Wednesday, July 14, 2010

Why Obama needs Erdoğan and Netanyahu to get along

The United States is still on the brink of a once-in-a-lifetime economic depression, or so says economist Paul Krugman in his recent column for the New York Times.
The U.S., in the decades following the Great Depression of the 1930s, went through many tough quarrels around the world, mainly with its chief rival, the Soviet Union, survived scandals at the highest levels, such as Watergate, and was humiliated by war losses in Vietnam. However, the superiority of its mighty military and ever-growing economy, and the generally good handling of the rivalry with its arch enemy allowed America to enjoy the most advanced living standards and the status as the richest place in the world.
However, these days, the U.S. economy seems not to be able to recover at once. Following a housing crash, now more than two years ago, the U.S. economy still cannot make the sharp upturn as it did many times, such as the last time in the years following the dot-com bubble.
Today’s Keynesian prophet Mr. Krugman predicted the scenario of the United States’ third depression in the same opinion piece, and argued that unless governments around the world confront the current crisis, tens of millions will be unemployed for life.
Many free-market economists who believe the power of the “invisible hand” oppose Krugman’s recipe, which can be summarized as more government spending to dig its way out the recession, mainly by creating new jobs. However, these free-marketeers also lack the trust of people, due to the credit boom they helped create with their decades-long push for unregulated financial markets. America’s financial heart, Wall Street, apparently fooled the whole world for years with fake and cheap housing promises using its sophisticated banking instruments. As it turned out, the same Wall Street, hedged against these dreams that it sold, cashed out wildly even as the housing market exploded right after.
Dr. Guven Sak, the managing director of the Economic Policy Research Foundation of Turkey, or TEPAV, was in Washington last week to brief many interested American groups and circles at various think tanks to give some insights on the booming Turkish economy, not only through the financial policies of the Turkish administration, but also to explain them as the main drivers behind the pro-active Turkish foreign diplomacy of recent times.
According to Dr. Sak at a meeting during the week of the International Monetary Fund, the reason the Turkish banking sector was not hit by a credit crisis like the U.S. and many other Western countries were, was chiefly due to the Turkish banking system’s lack of high-tech financial derivates and sophisticated instruments – not exactly because the Turkish banking sector was well prepared for such a crisis, as was mostly reported.
June employment numbers in the U.S. are another disappointing story, and not exactly what should be expected following a year and half in which more than $1 trillion was spent through stimulus packages. According to new statistics, pending homes sales and construction both declined in May as well.
The White House is well aware that the green shots that were injected into the economy for months were supposed to create some serious numbers of new jobs by now, to prove how the Democrats made everything better before the November elections. This plan is clearly failing with the new economic indicators and U.S. President Barack Obama has angrily begun to go after the Republicans instead, often reminding of their own mismanagement of economic affairs for the last decade.
While the president has been sailing through these tough domestic fights before the November elections, the U.S. Congress had increased its pressure on the president in regard to his not-so-well relations with Israel.
Just two days before the very low-profile meeting between Obama and Turkish Prime Minister Recep Tayyip Erdoğan in Toronto last Saturday during the G-20 summit, the U.S. Senate passed a resolution (S. 548) to “express the sense of the Senate that Israel has an undeniable right to self-defense, and to condemn the recent destabilizing actions by extremists aboard the ship Mavi Marmara,” which was adopted anonymously.
The resolution, which came after two similar letters from the two chambers of the U.S. Congress in June, urged Obama and his administration to back up Israel more strongly, condemned “any future such attempts to break the Israeli blockade of Gaza for the purpose of creating or provoking violent confrontation” and “condemned the violent attack and provocation by extremists aboard the Mavi Marmara.”
The strong language of the resolution increased the heat on the Humanitarian Relief Foundation, or İHH, and called for an investigation to find out whether it has ties to terrorism. Mr. Daniel Benjamin, the U.S. State Department coordinator of counterterrorism, is said to be working on another file against the İHH that may eventually put the organization on the State Department’s designated terrorist list. According to another piece of information, which could not be confirmed by the State Department, the crew of the Mavi Marmara flotilla has already been put on the agency’s “no visa” list.
The Obama-Erdoğan meeting was realized under these circumstances, and according to the White House readout, the meeting was “candid” and, strong Washington sources said, “serious.” One of the White House senior administration officials described Erdoğan’s language in the meeting this way: “Your prime minister is having no difficulty expressing himself. He can well argue whatever he has on his mind.”
Senior White House officials are extremely cautious about saying anything that might be taken as criticism of the Turkish administration, even as background, in these recent hot weeks. This is contrary to Mr. Philip Gordon, the assistant secretary of state for Eurasia affairs, who invited the Associated Press’ Washington reporter himself to make some harsh remarks in which he questioned Turkey’s commitment when it comes to its Western ties. According to one credible source who had conversations with the participants of the Obama-Erdoğan meeting, Mr. Obama also relayed Mr. Gordon’s same tough messages “one by one” to Erdoğan during the meeting.
When asked, a senior White House official did not want to comment on whether President Obama specifically asked Erdoğan to mend ties with Israel, but confirmed that “we have encouraged both countries [Turkey and Israel] to undertake efforts to improve relations.”
While the U.S. was encouraging both sides, Turkish Foreign Minister Ahmet Davutoğlu and Israeli Industry, Trade and Labor Minister Benjamin Ben-Eliezer met secretly in Brussels three days after the Toronto meeting, as one of the first high-level talks between the countries since the flotilla crisis. According to reports, the Israelis signaled that they could apologize and compensate some of the damages of the flotilla crew, necessary and positive steps that need to be taken to mend ties in the decades-long relations.
While the developments proved that both Turkey and Israel realized during the episode that they need – and can hurt each other – more than they thought they would, both also claim that the request for the mentioned meeting came from the other side. The third and most favorable option would be Washington, a party that wanted the diplomatic relations to resume, which does not hide its desires to see both allies to get along better in these dangerous seasons for the world politics and economy.

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