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TURKEY WAS JUST beginning to look like a neglected and potentially fruitful target for foreign direct investment. But a government skirmish with the military, the slow pace of reform and recent investor flight from emerging markets have taken it back towards the bottom of the FDI hit list.
A headline-grabbing showdown between the moderately Islamist government and the secularist military and establishment over religious education is casting a long shadow.
As recently as March, Turkey played host to a team of influential executives, the Investment Advisory Council, including Citigroup's Michael Klein and Mitsui's Norio Shoji, and led by World Bank president James D Wolfensohn. All of them claimed that Turkey was on the verge of transformation, amid new stability, near single digit inflation and the looming embrace of the EU. "Turkey can be a magnet for FDI, the country has huge potential," Wolfensohn said, wrapping up the first meeting of the council, which has been set up by the International Finance Corporation/World Bank's Foreign Investment Advisory Service to improve Turkey's investment climate.
Such talk is music to the ears of business and political leaders.