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Secretary General of TIM (Turkish Exporters Assembly)
  Dr. Emre Alkin
Dr. Emre Alkin
Secretary General of TIM (Turkish Exporters Assembly)

The Turkish economy has for a long time experienced difficult times and consequently it is not in its best shape. However, there is still light at the end of the tunnel and as you know, last year, Turkey was the emerging market with the highest growth rate. Considering this, how do you think Turkey should capitalize on its assets and its enormous potential?

That is a very difficult question because we have many, many options and I must say that I am an optimistic man. When I say I am optimistic, it means that I also put forward options and choices for some resolutions.

I know that our growth rate has soared over the past 20 years but at a high cost. The cost was domestic debt. It is true that domestic debt is pivotal - everybody inside and outside of Turkey is talking about the problem of rolling it over. I don't think that presently we have reached a point where we are discussing how we can capitalize on Turkey's potential. Everybody, the IMF and foreign markets, is talking about how we can repay our domestic debt. Frankly, when a government or a state takes a loan it does not mean that it will pay it back swiftly. This loan is also a sign of power. If you have credibility, you take loans. If you do not have any credibility you cannot take loans from financial markets or from other states. I think that the first thing that we have to do is to choose an approach which enables us to pay back, or give a sign that Turkey is going to pay back, domestic and foreign debts. The only way to do it is by producing.

Turkey's growth rate on average over the last twenty years has been about 6 or 7 percent. It has fluctuated. For example, one year you can see a growth rate of 10 percent and the next year a sharp decrease. This is not sustainable.

Actually as an economist, I can say that sustainable growth is impossible, because even when you have a low inflation rate like the United States, Germany, and Italy, you cannot have sustainable growth. Sustainability comes from production. If world trade or a state gives you the opportunity to produce in a sustainable way, then you can implement sustainable growth strategies. But you cannot say that every year you can reach 7 or 8 percent growth. It is simply impossible.

Now Turkey has chosen the path of EU membership. When you look at the EU´s 3 or 4 percent average growth rates, 2 percent inflation, and 6 to 8.5 percent nominal interest rates, then you see that Turkey is still somewhat far from the Maastricht criteria. What we have to do first of all is not walk, but rather run. This means that a growth rate of 3 or 4 percent over the next ten years will not be sufficient for Turkey. We have to grow by a minimum of 6 or 7 percent, but how?

From the point of view of an exporter, we can say that even though we have faced close to six financial crises, an earthquake, and other economic disturbances like the events of September 11, exports are rising because of their own dynamics. Also, Turkish entrepreneurs are very dynamic in terms of their attitude. When they see an opportunity they seize it.

As we export almost 53 percent to the European Union, all the importers in the European Union can come to Turkey. If I am not wrong, during this season British people, French, and Italians usually travel to Southeast Asia - now because of the SARS virus, they cannot go, so there is a huge potential which can be met by Turkish capacity. I cannot say that we can take any happiness from the suffering caused by this virus because it is extremely sad.

Turkey has to use its instincts and its ability to match the world's capacity. For example, our exports are nearly US$36 billion dollars, which is nothing compared to our potential of US$100 billion. Since we cannot fulfill our potential due to issues such as quotas, we must find a way to achieve our potential by other means; for example if something is happening on the other side of the world, we must look there.

We have all of this potential but we simply have not used it to our fullest capacity. We have many stores and brands, but when you look at people, given the economic crisis, they are a little bit demoralized. The problem is our morale. It is not an issue of money, because you may lose money one year and win it over the next three years. So you can appreciate your company. However, when you lose your morale to do things, it is much more difficult, even for organizations such as ours. We cannot improve people's morale because this is an individual phenomenon. One must be able to go into every home and speak to each person, so it is truly very difficult. But I believe that the origin of potential is morale. If you do not have it, you cannot do anything. In sports and in education it is the same thing. I think that other producers must have a greater degree of morale. Once they have it, we can all benefit because a positive outlook can be contagious. In the same way that, having low morale is also contagious. You know how people talk: 'The economy is so bad, I think we are going nowhere'. When people say that, it is bad. In my opinion, this is one of the biggest problems.

We have had 59 governments since the foundation of the Republic of Turkey in 1923 and this is a negative thing. We now have our 59th government. One government arrives and says we will do this and that, then another comes and says no, we have changed our minds - they did this but it was the wrong thing to do and now we are going to do this. There is no sustainability when you have this type of problem. I think this is where the problem lies. In order for us to reach our enormous potential, we must first solve our socio-political problems and then our economic issues.

There is a tendency to want to separate the economy and politics but this is impossible because both are the instrument of each other. You cannot really decisively separate economics and politics. Right now, many intellectuals speak about this and it puts pressure on the government. The last government before the election was, in a way, crushed by this pressure. They were capable, well led, and secular but when they truly tried to separate economics from politics, they failed because you cannot do this.

So, I think that the real answer to your question is first of all the role of morale. It comes from the government - if it says it will do a certain thing, you will soon see if it does, and then you will have confidence and morale. I did my studies in various universities and now teach in one - when a student lacks optimism and confidence in the teacher, then there is nothing you can do.

TIM plays an important role for all its members and you actively work to enhance their export businesses. Can you tell us a more about your activities and how you facilitate the task of exporters, as well as of small and medium enterprises?

First of all I can say that we have some macro-activities. We represent exporters but we have a very small budget because we took a series of thrifty measures in the five or six years in which we implemented the IMF program. We are part of a governmental body as well. We are a semi-civil and semi-public organization and as such, we have a variety of activities. One of these is to maintain a good relationship between the government and exporting bodies. We have 13 major exporter's unions. On top of this, the Turkish Exporter's Assembly obtains information from these exporters and unions, their concerns and problems. This board has to solve them. If something can be solved through the government, then we go directly to the Prime Minister and the Ministry in Charge of Foreign Trade. We try to maintain legitimacy, get certain rules changed, and put pressure on the Turkish Central Bank so that it can be more sensitive towards exporters, because the exchange regime is only applied to exporters.

For example, an importer is quite free, as someone in finance is free, to get foreign capital to come to Turkey. They can do whatever they want, but exporters cannot. When they get this money into Turkey they have to change it directly in the system. I don't know why; people are taking bank loans in dollar terms and the one who exports and gets the money should be able to use it for the activity he or she wants.

We have a liberty of activities but they exploit us. The exaggeration is deliberate. When we look at financial markets they are very liberated but when it comes to exporters they are not. We don't have too much confidence in each other, government and entrepreneurs. This lack of confidence I think produces these types of approaches.

The tax issue is an absolutely crucial one in Turkey and I think that the government cannot bear any kind of decrease. That is why most of the time, instead of organizing the tax regime or organizing direct and indirect taxes, they try to augment taxes or increase the rate of taxation and this brings the idea of the unregistered economy. We cannot solve this problem if it is being generated by this high rate of taxation.

It is possible that the high rate of taxes is a result of the unregistered or underground economy. Some economists say that 50 percent of economies are unregistered here in Turkey, which is why the government puts pressure on taxpayers: simply because they cannot find any other people to tax. Other economists say that this is not the case. It is the tax rates, which are so high, which cause people to go gray. This is a sort of chicken and egg problem and it can only be solved by confidence, which very hard to generate.

Look at marriage for example; when there is a lack of confidence, then people look at each other in a different way. You cannot assure the one in front of you that you are devoted and trusting. You can implement nothing by mere words, you must demonstrate it by actions. And when you are looking for actions from the other, then a tax rate increase arrives and the lack of confidence soars and soars. It is indeed a chicken and egg problem, which is common to many emerging markets. From Southern Asia to Latin America, there are similar problems. Latin America is the worst. An example is the problem in Argentina whereby the government seized deposits but not mutual funds nor pension funds because this would have have been a very bad thing. But one day, the government can say, 'I will take your deposits and your pension funds', which is terrible - for ten years or more you cannot implement any measures due to this lack of confidence.

Dr. Alkin, you have only been in your current position for one week, nevertheless I would like to ask you how you foresee the future of TIM. What would you like to achieve?

Well, my vision is truly international. I currently have contacts with international legal organizations and international consulting firms like Deloitte and Touche and firms in Turkey. Our job is to try to link up and create a standard between Turkey and the world. For example, now we have some trade standards and trade legitimacy. We have the WTO standards as well as the European Customs union standards. I know that one day, all of these will be unified and that this is a long-term process.

I can leave this chair and four years later, the one who comes to this chair can perceive what I have done so far for the future. That is why we have to instil standards in Turkey and TIM. This is a newly-founded board at the Turkish Exporter's Assembly and we have faced certain problems of standards.

In the next four or five months, I will be trying to make us more international than ever, to keep good contact with Pascal Lamy, the EU´s Minister of Foreign Trade, and good relations with our neighbors, something that the Foreign Ministry should have been doing for ten years but for some reason did not.

There are always military expenses which Turkey is criticized for. I think that the problem lies about 50 percent with the foreign ministry. If you have good relations with your neighbors you don't have high military expenses, whereas if you do not, of course you have to have high military expenses. My vision is that there is no country which is rich in the center and regionally poor. I think that no country, not even the United States, can operate like that. My vision is to have good relations with our neighbors and to have good trade, because if we have common benefits, we will carry each other more and more. If we are partners I will care for you because we have a mutual benefit, and then I will be able to help you not only for financial purposes. If you are restless and have no peace of mind this is very negative. For Greece and Turkey I have a similar idea, but first of all we have to find a common ground, an area of mutual benefit, and that area is foreign trade.

My vision is to have good relations because I know that peace brings wealth and war brings no wealth or benefit to anybody. Peace always brings wealth, and foreign trade is an important issue in order to import and export culture as well. Culture is a very subjective criteria, but civilization is a very objective criteria - we have the same Mediterranean culture and can therefore benefit from these exchanges brought by foreign trade.

I think that if we implement these programs, then within five years, although I am not overly optimistic, Turkey can have good relations with its neighbors. It will be a more peaceful, wealthier area. You become partners because the one you want to implement the partnership with has something that you do not have. It is likely that our neighbors do not have what we have. That is the basic idea of why we build partnerships and networks. The whole world's financial relations are a puzzle, like love and human relationships - you always give and take. But in love, the more you give the more you love.

Thank you very much for your comments Dr. Alkin

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