Thursday, April 07, 2016

#PanamaPapers in Turkey

"Panama Connection"

Let me tell you a story you from the distant past. It was years and years ago. As a major contracting company, they were unable to get any orders from big public sector organizations. No matter how much they bid and bid, and fulfilled all the necessary requirements, in the end they never got any positive results.

One day a gentleman came to their office. He said, “Make a consulting agreement with me and let me provide you with full information on the tender”. They signed an agreement with his company in Panama and sent a lump sum of money to their offshore account for consulting services.

After this, a new tender was opened, everything was kept extremely secret. All interested parties were required to submit their proposal dossiers in sealed envelopes. They all handed in their documents 5 minutes before the closing time of the tender.

After their proposal documents were submitted, they were requested to leave the offices immediately in order to avoid any undesired flow of verbal information. Client locked their doors behind us. Everything was arranged behind closed doors. Participants were later asked to declare a second, lower bid price. Blind price quoting without any inside information on competitors has no meaning. However, on that evening, their consultant sent a fax to Company's Ankara office containing all the information on their rivals’ prices.

If there is an information leak within a public institution, it most likely originates from the top, as the lower cadres wouldn’t dare to engage in such an activity. Such occurs not only in our geography, but all over the world.

As a young engineer who recently graduated from university, I thought that this must be “the way things work”.  Since then, time has passed, all of those top decision makers have retired, and the public company at hand was privatized, sold and eventually disappeared from the market. Over all of these years, these archaic procedures have continued and improved.

Today we see new procedures. Your applications for tenders will not be answered unless you are close to the top political administrators, so you should look for new opportunities in Russia’s remote regions or in the Middle East. Considering this, how can we continue to run businesses in such a fragile economy? Can we bear the burden of ever increasing costs? The system has been closed and locked, and hence the economy and investment climate are also inaccessible. Even the works of the privileged few have faced this reality.


I’ve had a difficult time understanding why we have shrouded natural gas prices in secrecy for so many years. I have also always envied the high investment placed in education by our northern neighbor Russia, their skilled mathematicians, their excellent market strategists. Our human capital has difficulty in matching theirs when it comes to trade negotiations in particular. Moreover, this is augmented by the fact that we should drastically and urgently reduce our dependence on their fuel supply. They will surely exploit our disadvantageous situation as long as this dependence continues.

If a trade agreement is kept behind closed doors, there is always some aspect thereof that goes against the people’s common benefit, there is always some aspect that favors top decision makers. The details of the Turkish Stream and Trans-Anatolian Natural Gas Pipeline (TANAP) negotiations are still unclear. What shall we receive in return for what we concede? What will be the extent of this, our northern neighbor’s Christmas gift?

We know that Russian President Vladimir Putin has an Ph.D. degree in energy economics. There are rumors that ghost writers brought together the wording of his academic dissertation. Anyhow, that is his thesis. Nonetheless, he completely assimilated the content of academic discipline with his office. Compared to his preparations, our decision makers fumble when it comes to academic and practical learning.

At the end of WWII, regardless of the huge human losses they paid on the eastern front, our northern neighbor crushed the last resistance of the Nazi German Army in May 1945. They then turned to the Far East and crushed the Japanese Army in Manchuria in August 1945.

Similarly, the country has now entered with its full weight into the Syrian theater in the most recent phase of the conflict. They have come to Syria for a long, if not permanent stay. Syria is now commencing a long-term accession to Russian territory as had also been the case for Eastern Europe and Manchuria.

We do not have weapons that can counter Russia’s SU-34 fighter planes or its T-90 war tanks. We should have designed and manufacture these weapons much earlier. There’s nothing more we can do right now other than trying to remain peaceful and independent.

"Après moi le deluge", Madame de Pompadour

I continue to be optimistic for our markets. We do not have the luxury to say, “après moi le deluge” (after me, the deluge). I would say that when the appropriate time comes, then we shall be able to prioritize market transparency, accountability, independent monitoring, rule of law, separation of powers, freedom of expression, and independent free media, and it is at that time when we can engage in better practices of parliamentary democracy, the results of which will allow for a better future.

As long as we have the freedom to choose in free elections, we should believe in and trust the common sense and common wisdom of the voters of this nation.

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

Prinkipo, Istanbul, 08 April 2016

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