Friday, 10 February 2017

Judiciary Issues A Powerful Lesson To Trump

A federal appeals court in the United States just brought down to earth and demonstrated powerfully for all to see the value of such seemingly abstract terms as rule of law or separation of powers. In the process the court also demonstrated why such concepts are the absolute bedrock of any self-respecting democracy, and are feared by all current and wanna-be autocrats.

The particular issue in this case was the noxious and shambolic temporary travel ban that the Trump administration imposed to bar entry into the United States for refugees and citizens of selected countries. Technically, a three-member panel of the 9th Circuit Court of Appeals refused unanimously the Trump administration’s attempt to overturn a lower court’s order temporarily blocking enforcement of the ban.
9th Ciruit Court of Appeals
The three-judge panel, including judges appointed by both major political parties, could have issued its ruling in a brief paragraph or two. Instead, it gave the new administration a sharply-worded 29-page lesson in constitutional law and separation of powers.

The opinion relied heavily on rights granted by due process, and shredded the administration’s main argument that the courts had no business reviewing Trump’s executive order temporarily banning refugees and those from seven majority-Moslem countries. This claim was slapped down hard.

“There is no precedent to support this claimed unreviewability, which runs contrary to thefundamental structure of our constitutional democracy.” In other, less august terms, you could say the court told the administration to ‘sit down and read the Constitution before issuing such foolish executive orders.’

Trump's order prompted massive protests across the country
Turkish courts take note. I wonder if President Tayyip Erdoğan read that particular section. Just imagine his reaction if any Turkish court issued a similar ruling that sharply limited his power. I suspect the reaction would be near-nuclear.

The 9th Circuit Court didn’t stop there. It also strongly rebutted the government’s claim of public interest to avoid irreparable injury.

“The Government has pointed to no evidence that any alien from any of the countries named in the Order has perpetrated a terrorist act in the United States. Rather than present evidence to explain the need for the Executive Order, the Government has taken the position that we must not review its decisions at all. We disagree.” Get the point, Mr. Trump?

While not ruling explicitly on claims of religious discrimination, the Appeals Court gave a strong indication of where its sentiments lie. It forcefully reminded the government of the constitutional protection for all religions, and that the constitution “prohibits the Government from impermissibly discriminating among persons based on religion.”

The court also said evidence submitted by the states challenging Trump’s order included his previous statements about implementing a ‘Muslim ban’ as well as evidence they claim suggested that the Executive Order was intended to be that ban. While not the final judgement, these statements are a thinly veiled warning to the government not to even attempt such a ban.

Of particular interest to Turkey in the issue of the extradition request for Fetullah Gulen  is the court’s insistence on the due process rights of everyone in the United States – Green Card holders, legal immigrants, illegal immigrants – the whole lot. The language couldn’t be more clear.

“The procedural protections provided by the Fifth Amendment’s Due Process Clause are not limited to citizens. Rather, they apply to all persons within the United States, including aliens, regardless of whether their presence here is lawful, unlawful, temporary or permanent.”

In other words, even if the Trump administration agreed to Erdoğan’s demands to extradite Gulen, the reclusive cleric has every right to contest that order in court, and if necessary push his case all the way to the Supreme Court. Obama tried to tell this to Erdoğan, but the message obviously didn’t sink in. Instead of building a sound legal case the Turkish government has relied on Trump-style bombast and not-so-subtle threats. The message of this ruling should be that such behaviour will backfire – just as it has done for Trump. Such tactics also didn’t work in Greece where the Supreme Court ruled against extradition for the eight Turkish soldiers who landed in Greece after the abortive coup attempt last summer. Why does Erdoğan think they will work in the United States?

Gulen's legal rights trump political concerns
The Trump administration has not indicated just what it will do – other than issue more harsh Tweets – about this ruling. It could well appeal all the way to Supreme Court where it would face an uncertain result. Regardless of the action of the Supreme Court this ruling is a strong reminder to the Trump administration that, unlike his family business, there are three, equal branches of government and that he cannot implement his favourite policies at the mere stroke of a pen.

Tuesday, 31 January 2017

America's Unseemly Retreat

That sound you’re hearing is one Americans don’t hear very often. It’s the sound of a panicked full scale retreat. Fearful of the wide world, convinced of his own narrow prejudices, disdainful of anything like facts Trump has chosen to pull up the drawbridge and cower behind walls rather than continue 70 years of strong American global presence. Far from being a beacon for the rest of the world, America under Trump is turning into a stagnant pond. The Statue of Liberty must be blushing.

So much for welcoming the poor and meek
Since World War II America has provided a blanket of economic and military stability for much of the world. Yes, there have been serious lapses like Vietnam or Iraq, but there are very few who can doubt the huge role that the United States has – up to now – played. Now Trump wants to change all that. According to him, the world is filled with deadbeats and cheats who have been getting a free ride under the American security umbrella and who have undermined the American economy with cheap imports.

American troops helping defend NATO ally Estonia. Just another deadbeat?
Does he have any idea that these years of bi-partisan American leadership were essentially an exercise in enlightened self-interest? Doubtful. Absent from his fact-free rants is any serious analysis of who or what will fill the vacuum created by the American withdrawal. What malignant forces will this retreat let loose? Not for him any serious analysis of trade. Does he even understand or care that American companies are the undisputed winners – not losers -- in globalization? Does he even understand that the real profit for a company like Apple is in the design and engineering done in California, not the manufacturing done in China? Why should American companies be forced to retain low profit, low value-added plants in the United States? There is nothing Trump can do to change the economic realities of the modern world.

But these are mere details, and we all know Trump has no time for details. I am not even sure that he realizes just how much he mimics the isolationist, anti-Semitic rants of the earlier ‘American Firsters’ led by Father Charles Edward Coughlin in the 1930s. Coughlin’s radio broadcasts were hugely popular as he excoriated Jews and praised Hitler and Mussolini in the run-up to World War II. In theory that war taught Americans the harsh consequences of isolationism. But obviously, Trump never bothered absorbing that lesson. Substitute Moslems for Jews and you have Trump of 2017.

Now the White House hyperventilates in the presence of foreigners in general and goes weak in the knees at the mere sight of Moslems. What’s worse, Trump and his acolytes simply don’t care. As he told TheWall Street Journal when asked if the U.S. should encourage political stability and economic growth in Mexico he replied, “I don’t care about Mexico. Honestly, I really don’t care about Mexico.”  If this is how he regards America’s southern neighbour with a population of almost 130 million and with close economic and political ties to the U.S. just think how he regards America’s role in the larger world.

Trump’s minions proudly proclaim his immigrant policy a ‘great success’. The only success of this mindless policy is to give groups like ISIS unparalleled free recruitment advertising. ‘See, I told you they hate you. Join up now and fight back!’ The problems American forces face in the Middle East have just been multiplied several times. So much for countries like Saudi Arabia, Jordan, the Gulf states, or even Egypt. Very tough for them to show much support for America under these conditions.

They just got a powerful new recruiting tool -- for free
Even in today’s multi-polar world the leadership role of the United States as the strongest economic and military power is undeniable. I remember a conversation with a senior Jordanian official not long ago when someone at the dinner table made a mild joke about America. The official scowled, turned to me and said “America is not something we joke about. It’s too important.”

            Trump’s arrogant disdain for international affairs and America’s role in the world may play well in certain parts of the country. But it could backfire badly with Republicans in Congress who are becoming increasingly uncomfortable with the antics of the Republican president. Even the arch-conservative Charles Krauthammer is apalled at what he calls 'Trump's foreign policy revolution.' A friend of mine put it very well when he said that Trump is a like a spoiled 7-year-old brat who has been given an Abrams tank for Christmas and is proceeding to destroy the neighbourhood. Trump, who mocks the traditional Republican party, may try to circumvent Congress as much as he can and substitute his famous Tweets for policy. His ego is such that he could even break with the traditional Republican party and form a separate entity in his own image.

            Those cheering Trump’s latest moves against immigrants should remember a poem by German Pastor Martin Niemöller about the Nazi horrors of World War II.

First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out— 
Because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out— 
Because I was not a Jew.
Then they came for me—and there was no one left to speak for me.

Monday, 9 January 2017

Could Turkey Make Northern Cyprus Its 82nd Province?

Negotiations to end the decades-long partition of the critically-located Mediterranean island of Cyprus are set to enter a new and theoretically critical stage this week in Geneva. There have been many ‘final stages’ since the island was divided between Turks and Greeks following the intervention of the Turkish military in 1974. But there are great hopes, at least by international negotiators, that this ‘final stage’ just might work.

Much has happened since 1974, including the internationally recognized Republic of Cyprus – the Greek part of the island – joining the European Union. The northern, Turkish part of the island, remains internationally isolated, recognized only by Turkey. The Turkish part of the island survives on hundreds of millions of dollars of subsidies from Turkey. The Greek part of the island has recovered from its financial meltdown and is buoyed by the promise of natural gas in its territorial waters.

Will the island re-unite or be split completely?
The rough outline of the Plan A solution to the island has been well known for decades. It would involve the Turks giving up some land, compensation for people on both sides who lost property, keeping some sort of local autonomy for the Turks, and ending years of economic and political isolation by joining the southern part of the island in the EU.  Sounds logical – to the outsider. But the deep, underlying distrust and dislike between the two communities have always been major barriers to this settlement.

Furthermore, there is the very sticky issue of ‘guarantors’ – those three countries of Greece, the UK, and Turkey who were supposed to ‘guarantee’ the stability of the island. This guarantor system failed spectacularly in 1974 when the Turkish army landed to protect the Turkish minority – and in the process left several thousand troops on the island who remain to this day. If there is a settlement what happens to this guarantor system? Will the Turkish troops leave the island? Will the Turks accept the security of the European Union instead of the security of their own troops?

Will they actually leave the island?
            However, beyond all these island-based issues there is a real elephant in the room that could scuttle all hopes of a deal. That elephant is the political maneuvering in Turkey to change the governing system of the country to give President Tayyip Erdoğan unfettered, unchallenged, unchecked power. Turkey's prime minister and parliament would be reduced to feeble rubber stamps with this change.

            In order to get the votes he needs in parliament to pass the constitutional changes Erdoğan needs the support of the Nationalist Party – a party who not only hates the Kurds but loathes the very idea of a settlement on Cyprus that includes the reduction or complete withdrawal of Turkish troops from the island. Even with the support of the Nationalist Party the issue is a near run thing. Several members of the Nationalist Party have balked at supporting changes reducing parliament to an afterthought. And there are even reports, nothing more, of ruling party AKP members who don’t like the idea of an all-powerful president.

            Assuming the bill passes parliament, there will be a national referendum to approve or reject the change to a presidential system. While Turkish polls are unreliable at best, a leading poll shows support for the referendum falling short of the required 50% + 1. Failure at the referendum stage would be a disaster for Erdoğan by puncturing his aura of invincibility and denying him the power he so blatantly wants. This he cannot allow.

            Thus, the elephant in the room of the Cyprus negotiations. Erdoğan could easily whip up nationalist sentiment in Turkey (not hard to do) by stonewalling any change in Cyprus. The brilliant Turkish journalist Metin Munir – now reporting from the safety of Cyprus because no paper in Turkey has the nerve to publish his work – says there is a Plan B being actively discussed in Ankara. That plan is simply to annex the breakaway Turkish Republic of Northern Cyprus making it Turkey’s 82nd province if negotiations fail. Such a move may bring international condemnation, but would be immensely popular among the nationalist Turks.

He would sell himself as the great savior of our valiant Cypriot brothers and win the referendum in a landslide. Any opposition would be drowned in cries of national traitors, tools of foreign powers seeking to destroy Turkey. Such a campaign would be ugly but effective.

            International condemnation of such a move would have no impact whatsoever. It would only strengthen the deeply ingrained feeling that a Turk has no friends but a Turk. Erdoğan would loudly point out that the world did nothing to stop Russia’s annexation of Crimea. Therefore, why should he even listen to any criticism? The European Union would howl and scream. But so what? Turkish/EU relations were already at a dead-end. How much worse could they get? Greece would complain bitterly. But Greece is in no position to do very much. What would the United States do? That’s a very good question. No one has a clue at this point about Trump’s foreign policy which so far has been limited to 140-character tweets. Besides, right now most Turks think that America is behind every problem that Turkey is facing. Russia? Who knows? Putin is currently manipulating Erdoğan brilliantly. But will that manipulation extend to allowing dismemberment of Cyprus?

            Threatening Turkey with harsh economic sanctions won’t work. The Turkish people will gladly suffer mere economic hardship to preserve what they see as national honor. And furthermore, Putin will simply move into any vacuum created by Western isolation of Turkey.

            Any possible settlement on Cyprus is going to have to pay as much attention to political fine tuning in Ankara as it does to developments on the island itself.

Tuesday, 3 January 2017

Turkey Starts 2017 On A Steep Downhill Slide

More terror, more bloodshed, more tears, more hollow official condolences. After all the attacks we have seen in France, Belgium, Germany and especially Turkey these past several months what is left to say? Our reserves of shock and horror have almost run dry. In this age of rigid sectarianism and deep, self-righteous, unyielding social/political divisions we have come to expect these terror attacks as the new normal.

The fanatical Islamic group ISIS has claimed responsibility for the deadly New Year’s attack at an exclusive Istanbul nightclub. Turkish authorities have rounded up several of ‘usual suspects’ without managing to catch the actual gunman. Thousands of extra police were on duty in Istanbul on New Year’s Eve, yet somehow this gunman was able to take a taxi to the nightclub, calmly get out and retrieve his automatic weapon from the trunk of the car, shoot a policeman in front of the nightclub, go in the club, kill more than 30 people, and then escape into the night. His harsh image was caught on CCTV cameras, but now one suspects he is ‘in the wind’ and will never be found.

Gunman firing in the Istanbul nightclub
 This attack has ignited furious debate in Turkey about government incompetence and the consequences of its attacks on the secular lifestyle followed by millions of Turks. They claim the government has been promoting an Islamic agenda while actively suppressing secular reforms instituted by modern Turkey’s founder Kemal Atatürk. Indeed, government-approved sermons delivered in mosques in the Friday before New Year’s included sharp warnings about the illegality and immorality of New Year’s Eve celebrations.

Even Santa Claus was not safe. Long considered by the Islamic press as merely an agent of perfidious Christian and Western values Santa Claus was always on tricky ground in Turkey – despite Turkey being the birthplace of St. Nicholas. This year things got a little out of hand as armed thugs held a gun to the head of someone dressed up as Santa Claus. And no one from the government had anything to say about this incident despite their vacuous claims of tolerance and respect for other religions.  No wonder secularists are worried about the steady erosion of their lifestyle in an increasingly intolerant Turkey.

Even he is not safe in Turkey
In a broader context, the nightclub attack is an another stark symbol of the overall incompetence driving the country straight over the cliff. As a close friend put it, “What do you expect from a government that refuses to recognize the serious economic and social problems staring it in the face. As far as they are concerned this is the best possible of all worlds.”

Forget the incompetence for a minute. The policy U-Turns should leave the ruling AKP-supporters scratching their heads. Then: We hate Israel. Now: We love and need Israel. Then: We hate the evil Assad. He Must go. Now: Assad will play a key role in the reconstruction of Syria. Then: Russia is a real threat. Now: Russia can balance the malignant influence of the hypocritical West and protect Turkey’s real interests.”

By now the economic tail-spin has become apparent to almost everyone – except the one person who counts. Inflation is up, the currency is way down, unemployment is up, investment is down. President Tayyip Erdoğan still maintains that everything is going smoothly, and there is no need for any change. When the Turkish currency was sliding faster than a bob-sled he and his entourage made a very big show out of telling the hapless man-on-the-street to Be Patriotic and sell evil foreign currency. Sadly, a few naïve citizens actually believed him, and are now suffering losses as the Turkish Lira continues its disappearing act. One bank CEO recently told me there would be several large bankruptcies in 2017 as private sector companies find it impossible to repay foreign currency debt taken out when the Turkish currency was much stronger and semi-stable.

On top of the terror attacks a Turkish policeman, a highly-trained policeman, gunned down the Russian ambassador at a photography exhibition in Ankara. Apparently, the gunman waltzed around the metal detectors by showing his police ID. The Turkish government’s only response was to blame the now hated Fetullah Gülen who lives in the United States. So much for background checks for security officials charged with sensitive political protection duty.

Erdoğan can twist and turn and spin anyway he wants. But the empty shopping centers and hotels tell a different story. People are staying home, not going out.  Besides having less and less money to spend, no one wants to be in the wrong place at the wrong time and get caught in yet another terrorist attack.

Does he really understand what's happening around him
The Turkish army is now bogged down in Syria trying to take the small town of al-Bab from ISIS. The army entered Syria ostensibly to fight ISIS, but the real objective is to stop the advance of the Syrian Kurdish fighters along the southern border of Turkey. The president has declared that al-Bab is about to be taken any day. So far, the town remains in ISIS control and Turkish losses are mounting.  

Erdoğan and his flunkies have now resorted to ludicrous claims that the reason for the army’s difficulties in Syria is that the Americans are not giving enough support to Turkey's anti-ISIS fight. What utter and complete nonsense. What are they saying? The huge Turkish army can not defeat a rag-tag bunch of jihadis?? That should be embarrassing. But then, no degree of foolishness seems to embarrass this government. The U.S. and the Kurds have been fighting ISIS for a long time while Turkey only recently decided that ISIS was a real threat. Welcome to the real world. But then, these claims fit a usual pattern. None of the problems confronting Turkey are caused by the incompetence of government officials. Those problems are all caused by ‘outside influences.’

And now Erdoğan wants to change the constitution to give himself unlimited, unchecked power. It seems improbable that anyone would call today’s Turkey enough of a ‘success’ to warrant giving the president unlimited power. But maybe there are enough fervent Erdoğan supporters to give him what he wants despite the wreckage surrounding them. Turkish citizens might want to ask themselves the following question. If Turkey can suffer so much under limited presidential power, how much more will it suffer if the president has unlimited power?

Wednesday, 7 December 2016

The Opponent Who Refuses To Do What It Is Told

          Has Turkish President Tayyip Erdoğan finally met his match? Does he now have an opponent he cannot intimidate, he cannot fire, he cannot shut down, and he cannot throw in jail? So far, the dreaded opponent foreign currency , also known as the U.S. Dollar, is resisting all his usual tactics.

            He has resorted to the familiar yelling, stamping his feet, blaming foreign interests, and threatening dire revenge. Oh, he can rant and rave about the ‘tyranny of the dollar’, but this particular opponent pays no attention. Just this year the Lira has lost about 18% of its value against the dollar.  Over the last three months it is the worst performing currency in the world against the US Dollar. The standard remedy for this is to increase interest rates to make the Lira more attractive.
The 'enemy' that refuses to be intimidated

Not a pretty picture. Red line is the TL vs the USD since September 2016

But Erdoğan refuses to allow that. The Central Bank is nominally independent. The bankers may know better, but like every other bureaucrat in Turkey they are powerless to counter the president’s wishes. He believes that high interest rates limit economic growth. What he fails to appreciate is that a disappearing currency does more damage to the Turkish economy than higher interest rates could ever do.

How bad is situation getting? “We’ve totally lost it,” despaired one former senior official. “We have no monetary policy. Where’s the Central Bank? Where’s the Ministry of Finance? Ultimately, he’s going to have to raise interest rates to stabilize the currency. But I’m getting really tired of seeing the same movie over and over again.”

Exchange bureaux are the busiest places in Turkey these days
A leading economist put it even more bluntly. “We have a current account deficit and have to roll over $170 billion of short term debt every year. Our only strength is being globally integrated in trade and finance. Right now, we have reasonably smooth access to foreign capital. If he wants to destroy that . . .”

Any one over the age of 50 in Turkey can easily finish that sentence. All they have to do is recall the horrible decade of the 1970s. In addition to rising political violence there was a shortage of foreign currency which led, among other things, to frequent power cuts and lack of fuel oil for heating. People remember wearing overcoats in their offices because there was no heat. There was no electricity to run elevators. A friend was working in a school where they resorted to burning hazel nut shells for warmth.

            All that changed in the 1980s with a new currency regime that allowed easy access to much needed foreign currency allowing the Turkish economy to grow rapidly. That access is now under serious threat. And that threat has very serious consequences for the Turkish economy. Why? Because every facet of the economy – from manufacturing, retail, tourism, agriculture, to energy has become tied to the hated foreign currency.

            Turkey has a strong manufacturing base, but almost all the equipment in those factories is imported. Raw material for much of Turkish industrial and retail sectors is imported. One company, for example, makes fine woollen fabric, much of it for export. Where does the raw wool come from? Australia and New Zealand. Every drop of oil, every cubic meter of natural gas, every ounce of petrochemicals is imported. Turkish officials boast of the export numbers. But the vast majority of those exports contains goods, like the wool, that were first imported.

           In recent years, Turkish companies have borrowed billions in foreign currency to fuel their growth. Why foreign currency? Because in a world of zero interest rates it was cheaper than borrowing in Turkish Lira. That was a good plan . . . as long as the Turkish Lira remained stable. Now, however, these companies are faced with the massive problem of finding much more Turkish Lira to buy the foreign exchange with which to repay those loans.

            The president now resorts to ‘jaw-boning’, lecturing everyone to change their carefully hoarded foreign currency into Turkish Lira. The only problem is that every time he does that the value of the TL sinks even further. Then he says he is negotiating with Russia, Iran and China to change their trade with Turkey from foreign currency into local currency. Tough to see this working out well. Russia, for example, depends on exports of its massive natural resources – all priced in US dollars by the way -- to get vital foreign currency. The Turkish Lira does not qualify as a one of those vital foreign currencies. Even if Russia did agree to accept Turkish Lira, the value of those Lira would be tied to the US Dollar for every payment. So what would be gained?

Is he really going to accept TL for his precious natural gas?? Not too likely.
            He does have some ‘nuclear’ options that would certainly stop the Lira’s slide. But they would also stop everything else. About 50% of the deposit accounts in Turkey are in foreign currency. He could force conversion of those accounts into TL. Drastic and very, very painful for average Turkish citizens.

            He could also institute some sort of capital controls, limiting the movement of currency into and out of Turkey. Disastrous for Turkish companies who rely on free movement of currency to run their businesses. And what about those foreigners who invested hard currency in Turkey?  Can’t imagine them being very happy receiving bags of Turkish Lira when they sell out.

            Before inflicting ‘nuclear’ options on the long suffering Turkish public the president might want to share just where he and his ministers store their wealth. But no one should hold his breath for that bit of transparency.

            These steps are unlikely. But if the currency continues to weaken and his rants about ‘evil foreign manipulation’ and the ‘interest rate lobby’ fail to stem the tide there is, unfortunately, no telling what the president will resort to.