İDE İstanbul Düşünce Enstitüsü ABD Temsilcimiz Dr. Frank Mismar Bey’in Gönderdiği 3 Makaleyi Sizlere Takdim Ederiz…
Saygılarımla,
Mustafa Şatıroğlu
İDE
Başkanı
The New World Order is a Geo-economical Regional Order
It is evident that the Russian-Ukrainian war is the turning point from a bipolar to an emerging, necessary, and peaceful coexistence multipolar world order. The collapse of the Soviet center of power was followed by the triumph of a West that aspired for global control, tried to impose its model as a universal solution upon the diverse world, and overestimated its strength politically, economically, and culturally, forfeiting much of what they could otherwise have achieved. Accordingly, the growing influence of non-Western states started growing and rising, ending the economic colonization and became an undeniable and inevitable trend centered in four regions; the East Mediterranean, South America, Russia’s hemisphere, and China’s hemisphere; represented by China, India, Indonesia, Brazil, Russia, Turkey, and Israel.
The emerged markets represented by the four trends start seeking non-interference in their internal affairs, diversification of economies and social systems, full sovereignty of their natural resources, fair prices of their raw materials, freedom to industrialize their nations with appropriate techniques and technologies, reforming of the international monetary system to line with development needs, international exchange of ideas, expertise and assistance, and better participation and involvement in international trade.
The first sign of the failing Western world order was Somalia, followed by the Afghanistan war, Iraq war, Syria civil war, Libya, Covid-19 pandemic, and the Russian- Ukraine war. The West reached its democratization, cultural and civilizational limits, the Western democracy with its increasingly ambiguous social roles for men and women, euthanasia, surrogate motherhood, same-sex marriages, the expansion of transgender rights, critical race theory, and the like, not only for political but also for moral reasons without considering other cultures social and religious hemisphere. Moreover, the West continued to act as if “history had ended,” using pressure, and even force, to assert its vision of the world and impose its political and economic system on other countries and regions that did not want to westernize.
The primary and significant turning point in the newGeo-economical regional order was The Abraham Accord; An Accord that concentrated on creating an exemplary model of tolerance, coexistence, and pluralism in the Middle East, Accordingly; the Accord opened the doors for many prosperous regional Geo-economical agreements that reinstate the East Mediterranean region to stand again to connect the East and West economically utilizing an existed coined trade agreement and coining new ones as needed.
In November 2020, 20 countries from the Association of Southeast Asian Nations (ASEAN) and five regional partners signed the Regional Comprehensive Economic Partnership (RCEP), forming the most significant free trade agreement in history to stimulate intra-East Asian integration around China and Japan, and linking technology, manufacturing, agriculture, and natural resources of North and Southeast Asia with the world.
The aftermath of the RCEP and Abraham Accord motivated every growing economy and many countries from the West to look for a seat in any emerging super economy to keep a slice of the cake. Accordingly, On 1 February 2021, the United Kingdom formally applied to join CPTPP. The East Mediterranean region, mainly and foremost, an area with many growing economies, rich in natural resources, lived many conflicts caused by the superpowers for decades, were the fast movers through bilateral economic and trade deals recently.
In April 2022, the United Arab Emirates launched an online service providing detailed information on the UAE-India Comprehensive Economic Partnership Agreement (CEPA) as a part of the major trade deal signed in February 2022 and entered into force on 1 May 2022. In May 2022, Israel and the United Arab Emirates penned a multi-billion dollar free trade agreement, with a stated target of increasing annual bilateral trade to more than $10 billion over the next five years; the trade agreement is the largest ever between Israel and any Arab country. In July 2022, Indonesia and the United Arab Emirates signed a free trade agreement, strengthening economic ties between Southeast Asia’s largest economy and the significant oil-producing Gulf state. The UAE agreements kept flowing; In July 2022, India, Israel, the United Arab Emirates (UAE), and the United States had their first leaders meeting of the “I2U2” Group intending to tackle the most significant challenges confronting the world with a particular focus on joint investments and new initiatives in water, energy, transportation, space, health, and food security. The UAE has engaged in talks about establishing similar arrangements, whether on its own as part of the GCC, with the European Union, Japan, Australia, South Korea, India, Brazil, China, Argentina, Malaysia, Pakistan, Paraguay, Turkey, and Uruguay.
In October 2021, Turkish and African leaders signed a Cooperation Framework Arrangement to promote investment and trade under AfCFTA to $50B annual trade between Turkey and Africa. In November 2021, Malaysia and Turkey finalized an agreement package to expand FTA by the middle of 2022 to cover trade in services, investment, and electronic commerce. Turkey signed similar expansion trade agreements with Georgia, Ukraine, Belarus, Korea, Pakistan, and England. In May 2022, Turkey and the UAE signed comprehensive trade agreements to boost their cooperation in a wide range of fields from $8 billion to $10 billion target shortly, by increasing mutual investment opportunities including but not limited to the transportation projects that will connect the Gulf region with Europe through Iraq.
To reshape the economics of the East Mediterranean, reshaping the political order became a necessity. Accordingly, in February 2022, Turkey reshaped and healed its relationship with the United Arab Emirates and welcomed Israeli President Isaac Herzog in March. The last step of reshaping the area was consolidating the strained relations with Saudi Arabia. Suppose the four emerging regional powers, Turkey, Israel, UAE, and Saudi Arabia, can work for their respective causes less aggressively. In that case, a new super economy will emerge in the East Mediterranean region in the aftermath of fall of the unipolar economy.
Energy is the Key Player in the New East Mediterranean Geo-Economical Order
The world reached the end of the world order that has strengthened the position of the dollar and the United States for decades. It is a matter of time before the global recession becomes official and serious crises will erupt in the western stock markets, leading to stagflation. The only reason the global economy is still holding is the fear of a destructive new world war as a solution to fix the problem escalating daily due to the shortages of energy supplies which will further exacerbate the inflation crisis.
Turkey’s unique location, robust market economy, well-established tradition of co-operating with the West, and large armed forces, second in size after the US in NATO, controlling the Straits and stabilizing the Black sea region, balancing the Caucasus region, an energy bridge between the rich natural resources of the Caspian basin and Central Asia, East Mediterranean basin, and the Western world provides geo-strategic and leverages for international influence affairs. The geographic location entitles Turkey to be a critical Geo-economical player as well.
The Russian invasion of Ukraine pushed Europe to scramble to secure alternatives to energy imports from Moscow, adding an urgent desire to take advantage of the region’s large offshore gas reserves, making Israeli gas the most viable choice. However, the tensions have been escalating between Greece and Turkey for several decades over the political settlement on Cyprus, the demarcation of the maritime borders of the disputed exclusive economic zones in the eastern Mediterranean, and Ankara’s unease over the militarization of Turkish islands in the Aegean, in violation of international treaties. The tension between Turkey and Greece was exacerbated by the discovery of large gas fields in the eastern Mediterranean, which exacerbated the problem of overlapping maritime areas.
Building the pipeline connecting Cypriot and Israeli gas to Turkey to transfer it to European markets via the already existing natural gas pipeline that crosses Anatolia is a comprehensive settlement deal that will glorify the area and avoid a military confrontation between Greece and Turkey. Discussing ways to include Turkey in regional hydrocarbon development partnerships such as the East Mediterranean Gas Forum would be a goodwill gesture; it means that all sides will be able to save face and give Turkey a chance to demonstrate its commitment to dialogue.
While there is reluctance among European leaders to engage with Turkey, priority must be given to focusing on results. Russia’s unnecessary war against Ukraine has suddenly changed the energy outlook for Europe. With the four countries, Greece, Cyprus, Israel, and Turkey, heading into a highly competitive election year, preserving the fragile status quo may seem the best bet. However, containing the outbreak of any future conflict is not a satisfactory long-term solution, and the focus must be on bold and creative solutions. In any election cycle, a crisis’s risk is escalating and highly costly.
In Comparison, Turkiye is in an Economic Renaissance
The main reason for an economic renaissance is the growth of trade and commerce. A bustling economy brings new ideas and goods into any country, creating prosperous cities and wealth. Trade is the core factor that makes the renaissance possible; it drew substantial income from the cities’ urban subjects and foreign consumers. The world is living a dramatic commercial and economic change based on the exchange of currency which will lead some countries to be isolated and decentralized.
According to Mr. Robin Brooks, the director of the Institute of Economics, during the next five years, compared to other countries in this way and such quantities and size, Turkiye will experience a tremendous economic renaissance in the coming years. Moreover, Mr. Brooks said,” In the last five years, Turkiye has seen a boom in export volumes, unlike any others. Hence, conditions for Turkiye to do well in the global economy, most obviously huge export competitiveness, are very much there. All that’s needed is macro stability, and Turkiye will boom”.
Mr. Brooks’s analysis is very realistic according to the numbers released by the Federation of Chambers and Commodity Exchange in Turkey for the first half of this year:
1- The country established 9,828 companies with foreign partners, with a capital of 5.4 billion pounds.
2- The modern foreign companies topped #Iran 640 companies, #Russia 500 companies, #Germany 269 companies, #Syria 266 companies, then #Egypt 186.
3- The auto industry in Turkiye achieved a growth of 2% during the first half of this year, and according to a statement by the Association of Automobile Manufacturers in Turkey, the period between January and June witnessed the manufacture of 649,311 cars.
4- In the coming days, Turkiye will witness the entry of 55 billion dollars into the Turkish economy from Saudi Arabia, 20 billion dollars, Qatar, 15 billion dollars, the UAE with 10 billion dollars, and Russia with, 10 billion dollars.
5- Istanbul ranked first in the list of the most established places for foreign companies, then Antalya, followed by Ankara, Mersin, and Bursa. The Russian newspaper “Kommersant.”
6- Turkey and Russia, “New Horizons for Cooperation,” is the title of an upcoming meeting in Antalya, Turkey, between Turkish and Russian businessmen (July 27) to discuss bilateral cooperation after hundreds of international brands left Russia and Western sanctions.
7- Western sanctions on Russia have created great opportunities for the Turkish business world to enter the place of the withdrawing companies; in addition to that, Turkey and Kazakhstan are the only trade corridors that are still open between Western countries and Russia.
8- The number of Russian companies established in Turkey this year represents 1 out of 4.
In comparison, Italy’s public debt is 155% of GDP, its budget deficit is 7.2% of GDP (2021), and its balance of payments is now also negative, meaning that Italy is bankrupt which has not declared bankruptcy only because the European Central Bank printed unsecured money and loaned it to the Italian government at an interest rate close to zero. Thanks to that, interest payments were low, but Italy would not have been able to pay them without new support from the European Central Bank. After the news of Mario Draghi’s resignation, the interest on Italian bonds jumped to 3.51% (a year ago, it was well below 1%), meaning that the problem of debt and its financing has worsened.
Germans are suffering from inflation, and resentment of Olaf Scholz is growing; it is possible that Schulz will soon face the crisis of the coalition government and will have to resign. Perhaps a similar situation will develop in some other European countries. Inflation and its fight against it is the main political topic in Germany and the main task of the present and future German government so that the Russian gas shortage in winter becomes the main topic. Once a government crisis begins in Germany, a deadly battle will begin between the South and north of the Eurozone for the right to determine fiscal policy. The interests of northern and southern Europe are at odds, as Germany will insist that the European Central Bank halt quantitative easing and raise interest rates. But fiscal tightening will immediately bankrupt Italy, Greece, and other weak members of the Eurozone. The Southern part will insist on continuing and increasing the volume of money printing, even if it means more inflation in Europe. This contradiction cannot be resolved, and as a result, the Eurozone will collapse. The US is not doing that great; also, the US inflation rates have jumped to the highest level in 40 years, reaching 9.01%
The west is moving slowly into one currency, and the Dollar and Euro will go into a deadly competition; one must get rid of the other, either the euro or the Dollar will last, and of course, the winner will be the Dollar. Now people will gradually start to give up the euro, especially when it falls below the Dollar, to preserve their savings; it is a matter of time. Accordingly, the regional economic power will rise, including Turkiye.