Archive for December, 2013

The Gulen Movement Strikes Back: Turkey expert Günter Seufert explains what this power struggle means for Erdogan

December 27, 2013

Power Struggle Weakens Erdogan

Bahman Bakhtiari

Pressures builds up in Turkey:

December 27, 2013

Prosecutor Overseeing Turkish Graft Inquiry Is Removed From Case

Bahman Bakhtiari

Drug groups pin hopes on Iran market potential

December 26, 2013

Source: Financial Times

Date: December 26, 2013

By Andrew Jack

When Pfizer sold a small batch of medicines to Iran last year, the process was painful. The pharmaceutical group needed authorisation from the US government, shipped the products through a foreign affiliate and received letters of credit in payment from the Bank of Tejarat to a non-US subsidiary bought in 2011.

Even so, Pfizer was caught by new US Treasury sanctions in early 2012 that froze transactions with the Iranian bank, including its foreign affiliates in France, Tajikistan and Belarus, and it has not yet received full payment. All that for sales of €620,000

Such tortuous procedures, which for other companies often involve payment through intermediaries in the United Arab Emirates, have constricted commercial transactions even for those western suppliers whose products – such as drugs and food – are exempt from sanctions on humanitarian grounds.

Olam International, the Singapore-based commodities trader, which sells wheat, barley and corn to Iran, also highlighted the lack of clarity on payments. “It’s too early to say if these developments will result in wider opportunities for our business given that we have not yet seen changes on the ground in terms of easing of banking sanctions or channels of payment.”

Yet with the prospect of eased controls on trade with Iran coming into effect as soon as next month following the Geneva accord reached in November, many are stepping up their interest in a potentially lucrative market. Michael Tockuss, managing director of the German-Iran chamber of commerce in Hamburg, said the diplomatic agreement had “transformed the mood among businesses”.

“In the days after the agreement we had many companies getting in touch who had either given up on the market or have been working in a very restricted fashion. There is now more optimism. They wanted to know the details of how it will be implemented, in particular regarding the export of petrochemicals,” he said.

Klaus Friedrich, foreign trade expert at the VDMA German machinery association, said the Geneva agreement had not yet resulted in a loosening of sanctions. But he said: “German companies must be prepared to react to protect future business opportunities in the event of a positive outcome to the talks.”

Some companies are already in the process of doing just that. Merck of Germany says it is eyeing the potential given Iran’s large population, and scrutinising local manufacturers to produce two of its medicines. It already sells, through distributors, treatments for cancer, multiple sclerosis, infertility, growth hormone deficiency, and cardiovascular and metabolic disorders.

A report this year by Siamak Namazi, a Dubai-based consultant writing for the US Wilson Centre think tank, highlighted strong potential in Iran and estimated that the pharmaceutical sector generated $3bn in annual sales, with 30 per cent coming from imported drugs.

But Mr Namazi cautioned that the share from western drug companies providing high-quality innovative treatments had fallen as a result of hard currency shortages for medicines, and sanctions on the financial sector which made payment, insurance and shipping difficult.

Other analysts have said the poor intellectual property protection in Iran could restrict investment by western companies. Yet some have been willing to take on the risks. Sanofi of France, which licenses drugs to a local manufacturer, is planning fresh product launches next year. It reported profits in Iran last year of €3.7m last year on sales of €10.2m, on treatments for cancer and cardiovascular conditions.

Novartis of Switzerland last year sold rabies and flu vaccines for €1.5m to an affiliate of the Iranian health ministry, generating net profits of €441,000, and said it expected continued sales in 2013. It signed an official memorandum of understanding in 2010 that could pave the way for accelerated sales, allowing it fast-track registration, market exclusivity, end user subsidies and exemptions from customs tariffs on sales via third party distributors within the country.

The Swiss group said it had an agreement with a local company for licensing and manufacturing in Iran, but a spokesman added: “With the tightened western sanctions on Iran, the flow of medicinal and life-saving products to Iranian patients has been severely affected if not fully ceased . . . we are determined to continue providing access to medicines for our patients in full compliance with US, EU and Swiss trade sanctions and regulations.”

AstraZeneca, based in the UK, reported profits in Iran of $6m on sales of $14m last year, alongside donations of respiratory products in response to health alerts caused by air pollution.

Other pharmaceutical companies remain more circumspect. GlaxoSmithKline, which reported profits of £2.8m in the country on sales of £19.7m last year, said: “We continue to monitor the situation, but it’s too early to comment.” Bayer of Germany said it generated “low double digit million euro sales” in Iran this year, and that the sales volume was “likely to remain on a low level.”

Additional reporting by Scheherazade Daneshkhu in London and Chris Bryant in Frankfurt

 

December 25, 2013

Iran’s friend in the Persian Gulf

December 23, 2013
In sending goods to Iran, Dubai weighs competing interests
 

Turkey’s business sector hit by scandal fallout

December 23, 2013

Source: Financial Times

Date:  December 23, 2013

By Dan Dombey in Istanbul

A bank caught up in the widening corruption scandal in Turkey denied on Monday it had broken the law, as shares in companies linked to government opponents plummeted in a sign the political fallout was affecting the country’s divided business sector.

Halkbank, a state-controlled bank whose chief executive was detained pending trial at the weekend, told the Borsa Istanbul stock exchange it complied “fully with national and international regulations in its businesses and transactions”.

Suleyman Aslan, Halkbank chief executive, has said cash at his home – police reportedly found $4.5m in shoeboxes – was for charitable donations.

Recep Tayyip Erdogan, prime minister, says the corruption investigation, in which the sons of two cabinet ministers have also been detained, is part of a plot by enemies of Turkey and has threatened to “break the hands” of those responsible. He added at the weekend that Halkbank “scares Turkey’s enemies”.

The launch of the investigation is widely seen within Turkey as a result of the government’s clash with the movement of Fethullah Gulen, a preacher whose followers are particularly influential within the police and prosecution services.

In a sign of the possible economic consequences of that rift, Gulenist-linked companies plunged on Monday.

Bank Asya, an Islamic bank, fell more than 13 per cent on the previous day’s close as of Monday evening. Koza Altin, a gold group owned by prominent sympathisers of Mr Gulen, fell by more than 11 per cent despite issuing a statement emphasising that it did not depend on the government for business or tenders.

Turkish Airlines, 49 per cent-owned by the state, has also halted purchases of Gulenist newspapers, including Zaman, which claims it is Turkey’s biggest circulation paper.

The scandal has exploded at a time when Turkey’s economy was already the subject of unease because of its dependence on short-term capital flows just as the US Federal Reserve is reducing its monetary stimulus. As of Monday evening, the Turkish lira was trading at TL2.096 to the US dollar – near its all-time low.

Government supporters allege Halkbank is being targeted by Turkey’s foes for its part in racking up billions of dollars worth of gold exports to Iran, while pro-government newspapers accuse the US of being behind the investigation – accusations Washington says are wholly unfounded.

The US has sought to halt gold exports to Tehran as part of a sanctions regime aimed at pressuring the government to rein in its disputed nuclear programme.

Halkbank itself has long been in a focus of US scrutiny because of its links to Iran. US officials say that co-operation with the bank, which some see as an extension of Mr Erdogan’s government, has recently improved.

Halkbank’s own statement on Monday emphasised that there was no international or local ban on exporting gold to Iran until July this year, adding that it halted such precious metal transactions as of June. The gold exports had allowed the transfer of funds to Iran, often in return for oil and gas exports to Turkey, without doing business with sanctions-afflicted banks.

Another of the principal focuses of the probe is Reza Zarab, an Azeri-Iranian businessman who allegedly made payments to Turkish ministers and who says he legally exported billions of dollars worth of gold from Turkey. The ministers also say they have done nothing wrong.

Nevertheless, concern about the corruption claims, the government’s subsequent removal of dozens of police officers from the investigation and impact on the economy has been expressed by all three of Turkey’s leading business organisations, Tusiad, Musiad and Tuskon, which are respectively seen as close to Turkey’s old secular elite, Mr Erdogan’s Islamist rooted AK party and the Gulenists.

Turkish businessmen and foreign diplomats have already suggested that some foreign direct investment in Turkey was put on hold after Mr Erdogan’s crackdown on last summer’s mass protests against his rule, because of concerns about political risk and unpredictability.

 

Turkey Will Either Lose Erdogan or Democracy

December 23, 2013

Bloomberg: “There are two reasons Turkish Prime Minister Recep Tayyip Erdogan may not survive the current government corruption scandals in Turkey. And if he does, the cost to the “Turkish model” will be enormous.” Read Full Article 

 

 

PM Erdogan greeted by followers wearing shrouds saying they’ll die for him.

December 22, 2013

PM Erdogan greeted by followers wearing shrouds saying they'll die for him.

An important year for Iran nuclear talks: What Israel got wrong

December 22, 2013

Shemuel Meir: ”President Obama’s exceptional appearance at the Saban Forum amounts to an authorized interpretation of the nuclear agreement with Iran. Israeli leaders should be paying attention to the points he made.”

Cuba’s Raul Castro calls for better US relations

December 22, 2013

BBC NEWS