Speeches

Seizing Today's Investment Opportunities Ambassador Eric S. Edelman

Izmir Chamber of Commerce, October 25, 2004

Thank you very much Mr. Demirtaş [Ekrem Demirtaş, President, Chamber of Commerce].  Mr Esen [Salih Esen, President, Aegean Chamber of Industry], Mr. Yemisci, [Tugrul Yemisci, President, Izmir Commodity Exchange]:  It is a pleasure to be with the leaders of Izmir's business community today.  And I can assure you it’s not the first time that I find myself following Marc Grossman’s footsteps I followed in his footsteps throughout my diplomatic career. I’ve replaced him in two jobs and I’m not surprised that am following him now and coming here to Izmir to speak to speak to you in this hall I hope today's meeting will be an opportunity to begin to think together about how we can join forces to deepen trade and investment partnerships between American and Turkish companies.  Indeed, I would like today to mark the opening of an ongoing dialogue for sharing ideas and initiatives with Turkey's business community. 

I wanted to launch this exchange in Izmir, a great Mediterranean port famed for its openness to the world and the entrepreneurial spirit of its people.  Every day in Ankara I meet politicians and bureaucrats who make the laws and regulations that affect business and the economy. And I also have the chance to talk to leaders of some of the great companies that are based in Istanbul. 

But the truth is that the real source of Turkey's dynamism and potential the real engine of its future economic growth is the Turkish people and Turkey’s entrepreneurs.  When I go to the United States, Washington and New York -- like Ankara and Istanbul -- are unavoidable.  But if I wanted to take the measure of the real action in the U.S. economy, I would go to Houston,  Atlanta, Denver, Detroit, San Francisco, Phoenix, or Boston. 

Izmir shows the potential of the U.S.-Turkish economic relationship.  This afternoon, I will be going to the Aegean Free Zone, whose operator is an American citizen and where, among other foreign and Turkish companies, one of America's largest automotive companies, Delphi, is creating wealth and jobs for Americans and Turks alike.  Foreign companies like Delphi are not only good and reliable partners and suppliers for Turkish firms; they are good corporate citizens.  They protect the environment, pay good and fair wages, ensure proper working conditions, and pay taxes.  They also bring new ideas, new technologies and ways of organizing business that raise standards and increase profits for everyone. 

My country's experience shows the dynamism foreign investment can foster.  Over the last 20 years, the United States has been both the world's fastest growing marketplace and its largest recipient of foreign direct investment.  The nearly $2 trillion dollars of foreign direct investment in the United States since 1980 has paid off both for foreign investors and domestic industries.  For example, our automobile industry came close to extinction in the 1970 and 80's.  Government support saved Chrysler from bankruptcy and American Motors failed. Meanwhile, companies like Toyota and Nissan were increasing sales and opening high-tech factories throughout the country.  But today, thanks in large part to what American firms learned from such foreign competitors, American companies are stronger and more profitable than ever and American consumers and taxpayers are both better off. 

So, the question I would like to ask here today is where we are and where do we go from here to build a U.S.-Turkish investment and business relationship.  What are the essential conditions American and foreign investors are looking for in Turkey?  How are those conditions being met?  What can we do together? 

I can start by confidently asserting that U.S.-Turkish political relations are strong. Turkey and the United States are democratic partners, they’re NATO allies, and longtime friends, as the intensity of our dialogue shows.  President Bush came to Ankara and to Istanbul in June and he has met Prime Minister Erdogan three times this year.  We cooperate fruitfully in many areas. 

After years of hard work, Azerbaijan's oil will begin flowing to the world through Ceyhan next year.  Our governments and private sectors are cooperating to help the peoples of Afghanistan and Iraq overcome their sad legacies of misrule, to achieve the prosperity and the stability they deserve.  We are working together to defeat terrorism and make the world secure so that freedom-loving peoples everywhere can improve their lives. 

The United States is very pleased with the progress Turkey is making toward its goal of membership in the European Union.  For over forty years, we have joined Turkey in believing that this is good for Turkey and good for Europe.  And we believe it is good for United States as well, and we look forward to a favorable decision when the European heads of government and heads of state meet in December.  We can be confident that Turkey's full membership in the EU will increase opportunities for Turkish business and for American business in Turkey. 

I am sure that all of us will agree that Turkey is getting in place the stable macroeconomic environment that business needs.  Inflation seems to be under control, the government's oppressive debt is declining, the financial system is back on its feet, interest rates are falling, and incomes and jobs are growing.  As the representative of their largest shareholder, I am proud of the role the IMF and World Bank have played in this impressive economic recovery. 

Of course, financial vulnerabilities remain.  Foreign currency debt is still large as a share of GDP and its maturity structure is overwhelmingly short-term.  This, combined with a growing current account deficit that is mostly financed by short-term inflows, leaves the economy exposed to unexpected exogenous shocks.  It is therefore critical that the government continue to pursue reforms, including aggressive privatization efforts.  Therefore, we strongly support a quick conclusion of the current discussions with the IMF and a new three-year economic program that enjoys continued international support for business-friendly reforms.  This will attract foreign direct investment and other forms of long-term, stable financing and offer a way out of Turkey's historic pattern of booms and busts. 

Over a year ago in Bodrum, in my first speech as American Ambassador to Turkey, I highlighted the potential of our economic relationship and described some of the elements that we thought would contribute to increasing trade and investment.  In addition to macroeconomic and political stability, I mentioned the importance of the "business climate."  By that I mean companies' assurance of the independence of regulatory bodies; the rule of law and intolerance for corruption; an appropriate role for the state in the economy -- leaving to the private sector what it does best; regulatory and tax policies that encourage growth, investment and entrepreneurship; and open, fair trade. 

There seems to be a broad consensus that progress needs to be made in enhancing the business climate for foreign firms and domestic firms alike. I have been pleased to observe over the past year that these are not just my ideas.  I have heard similar views from the business community here in Turkey and from senior political leaders.  The Prime Minister heard them loud and clear in his extraordinary meeting with 19 global CEOs last March.  Everyone agrees that Turkey is not attracting the levels of foreign direct investment that a country of its size and potential should attract, and they pretty much agree on what needs to be done. 

The question facing Turkey today is not one of diagnosing the problem, but of its treatment -- how to move from conceptualization, analysis, and planning to implementation.  And time is of the essence, because thanks to the economic recovery and the prospect of EU membership, foreign investors are taking a new look at Turkey. 

Indeed, this renewed interest is reflected in a modest increase in foreign investment this year, but it remains far short of the country's potential.  New business is knocking on the doors of my Commercial and Agricultural officers every day.  Thus, I believe today's moment presents a unique opportunity that should not be missed.  

This brings me to the quandary I face:  what do I tell the CEOs of America's leading companies, big and small, as they turn their attention to Turkey and its obvious economic potential? 

There are good things I can report.  I can say that a positive attitude toward foreign investment is developing, and that several key business climate reforms have been put into place. 

Investor screening has been eliminated.  It is now much easier to start a new company and to obtain official permits.  New legislation has supported the creation and expansion of industrial zones.  Street sales of copyrighted products have been banned.  The introduction of inflation accounting has balanced the tax burden on foreign businesses. 

But can I tell prospective investors that they can be certain that their contracts and investments in Turkey will enjoy the full and fair protection of law if disputes arise?  Can I tell them that their proposed investments will receive the same treatment from regulatory bodies that Turkish companies receive? 

Can I say that their investments, particularly in the intellectual property that is the foundation of today's services economy, enjoy the same protection from piracy and counterfeiting that they enjoy in Europe and the United States?  Can I say that Turkey's marketplace is a level playing field where private companies succeed or fail according to the laws of supply and demand? 

To date, I would be hard pressed to provide a definite “yes” to all these questions.  Facts are stubborn things:  due to the lack of protection of confidential test data, U.S. and European pharmaceutical companies risk the loss of their investments in developing new drugs in violation of Turkey's commitments to other members of the WTO.  

 American companies that have had difficulties with Turkish partners perceive that their disputes are not resolved quickly and equitably by the judicial system.  One major American construction firm is leaving the Turkish market place after eleven years over just such an issue.  American agricultural producers and exporters face numerous non-tariff barriers that restrict trade and raise costs for consumers in Turkey.  American companies applying for permits to start new projects in Turkey still face long delays and confusing procedures.  In Izmir alone, two major U.S. investors (the Konak Pier and Newmont Mining) continue to face difficulties.  

I believe that when such questions can be answered positively -- with success stories in hand -- Turkey will indeed begin to see the new investment that other countries that have joined the European Union have enjoyed.  This is not a futuristic fantasy; the opportunities are on the doorstep today.  Your government recognizes the issues and has plans to address them. 

As the American Ambassador to Turkey, I want to spend more of my time helping American companies find Turkish partners and Turkish companies find American suppliers and promoting low-cost, high-quality American products.  Both Turkey and the United States are youthful, vibrant nations with a common appetite to succeed.  There is enormous room for our business relationships to grow. 

Of course, I can't do this by myself.  In addition to working with you and with your government to implement business-friendly laws and reforms, I need your help in identifying opportunities and in capitalizing on them.  For example, what are the sectors in which American firms can make a difference, and how should we focus our energies?  I need to hear from you when you face impediments to working with American companies that may not be obvious to me or my staff. 

I'm looking forward to discussing these subjects with you today and in the future.  I hope we can continue and deepen these exchanges.  I've brought with me today my business and economic team at the Embassy:  Amer Kayani, my Commercial Counselor, and Tom Goldberger, my Economic Counselor.  

As you probably know, the U.S. & Foreign Commercial Service has a longstanding presence of 13 years in Izmir, in an office in this building capably staffed by Ms. Berrin Erturk.  Helen Lovejoy, our Consul in Istanbul, will also be in Izmir on a frequent basis to pursue our continuing relationship, and Helen is here with us today.  

I hope you will talk to them as well as to me.  We are looking at opportunities that both our countries have never seen before.  By seizing these opportunities and silencing the doubters, Turkey and the United States will be even better, more solid friends.  Delphi is not the only U.S.-Turkish success story, but we need many, many more.  I'm ready to go to work, and look forward to working with you. Thank you very much for your time and attention this morning and I’ll be delighted to answer any of your questions.