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22 August 2014
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Less talk, more action

Turkey’s presidential elections offer the foundations for the country to get some deals done
In Turkey’s recent presidential elections, Recep Tayyip Erdogan became the country’s first popularly elected president, receiving 52% of the vote. Although he has already spent 12 years in power, the increased democratic element of this latest vote can offer some confidence to those looking on from outside.
Erdogan has already announced his intentions to implement new infrastructure development proposals, with PPP at the forefront of those plans.   For a long time the Turkish PPP market has been associated with healthcare, as the country held the largest pipeline of PPP hospitals in the globe, fronting a €10bn programme covering 18 health campuses.
But first the programme ran into trouble when trying to find investors to support it. Then in May this year PPP Bulletin revealed there could be up to two further years of delays due to legal action. None of that was helped by the backdrop of political unrest, which saw rioting in Ankara last summer and forced Erdogan to submit to the popular poll.
His re-election has therefore provided a much-needed bright spot for the industry, representing some semblance of stability and, hopefully, a return to normality.  
“First of all it shows continuity and a stable political power,” said Franco Vigliano, partner at law firm Ashurst. “And also, one of the key features in Erdogan’s programme is the development of new infrastructures and privatisation of large transport infrastructures.”
However according to rating agencies Moody, there may still be political tensions within the country and economic risks may remain for a while. It says that the elections might not abate political tension, stressing that economic risks remain.   
“We caution that the conclusion of the presidential election is unlikely to resolve Turkey’s key economic and institutional credit challenges because of ongoing domestic political tension and uncertainty that will prevail at least through the next parliamentary elections,” the agency said.
It also pointed out that the credit implications of the presidential election would not be fully clear until a new prime minister is appointed in late August and general elections, which are due by next June, have been held. 
If the new president and government are keen to instil confidence in the market they will have to follow through on recent public promises to develop $200bn-worth of new PPP projects in the healthcare and education sectors, with transportation also expected to get a boost.
Talk is cheap, actions are expensive. People’s goodwill towards the Turkish PPP programme has long since worn thin and unless Erdogan wants to be categorised as just another politician making election promises, then projects need to be launched, sooner rather then later. 

 

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