Audio
Ambassador's Remarks and Public events
Ambassador James Jeffrey’s Remarks at TABA Breakfast
February 18, 2009
Sheraton Hotel, Ankara
Ambassador Jeffrey: Thank you. (inaudible) …raised the question two or three times in his introduction as to whether President Obama will continue the very strong strategic relationship that we enjoyed in the Bush Administration. I’m here today to tell you that that answer is yes. President Obama made it very, very clear in his calls at the beginning of the week President Gul and to Prime Minister Erdogan that America is looking forward to continuing and strengthening our relationship with Turkey, a relationship based upon shared values, one of which is commitment to a free economy. Now, we’re here today to talk about the economic situation, trade, commercial activities, to some degree micro economics. Why am I beginning with a political overview? Because these things are linked. It’s a triangle of interests and activities beginning at the top with diplomatic, security, US strategic interests which drive all countries’ foreign policies. A second leg of this triangle is a political relationship based upon shared values of democracy, rule of law and respect for minorities and for the opinions of all. The third leg is a free trade environment, a market economy. And we believe that all three support each other. Countries that trade together typically don’t go to war against each other. Democracies don’t go to war against each other. Countries that are used to a free marketplace of ideas in the political sector seek a free marketplace for goods and services and the exchange of them. Conversely, a free market stimulates choice and choice, of course, expands into the political realm. So all of these things are tied together and, thus it’s very important in this time of crisis, as again we heard a few minutes ago, that we continue to deepen our relationship across the board.
As we just heard, the world economy, including the economies of both the US and Turkey, is facing a very serious situation. Today’s Washington Post, carried a headline that economists are surprised how rapidly around the world every economy has slowed, many economies have gone into recession. Yesterday, Alan Greenspan, America’s leading economic figure, and former chairman of the Federal Reserve, stated that this is going to be the worst recession since the 1930s. These are chilling words, but there are actions that we can take actions and we are taking - around the world, in America, and here - to combat this and to break this decline. Let me start with what we’re doing in the US. You all saw yesterday that an almost 800 billion dollar stimulus package was signed by President Obama. This is classic Keynesian, demand driven, government sector action and activity to provide a demand for services and a demand for goods where the private sector temporarily is not able to do this. And our hope this to stimulate both the flow of goods and services and heat people on their jobs or in new jobs both inside the US and around the world because America is the largest economy and influences many others. At the same time our Secretary of the Treasury and the Federal Reserve less than a week ago announced a set of measures to take care of the banking sector. These are not fully staffed out and fully fleshed out yet, but some of the ideas are a financial stability trust who reevaluate and recapitalize banks. A private public…a public private investment fund to buy up what are called aegacy the toxic assets that banks and other financial institutions have on their books and which make assessing the value of these institutions very difficult. A consumer and business lending initiative, increased accounting and transparency, housing support and foreclosure prevention program, another step that President Obama just took for 50 billion dollars, and the small business and community lending initiatives. So, we’re going to be tackling this problem in a variety of ways within the US. Internationally we’re looking forward to the London meeting in a few weeks. With G-20, we’ll get together to coordinate their activities into…take a look at ways that our various individual efforts can come together and generate a synergy. This will be a more detailed meeting than the one held in Washington in November. At that time, President Bush was particularly delighted by the performance of the Turkish government led by PM Erdogan, and it’s commitment to stimulating the private sector and protecting the basic essentials of a market economy and its understanding of global international economic issues. Turkey was a very important ally in the November meeting and we’re looking forward to working with Turkey, which of course is the 16th largest economy in the world, at the November meeting.
Now, the situation here in Turkey as you all know better than I, is quite troubling. The latest unemployment figures that came out yesterday, which I think, they’re as of the end of November were unemployment at 12 percent, significant slow down in production, quite dramatic, of production of automotive parts and equipment, and textiles in particular - between 25 and 35 percent. The reason, of course, is that while Turkey’s economy has been much developed and much improved since the 2001 crisis, it is an export-driven economy. There’s a considerable amount of financial exposure overseas, although the Turkish banking and financial sector is in particularly good shape relative to other countries at the same level of development. So that is very encouraging, but nonetheless, in the case of a export driven economy, there are always going to be problems.
Now, several things can be done both to combat this crisis, but also to take advantage of it, to take a look at how economies are coping with the internal situation and how we can emerge from this crisis in better shape. Right now in Turkey, there are negotiations between your government and the IMF, for a new IMF agreement to replace the one that was very, very successful and finished last year. While the terms are a matter of negotiation between the two parties, we believe a new IMF program could well be beneficial to Turkey in this challenging environment. And thus we hope that we can see more progress. According to a report, I think it was on CNN Turk this morning, there may have been more progress, but again this is a sovereign decision on the part of Turkey and on the part of the IMF, but as a friend of Turkey, and as a major contributor and participant in the IMF, we hope that an agreement can be achieved.
In terms of our own trading relationship, as Ilkem mentioned, this is a very attractive country for American investors in maintaining international trade, maintaining international investment, even strengthening it, is an important way to cope with the crisis that we have before us today. We learned this in the 1930s, we should not have to learn it again. Thus, it’s important for our foreign investment to continue, foreign investment along with exports is what has driven the Turkish economy in the past decade, and even before, since the 1980s. And Turkey has done very, very well in attracting such investment, including from the US, especially in the financial sector and several other high-tech sectors. Nonetheless, we would like to see far more of what we call green field investment, that is investment that goes into the industrial sector, and goes to the creation of jobs, and goes into the very rapid and massive transfer of technology. This has been the way that some of the most rapidly advancing countries in the world, in terms of their economic growth, have achieved such success. We want to see more of that with Turkey.
Ilkem Bey mentioned the American Business Forum in Turkey’s annual survey and it was very positive about foreign investment, but also listed a number of steps that Turkey could take to make its economy even more hospitable to foreign investment. One is, concerns about inefficiencies and inequities in the judicial system and in the administrative system. Predictability is very, very important and there are problems at the individual firm level in the past and we still encounter them from time to time. Secondly, there is still insufficient intellectual property protection. This is very important because particularly the American leading sectors: pharmaceuticals, entertainment industry, high-tech product software, all involve intellectual property protections, and is very, very, important to protect them from piracy. Finally, you have an enormous informal economy here which is a burden on the formally organized economy. Nevertheless, we’ve seen progress. Turkey has done a great deal to counter these problems and thus we have removed Turkey from the special 301 priority watch list for intellectual property rights violation. So we’re seeing progress, we’re encouraging that progress and we’d like to see more.
Another area that we talked about a little bit earlier at the table, that’s very important to us, is cooperation in the energy field. We’re putting a great deal of emphasis, for example, on renewable energies and on combating global warming as part of our approach to investing in the US and developing responses to the crisis. That is, at the same time, the right investments can a) help in the short run in terms of increase in productivity and increase in production, maintaining or expanding jobs, and b) in the longer term such investments can help the economy generate jobs, generate progress, generate growth without generating more consumption of energy, particularly energy from sources that pollute the atmosphere and contribute to global warming. So, we’re looking forward to working with Turkey on this.
We’re also looking forward with Turkey in continuing the cooperation of the last administration on the East-West energy corridor. The US, along with some of our European friends, Turkey, Georgia and Azerbaijan, worked together in the late 1990s and the early years of this decade, I was involved in this as the Deputy Chief of Mission here at that time, to realize the Baku-Tbilisi-Ceyhan pipeline that since has been complimented by agas pipeline. And the possibilities are enormous, from East-West energy pipeline that can move gas from Azerbaijan, eventually Turkmenistan, possibly Kazakhstan, possibly Iraq through Turkey on to Europe, but also of the service the Turkish domestic market. We’re working at several levels to try to make this a reality. One is, cooperating with Turkey and with the European countries that are involved in the Nabucco project to attain an IGA- an intergovernmental agreement - which is one of the first steps to make this plan a reality. Secondly, we’re working with many agencies of American government and with the Turkish government to look at energy alternatives, energy efficiencies and other actions that we can help Turkey take, that we can help finance to move Turkey forward in more efficient use of energy, alternative sources of energy, alternative ways of tackling the energy problem. Turkey, after this economic crisis passes, will require much more energy as its economy continues to expand more. It is important to find the energy sources for that expansion and it’s important as well for strategic and security reasons as well as the economic reasons to find a way to capitalize on the great geographic position of Turkey and on its success in the past as an energy corridor to help Europe gain energy independence again.
Finally, another area where, despite the crisis, or perhaps because of the crisis, Turkey can increase in the long term, with help of its friends, from its friends, its economic, social and political situation is the EU accession effort. The US supports this and I know some of our European friends say ‘wait a second, you’re not part of the EU, and this is our decision, not yours.’ That’s absolutely true. And we would not ever try to assume that we have any kind of right, or obligation or special placement to advise you the Turks or the EU on their future relationship. What we do believe is: we believe in the EU; it’s a partner to the US with potential in terms of demographics, in terms of economic production, in terms even of potential military might, of being an equal partner in solving many of the problems of the world. Certainly, we have a high degree of commonality of interests and, very importantly values: democracy, free market economy and so forth, rule of law. But to achieve that complimentary position which we want very much to see Europe attain, Europe has to take on the hard challenges. Among those, the future of Russia and Russia’s relationship with Europe and with the West and the rest of the world, something that we’re all very involved in right now, but another key issue is the EU’s relationship with Turkey. The EU has made this offer to Turkey. It’s a serious, mature step by a serious, mature organization, and we hope very much that the Turks and the Europeans can move forward on this path. We’ve already seen what tremendous impact the reform effort to meet EU standards has had in Turkey. Not just politically, although that is very much the case, but also economically as the Turks, first of all, take advantage, as you have to an extraordinary degree, of the customs union with Europe which is an integral part of the entire process of becoming a member of the EU, but at the same time, the additional discipline, the additional streamlining of government bureaucracies, of government policies to meet the standards of the EU is having a profound change in the way this country is viewed by the entire international advanced sector. And it is very, very helpful, and it is an effort that deserves to be maintained and strengthened even during this time of economic crisis.
Once again, we do not know how long the economic crisis will last. We do not know how deep the recession will be. We do know that we have a lot work to do. We think we need to do it together. We think that in area such as EU accession, such as liberalizing the investment climate, such as in energy, Turkey can take advantage of these problems to move forward the reform efforts that, when I first came here in 1983, was just beginning, This is a totally different country. And is a much more modern country. It is a much freer country, it’s a much more democratic country and it is a much more secure country. It is a very, very important partner of the United States. It’s an important partner of Europe. It is a model for the entire region, from the Balkans to the Middle East up through the Cuacasus. And America’s proud to be your partner, and I’m proud to be here today. Thank you very much.
