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A Turkish Nightmare

A Turkish Nightmare

Turkish President Erdogan’s recent visit to London was not an unqualified success.

Turkey’s economy is on the ropes and President Erdogan delivered another blow to the solar plexus. In an interview with Bloomberg TV he declared he would take greater control of monetary policy after the June elections. The markets reacted with shock and the lira slumped to a new record low. At a meeting with investors Erdogan told of special schemes for foreign investors and assured them there was no discrimination between foreign and Turkish investors. But this is patently untrue.

In 1995 I formed a limited company with a Turkish partner as an investment in Turkish tourism, which was the beginning of a nightmare that only came to an end last year. As a registered British investor, I thought I was protected by the UK-Turkey IPPA (Agreement for the Promotion and Protection of Investments), but I was sadly mistaken. The IPPA stipulates that admitted investments shall at all times be accorded fair and equitable treatment and enjoy full protection and security, but this turned out to be an illusion.

Our first venture was to open a discotheque on the harbour front in Alanya on Turkey’s south coast, and it showed every sign of being a decent, profitable investment. However, when I discovered irregularities in the management, I called in a prominent lawyer from Ankara to represent my interests, which opened a real can of worms. After a year, my lawyer resigned, unwilling to “face the people who describe themselves as MAFIA”. In the meantime, a civil compensation case and a criminal case for fraud had been launched. The local court appointed a trustee to manage the company, but shortly after the trustee resigned because of intimidation. My partner’s response was to transfer the company’s rent contract and equipment to a new company.

This resulted in a game of cat-and-mouse with the local authorities, where I enlisted the aid of the British Embassy and the Turkish prime minister, Bülent Ecevit, who was a friend of mine. Both the Ministry of Justice and the Ministry of the Interior were involved with investigations by government inspectors and Internal Affairs.

In 2002 Michael Ancram, the Shadow Foreign Secretary, tabled a number of questions in the House of Commons about British investment in Turkey, including what safeguards had been put in place, but the Foreign Secretary, Jack Straw, dodged the issue. Two years later, James Arbuthnot, Shadow Secretary for Trade, took up the cudgels on my behalf. In reply to his questions the Minister for Europe, Denis MacShane, noted that “Robert Ellis has received an extraordinary level of support from British Ministers and our diplomatic, commercial and consular network in Turkey”, which I can wholeheartedly endorse.

Already in 2002, the new British ambassador to Ankara, Peter Westmacott, met with Ecevit’s deputy prime minister and urged Turkey to settle the case, not least because of the detrimental effect it would have on foreign investment. However, seven months later Ecevit’s government collapsed, ironically enough because of an amnesty law which also included my partner.

When Prime Minister Erdoğan visited Washington in 2004, he was warned in a briefing book by the American-Turkish Council: “The list of legal cases that involve American and other foreign investors and Turkish parties, including the Turkish government, is unfortunately growing. The negative publicity that is generated by these commercial and legal disputes contributes to the impression that Turkey is a hostile environment for foreign investment. One case involving a British investor, for example, is even being debated in Parliament and in EU circles – adding ammunition to anti-Turkish groups in Europe”.

in 2005 the Alanya court found for me and awarded me compensation, but this only gave rise to a new set of problems. Because of a systemic error in the Turkish legal system, it was not possible to execute the judgment, so I accordingly complained to the European Court of Human Rights. However, because of the overwhelming number of complaints about Turkey, this resulted in a 12-year struggle for some form of justice.

In 2011, when he learned of the case, the Conservative Minister for Europe, David Lidington, was immediately supportive. The British ambassador wrote both to the Turkish foreign minister Ahmet Davutoğlu and the Minister of Justice Sadullah Ergin, but it was not until April last year that the Human Rights Court awarded me partial compensation for the period 2005-2010, when the Turkish law had been changed.

In 2000 the EU Commission in a report on Turkey noted that “Investors need a stable, predictable and supportive legal and regulatory framework in order to make long-term investments”. But as this and other cases illustrate, this framework – especially since the rule of law has been suspended after the failed coup in 2016, is conspicuously lacking.

About The Author

Robert Ellis

Robert Ellis is a regular commentator on Turkish affairs in the Danish and international press. Earlier he was advisor to the Turkey Assessment Group in the European Parliament and a Senior Fellow at the Gatestone Institute in New York.

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