The data shows that Europe will experience a severe energy bottleneck this winter, but it still insists on not buying energy from Russia. The fact that the fuel rods required for the operation of nuclear reactors are also supplied from Russia is making Europe think about “coal”, which has been ignored.
Meanwhile, some experts indicate the possibility that Europe might shift its production to Turkey due to this energy crisis. Recently, the Greek government who apparently considers such a possibility has been harshly criticized by the opposition. Headlines in Greek papers such as “Turkey is about to become China right next to Europe” did not go unnoticed. It might be useful to analyse the situation in our country to see how accurate this claim is.
In order for Turkey to become “China next to Europe”, it needs a serious capacity increase. If it cannot ensure it using its internal funds, it will require external ones.But, the cost of external borrowing is quite high, so the government needs to take some actions to accelerate and facilitate new investments. The domestic capital or funds alone will not be enough to achieve such capacity increase. Therefore, foreign companies need to bring in funds and know-how, while Turkish companies and the Government providing human resources, facilities, experience, logistics, incentives, and sufficient energy.
All this means exporting both to Europe and to whom European countries sell goods to.On the other hand, foreign companies residing in Turkey do not transfer profits as speculated. Therefore, in order for foreign direct capital to flow into Turkey, a capital market is required where these companies can convert the value they create into money. Otherwise, it would not be rational for a European firm to invest in Turkey for a profit that it could never touch.
“Turkey Can Be An Alternative To What?…”
Labour-intensive production is quite scarce in Europe. Products such as textiles, footwear, etc. are generally manufactured in Asia or developing countries and when they arrive at Europe, they are branded with its original European brand. Accordingly, the production that will shift from Europe to Turkey will demand a considerable level of quality in terms of human resources, infrastructure, and technology. As for labour-intensive products, Turkey will continue to compete against Asia for quality and price.
So far, Turkey has been able to respond effectively to the “proximate supply” need caused by the pandemic. However, the grounds required for Europe to permanently shift its production to Turkey does not exist here at the moment. China alone exports over 150 Billion Dollars’ worth goods to Europe while this figure is over 100 Billion Dollars for other Asian countries. Nearly the half of Turkey’s 250-billion-dollar worth exports goes to Europe, which means that Turkey is currently the top rival of Asia.
With a brand new diplomatic, political, and administrative policy, Turkey can fill the position vacated by China and other Asian countries. A grave financial crisis is about to begin in China, and the possibility of a conflict with Taiwan has also emerged. In the midst of this possible turmoil, Turkey will need to take some quick steps and create a strong wave that will guarantee Turkey’s two decades ahead. However, it is not something that can be easily achieved. Turkey has plenty of shortcomings in many areas, particularly in infrastructure and human capital.