Nothing captures more what the failed Turkish coup is really about than A Fight for the Soul of the New Turkey, an insightful article written some nine years ago in the Turquie Européenne, an European journal (in French) on Turkish relations.
Ataturk founded modern Turkey in 1923. He abolished the fez, among other trappings of the collapsed Ottoman Empire. From the ashes of a once great empire, he ignited the country's aspirations to march forward in the 20th century and beyond.
I was a Speaker on China at the annual Forum Istanbul for five consecutive years celebrating Turkey's magical trajectory. Click here To me, Istanbul proudly showcases a unique romantic mixture of the East and West. Blue Mosque and other Islamic world heritage sites coexist with cool Taksim cafes and bars. State-of-the-art international businesses and conferences thrive in the midst of Turkish cultures and living quarters reminiscent of Nobel Laureate Orhan Pamuk's ancient Istanbul. A nascent East-meets-West modern democracy promises to inspire as the most beautiful sunset I ever experienced - that over the Bosphorus. Click here
However, in recent years, the country is becoming more Islamic and more authoritarian. Civil society is becoming more suppressed. Rather than dumping its authoritarian Ottoman past, the nation seems to be going Back to the Future as vision of an Ottoman renaissance beckons. While half of the country appears to support this vision, the other half is turning restless and wearied of a betrayal of Ataturk's dream.
The role of the military is never far from the surface. It has been playing a decisive role in coups in Turkey's recent past. However, this time around, the military leadership acted to thwart the legitimacy of regime change by force in line with modernist sentiments of the man in the street.
Underneath the surface, the struggle for Turkey's soul and future is becoming more pressing. The outcome is never more critical for a fractured Europe, a rising tide of militant Islamism, a potential Clash of Civilizations, and a tussle for preeminence between Western and Asian powers in an ever more inter-connected and inter-dependent world of the 21st century.
Prime Minister David Cameron gambled and lost on a Referendum to silence Euro-skeptics. With hindsight, he miscalculated the public mood and opened a Pandora's Box.
Many of the “Leave” voters, however, didn’t realize, or care, that the Referendum is not just about immigration, or taking back the country from Brussels. It’s nothing less than changing the historic composition, gravitas, and role of Britain, as well as the geopolitics in Europe and in the broader world.
For Britain herself, Brexit is likely to break up the union with Scotland and Northern Ireland. Demands for similar referendums elsewhere in the European Union are already being heard. A domino effect is likely to spell the beginning of the end of what has cemented European peace and stability after the Second World War.
The United Kingdom is the world's sixth largest economy with considerable financial and geopolitical assets. Without it, EU’s ability to harness responses to encroachments on European security, such as those from a resurgent Russia and a fractious Middle East, would be eclipsed. Its gravitas in other global or regional theatres will become less weighty. America will see its strongest ally cut off from the EU’s decision-making Click here. As pointed out in the New York Times, Britain would be rattling the Postwar Order as a pillar of stability .
The Brexit referendum outcome has scared many voters. Some 4 million people in the UK are petitioning for another Referendum. Some “Leavers” openly regretted their decision while some politicians call for Parliament to block its implementation. Click here
Technically, Parliament can ignore the Referendum, which is not constitutionally binding. But how can it legitimately overturn the will of a clear majority of voters? In any case, it is now up to a new Conservative leadership to formally invoke Article 50 of the Lisbon Treaty for Brexit to happen.
Article 50 will start the clock ticking on a two-year period to negotiate terms of departure. Even if no deal is reached, the UK’s membership will expire when this period ends. An extension is possible but only if agreed by all 27 remaining EU members. During this time, Britain would be debarred from EU decision-making. Any exit agreement must be unanimously approved by remaining EU members and endorsed by the European Parliament. With UK’s ambivalent and recalcitrant membership, the EU is in no mood to grant any more favours. “Pour encourager les autres”, so to speak. So once Article 50 is triggered, the UK will have little leverage on the outcome.
But there is no stipulated timetable when to activate Article 50. With rising European separatism and widespread market turmoil, the UK would have better negotiating leverage by not hurrying. Any Brexit arrangements are thus likely to come slowly, if at all. Click here
According to articles in Reuters and the New York Times, there can be many scenarios Click hereand here how negotiations with the EU may play out before and after invoking Article 50, including the prospect of a second referendum to remain within the EU on negotiated terms. The prospect of an early General Election remains a possibility Click here.
While some in the EU want to get Brexit over and done with to minimize contagion, the problems plaguing the EU are a loud wake-up call to reform the current rigid one-size-fits-all model which seems past its sell-by-date. The EU is a “flawed construction” needing thorough restructuring to give it new life, according to George Soros. Click here The widespread remorse caused by the emerging bleak future of Brexit and the growing EU-wide realization of the faulty EU system, may drive a bottoms-up momentum to transform the EU. Click here
As the EU is not yet a political union, perhaps a differentiated multi-track and multi-currency model may better suit different Members in the light of experience? Just like a club with various types of membership or “EU a la carte”, according to Nataxis, a Spanish Bank. By taking time on implementing Brexit, the UK may be able to provoke reforms for a stronger and less divided EU. The possibility therefore exists for a better deal for the UK to remain. If this should come to pass, it would then make perfect sense for the UK to hold another Referendum.
In the final analysis, what better political capital a new Conservative or Labour leadership would reap if it is seen to galvanize the reform for a better EU of which the UK, with Scotland and Northern Ireland intact, can remain a staunch member?
Whatever Brexit may turn out to be, it is a powerful manifestation of a rising tide in the West of anti-globalization, xenophobic nationalism, and inter-generational divide Click here. Nothing illustrates this better than the Donald Trump presidential campaign on the other side of the Atlantic.
According to latest PEW polling data, 57% of Americans, and similar majorities in many European countries, want their country to "deal with its own problems and let other countries deal with their own problems." Some 49% of Americans believe that "global economic engagement is a bad thing because it lowers wages and cost jobs.” “Both Europe and the U.S. are turning inward, and the ramifications for the global economic system set up after World War II are profound", says Alan Murray, Editor of Fortune Magazine. Click here
The implications extend well beyond the economic sphere. While the West starts to look more inwards, China is advancing more outwards. China is set to become one of the world’s top outbound investor by 2020, with the UK being the largest European recipient, according to the Financial Times Click here. China's outward tilt is set to redouble with launch of the Belt and Road initiative. While this helps to reduce China’s excess capacity, it addresses the world's critical infrastructural shortfall Click here. It also tallies with the world's “Fourth Industrial Revolution” in a new era of digital globalization and "connectography".
With a slowing economy, hanging debt problems, widespread corruption, powerful vested interests and an uncertain trajectory towards reforms, China’s rise is by no means assured Click here. However, with these inward and outward paradigm shifts, changes in global geopolitical influence and power distribution are bound to ensue, from which, unexpectedly, China and Russia may stand to gain for different reasons.
Regardless of the outcomes of Brexit and the Donald Trump campaign, both are symptomatic of popular anger and frustration with the negative impacts of "external" integration. Whether it's Britain for the British or America First, these apparently counter-intuitive phenomena are indicative of xenophobia and a popular desire to look inwards.
As reported in Fortune CEO Daily (15 June), according to latest PEW polling data, 57% of Americans, and similar majorities in many European countries, want their country to "deal with its own problems and let other countries deal with their own problems"; only 37% of Americans and around 40% in European countries are interested in helping "other countries deal with their problems." "Some 49% of Americans go even further, saying they believe "global economic engagement is a bad thing because it lowers wages and cost jobs," compared to just 44% "who think it is a good thing because it creates new markets and growth."
"Whatever voters decide, the message for business is clear. Both Europe and the U.S. are turning inward, and the ramifications for the global economic system set up after World War II are profound", says Alan Murray, Editor of Fortune Magazine.
The implications extend well beyond the economic sphere. As along with the swing of public opinions, the West starts to look more inwards, even if politically nuanced, China is rapidly moving more outwards.
"(a) Today the world invests some $2.5 trillion a year in the transportation, power, water, and telecom systems on which businesses and populations depend. Yet this amount continues to fall short of the world’s ever-expanding needs, which results in lower economic growth and deprives citizens of essential services.
(b) From 2016 through 2030, the world needs to invest about 3.8 percent of GDP, or an average of $3.3 trillion a year, in economic infrastructure just to support expected rates of growth. Emerging economies account for some 60 percent of that need. But if the current trajectory of under-investment continues, the world will fall short by roughly 11 percent, or $350 billion a year. The size of the gap triples if we consider the additional investment required to meet the new UN Sustainable Development Goals.
(c) Infrastructure investment has actually declined as a share of GDP in 11 of the G20 economies since the global financial crisis, despite glaring gaps and years of debate about the importance of shoring up foundational systems. Cutbacks have occurred in the European Union, the United States, Russia, and Mexico.By contrast, Canada, Turkey, and South Africa increased investment.
(d) There is substantial scope to increase public infrastructure investment. Governments can increase funding streams by raising user charges, capturing property value, or selling existing assets and recycling the proceeds for new infrastructure. In addition, public accounting standards could be brought in line with corporate accounting so infrastructure assets are depreciated over their life cycle rather than adding to deficits during construction. This change could reduce pro-cyclical public investment behavior.
(e) Corporate finance makes up about three-quarters of private finance. Unleashing investment in privatized sectors requires regulatory certainty and the ability to charge prices that produce an acceptable risk-adjusted return as well as enablers such as spectrum or land access, permits, and approvals.
(f) Public-private partnerships have assumed a greater role in infrastructure, although there is continued controversy about whether they deliver higher efficiency and lower costs. Either way, they will continue to be an important source of financing in the future. But since they account for only about 5 to 10 percent of total investment, they are unlikely to provide the silver bullet that will solve the funding gap. Public and corporate investment remain much larger issues.
(g) Institutional investors and banks have $120 trillion in assets that could partially support infrastructure projects. Some 87 percent of these funds originate from advanced economies, while the largest needs are in middle-income economies. Matching these investors with projects requires solid cross-border investment principles. Impediments that restrict the flow of financing, from regulatory rulings on investment in infrastructure assets to the absence of an efficient market, have to be addressed. The most important step, however, is improving the pipeline of bankable projects.
(h) Beyond ramping up finance, there is even bigger potential in making infrastructure spending more effective. Accelerating productivity growth in the construction industry, which has flat-lined for decades, can play a large role in this effort."
All the above suggests that given the uncertainty in corporate financing including the degree of private-funding risk aversion, public finance will most probably play a pre-dominant role in infrastructural projects.
This means that an increasingly important role is likely to be played by the newly-founded Asian Infrastructure Investment Bank (AIIB) with 57 Founding Members across the globe (expected to rise to a hundred by the end 2016), together with the BRICS's New Development Bank. It also means that given China's willingness to embrace better banking, project management and governance standards, China's trans-continental Belt and Road infrastructural investment initiative is likely to contribute towards reducing the global infrastructural deficit.
It is instructive that the European Bank for Reconstruction and Development (EBRD) has signed a cooperation agreement with the AIIB and has agreed to carry out joint projects with China’s Silk Road Fund. Click here
A new analytical report from the European Council on Foreign Relations (ECFR) suggests that the European Union is punching below it weight in its approach to Russian and Chinese integration of Eurasia. The following ECFR summary points to the Report's highlights -
"Moscow’s “Eurasian Economic Union” aims to create a Russian-dominated bloc to rival the EU, while Beijing’s “New Silk Road” wants to use financial power to place China at the heart of Eurasia. So far, Europe has treated these projects as unwelcome competition, and kept its distance.This new policy paper .... argues that Europe shouldn’t be afraid of Russian and Chinese efforts to integrate the Eurasian landmass, but should embrace these initiatives and absorb them into its international order, making use of its huge market, soft power, and long experience of regional integration".
"Europe should carve out its own role in Central Asia, deepening its relationship with key nations such as Kazakhstan. These countries need the EU’s market, and look to Europe to protect them from Russian – and to a lesser extent Chinese – control. Europe should ensure that no single country controls all energy routes through Eurasia, and back China’s projects in order to reduce Russia’s control over the region. Member states and EU bodies should invest in the New Silk Road, leveraging their money to ensure that the project meets European standards".
"Finally, Europe should set up a three-way mechanism for cooperation between the EU, EEU, and the New Silk Road, embracing the competition and drawing Eurasia further into its orbit".
Greetings! And the very best wishes to you and your family.
The outcome of a summer of uncertainties is awaited with bated breath. On 23 June, the fate of the UK Referendum on "Brexit" hangs in the balance. At the 18-21 July US National Convention, the Republican Party may well declare Donald Trump its Presidential Nominee. Meanwhile, the vicissitudes of China's economic restructuring and Great Power aspirations continue to confound and bewilder even the most seasoned China watchers. To many, in an increasingly connected world, China's Belt and Road initiative remains an enigma.
Hopefully, the following may offer a few insights into the world's changing dynamics for 2016 and beyond.
I have recently been elected Honorary President of a 1000-member Hong Kong and China-connected business association covering 15 different business sectors with deep and extensive business connections on the Mainland. Over the past 20 years, the Association has organized and received hundreds of China business delegations from and to the Mainland, Greater China, and other parts of the world. It is now-poised to expand business links with Europe and other regions, including investments, M & As, partnerships, marketing and distribution, capitalizing on China's Belt and Road Initiative.
Separately, and strictly in my own personal capacity, you are cordially invited to send me, in confidence, concise details of any proposition for cross-border M & As in any business sector on a no-commitment basis for either side, initially. These include any business or stand-alone assets for sale or acquisition. Please limit details per proposition to a one page self-contained PDF document, including key financial data, any photo images, and contact phone numbers and email addresses.
Relying on my extensive network of some professional contacts worldwide, I will try to match buy and sell sides, and, where appropriate and subject to mutually agreed terms, facilitate subsequent transactions, working with professionals in banking, insurance, due diligence, legal and accounting services as necessary.
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Cheer up and chill out
While the Year of the Monkey seems to be filled with doom and gloom, you may find joy, hope, inspiration, fun and humor, and perhaps wisdom in my website's repertoire of music, videos, songs and words, There is also a collection in Chinese.
An invitation to breakfast or afternoon tea in Catalonia, Spain
During August to October this year, I will be staying in London. Please drop me a line if you want to take advantage of my presence there.
From 29 August to 3 September, I will be enjoying a short family holiday at the Castell-Platja d'Aro, Catalonia, Spain. If you happen to be in the vicinity, you are most welcome to visit us at the Castell for breakfast or afternoon tea. But please email us early.
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At the invitation of National Geographic, I gave a two-hour TV interview in Berlin on 23 May at their temporary studio at the Robert Bosch Stiftung Building in Berlin on water conflicts between China and her neighbors, particularly India, which share the waters from the Tibetan Plateau. It is understood that my interview is to be used, together with other interviews and filming on location, for a four-part National Geographic TV documentary on global water scarcity and related conflicts, to be released worldwide in spring, 2017.