Investing in Turkey

An island of stability in the Muslim world

Turkey stands out in the Middle East as an overwhelmingly Muslim country that has (for the most part) spurned theocratic forms of government, and currently enjoys rapid economic growth as well as economic and political stability.

Secularism

After the ottoman Empire fell apart following the first World War, a famously successful Ottoman general named Mustafa Kemal built the Ottoman successor state which came to be called Turkey. Kemal cemented his authority by completely defeating Greece. Kemal was a strategic genius who often found himself at a technological disadvantage to the West. Although he usually won victories anyway, he linked Islam and traditional Turkish values to technological backwardness. As the (popular) dictator-president of Turkey from 1921-38, he committed the Turkish state to radical secularism.

After Kemal died, the army saw itself as the guardian of Turkish secularism. Unfortunately, it also became extremely corrupt. Turkey has been a democracy most of the time, but the military has not hesitated to overthrow democratically-elected governments which it sees as threatening the secular foundations of Turkey.

Investing in modern Turkey

Turkey's wild swings between democracy and dictatorship, with plenty of inflation regardless of who held power, meant that investors were often victims in the crossfire between Turkish political factions. Surprisingly, this changed when the Justice and Development Party (AKP) won a huge victory in 2002 national elections. As a moderate Muslim party focused on economic development, the AKP has nonetheless been extremely successful at balancing economic liberalization with political stability. Most observers agree that the AKP has been the best steward of the Turkish economy in decades. Although there has been recent tension between the AKP and the military (which sees the AKP as vulnerable to political Islamism), Turkey remains a surprising new magnet for foreign investment, now that the AKP has brought macroeconomic and monetary stability to Turkey.