Turkey’s international isolation

Originally commission early 2015

When talking about engaging with international investors, we cannot ignore the impact of international relations on a political level. In Turkey, the perception of the country’s domestic risk environment impacts investor sentiment. Part of this is the country’s orientation internationally, which can directly affect the health of the investment environment via the success or not of trade agreements or other such partnerships. Given this, it is concerning that Turkey has featured a lot in the press recently with relation to claims that the country is becoming increasingly isolated on the international stage. Articles appeared in the Center for American Progress, The New York Times and Project Syndicate all criticizing Turkey’s current international stance. These were pointed out in an article appearing in the Turkish Review (“Turkey: an un-allied territory?”, 20 March, 2015), which, to broadly summarize, noted that, while Turkey has turned away from some of its traditional partners, this has not been in the form of a pivot towards new ones.

The significance of this for the investor relations community in Turkey is twofold. The argument presented in the Turkish Review article is that the country may risk suffering from worsening political isolation as time goes on. Such a situation could also result in economic isolation, leaving Turkey out of the running for juicy trade deals or economic pacts. Thus, in broad terms this represents a potential upcoming risk factor for Turkish business, which as we argue (see: “In good time and bad, communication is key”, 19 February, 2015), is something that IR departments should be showing to their stakeholders that they are taking seriously.

The other issue of relevance for IR departments is how Turkey appears in the international press. The New York Times may be among the most influential publications on the planet in terms of how ideas it puts forward can enter mass consciousness. At a time when Turkey’s immediate neighborhood is in turmoil, the last thing the country needs is an article that paints the country as somehow unreceptive to international investment. While observers on the ground or who follow Turkey closely know that Istanbul is a million miles from Baghdad in terms of risks, from afar this is not always apparent. Thus, when these sorts of stories emerge, Turkish IR departments need to be proactive in countering their narrative with one of their own that shows Turkey as receptive and welcoming to the outside world. Few companies do this but those that do will be able to differentiate themselves from the crowd and attract the warier investors.

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