Union of Chambers and Commodity Exchanges of Turkey

Hisarcıklıoğlu gave a speech at the USA think-tank German Marshall Fun (GMF) titled, “Turkey’s Rise: The Private Sector Perspective.”

Stating that Turkey is on the rise in all economic aspects, Hisarcıklıoğlu spoke about the economic developments in the last 10 years.

Touching on the subject of oil and gas trade with Iran during his speech, Hisarcıklıoğlu stated that putting sanctions on trading with this country in gold would make Turkey more dependent on Russia for oil and gas trade. Hisarcıklıoğlu said that this is a significant risk for Turkey and would harm the investment climate.

As a solution, Hisarcıklıoğlu stated that Turkey needs to find a way to pay Iran or diversify its oil and gas trade with Erbil and the Caspian. Hisarcıklıoğlu stated that the increasing tensions between Erbil and Baghdad have been adversely affecting the Ankara-Baghdad.

Hisarcıklıoğlu, stating that the Arab Spring has become a much more far reaching and violent than expected and that the economic crisis the EU finds itself in starting with Greece has only gotten deeper, just like the global economic crisis. Hisarcıklıoğlu said, “We still cannot see the end of the road.”

Voicing his opinions on how Turkey came to deal with these troubles not of its own making, Hisarcıklıoğlu first stated that Turkey must raise itself from a middle-income country to a high-income one. To this end, Hisarcıklıoğlu pointed out the importance of transitioning to high tech.

Secondly, Hisarcıklıoğlu pointed out that the quality of democracy in Turkey must be improved through reforms in justice, education and taxation systems.

Stating that Turkey also needs a new constitution, the TOBB President provided information regarding the Constitution Platform they have formed to this end.

After Hisarcıklıoğlu’s speech, a presentation on the Constitution Platform was made.

- “Turkey needs a new constitution”

Answering questions regarding the new constitution, Hisarcıklıoğlu said that Turkey is in need of a new constitution and that this will be the first civil constitution.

Stating that the constitution forms the basis of everything, Hisarcıklıoğlu said that the implementation of the new constitution would open the way for other reforms.

Stating that political parties must also be encouraged towards a new constitution, Hisarcıklıoğlu reported that they are exerting efforts as NGOs to this end.

Hisarcıklıoğlu, in reply to another question on the subject, said that they have shared the findings from the Constitution Platform Citizens Meetings to the relevant departments. Stating that Turkey’s aim is to move on to high tech production, Hisarcıklıoğlu pointed out the need for a new justice system to protect the IP to be produced in this new high tech production environment.

Replying to a question regarding Turkey’s EU membership, Hisarcıklıoğlu stated that they still view this as important in regards to the transformation of Turkey and that there has not been a cease to the process. Hisarcıklıoğlu said that, as far as they are concerned, the matter is not whether Turkey becomes a EU member state but reaching certain standards in the fields of economy and democracy.

Hisarcıklıoğlu also expressed his belief that a free trade agreement will brought into effect following a similar agreement being signed between the USA and the EU.

- The economic aspect has always been neglected

Touching on economic relations between Turkey and the USA, Hisarcıklıoğlu said that the economic aspect has always been neglected; that although Turkey has certain shortcomings, there are certain things the USA must do, too.

The TOBB President stated that despite yearly visits between the two countries there have been no concrete steps to better economic relations but that the Obama administration has given positive signals to this end.

Hisarcıklıoğlu said that this is reason to look to the future of Turkey-USA economic relations in a positive light.

Stating that they are following the fiscal cliff debate closely, Hisarcıklıoğlu expressed the need for a quick resolution to the issue as the developments in USA economy are affecting the whole world.

- The tensions in Iran should not be raised

Replying to a question regarding the developments in the Middle East, Hisarcıklıoğlu said that peace in the Middle East is a prerequisite for world peace and that there is no need to raise tensions with Iran while there are already so many problems in the region.

Hisarcıklıoğlu stated that there is no problem in the economic sense between Turkey and Israel, and that, in fact, there is an increase.

Stating that the diplomatic relations between the two countries are likely to be mended in the future, Hisarcıklıoğlu said that the two countries are the only ones in the region with democracy and free market economies.

Stating that Turkey’s relations with Syria are not very advanced but that Syria is an important transit country for them for trade with the Middle East, Hisarcıklıoğlu reported that Turkey has found new avenues once this path was closed to it following the crisis which flared up in Syria, like the İskenderun-Haifa route.

Hisarcıklıoğlu, replying to a question whether he will enter politics, said that he is a businessmen and that at the moment he represents all businessmen in Turkey, which to him is great enough an honor.

Statement of Mr. Hisarcıklıoğlu, President of Union of Chambers and Commodity Exchanges of Turkey –Washington 17 December 2012 - GMF

Mr. Chairman
Ladies and gentlemen
I am delighted to be here at GMF this afternoon. 
First of all, I would like to share our condolences with all American people and with the families of the victims.
“Turkey’s Rise: A Business Perspective” was chosen as the title for today’s talk.
You have to go to Turkey, to realize that, Turkey is definitely rising.
First of all, in the perceptions of the people in our neighborhood, Turkey is rising.
Then, on numbers, you can see Turkey as rising.
Turkey is an industrial economy in our neighborhood, together with Israel.  Then, by looking at the FDI performance of Turkey, you can imagine that, Turkey is rising, as a regional hub, for foreign investment. We are not there yet.  But we are definitely going there.
Today, I would like to give you these three visions of Turkey’s Rise. Then, I would like to underline a few of our weakness for today.
To fulfill her enormous potential, there is a homework list for Turkey.
I have first, come to terms, with the perception of  “Turkey’s Rise”, in Baghdad in 2004.
I was in the Green Zone in one palace of Saddam Hussein. At that time, it was used by Ambassador Bremer. I was talking to some Iraqi ministers and a group of Iraqi officials. I was there to understand how Turkey could find new business opportunities in Iraq; right after the second American operation in the country.
Then the Minister, who was the head of the Iraqi delegation, said that; “I know Turkey. Turkey is an industrial giant in our region. You have big companies, not comparable to ours. We are looking up to you”.
I have to confess that, in the past, the perception was not always like this. Two years before my Baghdad visit, when I first became TOBB president, I heard participants to our meetings from the region, saying that;
 “You made a mistake in deciding to follow the West.  You have been doing that, for the last 70 years. So, look, where that policy choice has led you, at the end of the day.  You are still what you were in the past. You are constantly dealing with, never-ending crisis. Leave the Western ways to westerners come back to us. Come back to the region.”  This was the advice, at that time, I often heard.
So, life depends on relative evaluations. In 2001, when I became TOBB president, Turkey was in deep crisis. That was why, I was hearing negative remarks, in 2001. At that time, Turkey had taken effective measures, to find solution to its banking crisis. What we have done was, to recapitalize the banking system, and do a lot of belt tightening
Thanks to the reforms, at that time, we had macro stability.  This was very important, to fully using the potential of the Customs Union Agreement, with the EU. 
The political stability right after the 2002 elections, has started to rapidly change the country.  The determination for the EU accession process helped, the political reforms in Turkey.
Over the time, exports have increased, from 30 billion dollars to 150 billion dollars.
In fact, exports were around 3 billion, in 1980. It has, first increased, to 30 billion from 3 billion, due to Özal reforms.
How did Turkey transform, from a sleepy agricultural country, to a dynamic mid tech industrial country? This has been done, without natural gas and oil. The answer, is the reforms of Turgut Özal.
His reform process, has started, in the early 1980s. Industry became important. But, at the same time, industry also has spread, throughout Anatolia. Landscape has changed.
There are political results too. The periphery, has started to become rich. And, it has claimed, to have a say, in the political process. The middle class has emerged. It opened up, and, got connected, to the world. It has started to ask, those similar rights, enjoyed, by others, outside the country.
That is how, Turkey is rising. Turkey is rising as Turks are becoming aware of themselves, first and foremost.
That is, how, Turkey has changed. First, economic transformation and then, came the political transformation.
 We have transformed ourselves by being open to the world. We have found out that, by opening up to the world, we can be rich.
Secondly, we have transformed ourselves through the ballot box. If you have an experience with the ballot box, you do not need a Tahrir Square. Legitimacy comes from the ballot box in Turkey.
 That is why Turkey is rising. 
Due to the vibrant atmosphere for doing business, especially European companies have started to come to Turkey through FDI.
FDI before EU accession process was around 1 billion dollar a year. At that time, Poland was our example. FDI has increased, to 15 billion a year after EU trademark.
Turkey has changed in trading with Europe. Sophistication of our industry has gained from this trade. Europe FDI, and knowhow, were also vital, up until now. In the meantime, Turkey has become, the sixth tourism destination of the world. In the beginning of 1980s, number of tourists coming to Turkey was three hundred thousand. Today, it is 32 million.
So I am a strong defender of the EU process in Turkey. How can I not be?
I am the deputy president of a strong EU institution. I am the deputy President of the European Chamber network. I am the first, and only elected, Deputy President, from a Non-EU Member Country. So, I am part of the EU business lobby. I am advocating, 30 million EU companies. I am invited to be on the ICC board. Earlier, we were applying, not being invited. 
Also, as the president of TOBB, it is my duty to voice the concerns of the foreign investor in Turkey.
With the Arab Spring, a rather interesting period has started for us over the last couple of years. In Turkey, we do trade with our neighbors. In our west, we have the EU market. The share of EU market in our export is around 40 percent.  
By the way, 90 percent of Turkish exports are industrial products today.  In the early 1980s, this was only 10 percent. Now in our west we have the EU, no problem in access to the EU markets. Those are market economies. But to go the east, you have to be in good terms with the neighboring governments. 
That is how I understand, the “zero problem  policy” framework.
And with the Arab Spring, a new situation has emerged. As the business community, we have found ourselves in the middle of many conflicts.
Am I happy with that?
If my members are not happy, I feel the same.
We have found ourselves in the middle of conflicts. Non- of these conflicts are, our own making. More extended the conflict, more disturbed, we feel.
Of course, I understand that people fighting for shared values. But the conflict is still the enemy of trade. Trade needs peace. And trade helps to sustains peace and prosperity.
Iran, Iraq and Syria are our neighbors. You can’t choose your neighbors.
We are importing oil and gas from Iran. With increasing sanctions on payment via gold, we will be more dependent on Russia. This is an important risk for Turkey. And it hampers the investment climate.
To solve this, either;
-  we have to find a way to make payments to Iran or
- we have to diversify to other sources like Erbil or Caspian.
 As the relations between Baghdad and Erbil worsen, this also has a negative impact on the relations between Turkey and Bagdad.
The Arab Spring has become more widespread, and proved to be longer and bloodier than many expected.
 Meanwhile, world economic crisis continued and deepened. Starting from Greece, Europe has been into a deeper crisis. And we still don’t see the end.
Ladies and gentlemen,
As I said; Turkey certainly have not created these conflicts and difficulties. These are not our own making. We have done our homework properly to deal with the issues of the day.
Let me share my thoughts, with you, on what our reaction should be, to these challenges.
First and foremost, Turkey needs to transform itself from a middle income country to a high income country.
We have to move up the technological level, and transform ourselves, from being a mid tech economy, to a hi tech one. In addition, hi tech brings high income. Still 3 percent of our exports are hi tech, whereas, for Korea this is 20 %. There is a long way to go.
Secondly, we have to improve our democratic qualifications and we have to build upon the democratic gains of the last ten years. These are really so hard to gain but always so easy to lose.
First, we need to focus on justice, education system and tax reforms.
We need a new constitution. We need a new constitution to start our 21st century journey. We, as the Turkish private sector, took responsibility, to start an initiative called Constitution Platform. We copied, the America Speaks model. Let me conclude my presentation with the movie of the Constitution Platform.
Thank you very much for your attention.
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