Saturday, 2 December 2017

Welcome To Montana Mr. Zarrab

If the producers of the hit TV show Sopranos are looking for a sequel they have no further to look than a federal courtroom in lower Manhattan. There, before disbelieving journalists and other onlookers, a young Iranian/Turkish gold trader is outlining a brazen money-laundering, Iran sanctions busting scheme involving a cast of characters that would guarantee the show several successful seasons. The trail leading to this courtroom began in Iran and wound its complicated way through Turkey, Dubai, West Africa, China, India, Miami and now a federal court in New York.

Is the sequel coming up?
            The cast of characters would grow to involve not just one Reza Zarrab, but would include several corrupt Turkish ministers, bent banks, an enraged and uncomprehending Turkish president, relatives of this president, and a shadowy Muslim cleric now living in the U.S. who is accused of orchestrating an attempted coup in Turkey in 2016. Bit parts are reserved for former CIA officials and the now disgraced former National Security Adviser Michael Flynn. One final character would be Zarrab’s business partner in Iran who now sits in prison hoping against hope that the authorities change their minds about his execution. Oh, and in a wonderful bit of irony no script-writer would dare include, one of the Turkish ministers used by Zarrab is well acquainted with American courtroom procedures because he used to be a court-approved translator while living in New York.

As if this drama were not enough, in the middle of Zarrab’s testimony the leader of Turkey’s opposition party revealed what he said were bank statements showing that Turkish President Tayyip Erdoğan’s relatives had shifted several million U.S. dollars to the tax haven of the Isle of Man. There’s plenty here for several seasons.

            The scheme described by Zarrab – once hailed as a national hero in Turkey – involved running billions of dollars through the Turkish financial laundromat he helped create in a mind-boggling plan to help Iran gain access to funds it was receiving from oil and gas sales. This was a crucially important to Iran because UN and US sanctions had blocked its ability to trade in much of the international market place. Meanwhile, billions of US dollars which Iran received for its oil/gas trade were piling up in Turkish banks. The only problem was that under the sanctions regime and US Treasury rules there was no way for Iran to use those dollars. Enter our bright Mr. Zarrab.

            He was a modestly successful foreign exchange trader who saw an opportunity. The plan he designed to free up those dollars for Iran grew into a multi-billion-dollar business involving massive gold transactions, several countries, countless front companies, and banks with easy virtue. The scheme was so complex that it took him the better part of two days in the courtroom to draw an incredibly complicated diagram with multiple boxes, circles, lines, arrows, and names in an effort to show how it was done. Jurors struggling to follow all this could be excused for requesting a couple of aspirin.
Zarrab attempts to diagram his complicated scheme
            None of this could have worked without the active compliance of Turkish ministers and senior officials in state banks. Zarrab said he paid one of the ministers €40 - €50 million to get him to lean on the state banks to go along with the scheme. The general manager of the major state bank Halkbank kept $5 million in cash in a shoe box in his closet. Another one of the ministers involved recently thought it prudent to become a citizen of the Turkish Republic of Northern Cyprus – from which there is no extradition.

            Zarrab’s scheme was working like clockwork until an explosive series of wire-taps was released in December 2013 by unknown persons – later claimed by Erdoğan to be accomplices of the aforementioned shadowy Moslem preacher now living in the United States. These tapes blew the lid off the operation and riveted the attention of the Turkish public. The government quickly buried the news and the ministers got off with a slap on the wrist and dismissal from their jobs. The minister later accused of taking the €40 - €50 million protested loudly – in true Mafia fashion – his complete innocence and that he was ‘set up’. His case might have been stronger had he not displayed a watch that cost $700,000 while loudly protesting his innocence. Tough to do that on a minister’s salary.

"This is a gift, I tell you! A gift!"
            Zarrab himself spent a few days in jail but was soon released as a hero of Turkey who helped reduced the staggering Current Account Deficit through his gold trades. Nonetheless he began to feel a little uncomfortable when some of his calls were not returned and his partner in Iran was arrested, tried, and sentenced to death. That tends to focus one’s mind. It didn’t take Zarrab long to realize how much he was exposed to the whims of Turkish justice. He knew just how easily and how far he could fall from grace. In the spring of 2016 he decided to take his family to visit Disneyland in Florida. Imagine his surprise – or relief – when upon landing in Miami was met not by Mickey Mouse but by a couple of unsmiling FBI agents who promptly arrested him on multiple charges of money laundering and breaking the Iranian sanctions.

            Now, the conspiracy theorists have had a field day saying his trip to America was a set-up from the start with Zarrab deciding that life in U.S. prison was safer than being in either Turkey or Iran. Maybe, maybe not. But one interesting question is how a person with his record could get a U.S. visa. Anyway, he spent almost two years in custody while prosecutors prepared their case. Their job was made inexplicably easier when for some very bizarre reason Turkey decided to send the deputy general manager of the deeply implicated Halkbank to New York for a conference. This hapless individual was promptly arrested on the same charges and thrown into the slammer to be tried with Zarrab.

            By this time Turkey was caught up in the attempted coup that Erdoğan claims was orchestrated by his one-time ally Fethullah Gülen from his farm in Pennsylvania. Erdoğan pleaded vainly with Obama and later Trump to extradite Gülen. Also, recognizing the risk of a singing Zarrab, he pleaded with them to send Zarrab back. No luck.

            When it became clear that, again in true Mafiosi fashion, Zarrab was going to plead guilty and testify against the defendant from Halkbank rather than face decades in prison, Erdoğan began to play the national sovereignty card. “We are an independent country! This trial is a violation of our national sovereignty! We can trade with whomever we want!” True enough. But if you use U.S. dollars in those transactions you break U.S. regulations and your banks risk huge fines. Just ask BNP Paribas, Standard Charted, HSBC, and several others who had to eat massive fines imposed by the U.S. Treasury. In his anger and impotence Erdoğan is lashing out blindly, and ordered the Istanbul prosecutor to indict two former CIA officials on grounds that they helped in the coup attempt. “Anything you do we can do better!”

            So what next for Turkey? For a start, American/Turkish relationships have hit a new low. Erdoğan will do his best to play the nationalist card and portray all this Zarrab testimony as yet another plot against Turkey. Given his almost total control of the media in Turkey this may work with his really hard core supporters and limit his internal political damage. But Turkey’s international reputation has taken a serious hit. “We’ve been reduced to one level below banana republic,” lamented one friend.

            It’s not clear yet how big a fine, if any, Turkish banks involved in the sanctions busting scheme will have to pay. Erdoğan will probably make a big deal out of refusing to pay any fine as a violation of Turkish pride and sovereignty. But saner heads may remind him that failure to pay could result in the Turkish banks being excluded from the international financial system. That nuclear option could force him to climb down and negotiate. Also, banks with an unpaid fine hanging over them would find it almost impossible to roll over their massive foreign exchange debt each year. No one would touch them. 

Reza Zarrab's new home?
            And what of the one-time national hero Mr. Zarrab? Well, the Witness Protection Program beckons. He may learn to love the wilderness of some place like Montana rather than return to Turkey and face the possibility of becoming part of the infrastructure of the runways at the new Istanbul airport.     

Thursday, 14 September 2017

What In The Name of Zeus Are You Doing In Kavala??!!

Most of the Greek tourism ads feature pretty much the same thing – sparking seas, sun-kissed islands populated with bronzed, improbably long-legged beauties clad in micro-kinis lounging on a pristine beach or sitting on a bar stool gazing adoringly at some Adonis-like bartender mixing a lethal multi-coloured cocktail that will be adorned with a pink umbrella.
The Image That Launched 1,000 (Cruise) Ships
These ads must pay off because many of these islands ‘enjoyed’ a record number of tourists arriving by plane, ferry, private yacht or enormous cruise ships that deposited thousands of slightly dazed passengers (‘Tell me again just where we are, dear’) on islands like Santorini or Mykonos for a few hours every day.

However effective these ads may be, they tell only part of the story of the attractions of Greece. Yes, the seas are sparking and the islands are appealing. Too often overlooked, however, is that mainland Greece has much to offer.

We recently spent a fascinating week in northern Greece when we visited the cities of Kavala and Thessaloniki. Now, telling many Greeks that you are spending time in the northern part of the country generates the same reaction a New York hedge fund manager would get if he said he was taking a vacation in North Dakota instead of the pretentious playground of the Hamptons. My wife, for example, received a puzzled text message from a friend on one of the islands favoured by Greek A-listers. “What in the name of Zeus are you doing in Kavala?”

What, indeed. After a short flight to Thessaloniki and an easy drive on an almost empty motorway surrounded by fertile farm land we arrived at Kavala to join friends from Istanbul at one of the best hotels in Greece, the Imaret. The Imaret was built in the early 19th century by Mohammed Ali, an Ottoman Albanian born in Kavala who rose through the army and later moved on to found the dynasty that ruled Egypt until 1952.

Located in the old part of Kavala, the sprawling building is a beautiful example of late-Ottoman architecture with graceful domes, several courtyards, pools, and arched-walkways. An imaret was a multi-function building serving as a soup kitchen, school, and refuge. After the population exchange between Greece and Turkey in the 1920s the imaret was used to house Greeks who arrived from Turkey. The building is still owned by the Egyptian government and was carefully restored to its current state about 15 years ago.
One Of The Courtyards In The Imaret
The old town of Kavala with its steep cobble-stoned streets retains much of the Ottoman architecture – so much so that we heard a Greek tourist remark that entire area reminded him of one of the Turkish soap operas that Greek TV loves to show.

The trip was particularly poignant for our friend Ahmet because his family originated from Kavala. He had brought a picture of his family’s home hoping it still existed. One of the waiters at the Imaret took one look at the picture and said it most definitely existed, right next to the school he attended. After trudging down one hill and up another past the magnificent aqueduct built by Suleyman the Magnificent we found the house that is now owned by the Greek government.
Suleyman The  Magnificent's Aqueduct Leading To Kavala's Old Town
That very satisfying discovery was compounded during a visit to the Tobacco Museum – still filled with the rich scent of the region’s basma tobacco – where we found a picture of his grandfather who was one of the leading tobacco merchants of the day.

Ancient history buffs will want to visit nearby Philippi, renamed by Philip II of Macedon (father of Alexander the Great) in 356 BC, but perhaps better known as site of a battle during the Roman civil war in 42 BC following the assassination of Julius Caesar when forces of Marc Antony and Octavius defeated the armies of Caesar’s assassins, Brutus and Cassius.

After a couple of days of light sight-seeing and delicious meals of fresh fish followed by Turkish sweets we headed back to Thessaloniki to meet other friends revisiting the past. One of the first things to strike you about Greece’s second city is how vibrant it is compared to Athens.

Perhaps this is due to the city’s progressive, outspoken mayor Yiannis Boutaris, who does not fit into the stale, sclerotic Left/Right rhetoric of most Greek politicians. Thessaloniki was once one of the most cosmopolitan cities in Europe with large Jewish and Turkish Moslem communities living alongside their Greek Orthodox neighbors. During World War II about 56,000 Jews from Thessaloni were deported to concentration camps. Today the once-thriving Jewish community has been reduced to less than 2,000. Most of the Turks left after the Balkan Wars or during the forced population exchange in the 1920s.
Much Can Be Settled Over A Bottle Of Wine And A Good Meal
Boutaris has made a determined effort to attract both groups back to Thessaloniki. He calls the Turks ‘our brothers’, and his efforts have generated more than 100,000 Turkish visitors to the city every year. He has also made special efforts to attract the Jewish community and has called the deportations ‘the darkest moment’ in Greece’s history.

The friends we met in Thessaloniki are Jewish with deep roots in the city. As we were having dinner in a lively neighbourhood one of them commented that our table reflected the rich cultural heritage of Thessaloniki with Jews, Moslems, Greek Orthodox and even a Protestant (me) all sharing in the ‘bonhomie’ of the occasion. It was a good reminder that breaking down barriers with good food and wine is much more effective way to heal ancient phobias than building imposing walls.

Tuesday, 18 July 2017

Can An Unprecedented Act Of Non-Violent Protest Help Restore Turkish Democracy And Justice?

During the stale pageant commemorating the first anniversary of the failed coup attempt, Turkish President Tayyip Erdoğan and his acolytes demonstrated once again their ability to turn reality on its head. George Orwell would be proud of this very, very cynical performance.

            He hailed the failure of the coup as a victory for Turkish ‘democracy’ and yet another  demonstration of Turkey’s ‘unity’ and indomitable will to resist all enemies – foreign and domestic.

            Even conceding that the followers of the cleric Fethullah Gülen – who now lives in the United States -- were behind the coup, one wonders how Erdoğan can talk about unity when his actions for the past 12 months have done nothing but widen the existing deep divisions in Turkey and destroy his already slim credibility abroad. He is furious that no foreign leader is willing to give him the credit he thinks he deserves for ‘saving democracy’ in Turkey. He fails to appreciate that replacing the democracy that existed in Turkey with one-man rule is not the best way to get the appreciation and applause he thinks he so richly deserves.

Under the state of emergency that has been in place since the coup attempt – and just extended for another three months -- thousands upon thousands of people have been fired and the jails have been filled with people accused of being part of a ‘terrorist’ organization. It’s important to understand that Erdoğan’s definition of ‘terrorist’ is wide indeed. The ever-widening list of ‘terrorist’ organization includes the followers of Gülen, the Kurdish guerrilla group PKK, the Kurds in Syria and Iraq who are effectively fighting ISIS, and many others. The list also includes all those such as Amnesty International and opposition politicians accused of ‘aiding’ terrorist groups.
President Erdoğan at the anti-coup rally
            Erdoğan’s claims of national unity were also shown to be hollow when at least half the voters rejected the controversial referendum giving him absolute, dictatorial power. His narrow victory, marred by serious claims of fraud, was much closer than he anticipated.

            Then there was the 250-mile march from Ankara to Istanbul led by the opposition leader Kemal Kɩlɩçdaroğlu and joined by thousands who marched under banners emblazoned simply with the word Justice. This unprecedented example of non-violent civil disobedience was in protest of the arrest of an MP from Kɩlɩçdaroğlu’s party who, as a journalist, had the temerity to publish a story with pictures about Turkey smuggling weapons to radical groups in Syria.

            The odd thing about the failed coup, as one European journalist said, is that it was more like a family feud than the traditional military coups that Turkey had become accustomed to. After all, Gülen and Erdoğan were Islamic soul mates for decades. Gülen’s followers had been infiltrating government agencies and the military for years, and Erdoğan did nothing to stop this when he came to power 15 years ago. In fact, according to Murat Yetkin – one of the few remaining respected journalists in Turkey -- the cooperation only grew stronger as the Foreign Ministry ordered diplomats abroad to give full assistance to Gülenist institutions and schools opened in remote corners of the world, think tanks in influential places like the U.S. and European capitals, and institutions in world-renowned universities.”

            When Erdoğan was warned that Gülen’s people were taking over the judiciary he said that was no problem because they ‘shared the same qibla’ – the same religion. In 2008 it was Gülenists (many of whom are now on the run or in jail themselves) in the judiciary who fabricated evidence against current and former army officers, journalists, academics and others who were thrown in jail on charges of trying to overthrow Erdoğan’s government. This so-called evidence was later shown to be merely a figment of someone’s imagination. Again, Erdoğan did nothing to stop this abuse of judiciary power.

            It was only in 2013 when the Gülenists began probing serious corruption charges against certain cabinet ministers and Erdoğan’s own family that relations between the two began to sour. Gülenists in the police released several deeply embarrassing tape recordings of the ministers and Erdoğan’s family discussing all the money they had amassed. As if this wasn’t bad enough, the final split came when Gülen opposed Erdoğan’s bumbling intervention in the Syrian civil war.Now, of course, the former close ties and cooperation are being swept under the rug as hapless AKP spokespeople are going around saying ‘Fetullah who? Never knew the guy’.
Kɩlɩçdaroğlu leading the Justice march from Ankara to Istanbul
            Erdoğan’s commemoration ceremonies rang hollow with the same stale rhetoric and the spontaneity of a Stalinist politburo address. Same old, same old. The real star of the summer political season was Kɩlɩçdaroğlu’s march, a truly spontaneous example of non-violent protest in Turkey. Many people equated it to Gandhi’s Salt March in India in 1930 in protest of the British tax on salt. Erdoğan was at times dismissive and then furious at his inability to stop this powerful demonstration of civil non-violent disobedience. How do you arrest a 69-year-old man marching 250 miles in the heat of the summer during the Holy Month of Ramadan carrying a one-word banner Justice? Many thousands joined this march that ended July 9 with a massive rally in Istanbul.

            It took another 18 years from Gandhi’s Salt March before India gained independence. We can only hope it doesn’t take that long for Turkey to regain real democracy and justice.

Tuesday, 13 June 2017

Has The Tide Finally Begun To Turn Against The Extremes

Has the tide started to change? Has the negative, extremist populism that has dominated political rhetoric for so long slowly begun to recede? Recent elections in Europe and the UK certainly give some hope to those who reject the hard-line uncompromising positions of either the far left or the far (alt) right.

            In France, recently elected Emmanuel Macron just saw his newly-formed party roar to an overwhelming victory in the crucial first round of parliamentary elections. On current form his party, La République En Marche, should win more than 400 of the 557 seats in parliament. With this victory, he completely overturned the political status quo by burying the traditional parties of the Left and Right. Macron, France’s anti-Trump, showed just how meaningless those traditional alignments have become, and in the process breathed some long-overdue fresh air and vitality into French politics.

He is now firmly in control
             He now has the power to enact the sweeping legislative reforms he promised to get the French economy growing. Among the first items on his ambitious agenda is reform of France’s notorious labor law that makes it very expensive to hire anyone and almost impossible to lay anyone off – regardless of prevailing economic conditions.

            Macron’s desire to introduce much more flexibility into French labor has – predictably -- incurred the wrath of the far left, who traditionally reject any move to relax the current strait jacket of regulations. Jean Luc Melanchon, leader of the far-left La France Insoumise (Unbowed France) has warned Macron that he should not tinker with the employment laws. The fact that his party received only a negligible share of the vote doesn’t seem to have made much impression of Melanchon. Like many people, he severely underestimated the desire of the vast majority of French people for a thorough, pragmatic approach to get their country moving again. Macron’s type of pragmatism now has the chance to do more for the sans culottes of France than anything the traditional Left or Right have to offer.

            As a deeply committed Europhile, another key part of Macron’s agenda is to deepen and strengthen the European Union. He has already moved to re-ignite the Franco-German motor of the EU. It is not all clear just how much Chancellor Angela Merkel shares his views about deeper integration, but with her recent comments about the EU having to act much more independently from the United Kingdom and the United States it is possible see much greater Franco-German cooperation for more integration.

They hold the keys to the European Union
            It is doubtful that anyone could live up to all the expectations that Macron has generated. He may find that using great power effectively is much more difficult than getting such power in the first place. Sooner or later he will stumble and generate a backlash from even his most fervent supporters. But, in the meantime, it will be fun to watch him trying to pull a country as steeped in tradition as France into the 21st century. Right now, he has the wind in his sails. One only hopes he is a good enough sailor to survive the inevitable storms.

            The reversal of fortune between France and Britain could not be more dramatic. After a startling election last week that saw the ruling Conservatives unexpectedly lose seats, Britain is now drifting rudderless in very dangerous seas. For years the British political and chattering classes have used France as a shining example of why Britain must leave the European Union. “How can we be tied to this failing enterprise called the European Union? Just look at France! What a mess! They will never get out of that hole.”

            Now, it is suddenly Britain that looks old and bungling compared with the youth and vitality across the channel. Macron is only 39, while British Prime Minister Theresa May looks very old and haggard at 60. We are already hearing voices that maybe the so-called Hard Brexit – a complete break from the EU – might not be the smartest thing to push for at this time. These concerns are supported by recent economic data that show Britain at the bottom of the league table. First quarter growth in Britain was only 0.2% while the Eurozone recorded growth in the same period of 0.6%. The much-derided Euro has also picked up strength against Sterling.

Whoops! This wasn't supposed to happen.
            We were recently in Holland, traditionally a strong British ally, and heard almost a sigh of relief at the prospect of Britain leaving the EU. “For years, all they did was say ‘no’ to every initiative for closer European integration. They wanted to opt out from this, opt out from that. In short, they always fought harder for British exceptionalism than for the whole concept of a strong European Union. It will be a relief to have them gone. Now we can get on with things,” said one senior Dutch executive.

            I doubt that Macron will be in a mood to do Britain any favors in the upcoming Brexit negotiations. I expect him to pay much more attention to moving his aggressive EU agenda forward than worrying about Britain’s continued relations – if any – with the union.

            The anticipated re-election of Chancellor Merkel in Germany and the election results in Holland and France demonstrate that, in Europe at least, the vast majority of voters want nothing to do with political extremes. They want solutions to their problems, not the theoretical rantings of the extreme Left or Right. It remains to be seen if the shock results in Britain will have the same results.

Thursday, 11 May 2017

Anger, Fear, Resignation Of The NO Voters Who Believe They Were Cheated

Superficially, the heart of Istanbul, the beautiful city rich in history that sits along the Bosphorus, is hanging on – barely. The hideous tsunami of concrete skyscrapers ruining the classic silhouette of the famous city encroaches from all sides with every passing day. The drive from the airport to the city used to be one of the most beautiful anywhere. You had the sea on one side and well-laid-out flower beds on the other. Now, it’s like driving down a dark tunnel with no view of anything.

Worse than the aesthetic and historical damage are the barely suppressed anger, fear, resignation, depression among the at least 49% who voted against the constitutional changes giving President Tayyip Erdoğan total control. Convinced that victory was stolen from them by complete fraud the opponents of Erdoğan’s power grab are thrashing around trying to come up with an effective response. The one heartening note for the NO voters is that Erdoğan lost all the major cities, including previously solid Erdoğan districts in Istanbul. Perhaps this development will form the basis for a serious challenge to Erdoğan in the next election. But never underestimate the ability of the opposition to shoot itself in both feet.
So much for the once-beautiful skyline of Istanbul
After changing the election rules while the vote was being counted the High Election Commission has been proven to be completely useless. The courts are no better. Essentially there are no genuinely independent institutions or internationally recognized law in Turkey.

Some have given up and already moved to Europe or the United States. Many of these wisely got EU or American passports several years ago. According to Greek reports more than 200 Turkish citizens have boosted the Greek real estate market by buying houses and flats there.

As one Turkish friend with a brand new Athenian apartment put it, “Tsipras is a loose cannon, but he is tightly controlled by the EU. There is nothing at all controlling Erdoğan. He is flat out dangerous.”
Who knows? Your new neighbor in Kolonaki could be Turkish
Other wealthy Turks now spend their holidays in Greece’s garden spots like Spetses, or Porto Heli. The attractions of Greece extend beyond tourism, however. One major Turkish company is having its annual senior management retreat at the Grand Bretagne Hotel in Athens. One of Turkey’s leading groups, the Doğuş Group, has made major investments in Greece by purchasing the Athens Hilton, joining the partnership in the redevelopment of the Astir Palace, and buying five marinas. This is just part of a trend where Turkish companies are investing outside Turkey at much faster rate than inside Turkey.

Still others are very concerned about their children’s education, and are looking all over Europe and the U.S. for schools. “This government wants to produce a generation of morons with frontal lobotomies that simply accepts everything by rote, never questions anything and certainly never criticizes anything. My kids deserve more." As if to confirm this fear the government recently banned the internet encyclopedia Wikipedia because it contained information that was insufficiently pro-Erdoğan. Knowledge unfiltered by the Reis can be a dangerous thing according to the government.

Meanwhile, the Turkish economy continues its dangerous downward slide. Inflation and unemployment continue to raise despite government spokesmen laughingly saying the problem is ‘under control.’ The only way the government can secure funds for the public works projects that feed Erdoğan’s close circle of friends and family is the increasing resort to Treasury guarantees – guarantees that cover everything from revenue from public/private projects and debt held by the contractors of these projects, some of the private bank debt issued to exporters and small/medium sized businesses. There is even talk of making the state the payer of last resort for mandated severances payments that companies must pay each employee according to seniority when they leave. In order to save cash and make the books look better, many companies don’t set aside enough money for these payments. Now the government is considering if it should bail the companies out and assume these payments. One Turkish investment banker in London laughed when discussing these guarantees. "It's the perfect set-up. There is absolutely no way for one of the favored contractors or concessionaires to lose money. This government will make sure they get bailed out regardless of the hit to the Treasury."

The most troubling part of all these guarantees is that there is absolutely no transparency. No one, certainly not the hapless taxpayer, has any idea of the details of this potential serious hit to the Turkish treasury and ultimately to his wallet. But, then again, why would you make these deals transparent if that very transparency would undermine the fantasy that you are trying to get the Turkish people to believe?

However, before people start thinking that any looming economic collapse will shake Erdoğan’s throne they should recall some other countries where dictators have not been affected by weak economies.

“Think about places like Zimbabwe, Russia, North Korea and Venezuela. All these economies are suffering and the ordinary people are in tough straits. The ruling clique stays in power by throwing the democratic rule book out the window and making its friends rich. Essentially the people are stuffed.”

Despite all the turmoil and disappointment one young NO voter estimates that most of his fellow NO voters will hunker down and try to make the best of a bad situation. Family ties, professional lives and a strong loyalty toward a vision of what Turkey could be will keep them in their native country, and perhaps form the core of resistance to turning Turkey into just another 3rd world dictatorship. One can hope.

Thursday, 4 May 2017

Forget Politics For A Moment. Food Is The Real Passion In Most Of France.

LIBOURNE, France – This town in the heart of the Gironde region of southwestern France sits on the bank of the broad Dordgone River and is surrounded by some of the most expensive vineyards in the world.  Names like Petrus, Cheval Blanc, or Figeac are just some of the names that attract very deep-pocketed wine buyers from all over the world.

But most of the time vineyards are a sedate sort of business. Major activity seems to come in spurts at different times of the year, and there is almost a reverential attitude toward the vines. The vines and the red gold that comes from them are discussed in the hushed tones that one might expect in a church or a Swiss bank vault. But then again, you might have to open that vault to buy a bottle or two.

No, for real activity and a real sense of La France Profonde – Deep France -- one must visit the open air market that takes place three times a week in the arcaded center of the town. In this market and others just like it across the country you get a real sense of what  French people consider important – food. It’s not just food, however. If the spirit moves you can pick up a nifty hat, a pair of shoes, a shirt, a couple of plates or just about anything you can think of.
Food markets have been held in this square for centuries
Seeing the food is one thing. Actually getting what you want, however, is something altogether more difficult. You are competing against experienced French housewives with massive carrier bags or pulling trolleys the size of your basic Range Rover intent on getting that luscious looking entrecôte you had your eye on. Their strategy and aggression would put the French national rugby scrum to shame. Just as you think you have caught the eye of the butcher a sharpish elbow to the ribs takes you momentarily out of the game. A few more incidents like that and you might just join their husbands who have long ago learned the futility of offering an opinion on a certain vegetable or piece of meat. They have now been relegated to a special section where they sip their coffee while waiting to be told where to go next.

Good luck getting that cut of meat you wanted
And the food is discussed with real passion. The different cuts of meat or poultry, the quality of the animal or what it ate are discussed with an almost religious fervor that the Jesuits would appreciate.  And the debate is no less fervent for the fruits and vegetables. “Well, of course, you do understand, don’t you, that while the Spaniards do produce strawberries, one isn’t quite sure exactly where they come from or how they’re grown.”  The stall holder will then inform you of the provenance of his own strawberries and how they come from a long line of good respectable French strawberries.
If you don't want the meat there's always the daily fresh fish catch

            And then there are the cheeses. None less than Charles de Gaulle moaned about the difficulty of running a country that had at least 246 different types of cheeses. He had a point. Just about all of those varieties, and then some, are on display, and you are encouraged to sample the subtle – very subtle – differences between this brie or that brie, Comté aged for different lengths of time, and many, many more.

Is this what makes France difficult to govern?

           Now that the taste buds in your mouth are clanging like church bells you move on to the shell fish. Huge baskets are over-flowing with oysters, clams, or scallops from the Bay of Arcachon about an hour away on the Atlantic coast. You think about buying some. And then you think again about your skills of opening an oyster without slicing off at least one of your fingers. Best leave that task to the experts.

            While my wife is off haggling about the price of fresh asparagus – white or green -- in her perfect French, I head to the nearby stalls filled with fresh paté. My French isn’t awful, but I have to admit that the names of some of the ingredients of these patés escaped me. I just nodded sagely, took the offered sample, tried not to gag and moved smartly onto the instantly recognizable foie gras.

            By this time your shopping bag is feeling a little heavy and it’s time to look around for a friendly patisserie that would offer a chair and a coffee to go with that nice looking, fresh pain au chocolat.  The first one went down so well that it had to be followed with another. Finally, it was time to lug the stuffed shopping bag, now containing the obligatory baguette or two, back to the car and head home.

            Now the real challenge begins. Just what do you do with all your purchases that seem to include enough food to feed several small countries? Well, this is France, after all. And figuring out what to do with food is something they do very, very well.

Friday, 28 April 2017

The Challenge Before French Voters -- Pull Up The Drawbridge Or Move Forward

BORDEAUX -- Very few elections offer voters a crystal-clear choice of policies. The presidential election in France next month is one of those rare occurrences. The two candidates in the final round offer polar-opposites of policies for surmounting the multiple challenges facing France as well as Europe. The choice couldn’t be more stark.

            In the first round of the presidential election voters swept away the sterile, failed policies of the traditional Left and Right parties who had ruled France for more than 60 years. The minute policy differences of these two groups were hotly debated among the chattering classes of Paris for decades while the rest of the country was left to stagnate in an economic morass.

            The first round on April 23 highlighted the new division in France. Instead of the old Left/Right construct France now has a sharp division between those favouring the so-called liberal world order with all its international institutions, global economic aspirations, human rights and freedoms that Europe has become used to. This camp thinks France is in a much stronger position to face global competition as an active member of the European Union than as an isolated, independent country caught between the huge forces of the United States, Russia and China. Opposing this are those who reject completely the liberal world order and who want to pull France out of institutions like NATO, the European Union, and the Euro. Their answer to France’s economic and social problems follows Trump’s recipe: pull up the drawbridge, cower behind high tariff walls, and – most of all – kick out all the immigrants.
            Why does all this matter? Why should anyone outside France worry about this election? Simple. France is a big country at the heart of Europe. A European Union without France is inconceivable. A revitalized French economy would be a huge shot in the arm for Europe as a whole. A re-confirmation of the values of human rights and equality in a country as central as France would send a clear message that Europe still firmly rejects the authoritarian, isolationist, and nativist policies of the extreme right.
Centrist Candidate Emmanuel Macron

             The centrist candidate, 39-year-old Emmanuel Macron, came out of nowhere to form a country-wide movement that propelled him to first place in the first round of the presidential elections. He is a former minister in the government of President Francois Holland, but left last year to start his own independent run with a new formation called En Marche! – Forward. He symbolizes the side of France that accepts the global challenges of the 21st Century and says France could clearly be on the winning side of those challenges. He is full of ideas for changing the stalled French economy, but these ideas involve changing the status quo in France – something that is very hard to accomplish in a country where traditions and fixed opinions are strong. In short, change is not something generally well received here.

            The extreme-right wing candidate, Marine Le Pen – otherwise known as Le Trump – says Rubbish to all that. She inherited the Front National leadership from her father who was one of the founders of the party. She has tried to change, without much success, the party’s racist, quasi-fascist, anti-Semitic image into pure, Trumpian social and economic nationalism. But sometimes the old image shines through as she whips up the crowd about restoring the Glory of France. The only ideas she proposes for accomplishing this ambitious goal are retreating rapidly from the global economy, leaving international institutions like NATO, giving up the Euro,  and throwing out all the immigrants. And along the way, she would cripple all international investment bankers – like Macron – whom she blames for France’s fall from power and glory.

Extreme Right Candidate Marine Le Pen
            In normal times Le Pen would never have a chance of winning the second round because the vast majority of votes from the losing parties would go to anyone opposing the National Front – seen by many as an affront to the sophisticated, socially responsible image of France. This would be a repeat of 2002 when Le Pen’s father made the final round, but was routed by conservative Jacques Chirac as even the leftist voters chose him over the National Front.

 But these are not normal times in a deeply divided country. If a large number of voters whose candidates lost in the first round decide to abstain rather than support a change advocate like Macron it is quite possible that Le Pen could sneak into the presidency.

            This danger comes from the fact that in the voters’ disgust with the status quo the extreme Left and the extreme Right accumulated almost 40% of the total vote in the first round. Despite their apparent contradictions very little separates the economic policies of both extremes. To them, issues like globalisation, international finance, or bankers in general are evils to be rejected at all costs. The extreme Left risks making the same mistake that the small splinter holier-than-thou parties in the United States made in 2016 when they took votes from Hillary Clinton and handed the presidency to Donald Trump. Many of France’s extreme left have said they prefer to maintain their intellectual purity by abstaining rather than voting for the hated globalisation they think Macron stands for. This electoral dilemma has driven the French café society into overdrive as everyone offers advice on what must be done. It remains to be seen just how much the French electorate pays attention to all this noise.

            French presidential election campaigns are mercifully short, and it will all be over on May 7. The French are also spared the tactics of Turkey’s ruler Tayyip Erdoğan. It’s a relief to be in a country where political opponents and critical journalists are not thrown in jail, newspapers represent every political point of view, there is equal time for the candidates, and – most important – there is no threat of rigging the results. Regardless of the outcome, we should all be grateful for free and fair elections. Experience in Turkey shows they can never be taken for granted.

Monday, 17 April 2017

Turkey's Already Difficult Path Just Got More Difficult

The only surprising thing about the outcome of yesterday’s Turkish referendum was just how close the result was. Given his total domination of the media, use of thuggish gangs to intimidate opposition rallies, jailing political opponents and journalists Turkish President Tayyip Erdoğan should have won his power grab by 20 points or more. Reflecting the complete split and sharp divisions of Turkish society he won by less than 3 percentage points. And the opposition is claiming that at least 2.5 million invalid votes were cast in favour of the constitutional changes. Because Erdoğan and his cronies control every branch of government it is very doubtful that those claims will get anywhere.

The map shows the huge problem Erdoğan faces. All the big cities, the Aegean coast and Kurdish areas
voted against him.
            A leader genuinely interested in representing the entire country would pay close attention to this vote, especially the fact that all major cities voted against the constitutional changes. This was the first time ever that Istanbul, for example, had voted against Erdoğan. But introspection and course alteration to meet the demands of 50% of the population are not on Erdoğan’s agenda. He is now free to move Turkey even further from the ideals of Europe and closer to the dictators and petty despots of Central Asia he admires so much.

            He never liked the European Union with all its emphasis on thorny issues like human rights, freedom of speech, or independent judiciary. He loved to whip up the crowds by railing against any European leader who had the temerity to criticize him. He promised to replace the EU’s Copenhagen criteria with his co-called Ankara criteria, which most likely include stiff jail sentences for any of those pesky EU leaders who set foot in Turkey.

Erdoğan votes in the referendum
            One would like to think that the better-than-usual results achieved by the opposition would encourage them to capitalize on this showing by getting better organized and broadening their appeal to all segments of Turkish society.

On one level, Turkish voters continued their vain search for a strong leader a Man on a White Horse who can solve all their problems with the flick of his wrist. This part of the society refuses to accept that the complicated process of improving the country starts with themselves and includes truly independent institutions like the judiciary, the press, the Central Bank, and above all else a quality education system. But that’s hard work. Much easier to rely on the strong man. However, it was encouraging to see that almost 50% of the population rejected this simplistic notion and demonstrated – against all odds – that they valued a real representative democracy, with all its faults. Perhaps they can keep the flame of democracy alive in Turkey.

            His cynical tirades against Europe paid off for him as the referendum results showed most of the Turks who voted in Germany or the Netherlands voted in favour of the constitutional changes. In fact, without these votes Erdoğan may well have lost the referendum. Most of these Turks may have no intention of returning to Turkey, but they told a German journalist friend of mine that Erdoğan made them ‘feel proud to be Turkish.’ It’s a pity that they don’t realize they were just useful tools for Erdoğan and are much better off in Germany or the Netherlands – where they enjoy the full spectrum of rights and economic opportunities -- than they ever would be back in Turkey.

            In all his push to resemble his Central Asia idols, Erdoğan faces one enormous problem – a problem he can’t solve with a jail sentence. The economy now resembles Venezuela-without-the-oil, and is eroding like sand under his feet. The budget deficit is increasing rapidly, unemployment is climbing, inflation is back in double digits, and inward investment has dropped sharply. To add insult to injury, Iran is now the favored destination for many European companies. It is becoming increasingly difficult to fund Erdoğan’s massive public spending projects, projects that have enriched his family and several of his close associates over the last several years. Many people have spoken about this ‘charmed circle’, but a recent analysis by Rainer Hermann in the Frankfurter Allgemeine Zeitung described it in great detail. But now, funding them has become a real problem. Money is disappearing from the Treasury. Erdoğan has had to resort to such desperate tactics as issuing government guarantees of profitability for the favored contractors or demanding the state banks lend to these projects when private banks refuse. He has also forced state companies into a so-called Wealth Fund which will enable him to re-direct the cash flow and borrowing capabilities of those companies into ever-increasing public works projects to keep the ‘charmed circle’ happy and rich – at the state’s expense.

            What comes next? Will massive statues of Tayyip Erdoğan begin to dot the landscape of Turkey?  Will his likeness be sculpted onto a cliff, like Mount Rushmore in America? Will he change his name to something like Türkbaşɩ, Chief Turk? Who knows? And more important, how will he react when faced with serious economic, international or military problems of his own making? He has already reduced the number of Turkey’s friends to such a level that they can hold their annual convention in a phone booth. Who will he call? Donald Trump? Vladimir Putin?

            For the immediate future the Turks can only wait nervously while Erdoğan determines just how to play his narrow win. Will he snuff out Turkish democracy completely or will he uncharacteristically reach out to the millions of Turks who actually like their democracy?