Sunday, December 07, 2014

How should Investment Incentives be given? Should they be given?

Dear Readers,

This is a local saying in our geography, "All investment incentives are abused with intensive care". Let me try to explain this expression. We encourage exports, exporters create fake documents to get incentives to get tax back. We make procedures easier in order to encourage thermal power plant incentives, then vulgar investors initiate confiscation of forest land, the agricultural population of the region uprises. We make EIA applications easier for more combined cycle power plant investments, vulgar investors use drinking water of the local people in their cooling water system and water becomes heavily polluted, not suitable for any further agricultural use.

New EIA regulations are published in the Official Gazette on 25th November 2014 with No. 29186 and entered into force. Thermal power plants up to 300 MWt (about 100 MWe) are now exempted from the application of EIA. That 300 MWt capacity is quite high. Agricultural lands, forestry, wetlands, olive groves, are protected areas named as "Sensitive Areas". Ministry will give the final decision of the EIA Regulation. So the final decision will be in the hands of political will.

Thermal power plants must comply with environmental standards. Exemption from environmental norms should never be in question. Investment incentives are penned by well-intentioned western minds. In practice, oriental cunning heads- evil minds are engaged for loop-hopes, then in the end proper implementation of the work becomes deteriorated. Investment incentives can not be received by those who really deserve, but those who are close to the political will, get the most benefit.

EIA exemption is in unfortunate practice now. It means investor will have the exemption from the obligation to comply with local and international environmental norms. EIA exemption is definitely need to be removed. We all know that investment is not an easy process. Investors must prepare EIA and they should convince the local people. If there is no local acceptance, then this investment is not appropriate for the local people, so that this investment should cease. It is not correct to cut 6000 olive trees overnight, in order to clear the land to make ready for the thermal power plant construction. This is unacceptable. The investor who cut the grownup 6000 olive trees in one night, harmed us all.

The olive tree is mentioned in the all three holy books. Anyone who advocates importance of constructing thermal power plants, advises the importance of making the local indigenous basic design, anyone who puts money into investment, anyone who has built the power plant, were all in difficult situation in the public vote. There is no party to defend this horrible event against environment.

This irresponsible act harmed our hard earned reputation as well as our business profile. There is no justification of this act. There is no reasonable economic comparison between 500-year old olive trees, and the power plant with barely 20-30 years of lifespan. This comparison could not be made with simple arithmetic.

If a wrong practice is occured, it should then be immediately notified, corrective measures should be taken immediately. If the wind farms on open farmlands makes life unbearable with noise it created, and if locals in residential areas are complaining of noise levels, investors are to be warned to get quieter wind turbines. They should be warned that their wind turbines should not demolish the forest where they will be placed.

If there is an agricultural land seizure risk with solar investments, and if local farm people will remain without land, this should be avoided.
If the guaranteed purchase price cents per kW-hr is less that expected, they should be warned, so that the over-stimulated demand should be redirected. Market conditions should govern free competition. The consumer should be prevented from taking expensive electricity.

If you want to make an investment of thermal power plant with 1000 MW output capacity while firing imported coal, you will need at least 2,000-3,000 acres of vacant land. If yo make a false application of 300-400 acres of land for EIA application, you should be warned. "This is wrong, you need at least 2000 acres, 400 acres land is not enough for you. You can not ask public expropriation for additional land nearby. You can not get forest land, or agricultural land. You can not ask clearing land with olive trees.

Combined cycle power plant investment can not use underground water for their cooling water system, if that water is already allocated for the agricultural farmlands nearby. Otherwise investment risk premium increases due to local environmental concerns, IPO buyers impasse will end up loss of billions of dollars, while you try to save a small magnitude of that value by jeopardizing environmental norms and regulations.

If the ash dam or proper ash storage facility for a coal firing power plant is not properly constructed, if you pollute the nearby sea by deep water discharge, you should be warned, and the work should be corrected.

"I have money, why don't I construct the power plant where I want?", say some newcomer investors who are unaware of the sensitive environmental issues. Energy is not a priority, but environmental concern is. Having money is not enough to invest where you want. There are rules, regulations, laws, local and international environmental standards, to which we all must comply with.

New environmental equipment investments in public thermal power plants were exempted by law to be enforced until 2018. Privatized power plants get the same exemption.

Compliance with environmental norms must be put off. We give investors extended exemption from environmental investment. That is not fair, not correct.

Investors ask more exemptions at least for 3-5 more years time extension for rehabilitation expenses. They further initiate reduction of personnel expenses. Our people becomes unemployed. We face with unnecessary social mess, public tension and confusion.

With this pace enforced, we shall face more and more deforestation, reducing farmlands, demolishing of lands of olive trees. We now promote renewable energy, more wind turbines, more solar panels to be installed on empty lands. We also guarantee higher electricity purchasing rates in order to let them receive better financing terms. These incentives will serve primarily the importing equipment. Our environment will be saturated with cheap imports, poor quality, non-redundant renewable energy equipment with non-maintenance contracts.

There are incentives to promote domestic manufacturing to be implemented. We fear that those measures will be plagued by bureaucratic procedures, which will make regulations not applicable, or facilitation will be worse. Who can build a reputable turbine / generator plant in five years, construct the factory, get market share, get trust of new business credit, get orders to survive, finalize manufacturing, make erection on-site, operate and further promote domestic production? This is a dream which can not be fulfilled. We may establish assembly plants of foreign firms, and initiate partial production.

Locally designed power plant construction with local coal firing is not so easy in a few years. The measures which are taken are not so clear for encouragement of domestic manufacturing. There is a draft roadmap summary already released for public, but details are not disclosed yet.

On the other hand, our local civil contractor companies are doing heavy labor abroad in power plant constructions for neighboring rich investor countries with limited labor force. They have record level of orders. However they earn money by marketing the most basic human workmanship. They do not supply basic design. Their engineering is limited. Major foreign contractor company makes the basic design, delivers the necessary engineering, and gets the biggest share of the profit.

If an investment does not create local employment, it has no importance. Investment incentives should promote local engineering, local fabrication, local employment for site installation, and further operation and maintenance works.

Public authorities fear that if there is no proper investment incentive, then there will be no investment. This assumption is not correct. If there is proper market forces emancipated under rule of law, under free market conditions, under fair competition, there is always investment for the prosperity of all. On the other hand, if there is investment incentive then there is corruption possibility in favor of for those privileged..

Transparency International's latest 2014 annual "‪Corruption Perceptions Index" saw ‪Turkey drop 14 places to 64th of 175 countries. If our corruption perception index is so bad, it is better to avoid any further possibility to get worse with introducing un-manageable investment incentives. Investment incentives are unnecessary cost, unnecessary burden on our economy.

It is much better not to have incentives, and let the market forces to dominate the local environment under close scrutinizing by public authorities as well as under surveillance of NGO institutions.

In our geography, we visualize that the more investment incentive measures we enforce, the more corruption we create. Therefore it is better to stop investment incentives completely. We would strongly recommend and prefer that no incentive should be provided other than current standard general tax cuts and flat electricity feed-in tariffs for energy investments.

Prinkipo, 09 December, 2014

Haluk Direskeneli is a graduate of METU’s Mechanical Engineering Department (1973). He has worked in public and private enterprises, US-Turkish JV companies (B&W, CSWI, AEP, Entergy), and in fabrication, basic/detail design, marketing, sales, and in project management of thermal power plants. He is currently working as a freelance consultant/energy analyst of thermal power plants, and utilizing his basic/detail design software expertise for private engineering companies, investors, universities, and research institutions. He is a member of METU Alumni and the Chamber of Turkish Mechanical Engineers Energy Working Group.

Monday, October 20, 2014

Does Turkey Enter Energy Bottleneck?

Dear Readers,

In upcoming days, we shall have new developments in our energy markets. Therefore we should make upfront predictions to develop appropriate strategies. We have serious problems in natural gas supply. Even if we do not have any political friction with Ukraine or Russia, in the days when outside temperature drops to below "-5 ° Celsius", we will have serious shortage of natural gas.

There are optimistic expectation that we may have gas supply from ShahDeniz-2, Israeli offshore fields, Northern Iraq. However these are not materialized in real contract form yet. At this difficult times, in overly complicated geography, these optimistic expectations are not more meaning than "wishful thinking", whereas we cannot configure our future on those loose conditions.

Our installed electricity generation capacity has reached 68,000 MW, but the peak (maximum) supply does not exceed 40,000 MWe. We have limited new thermal power plant investments in the recent years, which are not sufficient for necessary annual increase.

Currently we have new generation capacity, in which their investment decisions are initiated in year 2007 and earlier. Those opportunistic investments in wind and geothermal power plants have been increased. There is nothing new in thermal power plant investments. Those new thermal power plant investments under construction in Tufanbeyli, Göynük, Adularia, Iskenderun are expected to be commissioned in 2015 at the latest. There are no other new thermal power plants.

Hydro-electric power plant investments are saturated. There is general shortage of natural rain water in the dams. In recent years, our land have received less rainfall. The hydro dam reservoirs are half-full. During and after winter season, we may have some more rain water in hydro dams, but we are not so sure that those accumulations will be enough for demand.

There are new natural gas firing combined cycle thermal power plant investments. There are not enough natural gas reserve to feed them. Moreover we do not yet have free market conditions, as well as essential legal framework for safeguarding the system.

You may release new laws, and regulations, but still in the long term you may not secure necessary gas demand. Gas prices should not be subsidized by public funds. Cost of natural gas have increased between 2005-2007, whereas electricity prices were kept constant between 2002-2007 by subsidizing, so private market players were kept in difficulty.

"Shell" company has initiated 2-separate drilling for shale-gas exploration in South East of our country, each with cost at 40 million US Dollars. The third well is awaiting approval for drilling. There are optimistic estimations for about 1.8 trillion m3 shale gas reserves in South East Anatolia. So with 45-billion m3 of current annıal demand, that reserve can meet our needs for at least next 40-years. However we need to make substantial investments in new drilling. Who will pay this expenditure?

In last 10-years, public companies could not make any investment in energy sector. Public institutes have only promoted, and encouraged local and foreign investors to put money. Public institutes tried to avoid any legal responsibility, nor agreed to guarantee any purchase for energy sales. They did not take any legal, contractual or financial responsibility. Country has to invest more in energy generation but there is no easy hot money available any more. Local and foreign investors both have serious concerns in terms of the reliability of the investment environment.

Old local coal-fired thermal power plants were sold in privatization, however their availabilities are low, their operational efficiencies are low, they have poor environmental equipment, low quality electrostatic precipitators. Most of them have no flue gas desulphurisation units. Plants need costly rehabilitation, or even complete replacement.

Thermal power plants have legal exemptions from rehabilitation and they can work until 2018 without any upgrading. That procedure is cancelled by the judicial decision but the new work is not enforced. So application remains the same until a new legal measure is installed. Old existing coal-fired thermal power plants continue to pollute the environment without the use of new better bigger environmental equipment. There is also 3-year extension possibility for the exemption status.

New thermal power plants which are Diler 600-1200 MW, Cen-AL 1200 MW, Biga 1200 MW, Şırnak 405 MW, Soma 450 MW, Kırıkkale 800 MW, Bandırma 920 MW CCPP plus some 400 MW of small thermal power investment constructions are continued.

Most of the dam construction of the hydroelectric power plants, such as most controversial Ilisu 1,200 MW, Kalehan 300 MWe, plus some 3-5 GW could be activated within a few years. New wind energy investments around 500 MW per year for the next 4 years may also enter into energy generation.

Most of these new power plant investment decisions have been initiated much earlier. Their construction and equipment purchasing are in advanced stage in financial markets, despite the negativity which may be experienced for any delay.

New Solar plants with capacity 1-3 GW can contribute to meet necessary summer peak predictions within next 4-5 years. With an average of 10-13 GW new power plant capacity may be introduced in the next 3 to 4 years. We should also consider nuclear power plants. Investment financing is conditional upon social and political climate we shall have. 

According to new "Medium Term Economic Program", Turkey's growth rate will fall to 4.5% per year, and annual increase in energy demand will be readjusted accordingly. Politics based on economy, and growth rate. For more annual growth rate, one should create more annual growth in electricity generation. Simple as that.

On natural gas supply, if we can have no failing in domestic transmission, if Ukrainian- Russian crisis does not climb, if there would be no technical problem at Russian entry points, then we may consider new contracts to purchase extra gas. European gas consumption is predicted to decline at least 10%, as a result natural gas prices inevitably decline to probably to levels less than 240 US dollars per thousand cubic meter, whereas current price is floating around 400 US dollars per thousand cubic meter. So for Russians, any additional gas sale is a very valuable gain in future.

In Elbistan coal fields, each plant has four units each with 350 MWe. Afşin-A plant is running only one unit at 240 MWe capacity. Afşin-B plant has only two units at full capacity. Other units are down, they need rehabilitation, maintenance or even complete replacement. For new rehabilitation works, new engineering consultancy tender is released which will take some time to complete. Çöllolar coal field is closed due to past land slide in the mine. Hurman Creek which passes through coal mine field will have new artificial river bed. Dewatering coal field works are under execution.

New investments for exploitation of Elbistan C-D-E coal fields are underway. Sites visits, feasibilities, preliminary contract works are carried out by Chinese, South Korean, Japanese, and Qatar investor groups.  An investment portfolio around US $ 12-billion budget is discussed. Public side should also participate to risk sharing in this investment projects.

New Afşin power plants in Elbistan coal fields will face four (4) major risks in which public should have major initiatives. These are changing river bed, replacing and removing existing power transmission lines away from coal field, land expropriation and resettlement of local population, and construction of new water dam to meet plant water needs. Those are to be within the scope of public enterprises since private entities can not respond in these scopes.

On the other hand, imported coal prices in the international markets dropped to FOB US 60-70 Dollars per metric ton, which means approximately 2.40-2.50 US Dollars per MMBTU. In the past that price was floating in the range of 80-90 US dollars per metric ton, and even climbed to 160 Dollars. This is a sort of gambling and investor is to accept that risk.

However local coal price tends to be stable in the long run. It is around 2.00-2.50 US Dollar equivalent at mine mouth delivery per metric ton. There is limited or small fluctuations in these local coal prices.

We may also consider production of Synthetic Gas from low quality underground coal mines, whereas its calorific value is 1/4th or 1/5th of natural gas at around 1500-2500 kcal HHV per thousand cubic meter. Syn Gas has less environmental pollution risks compared to coal firing. A couple of pilot field test plants are continued in Soma-A and Tuncbilek.

All in all, with those emerging events, we have serious problems to face in our local energy markets, to meet with our ever increasing energy demand which is vital for our economic and social development.

Prinkipo, 21 October, 2014

Haluk Direskeneli is a graduate of METU’s Mechanical Engineering Department (1973). He has worked in public and private enterprises, US-Turkish JV companies (B&W, CSWI, AEP, Entergy), and in fabrication, basic/detail design, marketing, sales, and in project management of thermal power plants. He is currently working as a freelance consultant/energy analyst of thermal power plants, basic/detail design software expertise for private engineering companies, investors, universities, and research institutions. He is a member of METU Alumni and the Chamber of Turkish Mechanical Engineers Energy Working Group.

Saturday, September 20, 2014

What's new in 2014-2015 season at the Turkish Opera?

Dear Readers,

As summer comes to a close, we look forward to the new season in arts. Let’s look at the new opera season today. Unlike their counterparts in other countries, Turkish opera companies do not announce their plans ahead of time. Most commonly, the Turkish opera company program announcements arrive only two to four weeks in advance. As we tried to glean the new season plans of opera companies through a variety of sources and will report here, albeit the plans are not yet final.

First, a bit of news from the past summer: Ankara State Opera performed Mozart's "Abduction from the Seraglio" in Sicily's Taormina city Opera festival on 6th September to great acclaim.

Official web site is recently renewed for new season. But it is still not finalized since the most programs are not officially announced. From various sources, we have gathered the new opera program but it is still not final yet.

We have great opera works in Izmir opera house.
Season starts on 1st october with Verdi's "Aida" opera.
Then we shall have Puccini's "Madame Butterfly".
This year "Tosca" will be on stage.
Brahms’s "Requiem" will be performed in concert.
In the current repertoire, we have
Donizetti's "Don Pasquale" and "Regiment's Daughter",
Handel’s "Agrippina",
Bellini's "La Sonnambula" (Sleepwalking Girl).
We should see all of them multiple times to compare different casts.

The number of opera locations are now reached to 5(five) now. Alhambra, Sabanci cultural center, Ahmet Adnan Saygun cultural center, Karsiyaka, Bostanli. In addition, we have university auditoriums, and ancient theaters available venues for opera performances.

Ankara Opera house will open the new season with Bizet's "Carmen" on 1st October. In the repertoire, we shall have
Verdi's "Rigoletto", "Macbeth" and "Attila",
Strauss "Die Fledermause" (the bat)
Mozart's "Don Giovanni" and "Abduction from the Seraglio".

We have learnt that Wagner's "Das Rheingold" opera is in preparation in early 2015. Furthermore we shall have opera concerts in Bilkent, Odeon, Congressium and Presidential Symphony.

Istanbul Sureyya opera house will perform
Verdi "La Traviata"
Donizetti "L'Elixir d'amore"
Strauss "Ariadne on Naxos "
Offenbach "Tales of Hoffman"
Rossini "La Cenerentola" (Cinderella)
Bellini "La Sonnambula" (Sleepwalking Girl)

The biggest opera house in Istanbul, Ataturk cultural center in Taksim square is still closed for never ending renovation. Fulya and Bakirkoy new concert halls are suitable for opera performances, but they still do not have regular opera programs yet.

Istanbul Zorlu Center for the Performing Arts (Zorlu PSM) will host London Royal Opera House artists to perform Puccini's "La Boheme" on 18-20-22-24 January 2015. Tickets are available to buy from internet, and Prices are changing between 95-350 Turkish Lira. Zorlu PSM is an entirely commercial identity with 2500 audience capacity.

In Samsun, the recent opera performances are
Franz Lehar's "The Merry Widow",
Mozart "The Magic Flute"
In Repertoire, we shall have,
Puccini "Madame Butterfly" and "La Boheme".
Opera Season in Samsun will start on 24 September with Carl Orf's "Carmina Burana" concert on stage.

In Mersin, in the historical cultural center from late Ottoman, Levantine Period, we shall have,
Puccini "La Boheme" and "Madame Butterfly",
Bizet's "Carmen"

In Antalya, in the Modern Culture center, we shall have following operas in the repertoire.
Verdi "La Traviata,"
Puccini "Tosca"
Mozart "The Marriage of Figaro" and "Don Giovanni",
Ali Hoca "Tulip Craze",
Verdi "Macbeth,"
Handel "Hercules",
Rossini " A Turk in Italy "will be on stage.

If we shall be in a metropolitan city with an opera house for any reason such as business meeting, seminar, fair, conference, we have to check for an opera program at least 15-days or 1-month earlier to buy tickets at night for opera. We should not limit ourselves only for local operas, but we should check opera programs in Moscow, St.Petersburg, Paris, london, NewYork, Sydney, Berlin, Milan as well. On business trips to overseas, an opportunity to see an opera performance would be great personal gain.

YouTube releases past opera performances in full. Munich opera house broadcasts live opera performance almost every month. London Royal opera house, NewYork metropolitan opera house have similar internet broadcasts with some paid subscriptions.

You should not go to opera performances unprepared. You should listen to its music at home, in the car, at work, by playing cassettes, CD, iPod, mp3 player, radio, PC, whatever you have. You can open up youtube on you PC, nonstop multiple times for at least 2-3 days prior to the live performance you will watch on stage. Each note of music, each melody should be in your mind. It is not necessary to take conservatory training in order to enjoy opera music.

Opera performances are to get critics, it is not important whether it is good or bad. If there is no critics, it is not good at all. On the other hand, we critics are not supposed to love every performance.

We should buy program booklet. One for each audience is to be distributed. Do not try to read the booklet prior to opera performance. You should read the topic much earlier. Do not try to read the digital translations. Enjoy the live music.

After the opera performance, spend half an hour in nearby coffee shop, drink black coffee with no sugar to keep yourself awake while driving. In the meantime, crowd is dispersed, it becomes easier to drive or find a taxi to return home. We wish all the best for all Opera lovers.

Prinkipo, 25-Sep, 2014

Haluk Direskeneli, is a graduate of METU Mechanical Engineering department (1973). He worked in public, private enterprises, USA Turkish JV companies (B&W, CSWI, AEP), in fabrication, basic and detail design, marketing, sales and project management of thermal power plants. He is currently working as freelance consultant/ energy analyst with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of ODTÜ Alumni and Chamber of Turkish Mechanical Engineers Energy Working Group.

Sunday, September 14, 2014

Energy Market Analysis for the 2016 American Presidential Elections

Dear Readers,

The next Presidential elections in the United States will be in year 2016. In the last two-term Obama administration, American Democrats appear to be worn-out. Obama's cautious, rational foreign policy and his economic and geopolitical expectations were not enough. Democrats were unable to perform most of their social promises, i.e. ObamaCare.

Oil in the Middle East and Europe gas supply pipeline in Ukraine could not be controlled. The necessary precautions could not be taken upfront. They could not control events. Early preventive interventions could not be enforced in times of crisis. The interventions which are being considered in Northern Iraq and Eastern Syria against terrorist establishments were too late, hence the enemy is unclear to specify. Fighting on land in this region is too risky, it is much better to avoid interference which seems auspicious in times of conflict in the Middle East in order not to get harmed.

Democratic presidential candidate Mrs. Hillary Clinton (66) will have hard times to persuade the majority of the eligible US voters. When she was the Secretary of State, Mrs. Hillary Clinton has lost credibility in her late responses during crisis especially in Benghazi,Libya and her mismanagement in the incident what happened to the late American Ambassador. Those unpleasant incidents, her delays in action, her security weaknesses and her mismanagement to give proper attention to the crisis have cost her loss of the great prestige. She graduated from Yale law School and worked as attorney in her own office. 

During her post- ministerial period, Mrs. Hillary Clinton released her new book on her experiences in her tenure in the State Department. The name of her book is "Hard Choices". In her book, she writes in careful language to describe the merits of our new Prime Minister "The Hodja".

Mrs. Hillary Clinton appreciates his academic knowledge, his intellectual capability. However she also says that his academic capability is not updated with the current world events, with his new political experiences.

Similarly new US Secretary of State, John Kerry has discomfort in their mutual press conferences. When his counterpart starts long sentences which are prepared during his past academic studies from his memory, whether it is related or unrelated with the current situation, the face expressions of Mr. Kerry become changed. He stops listening and interrupts the conversation. He is bored with the same pre-prepared conference wording. John Kerry has majored in political science at Yale University in 1960s. He was a Vietnam war veteran, decorated with war medals. In his later years he joined anti-war movement and he had wide experience in world politics. He fluently speaks French and some other foreign languages which is not so usual for an US Secretary of State since most top level American politicians do not speak foreign languages. There is a common feeling that an American who speaks a foreign language is probably an immigrant.

Mr. Kerry was the Democratic presidential candidate in the past and he lost the general elections to George W. Bush. So he can not be re-nominated in the next elections. Similarly former Republican candidates John McCain and Mitt Romney have little chance to get re-nominated, since they both lost the past elections.

Yesterday was left in yesterday. Ottoman period in the Middle East is in the long past with nice pleasant memories for modern Turks. Ottomans were wiped out of the history in 1918. Since 1918, the world has faced with WW1, WW2, Korean war, Vietnam war, Afghan war, Iraq war. All these wars reshaped the world, as well as strategies, and policies. In the Islamic world, especially the Arab world has their own expectations, their own visions, their own policies, and none wants to have a big brother to tell what to do on this behalf.

Every individual country has his own national policy to fulfill their own ambitions. Particularly in complex Arab world, we must understand that new Ottomans, namely new Turks can not lead this region, as in the past centuries. World history did not end with the exhaustion of the Ottomans in 1918.

Those long distances which were passed by walking or on horseback, are now completed in very short period of time on choppers in today's modern armies. Weapons are changed. Their destruction capabilities have reached to immense levels. From the other end of the world, unmanned aerial vehicles are flown over enemy lines without taking risk of any human casualty. Battles are moved to other mediums, such as virtual space. Internet, Youtube, Twitter, WhatsApp, Facebook, Linkedin are used for intelligence gathering and in psychological warfare.

From consulting to the President, to high prestigious job of US Secretary of State, Henry Kissinger's rising career is very interesting. Kissinger was born in Bavaria Germany in year 1923 to a Jewish family. They emigrated to USA in 1938. In WW2, he fought in Germany with the rank of US Sergeant. After the war, with the support of "GI Bill" scholarship for the war veterans, he joined to Harvard University and earned his doctorate degree (Ph.D) in political science. He was then invited to the Presidential circle as the political consultant with high academic credentials. He became US Secretary State between 1973-77. Over time, he became very successful. He created new applications such as "Shuttle diplomacy", "détente" in new international relations into practice. Despite of ongoing hot war between US and Vietnam, he operated secret negotiations with North Vietnam, and he has made a huge contribution to the termination of the war. He received the Nobel peace prize. Since he was not born in the USA, he had no right to be a Presidential candidate.

Among the Republican candidates, there are former deputies of presidential candidates, state governors, former advisors to Presidents.
We have candidate names, Paul Ryan, Rick Santorum, Marco Rubio, Chris Christie, Rand Paul, Sarah Palin, Condolleez Rice, and more.

We feel that the most important candidate, is the younger brother of former President George W.Bush, namely Florida Governor "Jeb" Bush (61). Please do note his name. Although his mother "Barbara Bush" is very reluctant for the third Presidential candidate from her family, if the "Bush" family decides to promote the youngest "Bush", they have definitely high chance of winning the game. He is a graduate of University of Texas, from Department of International Relations with major in Latin America. He speaks Spanish fluently. He will surely get all Latin votes. He will the first Latin President in the USA.

If Republicans win the Presidential elections, they do not hesitate to interfere the hot wars in the Middle East, in order to secure their energy supply routes. For better national economic output, for more growth, to earn more money in new conventional weapon manufacturing, they love to move not only with air force but also by foot soldiers on land for hot wars in the Middle East, namely Syria, Iraq, Iran, Libya etc. We worry that all these war initiatives affect us directly in our geography.

It is our sincere feeling that Pan-Islamic, New Ottoman foreign policies are to be avoided by all means, since they are not practical, nor have any meaning in the fragile insecure unreliable relations in the top level decision makers of the lands of the Middle East. New energy policies, new energy diplomacy, new ways of security in communications, warfare and technological superiority will heavily dominate the foreign relations.

Ankara, 16 September, 2014

Haluk Direskeneli, is a graduate of METU Mechanical Engineering department (1973). He worked in public and, private enterprises, USA Turkish JV companies (B&W, CSWI, AEP, Entergy), in fabrication, basic and detail design, marketing, sales and project management of thermal power plants. He is currently working as a freelance consultant/ energy analyst with thermal power plants basic/ detail design software expertise for private engineering companies, investors, universities and research institutions. He is a member of METU Alumni and the Chamber of Turkish Mechanical Engineers Energy Working Group.

Wednesday, September 10, 2014

The New Political and Economic Era in Turkey

Dear Readers,

International investors of the business world love to read strategic forecast reports. These reports give a preliminary road map to help them know how to navigate in the future. They also originate from local environments and are therefore valued by the investors as they unmask local sensitivities. I hope that the report you are now reading will warrant your attention and appreciation. Please feel free to comment after reading.

In the free and democratic elections for the office of the President of the Republic of Turkey, the former prime minister was elected by 51.8% of the electorate. He was sworn in and quickly moved on to fulfill his responsibilities as the new president.

The new Prime Minister was chosen by the majority party, although we all know that this was not through democratic free elections but by direct appointment as per the "Dilbert Principle" of the famous US cartoonist.

The new Turkish Prime Minister has been referred to as "Hodja" (teacher) seeing that he is a former university academician. It is known that he was not elected, but appointed by the President because he fulfilled the certain preconditions for this post. A new prime minister should be a member of parliament, member of the majority party’s executive committee, and should not serve in excess of a maximum of 3-terms as stipulated by party regulations.

Now a new era is dawning. How do we expect our new President to rule our country? In his new presidential term, is he going to rule with the powers of an "absolute leader/monarch" as is the case in the US and in France? We are skeptical that such an option will become a reality as the Turkish Constitution has not been changed by the Turkish Parliament to open the door to such extended powers.

We can say that it will be difficult to change the legislation in this regard. Up to a point, the new President can enforce some new measures under the existing applicable laws, but for the application of total and absolute power, the legal conditions remain largely absent.

According to the Turkish Constitution, it is currently the Prime Minister who possesses the absolute executive authority to govern the country, whether by designating the budget, making political decisions, allocating public spending, or deciding where to invest. We are about to observe a slow but definite power struggle, albeit rarely publicized. So what does this "new era" entail in the future?

We, the people of the business community, want our elected government to be successful in its endeavors. Each democratically elected government is our government, and we fully support its decisions. And we expect our government to make the right decisions, creating peace at home and with our neighbors, securing our national unity and our borders, keeping inflation and interest rates low, increasing investment, boosting national economic growth, cutting down the "current account deficit" (CAD), reducing unemployment, and increasing everyone’s share of national wealth and access to education and health care services.

A successful democratic government facilitates the success of our own businesses. We are in the business world, and we flourish only if our government flourishes, therefore, we wholeheartedly hope for the success of our government.

"Hodja" has valuable academic credentials. He was the foreign policy adviser to the Prime Minister, was later appointed as the Minister of Foreign Affairs, and recently became a member of parliament.

Earlier he wrote numerous academic and popular newspaper articles. He speaks German, English, and Arabic. He holds a bachelor's degree from the prestigious Bosphorus University in Istanbul with a double major in economics and political science. He also completed his Ph.D. degree at the same university. He is happily married with four well-educated children, two of which are already married. His wife is a very successful obstetrician MD working in a private clinic in Istanbul.

"Hodja" published a book entitled "Strategic Depth (2001)", which was a compilation of his past popular articles in academic and popular journals, putting forth a Pan-Islamist, Neo-Ottoman approach to international affairs in the modern world. To this day, the book has had 91 new editions, all in the Turkish language, but has not yet been updated or supplemented with and major changes in its intellectual content or prevailing arguments.

During his tenure as Turkey’s Foreign Minister, "Hodja" engaged in dialogue with his counterparts from other countries with ease, and influenced them with his broad academic background and vast intellectual knowledge. He advocated the policy of "zero problems with neighbors", and even though it ultimately backfired due to unforeseen, unfortunate developments in the Middle East, all the blame should not be placed on him and him alone.

He is an academician by trade, not a career diplomat. He has limited background on putting his academic work to practice in the Foreign Ministry and has acquired only on-the-job diplomatic training. Although he spent some time at a Malaysian university, he has almost no experience working alone in completely foreign environments, and his ability to empathize with foreign missions is yet to be truly tested.

His background was gained in the lecture halls, where he has spent long hours with his undergraduate and graduate students. Yet everyone has the same question in mind, "if he were not appointed, could he have been democratically elected at the ballot box?!" The answer will be made clear in the nationwide general elections to be held in June of 2015.

When Hodja takes the podium, he can academically postulate for hours on end. For a new listener, his vast intellectual capability is impressive as his speeches are similar to the lectures one could hear in a university course at the department of international relations. Yet, the audience can quickly bore of such stultifying orations. For every occasion he has well-prepared academic documents, whose lengthy, rehearsed contents he reproduces and duplicates in different meetings and settings, regardless of who the audience may be. One has to be reminded that Hodja can probably recite lecture material for every single class of a 4-year bachelors program in International Relations from memory.

Will Hodja limit himself only to foreign policy issues during his office as PM? That is impossible. Will he make radical changes to his Pan-Islamist, Neo-Ottoman ideas over time? We shall see. Will he implement successful and effective domestic and economic policies? How is he going to manage the economy? After a very charismatic and dominant personality that saw unprecedented success on the local level and held the prime ministerial office before him, is he going to be effective? Will the former PM (now the President) interfere in his day-to-day decisions and rule as he pleases?

We feel that it will take some time for Hodja to learn to govern, and that in time he will be very effective. Hodja will change. He has to change, otherwise he will fail and loose the next general elections. This is his "Dilemma", his inescapable "Paradox". We shall all visualize the change he calls "Restoration" in his party meetings, in his public speeches, in his new revisions to his famous book "Strategic Depth".

Departing from the prime minister, positive monetary indices related to the international financial markets, foreign direct investment, and the local stock market have shown that the ministers in charge of Turkey’s treasury and finance ministry are indispensable. As far as it concerns these individuals, the majority party's self-imposed three-term limitation may not apply. While they may not be elected in the upcoming elections as deputies, they may continue their ministerial duties until the top political decision-makers find similarly reputable replacements. This is also the case for the Central Bank Governor, who is very likely to continue his charge for some time to come.

Those deputies (members of parliament) who will complete their maximum three-terms in parliament, will not be appointed to the party ticket in the next general elections based on party procedure. This means that they will have time to recharge, time to rest, time to reflect.

They may return to their commercial family enterprises to work, to earn money. They may join universities if they have academic titles. They may share their political experience with other political institutions. They may take on national and international functions. Although not typical in the Turkish context, they may even write books on their past experience in the parliament.

The new Prime Minister, "Hodja", will quickly learn the ins-and-outs of domestic politics, how to manage the local economy, and how to speak intelligibly to the public. He will feel the heavy burden of the current account deficit (CAD) which is now at $60 billion. He will look for solutions on how to cope with our dependence on fuel imports and how to halt and reverse our ever-increasing foreign debt which has already reached $400 billion.

He will try to find a solution to the Syrian refugee dilemma, as their numbers approach 2 million. He will observe the geographies of Syria and Iraq from a different angle in order to seek new, better and more applicable solutions. We will see his Pan-Islamic, and Neo-Ottoman ideas pass through "Restoration". A new "Strategic Depth" will be considered. Meanwhile, Hodja's hair will grow gray with the weight of his great responsibility.

The fragility of the domestic economy will increasingly be felt. The appreciation of the US Dollar and the debate between floating and fixed currencies will be a constant issue. The real-estate market bubble will need to be addressed. Market behavior and investment dynamics will be carefully monitored. Hodja’s political effectiveness will ultimately increase in time. We shall witness his ever-increasing political efficacy in party meetings, in his public speeches, in his encounters with foreign prime ministers, and in the upcoming 2015 general elections.

Prinkipo, 30 September, 2014

Haluk Direskeneli is a graduate of METU’s Mechanical Engineering Department (1973). He has worked in public and private enterprises, US-Turkish JV companies (B&W, CSWI, AEP, Entergy), and in fabrication, basic/detail design, marketing, sales, and in project management of thermal power plants. He is currently working as a freelance consultant/energy analyst of thermal power plants, basic/detail design software expertise for private engineering companies, investors, universities, and research institutions. He is a member of METU Alumni and the Chamber of Turkish Mechanical Engineers Energy Working Group.

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