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News Round Up From Turkey – 26.01.2021

In the battle against Covid-19, Turkey has taken delivery of 6.5 million doses of CoronaVac, the vaccine which has been developed by Chinese company Sinovac Biotech.  The consignment follows the earlier delivery of 3 million doses, which has enabled Turkey to innoculate 1.27 million people so far, mostly health workers, care home staff and residents but the programme has now been extended to enable people aged 80 and over to receive their Covid-19 vaccinations.

The Health Ministry will test the new shipment, which medics say takes around two weeks, before the vaccines are administered and a further delivery of 3.5 million doses is also on order.

Fresh Talks Begin Between Turkey & Greece

Yesterday saw the launch of diplomatic talks between Turkey and Greece, the first in almost 5 years.  The negotiations will attempt to address their disputes relating to sovereignty rights in the Eastern Mediterranean and it is believed that the talks will further improve relationships between the two countries.

Reports from the meeting state that recent developments in the Eastern Mediterranean, the current situation and future possible steps were discussed.  Turkey’s Presidential spokesperson, Ibrahim Kalin later tweeted that Turkey is hoping for regional peace and stability and that a solution to all problems is possible.

It is believed that the two countries will initiate talks surrounding the world’s most recently discovered regions of proven natural gas reserves.

2020 saw an escalation of hostility between the two countries, which resulted in the setting up of a hotline between Athens and Ankara, both NATO members, so that any conflicts, whether at sea or air, could be de-escalated quickly.

Both the Greek Foreign Minister, Nikos Dendias and the Turkish Foreign Minister, Mevlüt Çavuşoğlu, are quoted as saying said over the weekend that they are entering the exploratory talks “in good faith”.

The current talks were initiated on 11th January, when Ankara officially invited Greece to resume dialogue, demonstrating Turkey’s wishes for further dialogue, cooperation and resolution.  The invitation was accepted by Greek Prime Minister Kyriakos Mitsotakis, on 20th January, when he stated that his country would join the talks with “optimism and confidence.”

 

 

 

EU Bosses Welcome Turkey’s Recent Diplomatic Efforts

The recent meeting, between Turkey & Greece, has been met with optimism from members of the EU, who have already declared that they will discuss relations with Turkey again in March.

European Council President, Charles Michel, yesterday welcomed the latest development between Turkey & Greece and stated that the EU is “looking forward to resumption of exploratory talks between the two countries.

Turkey’s Foreign Minister, Mevlut Cavusoglu met with top EU officials in Brussels last week, which Ankara hopes will result in a return visit to Ankara in a few weeks’ time.

Disputes between Turkey and Greece, surrounding the divided island of Cyprus and contested maritime boundaries, resulted in a meeting in Brussels on 10th December, following which France, Greece and the Greek Cypriot administration identified several Turkish targets to sanction,  although other EU states, including influential Germany, were in favour of a diplomatic approach.  Turkish leaders responded by reiterating their desire to resolve the problems through dialogue and negotiations, which hasn’t always been reciprocated by Athens.

The past few weeks, however, has seen a mellowing on all sides, as both Turkey and the EU have expressed desire to ‘turn a new page’.  Turkey has always maintained it’s desire to be a member of the EU, and it is anticipated that 2021 will see progress towards achieving that aim.

Late in 2020, Turkey also proposed a conference between all Mediterranean countries, including Turkish Cypriots, and are awaiting a response from the EU.  During last week’s Brussels meetings, Mr Cavusoglu repeated the request, adding that the region’s natural resources must be fairly distributed between both Cypriot parties, but Ankara feels that the EU has disregarded the rights of the Turkish side.

 

Foreign Investors Returning to Turkey

Eagerly awaited reform pledges, and the newly appointed head of the Central Bank, have been instrumental in attracting investors back to Turkey as over $15 billion has flowed into the country, since November, when the President, Recep Tayyip Erdogan promised a new ‘market friendly’ era.

This figure is expected to double mid-year, reports Reuters, following their interviews with more than a dozen foreign money managers.  Six Turkish bankers also told Reuters they expect foreigners to hold 10% of the debt by mid-year on between $7 billion to 15 billion of inflows. Deutsche Bank sees about $10 billion arriving.

 

London based Head of Emerging Markets at BlueBay Asset Management, Polina Kurdyavko is encouraged by the latest moves in Turkey and said “We have added to our exposure, and plan to keep it that way as long as we continue to see the orthodox steps”.

Another asset management company, Paris-based Carmignac, which manages $45 billion in assets, may also take the plunge after a year away.  Emerging debt fund manager, Joseph Mouawad, emerging debt fund manager says ““There could be some value in Turkish assets and we have started to look with a little bit more interest especially with the very high rates.”

Turkey’s asset valuations and real rates are among the most attractive globally and are also lifted by a wave of optimism over coronavirus vaccines and economic rebound that pushed EM inflows to their highest level since 2013 in the fourth quarter, according to the Institute of International Finance (IIF).

Whilst the Turkish Lira touched a record low in early November, the day before Naci Ağbal took the reins of the Central Bank of the Republic of Turkey (CBRT), it has since been gaining value, following the hawkish messages and moves by the bank, with interest rates being hiked from 10.25% to17%, and a promise of even tighter measures if needed.

Such measures are encouraging some foreign investors who, after almost abandoning Turkish assets in recent years, are now giving Turkey another look.

In November Mr Erdoğan promised a slate of judicial and economic reforms. He said the country will bring in structural reforms to break the “triangle of evil” of interest rates, inflation and exchange rates, adding Ankara was determined to form a system based on production and employment.

Mr Erdoğan added that 2021 would be “the year of democratic and economic reforms” and that it would present the reforms to parliament “as soon as possible.”

 

 

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