzaty
Founders: Marwan Chaar and Hassan Jaffar
Launched: 2017
Employees: 22
Based: Dubai and Muscat
Sector: Automobile retail
Funding to date: $5.5 million
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RACECARD
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The specs: Volvo XC40
Price: base / as tested: Dh185,000
Engine: 2.0-litre, turbocharged in-line four-cylinder
Gearbox: Eight-speed automatic
Power: 250hp @ 5,500rpm
Torque: 350Nm @ 1,500rpm
Fuel economy, combined: 10.4L / 100km