Turkey’s Motto: Be Prepared

Harbor in Turkey

You can’t say Turkey sits around and lets the dust gather. Due to the recent problems with the Euro vis à vis the dollar, Turkey’s lira, through no fault of its own, has gained some strength against the Euro (incidentally, as of this month, the Euro is the most circulated currency in the world, passing up the U.S.). This has naturally affected Turkey’s export volume. With around 60% of its exports currently heading for Europe, the adventures of the ten-year-old Euro Zone currency are of great interest to Turkish businessmen, as well as to the Turkish government. Turkey also faces a more cautious market at home, so how can she move even more stuff out of her factories and into European markets?

Ah, but how do we get around cautious lenders, paranoid (with good reason) EU importers and insurers, a contracting European consumer market, and the almost daily scramble of currency values? Well, how about setting up a government-owned bank, which will loan money to entrepreneurs who want to export product to “priority countries” AND provide insurance and eased pay-back terms AND act as guarantor for loans sought from other commercial banks? While not a fix for the Euro/Lira problem, that would put more Turkish businesses into the export arena, both by bolstering start-up companies in Turkey and also for allowing the opening of more branches of larger companies in other countries. Well, the Turkish government just happened to already have an export-credit agency, named Eximbank, which they are proposing to immediately restructure into an entity like I just described. One benefit of a strong, if deeply fractured, central government is the ability to act on ideas quickly.  And it needs to be quick – more than one pundit has predicted a severe impact on Turkey’s EU exports as early as July, due to the recent EU efforts to rein in debt and other debilitating financial issues, and the convulsive consumer reaction that will probably entail. As I understand it, the Eximbank fix will not be only for European-export companies, but for those proposing exports to other countries, like Kenya, the Balkans, and other emerging economies. It depends on what a “priority country” is. While the conservative press laments Turkey’s perceived rifts with the West, she just plows right ahead with pushing trade.  She is still on-target for an estimated $107 billion (USD) in exports by year-end ($51 billion Jan. 1 through June, 2010). Now we’ll see if it works, but if it doesn’t, I’m sure someone will have another idea to try next. Fortunately, this is not “last-minute”, but rather an attempt to be “prepared”.  And that is ALWAYS a good idea.

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Elsie Alan is a native Californian currently living in Kocaeli, Turkey and has a vast and varied background in finance and accounting. Elsie and her husband are currently in the process of finishing a house they bought several years ago. They travel frequently, both within Turkey and to other countries.

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