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Skip Navigation LinksHome :: Back Issues :: Three Turks in Italy

July 2000

Three Turks in Italy


This is not an adaptation of Rossini’s opera Il turco in Italia. Rather it is an attempt by three Turkish bureaucrats to find sustenance – outside their own country – for their ambitious economic programme. Turkey’s central bank governor, treasury under-secretary, and stock exchange chief, roadshow their country to investors in western Europe. They are later joined in London by privatization boss Ugur Bayar. Metin Munir goes along for the ride




We are standing in front of La Scala restaurant in Milan, engulfed in heat and a sense of failure, waiting for the limousines which will take us to the airport. Our little group includes bankers from Garanti Securities and Merrill Lynch and three of the four king-pins of Turkey's financial bureaucracy: treasury under-secretary Selcuk Demiralp, central bank governor Gazi Ercel and Istanbul Stock Exchange chairman Osman Birsen. The fourth, Privatization Administration chairman Ugur Bayar, will join us in London, which is our next port of call.
We are on a three-day road show covering Frankfurt, Milan and London - in that order - to convince investors that Turkey has got serious about putting its house in order.
Turkey has an atrocious record for economic discipline. Britain's inflation at 0.5% a year, the lowest in Europe, is something the Turkish economy can manage in three days or at most a week. "You think you have inflation? We have inflation," is the proud boast of the Turk.
So the task facing Demiralp&Co is not an easy one. But our sense of failure is not about that, but something more basic. We had seen prospective investors tuck into their lunch while the trio made a good case for Turkey's economic U-turn.
The agony comes from having failed, even in this famous north Italian city, to satisfy our personal gastronomic ambitions - to eat a first class Italian meal. Yesterday in Frankfurt we stayed long enough to brief a roomful of German investors around a dining table on the virtues of the Turkish economic programme - the food was definitely mitteleuropa. As we left for Italy we began to salivate at the prospect of some good Italian food. Alitalia's business class didn't deliver the goods. Nor did dinner at Milan's Four Seasons Hotel, or lunch at the restaurant La Scala, which was disappointing mid-atlantic cuisine. We might have done better in Frankfurt's West-End, with its raft of Italian eating houses.
But stock exchange chairman Birsen is philosophical. "I like Milan," he says, gazing at the statue of Leonardo da Vinci which stands in the middle of the square. It's a question of investing the time in research. "We should come back." "We will," says treasury boss Demiralp. "As long as they have cash and we have words to say." "Next time we should stay at least eight days," says Birsen. That should be time enough to find the best saltimbocca alla Milanese in town. Birsen looks fierce, but on a trip like this he turns out to be a man of wit, with a ready laugh.
"You're right," says Demiralp. "This story has to be told slowly and really well - over some nice Italian food." "If you tell it just once," agrees Birsen, "they may not quite grasp the detail." Birsen can afford to laugh.
He's by far the best paid of these officials, and he sits in Istanbul, away from the bureaucrats and politicians in Ankara.
Holding the purse-strings
Treasury boss Demiralp, who has to face the politicians every day, is deeply envious. "This guy is relaxed," he says of Birsen, who has burst into another fit of laughter. "I am unrelaxed." Central bank governor Ercel is somewhere between the two.
He obviously loves his job, and, unlike Demiralp who holds the purse-strings, doesn't have to say no to politicians quite as much.
Ercel will be more than happy to do another five-year term when his contract expires next year. Demiralp would probably have been happier to be fired five years ago. Many of his predecessors were, or they resigned because they found the job impossible - Mustafa Egilmez, Murat Kudat, to name just two. These three have known each other for decades. Ercel and Birsen went to the same university and all three started off at the ministry of finance. Their stints in Washington representing Turkey overlapped or followed each another.
Bayar, the privatization chief, is a different animal: he is the scion of a wealthy political family who gave up a fat private sector salary to work for the government. He is polished and dapper. He studied abroad and speaks faultless English. Many people believe that if he plays his cards right he could enter politics high up the ladder.
It is probably the dedication and enthusiasm of these men that engages their audience, more than the story they have to tell. During the past few years they have many times had to coax increasing amounts of money from investors to soften the impact of the latest financial crisis that has hit their country.
This time, however, the four senior financial officials have a different task. Their goal is not to raise money but to explain Turkey's sweeping economic reform programme to somewhat sceptical investors. "Haven't we seen this film before?" some of them ask.
The road-show is organized by Garanti Securities, one of Turkey's leading investment banks, and Merrill Lynch. Although they are sharing the bill and appear to be co-managing events, each has a slightly different agenda.
Merrill wants to do "a bit of bonding" - in the words of one investment banker - with the treasury's Demiralp and to show its clients it has the highest contacts in Turkey. Garanti Securities, which co-hosts a breakfast for Demiralp and Ercel with the National Bank of Greece, wants to show the bureaucrats that its expertise and strength goes beyond the boundaries of Turkey.
The Turkish delegation tries to convince investors that solid achievements, not just promises, underlie the three-year disinflation and structural reform programme now in its sixth month. After 20 years of chronic high inflation, high interest rates, and increasing budget deficits they realize they have a difficult challenge to convince investors that Turkey has changed its tune.
"This time we must demonstrate by actions, not words, that we are serious about reforming our economy," says Ercel. He says he's fed up with the number of noughts he has to write every time he signs a cheque. (Ercel has already made plans to discard some zeros from the Turkish lira in January 2002 - the date that euro notes and coins are introduced in the eurozone.)."I am ashamed of putting my signature under so many zeros," he says. "We want Turkey to become a first-class country in the world." Ercel continues: "Over the last decade the Turkish economy was characterized by high real growth, but this growth was overshadowed to a large degree by our inability to correct the well-known imbalances of high inflation and high interest rates."
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