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March 17, 2017 www.intellinews.com I Page 3
“The still escalating political crisis between Tur- key and the Netherlands has reinforced concerns that Erdogan and the ruling AKP are prepared to seek short-term domestic political gains at the cost of severe damage to the country’s long-term commercial, economic and political interests,” wrote Wolfgango Piccoli of Teneo Intelligence in an emailed note on March 12.
The stable political outlook and vibrant economy made Turkey the darling of foreign investors in the noughties; foreign direct investment (FDI) inflows surged to $22bn in 2007 from only $1bn in 2002. But last year’s coup attempt, geopolitical tensions and domestic political noise are scaring away for- eign investors, especially international investors, who anxiously watched as the government seized hundreds of companies for their alleged links to the coup plotters. FDI declined to $12.2bn last year, financing just 38% of the country’s current account deficit of $32.6bn. Portfolio inflows rose to $38bn in 2012 from $1.5bn a decade ago, but they declined to $7.8bn last year.
Over the past five years M&A activity has also suf- fered. There were 331 deals in 2012 with a total value of €16.6bn, but last year there were only 183 transactions worth €12.5bn, according to data from the Emerging Europe M&A report published by law firm CMS and research company EMIS. However, Turkey still remained one of the most
ECHR ruling against Hungary strikes blow for refugee rights
transit zone for more than three weeks and ex- pelled them to Serbia on October 8. The court held that, “Hungary was to pay each applicant €10,000 in respect of non pecuniary damage and €8,705 for costs and expenses”.
important M&A markets in Central and Eastern Europe.
Reflecting investors’ worries, the currency lost 17% of its value last year against the dollar and
it has fallen by another 6% since the start of the year. Inflation, propelled by the weaker currency, hit double digits in February for the first time in five years. The central bank believes inflation will start to fall in the second half of this year because of its tight monetary stance. But analysts do not appear to share the bank’s optimism: end-year inflation expectations rose to 9.08% in March from 8.87% in February.
Investors are now firmly in a wait-and-see mode. The government is trying to convince them that the referendum will remove a major political uncertainty, and then it can focus on long-delayed reforms to unleash the country’s economic poten- tial to address some of the chronic problems such as inflation and the ballooning current account deficit.
If the AKP emerges from the referendum even stronger, many investors might decide that the ensuing 10 years of stability would be worth the current instability. “There is nobody within and outside the AKP who could challenge Erdogan giv- en his popularity, charisma and grasp on power,” wrote Piccoli of Teneo.
“It was quite inconceivable how the applicants could have pursued any judicial review of their de- tention in the transit zone in such circumstances, their detention not having been ordered in any formal proceedings or taken any shape of a deci- sion,” the ECHR said.
The verdict could now set the scene for a show- down between the EU and the Hungarian govern- ment. “The ECHR has declared massively unlawful both main pillars of the Hungarian government’s new asylum policy,” Gabor Gyulai, Refugee Pro- gramme director at the human rights NGO the