Bringing Turkey into the European Union was never going to be easy. The economic, political and cultural differences between the two are far greater than those between the EU and any other accession candidate. But the potential benefits of membership -- projecting European stability into the Middle East while incorporating Turkey’s supercharged growth potential into the EU’s lethargic economy -- are outsize, too.
The challenge for Brussels and Ankara is to keep the enlargement process alive. Investors clearly are betting that they will. Foreign banks have spent $3.2 billion investing in Turkey over the past year. Will Turkey see its banking industry taken over by bigger players from Western Europe and the U.S.?
Not if the Sabancis have anything to say about it. In this month’s cover story, “All in the Family,” page 38, Staff Writer David Lanchner relates how chairman Erol Sabanci and his daughter, Suzan Sabanci Dinçer, plan to maintain the dominant position of Akbank in the face of growing competition. They are combining their knowledge of the local market with Western expertise in risk management and credit scoring to develop a leading franchise in retail banking and small-business lending. The results so far are encouraging.
Unlike Turkey, Pakistan has no EU aspirations, which makes its reform agenda all the more ambitious -- and uncertain. The recent sale of a controlling stake in Pakistan Telecommunication Co. Ltd. underscores the potential rewards, and risk, of investing in the country. In “Privatizing Pakistan,” page 44, Contributor Eric Ellis recounts the seven-year saga of a deal that was delayed repeatedly by everything from a military coup to the collapse of the technology bubble to the September 11 attacks on the U.S. Even the sale itself is not yet a done deal, as winning bidder Emirates Telecommunications Corp. was withholding payment as this issue went to press. Pakistani President Pervez Musharraf tells Ellis he is determined to press ahead with a raft of big privatizations to sustain the country’s rapid growth and combat the poverty that feeds terrorism. Investors, and Pakistanis, can only hope he succeeds.
