Turkey

Lord Bhattacharyya Excerpts

Thursday 13th January 2011 Lords Chamber

[Lord Bhattacharyya]

My Lords, I congratulate the noble Baroness, Lady Hussein-Ece, on securing this vital debate. I am pleased to declare that WMG at the University of Warwick, of which I am the director, admits many Turkish students on bursaries that we fund ourselves. We have a very close relationship with leading Turkish universities and businesses, such as the private university, Sabanci University in Istanbul, which I had the pleasure of visiting last year.

Walking the streets of Istanbul, you see how the western world found its axis there. Think of Belisarius, who reconquered Rome in the name of the Roman Empire, or of the great Ottoman scientists like Ali Qushji.

Our relationship with Turkey should be based on shared interests. Turkey's national interest lies in meeting its citizen's hunger for prosperity. Our interest lies in benefiting from its future growth. The first key to Turkey's prosperity is, of course, joining the European Union. That in turn relies on many things, especially solving the problems of Cyprus. I know that many noble Lords will address those issues today. I wish to focus on the economy, so I merely observe that it is in the interests of all of us to find an amicable way forward. I understand that Turkish leaders in Nicosia are keen for a solution as well.

The second key to Turkey's growth is to become the manufacturing powerhouse of the Near East. We should welcome that. If we want to prevent the Islamic world moving to fundamentalism, we need a successful and educated Turkey, for itself and as an inspiration to the people of neighbours such as Iran. After all, who would rather live in a closed city than an open, vibrant one, such as Istanbul? We should have confidence in the attractions of the free, open, prosperous society.

Of course, the path to prosperity can be a hard road. Turkey suffered greatly from the global economic crisis. Its peak to trough GDP decline was 14 per cent, the highest in the OECD. To take one example, the automotive sector, on which I am very keen, was responsible for a fifth of Turkey's export earnings in 2008. In 2009, those exports fell by a quarter.

Turkish leaders see that their position is exposed to external shocks. The economy is recovering strongly—over 6 per cent last year, as the noble Baroness mentioned—but they know that they must diversify to achieve stable growth. The first element of their strategy is supporting innovation. In 2008, Turkish business expenditure on R&D was less than a quarter of the OECD average.

I recently discussed that with the Minister for Foreign Trade, Zafar Caglayan. There is huge room for growth in the region, but it requires innovation. Take the automotive sector again. There are only 100 vehicles per 1,000 people in Turkey. In neighbouring countries, the number is lower still, though people are getting wealthier, so developing durable, low-fuel consumption vehicles will be crucial to meeting consumer needs. Furthermore, Turkey may move away from the textile trade, on which its economy has depended, to other areas.

That is why Turkey is now focused on increasing R&D. Facilities that employ at least 50 technicians get around half of their investment costs back. Ten of Turkey's 13 vehicle manufacturers are already taking advantage of that support. This is a major opportunity for British business. We have world-leading innovation in the automotive sector to offer.

Next, Turkey has a pressing need to improve its human capital, especially in science, skills, and other education. In the 2009 international education ratings, PISA, Turkey showed some of the biggest improvements surveyed, but that success needs to extend to the graduate and vocational level. The challenge is being taken seriously.

When I visited one of the biggest football clubs in Turkey, Fenerbahce, I found that it planned to establish its own university and asked us to help. Not many British clubs would do that.

Britain's university science sector is excellent. If we offer partnership with Turkish institutions now, we will reap rewards when expanding businesses look to the UK for support. After all, Turkey is not short of investment for entrepreneurs. A lot of the new universities are coming out of private capital.

The flow of money into Turkey has led the central bank to take the unusual step of cutting interest rates to cool the economy and lower inflation. As the EU builds a fence across the border with Turkey to keep out immigrants, Turkey is building fences to keep money from flowing the other way. We should follow that money. If we offer help now, we can be partners with Turkey as it develops and take advantage of the investment available to businesses operating there. If we spurn this chance, others will seek to take that place. I hope we do not betray our own interests by neglecting those of our allies. I trust that this Government, like the last, will see the great opportunity that lies ahead in the Near East.