Syria Is Not Libya

The regime running the critical and complex country of Syria is proving a much harder nut to crack than Muammar Qaddafi and his motley group of henchmen in Libya. Indeed, the Syrian drama is notable for what we have not seen: wholesale defections from the armed forces, resignations of key government officials, erosion of all international support, and direct European intervention. Those waiting for the immediate or easy withdrawal of the regime and its assorted allies will be sorely disappointed.


The demographics of Syria explain part of the puzzle. This country of 23 million has been ruled by the minority Alawite sect, related to the Shiite branch of Islam, for decades. From time to time, most notably in the 1980s, the Alawite regime of the late Hafez al-Assad brutally suppressed the Sunni majority. The al-Assad regime was much more concerned with raw power than religion, and smashed any effort seen as a potential competition. His son, Bashar al-Assad, shows he has learned his father’s lessons well in his cruel suppression of the current uprising.

Christians Content With The Status Quo

Christians, mainly Greek and Armenian, make up about 10% of the population and have done fairly well under the current regime. Unlike most other countries in the Middle East, there are several operating monasteries in Syria, and the churches function without the interference seen in Egypt. It’s not that the al-Assad regime is particularly tolerant, but it sees the Christians as natural allies against the fundamentalist Sunnis. And they’re not entirely wrong as many of the Syrian Christians, seeing what is happening in Egypt, fear that a fundamentalist Sunni uprising could threaten them as much as the ruling regime.

A sophisticated middle class has also developed under the Alawite regime. A sudden change could threaten their position. While they might not be strong supporters of the al-Assad family, they fear the Islamic fundamentalists even more.

But it is in the international arena where the complexity of Syria becomes even more apparent. Where Qaddafi was left with no friends or allies, except perhaps Chad, Syria can count on enough international support to keep it going. Iran, for both religious affiliation and raw political influence, is Syria’s key supporter. When the rest of the world has you in the cross hairs you accept any ally you can find. Not far behind is Iraq, anxious to stay close to its Shiite co-religionists. Russia may have distanced itself from its role as Syria’s only arms supplier, but it is no supporter of the European and American sanctions against its former client state.

Turkey's Key Role

Turkey presents an interesting case. Not too long ago Prime Minister Tayyip Erdoğan and his Foreign Minister Ahmet Davutoğlu were basking in the glow of their improved relations with the Arab countries – especially Syria. Turkey was anxious to show Europe that it had other options than joining the European Union, and it felt strong enough to re-assert itself in the Middle East. Erdoğan even received the ‘coveted’ Qaddafi prize for Human Rights. Visa restrictions with Syria were eased and traffic flowed easily across the once-heavily guarded border with Turkey. Earlier Syrian support for the outlawed Kurdish militant group PKK was conveniently shoved into a dark corner.

Then Turkey got caught out by the Arab Spring, and did some hasty back-peddling. Initial ambivalence toward the European intervention in Libya soon gave way to support. Turkey also saw that its support of the al-Assad regime in Syria was hurting its claim to be a friend to the new ‘democracies’ in the Arab world. At the same time Turkey’s prized relations with Iran began to unravel, especially after Turkey agreed to site NATO radar along the Iranian border. It also began to dawn on Turkish officials that an Iran with an atomic bomb would be major problem for them. Relations with Iraq turned sour with the Iraqis accusing Turkey of meddling in internal Iraqi affairs.

On top of this Turkey’s dominant, orthodox Sunni Moslems can not be pleased with the prospect of becoming encircled by Shiite Iran in the East, and Shiite Iraq and Syria in the south. The upheaval in Syria also gave the Turks the opportunity to be seen providing humanitarian relief to desperate people fleeing Syria.

The attitude of the rest of the Arab world toward events in Syria really depends where they stand on Iran. Those close to Iran, like Iraq, take a softer line with Syria. Others like Saudi Arabia who detest the Iranian regime keep their distance from Syria. Bear in mind that Saudi Arabia also regards itself as the protector of the orthodox Sunni branch of Islam.

Barring some kind of military intervention – very unlikely – there is no rapid end in sight to the Syrian standoff. The insurgents do not appear strong enough to overthrow the regular army and the regime does not appear strong enough – or willing enough – to crush completely the insurgents. At this point all eyes are on Turkey. How far will it go to protect the insurgents? Could this protection include establishing a buffer zone inside Syria backed up by the Turkish military? Turkish officials deny any military plans. But this is the Middle East. The unexpected and unwanted happen regularly

First Lesson -- Avoid Shooting Yourself In Both Feet

The Turks have proved once again in stunning fashion that they were born without the PR (public relations) gene. Their latest folly is to charge Sarah Ferguson, the Duchess of York, better known simply as Fergie, with insulting the Turkish state by secretly filming the horrors of mistreatment found in one orphanage.


Apparently Fergie and her daughter disguised themselves, entered the orphanage and secretly filmed some of the workers badly mistreating the children. The incident caused a furore when it occurred almost four years ago. There was much hand wringing in Turkey at the time over the conditions of the orphanage. Then, after its usual three-day coverage in the Turkish press, the subject was dropped into the same deep hole with all the other potentially embarrassing stories.

In a spectacular own-goal the Turkish prosecutors now bring the whole issue roaring back to life with this ridiculous indictment. If they had wanted to draw global attention to the failures of Turkish institutional childcare they could not have found a better way. One ruling party member even went so far as to say that Fergie’s filming was part of a premeditated plot to discredit the Turkish state during critical negotiations with the European Union.

Now I am sure that Fergie has many talents, but premeditating anything is not among them. She has performed the most ludicrous actions only to express shock and embarrassment when the consequences of those actions became apparent. How many times have we seen tabloid photos of Fergie with her ‘shocked, caught-in-the-headlights – again’ expression after a particularly blatant misstep?

Hidden in all this nonsense is any rational discussion of the main issue. Are children in state orphanages being mistreated or not? The fate of the children suddenly seems less important that the alleged slurs to the State. How Orwellian can you get?

I have actually visited a few Turkish orphanages over the years and found that the care varies from superb to miserable. In many cases the staff create a loving atmosphere and treat the children like members of their own family. In other cases the staff act more like guards.

Why can’t Turkish officials take the simple, understandable route of admitting that orphanage conditions are not universally excellent, and that they are working hard to improve all of them? End of story. Don’t they realize that admitting an error and promising to do much better is a far more effective way of preventing lasting damage than a non-credible flat refusal followed by an indictment? Instead they come up with this outlandish charge that can only bring unwanted, critical global attention. Just when Turkey is struggling to assert itself on the global geo-political stage it pulls a stunt like this demonstrating that much of Turkish officialdom is not yet ready for prime time. One has to wonder if anyone is in charge. There is a popular Turkish saying that a Turk has no friends but a Turk. With this kind of official communications policy one can see the self-fulfilling truth of the statement.

A Return To Real Winter

In an earlier post I mentioned the correspondence I had with the large American retailer L.L. Bean in which the store said that, sadly, it carried only a limited amount of product made in the United States because its suppliers had gone out of business. Turns out their assertion about the lack of American clothing suppliers is not necessarily true.

While on a trip back to the U.S. we came upon a store in Woodstock, Vermont called Vermont Flannel that sells very high quality 100% made-in-America flannel shirts, night dresses, and other clothing times. The manager said that L.L. Bean used to carry their products but no longer does so. According to the manager, Bean wanted the company to sell under the L.L. Bean label and give up its own identity. When Vermont Flannel refused, L.L. Bean dropped the product.

When generalizing about the lack of American clothing manufacturing it would be useful if giant retailers like L.L. Bean were less evasive and more accurate.

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I would appreciate it if someone could explain to me the habit of urban professional American males wearing their baseball caps indoors. Is the roof leaking? Is it too cold in the restaurant? Does no one tell them they look like total dorks? During all their expensive education did no one ever tell them that it is simple good manners to take off your hat indoors? I can understand the habit in certain parts of the country where the dress code is ‘red-neck chic.’ Guy pulls up to the diner in a rusty pick-up truck complete with the well-stocked gun rack and mangy dog in the back. The greasy baseball cap and four - day growth go well with the mud-splattered overalls and the menu of grits and ham. The baseball cap with an agricultural- equipment- company logo sort of complements the whole image. But in Woodstock, Vermont where Herman-the-hedge-fund-manager with a Harvard MBA pulls up in his spotless $60,000 Porsche Cayenne and walks into the five-star hotel in designer jeans the effect of the baseball cap, often reversed in imitation of some Bronx gang-banger, is more than ridiculous. Someone should tell him in the kindest possible way that his attempt to look like an extra in Deliverance really doesn’t work.

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If We Don't Have It, You Don't Need It

Natives in my home state of Vermont, if you can still find any, are known for being laconic. A typical response to stranger asking if you have lived there all your life is “Not yet.” The state is also known for its small town General Stores that carry everything from chain saws to sandwiches. Few are better known than one called Dan and Whits in Norwich, Vermont. The store is very proud of its abundant merchandise and displays a challenging sign in its window. “If We Don’t Have It, You Don’t Need It.” Wal-Mart take note.

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We drove up to Quebec City on a clear, freezing  (-15 C) day to meet my brother and his wife. Northern Vermont was snow covered and essentially empty. Mile after mile of trees and snow and snow and trees.

Northern New England in January

I had heard that the border crossing into Canada after 9/11 had become more formal, but it still took no more than 30 seconds. The province of Quebec is very proud of its French heritage, and provincial Fleur de Lys flag is much more prominent than the Canadian Maple Leaf flag. It is easy to forget that not that long ago France controlled a huge slice of North America from New Orleans up the Mississippi and what is now the Midwest U.S., along with all of central and eastern Canada. Quebec remains the only walled city in North America and retains much of its Gallic charm and heritage. You don’t have to speak French, but it is appreciated if you do.  It was also nice to see shops proudly proclaiming that their products were ‘Not Made In China.’ The city somewhat resembles Istanbul in that it is high on a cliff, surrounded on two sides by water and protected by a land wall. The wide Saint Lawrence River flows from beyond Montreal, past Quebec to the Atlantic Ocean 300 miles away. This time of year it is mostly frozen forcing the ferries and ocean-bound cargo ships to smash through the ice on their way to clear water. 

Chateau Frontenac On A Chilly Evening

The Saint Lawrence River from the Chateau Frontenac

There were even some demented souls who thought it fun to take a long row-boat across the river, paddling where they could and then leaping out and pulling the boat across the ice before plunging back into the water. Needless to say we enjoyed this spectacle from the comfort of a warm lounge.

The Real Cost Of That Chinese T-Shirt -- continued

Early in October I posted a note about my annoyance at being unable to find any clothes that were not made in China or some other Southeast Asian country. Everything, from underwear to topcoats seems to come from the same factory deep in the heart of China.

I threatened to go around barefoot wearing a barrel until I could find something that was actually made in the country where it was sold. The closest I could come is Italy. Now, the Italians make beautiful clothes, but, unfortunately, they all seem to be made for someone with the figure of a No. 2 pencil. I once went into a shop on the Via Gesu in Milan where the salesperson took one look at me and sadly shook his head as if to say “We don’t do industrial tents.”

Well, winter has approached and it’s getting cold. Out of desperation I wrote to the iconic American retailer L.L. Bean expressing my problem and wondering if they had anything, anything at all, made in the USA.

This is obviously a sensitive subject for L.L. Bean, and within a couple of days I received a very polite email that I will share with you:

Dear Mr. Edgerly,
Thank you for taking time to write to L.L.Bean and express your concerns.
Our policy is that we will always buy USA-made merchandise whenever we can get the quality that we require for our customers.
Our experience, unfortunately, is that so many of our long-term factories are closing their doors that most of our products are no longer available in the USA. As our suppliers have closed we have been obliged to search for new suppliers in other countries, and we continue to do so as necessary, to meet our customers expectations.
Below you will find a link of the items that we do carry that are made here in America:
http://www.llbean.com/llb/search/2/1/Relevance/1?freeText=made+in+the+USA&crt=(free_text%3d%3d(+made_x20_in_x20_the_x20_USA))
If L.L.Bean can be of any further assistance, we are happy to help you 24 hours a days.


If you click on the link you will find about 170 items in the store that are made in America. Unfortunately, not one of this is an item of clothing. While I might look just grand wearing a Christmas wreath or perhaps a down comforter or small throw rug I doubt those items would really do the job.

But beyond the ‘Made in America’ items the email dodges around the main point. It’s sort of the ‘chicken-and-the-egg’ scenario. What came first, the suppliers closing or retailers like L.L. Bean taking their business elsewhere in search of the elusive profit margin? Of course the suppliers are going to close if their biggest customers rush to Asia. It’s hard to imagine U.S. suppliers closing if the large retailers made it a goal to purchase at least 50% of their clothing from the United States. Missing in this email is any discussion of just how much more the customer would pay if 50% of the clothing items came from America? 5%, 10%, 25%? I also wonder if the American consumer would bear this cost if he knew that he was helping keep his neighbour in a job, helping his community afford decent schools and other public services.

It’s probably asking too much, but it would nice if the retailers were at least honest with consumers and explained just how American communities as a whole are benefitting from their rush to foreign suppliers.

Hard Liquor, Loose Women . . . And Interest Rates

You really have to feel for Ali Babacan, the head of the Turkish treasury, you really do. He is very bright and understands extremely well the complexities of the global financial markets and the key role of interest rates in navigating through those markets.  Yet, unfortunately, his job is made extremely difficult by many fellow government ministers, including the prime minister, who are ideologically opposed to interest rates per se and tend to view them along with hard liquor and loose women as spawns of the devil.

Babacan is constantly forced into defensive and somewhat silly explanations of this clash between reality and ideology without seeming to contradict the prime minister who has a notorious dislike of any dissent.  “My prime minister’s will for a zero real interest rate is an ideal target. That is an ideal target which we would really like to see at one point, but that point might not be so close,” the beleaguered Treasury chief said in a recent Wall Street Journal interview. Very careful understatement, that.

The Turkish economy is going through a particularly dangerous period right now, and the prime minister’s zero interest rate goal is starting to resemble the fanciful foreign policy zero problems strategy.  The zero interest goal is morphing into high rates and multiple problems. Babacan’s efforts to resolve the ideological positions of many of his fellow cabinet members and financial reality have led to some odd contortions that strain the credibility of Turkish financial policy. Whether the prime minister likes it or not Turkey’s economic policy is closely bound to Europe, and the same forces creating so much trouble in Europe are rapidly making themselves felt in Turkey. With the currency depreciating rapidly, personal and corporate debt increasing to record levels and inflation headed back to double digits rates in Turkey are set to head north quickly.

And as interest rates head inexorably northward we can expect consumption to slow down, thousands of apartments remaining unsold, government funding becoming more difficult, massive new infrastructure projects remaining on the drawing board, and unemployment rising. Not welcome news to a government that has won the last two elections on the back of strong economic performance.

Growth At A High Price

A little background will help make this clear. For much of the last 9 years the Turkish economy has boomed on the back of a strong currency and low interest rates. Until a few years ago personal and corporate debt were extremely limited, held in check by Turkey’s chronic high inflation and interest rates. Credit card debt was just beginning and mortgages were almost non-existent.  After its own crisis in 2001 Turkey implemented  IMF-approved reforms that had the desired effect of lowering inflation and interest rates. The currency strengthened and the country began a 10-year run of high growth. Credit expanded rapidly, consumers discovered the joy of loading up their credit cards, contractors borrowed heavily to satisfy the incredible building boom all over the country. And why not? Interest rates were low and the relatively strong currency encouraged massive imports to meet demand for industrial material and the latest consumer goods from all over the world. Expensive imported cars were the order of the day.

Kool-Aid, Anyone?

A few notes of caution were raised about the escalating Current Account Deficit (roughly, imports are much more than exports), but they were drowned out in the self-congratulatory celebrations of high growth, low rates and continued currency strength. It was cheap to borrow in foreign currency and repay with a strong, stable currency. And borrow they did. Officials were in no mood to listen to warnings that this rapid ride might end in tears with an equally strong down-turn. It wasn’t just the officials. Bankers and financial market players were all drinking the same Kool-Aid, and they kept telling people that a new day had dawned and Turkey would be able to fund its deficits indefinitely. The Turkish Lira was to become the new, stable model for developing countries. Turkey’s newly assertive foreign policy was supported by this strong economic growth. Listening to the prime minister Turkey was about to assume its rightful place alongside Brazil, India, Russia and China as one of the major winners of the young 21^st Century. Or was it? Had the hype gotten ahead of reality?

The first warning bell was sounded by the current account deficit that was on track to reach nearly 10% of Gross National Product – a dangerous level in any country. The problem was how to pay for this huge deficit. As long as global financial institutions were flush with cash they were happy to lend to Turkey. Now that the Euro is close to implosion these same financial institutions have become much more careful where they put their funds. Not good news for Turkey. Then Europe, the major destination for Turkish exports, embarked on aggressive austerity programs with the obvious effect of consumers slowing down their purchases of those nice Turkish – assembled televisions or refrigerators.

Spooked in part by the exploding Current Account deficit investors began to shed the Turkish Lira. It’s 20% decline so far this year makes it one of the worst performing currencies in the world. The Istanbul Stock Exchange has also been in a free fall this year, down more than 30% in US dollar terms.

A common Central Bank response to rapid consumption growth and depreciating currency is to increase interest rates. Stuck with the government’s rigid zero interest rate philosophy the Central Bank has been unable to take this step. This is where the contortions come in. The official Central Bank interest rate remains at 5.75%. However, there are few, if any, transactions at this price. If a commercial bank needs to borrow from the Central Bank it will pay more than 12%. Commercial banks, under no philosophical constraints, have been quick to ratchet up their loan rates.

None of this is good news for an economy that needs hundreds of millions of dollars in external funding every year just as the sources of that funding are drying up. The sooner government officials acknowledge this trend, the chances the Turkish economy avoiding a major train wreck improve greatly.