N. Y. ULCHENKO

Candidate of Economic Sciences

Institute of Oriental Studies of the Russian Academy of Sciences

Turkey Keywords:, external sources of financing, FDI, loans, geographical structure of capital inflows, foreign policy priorities

Recently, the process of forming a new system of priorities in Turkey's foreign policy has been actively discussed. According to many analysts, Turkey's attachment to the Western states, which were its main allies until recently, is weakening, and ties in the region, including with the countries of the Arab East, are strengthening. However, such a change of priorities can only be more justified if they are supported by a reorientation of Turkey's foreign economic and, above all, external financial relations. Termination of credit cooperation between Turkey and the International Monetary Fund (IMF)in 2008 This is not yet a sufficient reason to state serious changes in the geographical structure of capital imports.

So how high is Turkey's dependence on external financial flows to influence the country's system of foreign policy priorities? And are there any changes in the geographical origin of these flows that are sufficient to support a change in the country's foreign policy orientation?

ECONOMIC GROWTH IS NOT ONLY ON ITS OWN BASIS

An analysis of the economic growth process in Turkey during the rule of the Justice and Development Party (AKP) from the end of 2002 to the present suggests that it is taking place against the background of a noticeable increase in the current account deficit of the balance of payments.

As you know, the current account deficit of the balance of payments is the difference between savings and investments of the national economy. In other words, it corresponds to the part of the investment that is provided by external sources of financing. Therefore, the macroeconomic significance of the current account deficit in the balance of payments is not only that it allows us to draw a conclusion about the dependence of the national economy and its growth on the inflow of resources from outside, but also to estimate the specific size of this dependence in absolute terms, or, for example, on the basis of attributing the size of the deficit to GDP.

In 2002, Turkey's current account deficit was less than $^1.5 bn1. Steadily rising, in 2008 it already amounted to $42 billion. After falling to $14 billion in the 2009 crisis, it exceeded the pre-crisis level in 2010 and reached $49 billion.² According to the Central Bank of Turkey, this indicator increased even more significantly in 2011, reaching $77 billion.³

Table 1 shows the relative size of the current account deficit for Turkey in the period under review (% of GDP). As we can see, they also grew significantly after the AKP came to power and over the past few years have remained at the rate of 6-7% of GDP, with the exception of the crisis in 2009.

Another indicator of the dependence of the national economy and its growth model on external financing is the size and dynamics of external debt. But they, in turn, in the

Table 1

Current account deficit (% of GDP)

* Estimated data.

Calculated by: TOBB. Ekonomik Rapor 2003. Ankara, 2004, s. 109, 129; TOBB. Ekonomik Rapor 2009, s. 107; TOBB. Ekonomik Rapor 2010, Ankara, s. 116,144; www.tcmb.gov.tr; Economic Intelligence Unit. Country Forecast. Turkey. London, April 2011, p. 11.

Table 2

Leading countries in terms of total FDI in Turkey (1980-2002)

Compiled by: T. C. Bapbakanlyk Magazine Musteparlydy. Yabancy Sermaye Genel Mudurludu. Yabancy Sermaye Raporu 2002. Ankara, Pubat 2003, s. 52.

It is largely determined by the presence and size of the current account deficit in the balance of payments. Therefore, it is quite expected that Turkey's external debt has grown from $144 billion in 2003 to $290 billion. in 2010, although its ratio to GNP fell from 60% to 39% ⁴. In the first three quarters of 2011, the country's external debt totaled $310.5 billion.

The share of the private sector in long-term external debt, which was 24% in 2003, reached 55% in 2010, which, by the way, is not the highest indicator in recent years. In 2008-2009. it was about 60%⁶. Such structural changes should be associated with an increase in the balance of public finances, the use of the principle of maintaining a primary budget surplus (a budget whose balance sheet does not take into account interest payments on public debt - N. U.), which makes it possible to find a significant part of funds to repay the accumulated public debt at the expense of budget revenues, and also-with a parallel increase in the role of the private sector in the investment process within the framework of the modern model of economic development of Turkey.

In the total volume of investment in the national economy, the share of the state decreased from 32% in 2002 to less than 20% by the end of the first decade of the 2000s.⁷ As a result, the main role in the country's economic development and in finding additional financing for it abroad was transferred to the private sector of the country. In the structure of short-term debt, the dominance of the private sector was formed much earlier and continued throughout the entire period under review-it accounted for 80-90% of its total volume.⁸

FDI IN TURKEY: HOW MUCH AND FROM WHERE

Recognizing that the scale of the Turkish economy's dependence on external sources of financing is quite significant, we will proceed to a consistent analysis of their structure. To this end, we will follow the same order of accounting that is used in drawing up the country's balance of payments, or rather, its second part-the capital account. It reflects how the country's economy strives to attract the minimum required amount of external financing, which is formed by the size of the current account deficit and the volume of payments of principal amounts of debt that have reached maturity.

So, a large, including stabilizing, role in the development of Turkey in recent years has been played by sharply increased foreign direct investment (FDI): in 2002, Turkey managed to attract only $1.1 billion, and in 2007 - over $22 billion. (maximum indicator). However, in the post-crisis period of 2010, their volume slightly exceeded $9 billion, ⁹ but in the first eleven months of 2011, it increased to $12 billion, showing an increase of 70% compared to the same period of ^2010.10.

Has the geography of investors changed over the years of AKP rule? In the period from 1980 to 2002, France was the leader in the volume of permitted investments of private foreign capital (see Table 2).

It was followed by the Netherlands and Germany, with the United States in fourth position. At the same time, in the list of the largest investors from among the countries whose role is expected to increase in the current foreign policy situation of Turkey, only Saudi Arabia appeared in 10th place with a total investment of only $320 million. Further, dozens of leaders are already far beyond the borders: Bahrain is in 18th place with $166 million and Iran is in 22nd place, which has invested only $118 million in the Turkish economy over 20 years.

The picture was somewhat different in terms of the volume of actual investments of foreign business capital made in different years.¹¹ But the differences were rather in the details, without changing the general trends. Thus, in 1999, the top three countries were the United States (31% of total investment), Germany (28%), and Bahrain (19%). In 2002, the leaders were Italy (43%), Germany (17%), and the Netherlands (15%)¹².

Table 3

Geographical structure of FDI in Turkey in 2003-2011 (%)

* Data for January-October 2011

Рассчитано по: T. C. Basbakanlik Hazine Mustesarligi. Yabanci Sermaye Genel Mudurlugu. Uluslararasi Dogrudan Yatirim Verileri Bulteni. Ankara, Subat 2007, s. 16; T. C. Basbakanlik Hazine Mustejarligi. Yabanci Sermaye Genel Mudurlugu. Uluslararasi Dogrudan Yatirim Verileri Bulteni. Ankara, Mayis 2011, s. 15; T. C. Ekonomi Bakanligi. Tesvik Uygulama ve Yabanci Sermaye Genel Mudurlugu. Uluslararasi Dogrudan Yatirim Verileri Bulteni. Ankara, Ocak 2012, s. 15.

If we analyze the regional and geographical distribution of direct investment received in the country, in 2002, 73% of 622 million came from the EU countries, only 11% from Asia, and just over 1% from the Persian Gulf countries.¹³

Thus, Western Europe and the United States remained the leaders in this indicator, with only a few exceptions, and consequently, Turkey's foreign policy priorities were reinforced by the importance of the main partner countries as private investors in the country's economy.

In the regional and geographical distribution of investments received in the country after 2002, the following main trends attract attention: a steady preservation of leadership for the EU countries, rather strong fluctuations in the positions of US investors, and although unstable, there is still a slight increase in the relative scale of the presence of investors from Asia (see Table 3).

As for Western European investors, the main trend here is a gradual decrease in the pronounced predominance of leading countries in the total flow of European investment (for example, in 2006 and 2007, the Netherlands became such with a share of about 30%, and in 2008 - the Netherlands, England and Germany, but with shares of 8-9%).) and ensuring Europe's leading position through the combined and more even investment presence of a wider range of countries in the region.

The years 2009-2010 were not marked by a pronounced investment leadership of any of the countries, which, however, may be due to a less favorable overall economic situation for making large investments abroad. In 2011, the Netherlands again managed to strengthen its position, but its share in total investments did not exceed 11%. Against this background, the positions of the countries of Western Europe that are classified as other, that is, not included in the top five - Germany, France, Holland, England and Italy-remained strong. Thus, the scheme that ensures the leadership of Western Europe in terms of the share of FDI in Turkey is somewhat changing, but the fact of its dominance with an average share of about 70%ⁱⁿ 2003-201114 and a rather insignificant spread of indicators for individual years around the average value remains unchanged.

The share of investments from the United States ranged from 2 to 7%. The exception was in 2007, when they accounted for more than 20% of the total FDI inflows to Turkey.

As for investments from Asian countries, there is certainly a very significant correlation, close to 1, between the presence of investors from this part of the world and the Persian Gulf countries. In other words, the Asian vector of investment is almost entirely provided by their inflow from this region.

Attention is drawn to 2005, when for the first time there was a significant increase in the share of investments coming from the Persian Gulf countries - they accounted for almost 20% of their total volume. In subsequent years, the relative size of the presence of Gulf investors was lower, but they accounted for an average of 8% of total FDI inflows15 in 2005-2011, which is significantly higher than their share in the cumulative volume of FDI in 1991-2002-about ¹%. It should be noted that the volume of investment from these countries is exposed to global fluctuations in the economic environment-

Table 4

Geographical structure of Turkey's long-term private sector debt, 2002-2011 (%)

Рассчитано по: http://www.tcmb.gov.tr/yeniler/OzelSektorunYurtdisindanSagladigiKrediBorcu (Aralik 2011).

ry. During the years of its deterioration, the investment activity of these countries in Turkey (relative and absolute) declined, as did the activity of Western players.

Further, the structure of the country's balance of payments examines the dynamics of portfolio investments, but here we do not have information about the country of origin of capital invested in the purchase of shares and securities of Turkish issuers.

WHY IS THE EXTERNAL DEBT GROWING?

Let's move on to analyzing the geographical structure of other investments, as they are called in the current balance of payments of Turkey. According to the IMF methodology, this item is the sum of such items as "other long-term capital" and "short-term capital". In other words, we are talking about various types of loans and loans from abroad. We have access to statistics on the use of long-term and short-term loans by the Turkish private sector. The illustrative nature of these data is quite sufficient, taking into account the above-mentioned transition of leadership in the use of external loans to the private sector. Indeed, for example, in the pre-crisis period of 2008, out of the total volume of other investments attracted by Turkey, $34.6 billion. Only $ 1.7 billion went to the central government, about $ 9.4 billion to banks, and the rest to " other sectors "(private non-financial organizations involved in the production of goods and services), which since 2004 have become more active borrowers than Turkish banks. ¹⁶ For comparison, as early as in 2003, the number of banks in Turkey increased significantly. Turkish banks and" other sectors " made loans in the amount of only $6 billion ¹⁷.

In the crisis of 2009, the "other sectors" were mainly engaged in debt repayment, while the banking sector managed to raise only $0.5 billion. loans. But in the following year, 2010, the situation quickly returned to the state of 2008, but, however, almost the entire amount of debt raised in $27 billion fell on Turkish banks.¹⁸ In any case, this trend has led to an increase in the share of the private sector in the total external debt of Turkey. On the one hand, this trend is quite consistent with the above-mentioned increase in the role of the private sector in ensuring the country's economic growth. On the other hand, one cannot help but be surprised at such a noticeable increase in external financial support for the Turkish business sector, the size of which noticeably exceeded both the net inflow of foreign direct investment and the scale of attracting foreign loans by Turkish banks. Some analysts attribute the changes in quantity to changes in quality - increased financial cooperation between Turkey and the Middle East. According to some of them, as a result of the activation of Turkey's foreign policy, "AKP-friendly businesses, managers and politicians got a chance to use their "Islamist" recommendations in the Arab world."-

Table 5

Geographical structure of short-term debt of the Turkish private sector (%)

Рассчитано по: http://www.tombs.gov.tr/yeniler/-OzelSektorunYurtdisindanSagladigiKrediBorcu (Aralik 2011).

re, which has significant amounts of liquidity due to higher oil prices and is actively looking for investment opportunities in the neighboring region. " ¹⁹

Let's check this thesis by analyzing the available statistical data.

First of all, it should be noted that the absolute size of long-term credit indebtedness of the Turkish private sector is growing steadily and strongly, which is fully consistent with the data on the country's balance of payments and external debt discussed above: from $29 billion in 2002. it increased to $140 billion. in 2008 In 2009 it fell to $127 billion, and in 2010 - to $116 billion, but in 2011 it began to grow again, so that in the first seven months it amounted to $124 billion ²⁰. The geographical structure of external debt of the private sector is shown in table 4.

Thus, the share of Western European countries as a lender to Turkey not only did not decrease, but even increased by several percentage points, exceeding 70%, while at the beginning of the period it was only approaching this level.

Among European creditors, the position of Great Britain remained consistently leading, while the role of Germany decreased quite noticeably, which, nevertheless, was in the top three with the difference that in some years its second place was second only to the alternately towering Holland or Luxembourg. By the end of the period under review, the share of the United States in the long - term credit debt of the Turkish private sector had slightly decreased (by 4-6 percentage points). But the ceded positions were used by European lenders, rather than by Asian lenders, whose share remained fairly stable - 13-15%.

Among the Asian "rentiers", the strong position of Bahrain, whose share, as a rule, was slightly more than 10%, is noteworthy. But it was by no means one of the lenders whose relative role had increased: during the period under review, its share in total lending remained no more than stable. The absolute size of loans extended by Bahrain has increased significantly (from $3.2 billion in 2002 to $18 billion). in 2008, followed by a slight decline) ²¹, but their growth rate did not exceed the rate at which the total credit debt of the private sector of the country increased. As for another Arab lender, the UAE, its already insignificant positions were squeezed out by such new lenders as Kazakhstan and Azerbaijan.

Thus, the geographical structure of long-term loans turned out to be even more conservative than FDI, and only slightly influenced by the overall process of diversification of foreign economic relations, which Turkey tried to implement in every possible way over the past decade, using the relative decrease in the severity of foreign policy challenges to activate the economic component of its national foreign policy.

As for the geographical structure of short-term loans received by the country's private sector, we have data as of July 2011. The distribution of total debt of $27 billion ²² is shown in table 5.

The first four positions in the table are occupied by countries that are really leaders in the volume of short-term loans granted. Further, the sample of countries is arbitrary and does not correspond to their ordinal number in the list of creditors in descending order of their share in the total amount of funds provided. Rather, their choice is determined by the desire to show the role of investor countries marked in other areas of external financing, as well as Russia. Thus, a pronounced dominance of Western countries is also observed when providing Turkey with short-term loans. Rather, the role of neighboring countries in the region is reduced to a nominal presence when performing a small part of the functional task.

Having considered the officially registered financing flows, we should focus on the problem of unclassified foreign exchange earnings, which are recorded in the balance of payments in the line "net errors and omissions". In recent years, the volume of such revenues has been significant. For example, in 2007 it amounted to $1.6 billion and

it gradually increased, reaching $12.4 billion in 2011.

During the years of the AKP's rule, first of all, this item went from negative (i.e., the outflow of funds not recorded in the official balance of payments items) to positive (revenue). Secondly, the inflow of currency through it really reaches quite significant proportions.

In September 2011, the Turkish media, citing the Central Bank, reported that the country received $10.6 billion from January to July. "unknown origin" ²³. We are talking about receipts under the article "net errors and omissions". These foreign currency funds have long attracted the attention of analysts, some of whom consider them to be the very support of Islamic capital operating in the country that is not publicly advertised at the official level, from Islamic capital operating outside of its borders, for example, from Saudi Arabia.

We do not have enough information to confirm or refute this assumption. Nevertheless, the opinion of the Turkish researcher Ugur Ciplak, a specialist of the Turkish Central Bank, who has studied the dynamics of this article in the balance of payments of Turkey, using available statistics since 1950, seems quite reasonable. He found that in times of crises and economic shocks, the negative values of the "net errors and omissions" item increase, while in the period of stable stable development, the inflow of funds recorded under it from abroad increases. The author rightly notes that the movement of capital under this article is primarily due to the activities of the non-banking private sector, which, from the point of view of statistical accounting of the movement of foreign currency assets, is less transparent than the activities of state institutions, including the Central Bank, and the banking sector.

Summing up the above, the author concludes that in times of economic instability, the private sector tends to withdraw foreign currency assets from the system (national economy), using, inter alia, illegal ways. On the contrary, in economically favorable conditions, it seeks to introduce them into the turnover of a successfully developing local economy. Therefore, according to U. According to Chyplaka, the increase in capital inflows under the "net errors and omissions" item was traditionally associated with a change in the algorithm of actions of local capital with foreign assets, and not foreign investors.²⁴ Nevertheless, it is fair to say that this kind of "historical" approach does not negate the possibility of new trends emerging.

Thus, the change in geographical priorities of Turkey's foreign policy noted by some analysts has not yet sufficiently affected the geography of attracting external sources of financing. These changes allow us to speak more or less confidently only about the diversification of Turkey's foreign economic, primarily financial ties within the framework of the concept of transition from "a state concerned with national security goals to a trading state". Therefore, it is probably premature to talk about the changes that have taken place in the configuration of foreign policy relations, given the continuing link of Turkish business to Western sources of financing, and in the case of FDI, to Western technologies. Moreover, Turkey's continued geographical alignment with Western countries in the system of foreign economic relations predetermines greater caution with which the country should approach changing foreign policy priorities, if it does not significantly limit the possibility of such a change in principle.

¹ TOBB. Ekonomik Rapor 2003. Ankara, 2004, s. 109.

² Ekonomik Rapor 2010, Ankara, 2011, s. 145.

³ See: official website of the Central Bank of the Republic of Turkey - http://www.tcmb.gov.tr

⁴ TOBB. Ekonomik Rapor 2006. Ankara, 2007, s. 109, 125; TOBB. Ekonomik Rapor2010, s. 121, 145.

⁵ http://www.hazine.gov.tr/irj/portal/anonymous?NavigationTarget=navurl://ca8a5b252efea63752 b1cb4e1cc81997&InitialNodeFirstLevel=true

⁶ Calculated by: TOBB. Ekonomik Rapor 2009. Ankara, 2010, s. 113; TOBB. Ekonomik Rapor2010, s. 121.

⁷ TUIK. Istatistik gostergeler 1923 - 2008. Ankara, 2009, s. 746.

⁸ Calculated by: TOBB. Ekonomik Rapor 2009, s. 113; TOBB Ekonomik Rapor 2010, s. 121.

⁹ TOBB. Ekonomik Rapor 2009, s. 109, TOBB Ekonomik Rapor 2010, s. 118.

¹⁰ T. C. Ekonomi Bakanligi. Uluslararasi Dogrudan Yatirim Verileri Bulteni. Ocak 2012, s. 3 - http://www.ekonomi.gov.tr/upload/6C97D742-9E8D-BC51-5694897A81B186EF/2011_12.pdf

¹¹ The estimate excludes domestic credit received by international companies from branches operating in other countries, non-resident expenses for purchasing real estate in Turkey, and direct investments of Turkish capital abroad.

¹² T. C. Basbakanlik Hazine Mustesarligi. Yabanci Sermaye Genel Mudurlugu. Yabanci Sermaye Raporu 2002. Ankara, Subat 2003, s. 50 - 51.

¹³ T. C. Basbakanlik Hazine Mustesarligi... Uluslararasi Dogrudan Yatirim Verileri Bulteni. Ankara, Subat 2007, s. 16.

¹⁴ is calculated from Table 2.

¹⁵ is calculated from the data in Table 2.

¹⁶ TOBB. Ekonomik Rapor 2010, s. 116.

¹⁷ Calculated by: Ekonomik Rapor 2009. Ankara, 2010, s. 107.

¹⁸ TOBB. Ekonomik Rapor 2010, s. 116.

^{Grigoriadis I. N.} 19 and Kamaras A. Foreign Direct Investment in Turkey: Historical Constrains and AKP Success Story // Middle Eastern Studies, Vol. 44, N 1, January 2008, p. 62.

²⁰ http://www.tcmb.gov.tr/yeniler/OzelSektorunYurtdisindanSagladigiKrediBorcu (Aralik 2011)

²¹ Ibidem.

²² Ibid.

²³ Milliyet, 13.09.2011.

²⁴ См. подробнее: Ciplak U. Odemeler Dengesinde "Net Hata ve Noksan" Kalemi uzerine Bir Degerlendirme. Ankara, 2005.

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