G-20: Let's Talk Turkey

Oh how the times change. This past week's G-20 summit in France proved that there's a new "Sick Man of Europe," and it's certainly not Turkey.

As ArabNews.com reports, The "Sick Man" is actually the "Sick Men-" the consortium of troubled Eurozone economies that includes Greece, Portugal, Ireland, Italy, and perhaps even Spain. The Cannes gathering mainly focused on the European debt saga that just seems to grow worse, and amid the European panic, Turkey played it cool. France's Nicolas Sarkozy met with Turkish President Abdullah Gul to agree on a broad platform of domestic as well as international financial reforms, and it was also announced that Turkey will play host to the G-20 meeting in 2014. The real story however, came after Cannes. Planning for the future, traditionally Westward-looking Turkey has taken note of the tumult in Europe and is now opting to diversify its trading partner portfolio.

The stable Erdogan government boasts the 17th largest economy in the world and at the beginning of 2011, Turkey recorded a 10.3 percent double-digit growth rate while many Western powers stood at the brink of a double-dip recession. And this is likely to continue. Turkey has a robust population of 70 million with the youngest average age in Europe at 29, and its diverse economy remains attractive to foreign investment.

Situated at the crossroads of east and west, Turkey has a geographic advantage when it comes to trade. As an Islamic state with a staunchly secular government, Ankara has no problem wooing both the Europeans and its partners in the Middle East. Nearly any any energy deal or pipeline from the Caspian to Europe goes through Turkey, and as an associate member of the European Union with a Customs Union agreement, it runs little risk of falling to Russian political manipulation like the Gazprom shenanigans up north in Ukraine. But with so much drama unfolding to the west with Europe and the east with the revolutions of the Arab Spring, Turkey has turned its eye outside its immediate region and has found a kindred secular spirit in Southeast Asia.

Turkey and Malaysia, while both secular regimes, have strong financial sectors that conform to Sharia law. This particular brand of 'Islamic Banking,' prohibits usury and investment in goods or services that are considered contrary to Islamic principles. Recently, Turkey and Malaysia have signed agreements to increase trade and work together on originating Sukuk, the bonds unique to Sharia-style finance. Malaysia has a dual banking center that trades both Islamic and customary financial assets. Turkey, looking to open up its own financial sector, can look to Malaysia for guidance and support.

At a G-20 rife with gloomy financial woes, Turkey has emerged as one of the few points of optimism, and Ankara's shrewdness predicts its continued success.

-Rachel

G20: Brazil and an attempt at tough love.

“The Brazilian message will be: ‘You have to get your game together and make some decisions’,” claimed David Fleischer, a political scientist from the University of Brasilia.

Brazil is prepared to aid the EU through monetary contributions to the IMF, but needs to see a more detailed report on the intended implementation of resources before committing specific figures. Brazilian authorities and other BRIC country officials held a meeting prior to the beginning of the G20 summit to discuss a coordinated aid effort to the IMF, which would be of substantial help to the IMF. Although Brazil has $350 billion in foreign reserves, China has an estimated $3.2 trillion. China has thus far committed $100 billion, the equivalent of which for Brazil would be $11 billion.

Between the financial crises erupting in Europe and the United States, and the economic slowing of China, Brazil’s greatest trading partner, the concern of impending shockwaves is legitimate. With all this success, it is growing fears of recession “contagion” that has emphasized the need for Dilma’s attempt at tough love.

The Brazilian economy faired the 2008 financial crisis fairly well, dropping from a relatively low level of economic damage and a quick recovery (real GDP growth dropped in 2008 from a fairly steady 5.1-5.7 down to -0.7 in 2009, but then rapidly climbed up to 3.5 in 2010 and continues to grow).

Economically, Brazil’s near future is even brighter: the poverty rate in Brazil has halved over the last two decades, and economic disparity among Brazilians, measured by the Gini coefficient, is continuing to drop. This is largely due to economic and social reforms set forth during former President Lula da Silva’s term, where he expanded the size of the middle class by 29 million people.

GDP per person has been growing steadily, and according to the Economist Intelligence Unit, Brazil’s economy is expected to exceed Britain’s economy this year to become the sixth largest economy in the world this year.

For Brazil, avoiding falling south the way of Europe, encouraging growth of global markets, and improving economic and social conditions at home are of the utmost importance. Although negotiations at the G20 could be said to have produced less-than concrete results thus far, Brazil is willing to give aid where it can, and is in a considerably better position than many of its fellow G20 participants.

- Liana Mitlyng Day