Going old Turkey: a regional power spreads

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135 gigabytes of network busy. Taxes and fees extra. See mintmobile.com. Hello and welcome to the Intelligence on Economist Radio. I'm your host, Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. The World bank recently blessed Tanzania with classification as a middle income country based on years of reports of strong economic growth. But we pick apart the numbers behind those reports and there's definitely something that doesn't add up. And the stunning ruins of the Acropolis loom over Athens. Locals are rightly proud of the site. So when a hotel went up that blocked their view, petitions and lawsuits soon followed. Now two floors of it have to be lopped off. And other hotels plans are on hold. But first, A decade ago, Turkey's foreign Minister, Ahmet Davutolu used to boast his country was on good terms with everyone.

Policy of engagement, less confrontation, less tense attitude, especially in the region.

He spoke at the Council on Foreign Relations.

We developed a principle in 2003. We declared zero problems with our neighbors and we made a huge progress.

All that now seems a distant memory. Turkey is growing its international influence and not always with a light touch. The country has been backing Libya's government in its civil war. Last month, the Turkish defense minister landed in Libya to inspect his troops and an opposition warlord warned them to get out or else. Turkey prompted an angry statement from Egypt last week by allegedly planning gas exploration in Egyptian waters. And yesterday, Turkish officials railed against an American company for its dealings with ethnic Kurds in neighboring Syria that Turkey believes to be terrorists. To some, all this adventurism is reminiscent of a past chapter of the country's history, when the Ottoman Empire ruled all of Syria and far beyond. Turkey has been playing an especially prominent role in Syria since protests spread into a full blown civil war.

Turkey has really become enmeshed in Syria since the start of the Arab Spring, the uprisings that took place in 2011 across the middle East. It backed the Islamist movements that initially took to the streets and then took up arms.

Nicholas Pelham is our Middle east correspondent.

But as those fighters were forced back towards its border, it's really stepped in to try and protect its southern border, stop any more refugees coming into the country and to provide some sort of safe zone for the. And it's also very nervous about the sort of Kurdish state that emerged in the northeast of the country. It feels very threatened by the emergence of Kurdish power on the southern borders.

And is it reasonable for Turkey to think that those Kurdish forces are really a threat?

Historically, there have been links between the PKK, the Kurdistan Workers Party, which has been waging a 35 year war for autonomy and separatism inside Turkey. Many of those fighters did flee some sort refuge in Iraq and in Syria. And so Turkey is worried about what it sees very much as a kind of PKK influenced state emerging on its southern borders. So this year it's been launching pretty heavy attacks inside Iraq. It's been sending tanks across the border, it's established positions inside northern Iraq. It's been carrying out drone and air bombardments up to 200 km from its border in Sinjar and Makhmur. Kurds all the way along its southern border inside Syria, inside Iraq see a new Turkish assault which is pushing deep into their territory and not just unsettling Kurdish aspirations for sovereignty in Iraq and Syria. And this is also unnerving Arab leaders as well who see Turkey pushing deep into territory which was part of the Turkish Republic's predecessor, the Ottoman Empire, which ruled the Middle east for centuries until its dissolution about a century ago.

Which is to say that Turkey is expanding its influence. It is doing this kind of adventurism beyond Iraq and Syria, all over the.

Middle east at the moment. This year has seen the new intervention of the Turkish army in Libya. They came to the rescue of the besieged government of National Accord in Tripoli, which has been fighting a civil war against a renegade, General Khalifa Hafta. Turkish forces establish an air base on the borders of Tunisia. We're seeing its frigates make a bid for control of the Libyan coastline and even ward off French frigates. We're really seeing a substantive increase in Turkish power across the Middle east. And it's not just happening in Libya, it's happening in Qatar, which is an ally of Turkey. Turkish forces there have tried to help Qatar break its blockade by Saudi Arabia. There are reports of anything from a few hundred to a few thousand Turkish forces that are there. We're seeing more Turkish interest in Yemen, civil war. We're seeing interest in a Sudanese port and actually Turkey's largest overseas base is in the Horn of Africa. So really this is a massive increase in Turkey's spread across the Middle East.

And do you believe that the Ottoman history plays into that? Is this a return to former glories in some way?

It's very much there in the rhetoric. Certainly we saw Mr. Erdogan played on Ottoman tropes at the height of the Arab Spring. He wanted to appear to be the leader of the Muslim world. He was promoting his version of Islamic governance across the region, hoping to clone the Turkish model across the Middle East. But since the collapse of Islamist movement, since its ousting from power in Egypt and the retreat of many of its forces, he's really kind of played much more on Turkey's national interests. He's allied domestically with what had been his nationalist opposition. He seems to be much more concerned on trying to maximize Turkey's economic claims in the Mediterranean. This seems much more about promoting Turkey's national interests than flying its Islamist colors. This is really an exercise in hard power and trying to exploit the weakness of others. The retreat of Europe and America from the Middle east, the parlour state of many Arab governments, and try and push Turkey to fill what seems to be a vacuum of power across the Middle East.

And so is that push to serve Turkey's national interests working? Is it benefiting from this expansionism?

If you're trying to put together a balance sheet of profit loss, balance sheet. Turkey has benefited from Qatari investment. Qatar's loans and investments have helped prop up the Turkish lira. It may be that Qatar is also helping to fund part of its military costs in Libya. Turkey is keen to promote its companies when it comes to the eventual reconstruction of water on Libya, which after all is an energy rich state. And so long term, there may be benefits. His critics at home highlight the cost. It's estimated that Turkish operations in Syria have cost anything up to about 30 billion doll. And of course there is the threat that you're going to see a major escalation in the Middle east which could embroil Turkey. It's not just Turkey which is entering the Middle east in force. It's also Russia. Many Arab states are trying to gain Russian support to push back Turkey. Not just Syria, but Egypt and the United Arab Emirates are looking to Russian support in Libya. And Egypt is sending its tanks to the Libyan borders. The UN warned that the risk of a regional war focused on Libya and beyond that, that risk was hu. So this is a massive gamble and it looks as if the stakes are going to be increasingly high for Turkey.

Thanks very much for your time, Nicholas.

Thank You, Jason, a pleasure as always to be with you.

For a lot more views and analysis like this from around the world, subscribe to the Economist to find the best introductory offer. Wherever you are, just go to economist.com intelligenceoffer the World bank assigns global economies to four income low, lower middle, upper middle and high income countries. About a month ago, it upgraded its rating of Tanzania from low to lower middle income. For the country's president, John Magufuli, this step up on the economic ladder was caused to celebrate, especially given that this is an election year. But a close reading of his government's financial figures, which trumpet a decade of almost 7% annual growth, suggest some striking gaps between what's being reported and what's actually happening on the ground.

So about a year ago, the imf, which publishes an annual look at each economy around the world, just about did a report on the Tanzanian economy that raised some questions about the reliability of the official growth numbers.

Kenley Salmon is the Economist's Africa correspondent.

But that report was actually blocked from publication. So really from then on, people have been wondering about the validity of some of the official numbers coming out of Tanzania.

More recently, you've been looking into the numbers yourself. What do you make of the current situation?

We took a look at the Central bank of Tanzania's own numbers for both growth and some of the other things that would normally go well with growth. Things like tax revenue, which is published in Excels on the bank of Tanzania's website. They show that tax revenue actually shrank in real terms in the last full fiscal year available. Very few economies grow at 7% while their tax revenues decline. Then we also looked at door to door surveys which were done in 2012 and then again in 2018, and they suggest that despite this apparent 7% growth for that time, still 49% of the population lives in extreme poverty. So there's really been no impact on people coming out of poverty from this apparent growth. We also looked at some private data. For example, when incomes rise, people tend to buy more beer. But actually revenue for Tanzania's biggest brewer fell in both 2018 and 2019. So things just don't seem to add up as you would expect.

And insofar as this plays into the World Bank's decision to rate Tanzania as middle income versus low income. What's at stake there? Why does a country like Tanzania want to have that label added?

Well, being recognized as middle income can be really important for politicians in the country to be able to say, look, we've been doing a good job. We've reached this official status and that's already something we've seen in Tanzania. The president, John Magufuli, has on Twitter trumpeted this achievement, boasted that it's happened five years ahead of plan. And so it's a really important thing from their perspective to be able to claim, and they're very glad to be recognized as it.

But why that disconnect though? Why hasn't the IMF had a stronger hand in making sure the numbers match the reality?

Well, I think obviously plenty of people have got their own angle on these numbers. But the big issue here is that lots of institutions that work with governments like Tanzania think, well, it's important to stay close to these governments to try and influence them in a policy positive direction. But of course, at some point that can also just end up endorsing dodgy numbers. And I think that's the risk that potentially these institutions are running here.

But if the notion here is sort of conferring that status on Tanzania to encourage good progress, good behavior, that doesn't square with blocking the report. That doesn't sound like good forthright behavior.

Well, that's right. And there have been also, in a way, even more worrying trends in what the Tanzanian government is up to domestically. They, for example, in 2017 arrested Zito Kabwe, one of the main opposition figures, simply for questioning the official growth numbers. In 2018, they made it a crime to question official statistics. There was an outcry about that, including from the World bank and the IMF. And that law was eventually toned down in 2019. But of course, people domestically who are trying to dig in and look at these numbers in Tanzania aren't entirely reassured. That's still a pretty alarming set of circumstances. And then perhaps even more worryingly, this year, when almost every country around the world is reporting COVID19 figures on a regular basis. Tanzania hasn't reported really any detailed numbers since May 7 and has recently claimed the country is coronavirus free.

So how does all of this, the suppression of debate, the discrepancy between what's being reported and what's actually happening, how does it play out as regards people trying to do business in Tanzania?

Well, it's a very difficult place to do business, or at least increasingly so. The rankings on things like the ease of doing business indicators, Tanzania has been dropping in recent years. And there are also specific examples. Acacia, which was a London listed gold miner, which was accused of underreporting its taxes, was hit with a fine of $190 billion, which is more than three times Tanzania's total GDP. Some of its executives were detained for more than 18 months without bail until gilt was admitted and fines were paid just last month. And then it's also very difficult for the domestic businesses as well. In late 2018, President Magufuli abruptly banned private companies from buying cashews altogether after a standoff over prices and got the army to step in and buy them at a premium. But the farmers in fact then weren't paid for those cashews for over 18 months. So it's not an easy environment for business at all.

When do these kind of governance questions and discrepancies in the numbers finally catch up with Tanzania, do you think? Is there a reckoning to come here?

Yes, there is likely to be a reckoning at some point. And of course for many Tanzanians already given there has been very little improvement in the number of people living in extreme poverty despite this apparent growth success. They can already feel that today. But the government is really, it seems, trying to build its own narrative about its own success at managing the economy. And with an election coming up later this year, it's likely that any serious reckoning will come too late to influence the election itself.

Kinley, thanks very much for your time.

Thank you.

The Acropolis dominates the city of Athens. The rocky outcrop is a treasure trove of ruins from classical Greece, none more striking than the columns of the Parthenon. It's a memorial to the country's role in anchoring Western civilization and locals love having a view of it, which is why when the new Cocomat hotel went up further up than the surrounding buildings, there was an outcry.

It's such an important monument of Western civilization.

Keren Hope writes about Greece for the Economist.

People who live in Athens, I think, have a sense of possession about it. You can see it from most areas of central and residential Athens, and it sticks out. It's a very obvious set of buildings on a very flat topped hill and it's really bang in the middle of the city between the sea and the nearest mountain.

So tell me about this hotel that's caused such a fuss here.

It's a very modern hotel. It sticks out above all the other buildings in the area. I think it's expected to be a bit hipsterish. It's built by a company that makes mattresses, ecological mattresses, and it went up in 2017 and 2018. And you can see it when you're up on the Acropolis. If you see it from somebody's terrace, it can partially or wholly Block your view of the Parthenon. It's 37 meters tall in an area which used to be restricted to 21 meters tall. But gradually various buildings have crept in, getting higher and higher.

But how did that creep happen?

Well, this particular one got an extra two floors through a law that was passed in 2012 allowing hotels to exceed the normal height if they had a proper green terrace. And by that it was meant a full scale garden. And you could have a swimming pool as well in the small cafe. And it's not quite sure how they got permission. The hotel was never approved by the Central Archaeological Council, which it should have been, but it went up anyway. And I was up there a few nights ago checking out the view and seeing what it was like, and I counted 13 small bushes representing the roof garden.

And so that in turn has angered the locals, particularly the ones whose views of the Acropolis are now obstructed, I guess.

Yeah, a lot of people signed up as activists to try and stop it. A couple of architects got a petition going which now has almost 50,000 signatures, and they lobbied the Culture Ministry and the Environment Ministry and they sued the owners of the hotel.

And so what have the authorities said to all of that?

The authorities froze the case for a year. But then finally the Central Archaeological Council got itself together and decided that the building was illegal and the top two floors should be taken down. And after that the Culture Minister signed off on that decision. And now it's up to the Municipality of Athens Planning Department to take it a stage further and order the company to pull down the top two floors.

So if this was going to be the end result, why do you think the hotel was allowed to be built?

Because I think it seemed that it was possible to do that at the time. This was the middle of the crisis. The Greeks were anxious to get more new hotels and more tourists, and blind eyes were turned. If you look around the Acropolis on the other side, on the north side, that's where you have the old part of Athens, which is called the Plaka. And that's a lot of small red tiled houses which have been around since basically the 1830s when Greece became an independent state. And so they've been protected ever since then.

What's being done to make sure that this kind of thing doesn't happen again?

Well, that's what we have to wait and see. Certainly it'll be a demonstration of rigor by the archaeologists if finally the two floors are taken off. And I don't think other people will then dare to make their planning permissions so excessive. You certainly need some better zoning regulations for that part of town. That's not as easy as it sounds. That has to go through the Environment Ministry, which was the ministry that decided originally that you could have these excessively high buildings. And obviously, there are lots of political pressures. So I think the residents are pretty determined, and they know that they're going to have to go on campaigning until they get the land use regulations, and then they will probably have to be tested in court at some time. So the whole thing's not going to go away.

Karen, thank you very much for joining us.

Thank you.

That's all for this episode of the Intelligence. If you like us, give us a rating on Apple podcasts and see you back here tomorrow.

Sam.