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Turkey and the European Union

By John Dietz - Email Editor

Date: Sep 19, 2006

For many years, traveling outside the U.S. meant exchanging a few dollars for local currency. Today, between credit card surcharges and a weak greenback, a simple lunch can turn out to cost the price of a gourmet meal. I can remember not that long ago, as most of you can, when England was on sale for most Americans. Things have sure changed in the old country.

One of my colleagues has wanted me to visit Turkey for future business prospects. After my business was concluded in the euro zone, I decided to head to a stronger dollar area. Turkey, or more exactly Istanbul, turned out to be the right move, the country where the East really does meet the West. Upon arriving in Istanbul, the first thing that hits you is the sheer beauty of the skyline; it is the proverbial photographer's dream. When you read the history of Istanbul and view the skyline, you can conjure up dream-like thoughts of sultans, harems, wars, religious battles, political strife, and a hearty bunch that are very keen to know their place in the world.

It is always interesting to see other cultures and societies as an outsider. The Turkish, living on both European and Asian soil, by their own admission are not European, nor are they Asian. With their unique geographical position, sitting on two continents, Turkey was, and still is, an important trade route. The shipping traffic through Bosporus looks like Times Square at rush hour.

Turkey is arguably one of the most archeologically significant countries in the world. From Mt. Ararat in eastern Turkey, where Noah's Ark is believed to rest, to Istanbul in western Turkey, with its treasure trove of palaces and artifacts, the archeology in this country is well beyond any Indiana Jones movie. It would be impossible to list all the wonders of Turkey in one small article, but a few that stand out as a must see before you leave this world are Ephesus (the former West Asia Minor early Christian community), Cappadocia (the former East Asia Minor Roman province) and Troy (as in the Troy in the Iliad).

Some of the more notable must see places in the bustling 12 million plus city of Istanbul are the Dolmabahce Palace, Suleymaniye Mosque, The Blue Mosque, The Grand Bazaar, and The Spice Bazaar. From the ancient walls of the Topkapi Palace, to the modern day business centers, Istanbul's skyline is breathtaking. At night, the mosques and their spires are lit with an amber glow that encapsulates the entire city.

Getting To Business

Turkey began EU membership talks last year, with a full assessment to be completed by October's end this year. As recently as last week, the European Parliament's Foreign Affairs Committee members urged for more guarantees from Turkey regarding freedom of expression and religion. The Turkish response was that the EU Foreign Ministry was being unrealistic. The crux of this matter is deeply seated. Turkey's full membership to the EU is supported by all Muslim nations. The Muslims see Turkey's membership as a paradigm shift in relations with the West. Meaning, currently there are no Muslim representatives in the G-8 or among the permanent members of the UN Security Council. This seems to be a proving ground for equal relations with the West.

The reality is that Turkey's economy is the 17th largest in the world with 72 million people and a GDP of $325 billion USD. While 98% of the population is Muslim, the Turkish believe that Osama bin Laden is a terrorist, and al-Qaeda is a terrorist organization. Their view of Islam is not based on revenge or hatred, but of cooperation and tolerance.

Turkey wants relations with the West, which is one of the reasons I visited. When meeting for the first time with businessmen and bankers, I was able to ask questions and get the pulse of the country. Today, Turkey has a liberal, sophisticated banking system, and many international banks are well represented in the major metropolitan areas. Since the 1980's, the Turkish government has followed liberalized, outward oriented, economic policies: deregulation of interest rates, establishment of organized markets for money, foreign exchange, stocks and securities, liberalization of capital movements, and reforms in the banking sector.

One of the major policy decisions was the adoption of a liberal and flexible foreign investment policy. As a result of the changes in the Foreign Investment Law, the investment climate was made more efficient and suitable for potential investors.

On the other side of the euro debate, one wealthy businessman explained, "Look, we have our own system, we have our own religion, nothing's perfect, but we make it work!" For most of the business owners I spoke with, that seemed to be the general sentiment. The Turkish story is a powerful one; one that we will keep our eye on. For certain, the surrounding nations are following the story closely. I believe that the outcome, whatever it is, will have an impact on the region as a whole, and some interesting reverberations around the globe.

To sum it up, I like Turkey for lots of reasons. This nation speaks their own language, but understands Europeans and Americans as well as Middle Eastern thought. One of the more interesting observations is that people of Turkey are much more than entrepreneurs; they are extraordinary opportunists. Just ask anyone who has been in a Turkish cab. Unlike most folks, I enjoy the hucksters in the markets and appreciate their tenacity, which is probably the reason why most visitors end up with at least one Turkish rug delivered to their doorstep. It seems that the only time a Turk stops soliciting you is when you are completely out of earshot. I could go on for hours about this amazing country from it's incredible fresh food, to it's vibrant night life, to it's shopping. It really is worth the visit.

One more notable point: A venture to Turkey without a Turkish bath would not be proper. Just make sure you know what you are asking for if you splurge for the Turkish massage. My experience was with a large burly man named Boris. I named him "Boris The Destroyer." Boris manipulated every bone in my body on a solid marble slab with the ease of a chiropractor on steroids. Through broken communication, the only thing I could ascertain from him was that he was very strong, and that somehow I would derive great benefit from that tidbit of information. Well, my black and blue marks certainly prove his virility.

The big picture for you and I is the valuation of the greenback. The euro of late has been a strong currency with many nations in talks with the EU. It is very hard to speculate which way any currency is going to go. Conventional wisdom says the dollar is doomed. I am not so sure about that, but as EU members are added, it's going to get interesting. We need to consider how currency fluxuations will affect your portfolio. It's no longer OK to look inward when it comes to your wealth. Asset Protection is a global event.

Hope you dreamed a little with this one. As always, thanks for listening.

Until next time,

John

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