12 December 2016
A Coup d’état was attempted on 15 July 2016 against state establishments in turkey. It was carried out by a gang of the Turkish armed forces who attempted to seize control of various important places in turkey, including its capital city. They failed, when members of the loyal forces defeated them. During this period, about 300 persons died and about 2,100 were wounded. Many government buildings such as the presidency, were damaged.
Whenever there is a military coup against the serving government of this sort, there will be an influx of analysis of the economy and the future of the country. In terms of foreign relations, there will be a breakdown in relations with foreign investors. Such was the case with turkey. Turkey’s relationship with some foreign countries, such as the United States was very unstable afterwards. As a country with security issues, foreign investors were sure to withdraw until the country got back in order, as it was a risky place.
As investors reacted to the failed coup attempt, some Turkish banks folded on their plans to raise funds and the lira, turkey’s currency fell. The coup also shook local markets and the lira plunged against many other currencies.
By the month of august, there were reports that turkey’s stocks, bonds and currency rose high, recouping nearly half of the total losses experienced. President Recep Tayyip Erdogan restored his authority and purged numerous judges, civil servants and soldiers from the system and imposed a 3months state of emergency. There were massive arrests as about 40,000 persons were detained including about 21,000 teachers, 2745 judges and 10,000 policemen. This really swift action brought back a level of stability to the nation. According to Wolf Fabian Hungerland, the president was the nation’s most important anchor of stability as well as one of its biggest causes of political risk.
During the global financial crisis, turkey was one of the G-20 countries which did not get thrusted into the severe recession. However with the failed coup, even tourists became scared of visiting for fear of terrorism.
Presently there has been an impressive recovery from the failed coup attempt. Businessmen and investors from America seem impressed with the rapid recovery despite the issues it experienced. According to Arda Ermut, the president of the Investment Support and Promotion Agency of Turkey (ISPAT), the Turkish government had done all it had on its agenda, in order to improve the economy of the country. He also disclosed that American investors seemed pleased with the speed at which the economy of turkey picked up after the failed coup. He also pointed out that it would be the hardest feat for turkey to achieve attracting new foreign investment termed “green field”. This is a sort of direct foreign investment whereby the firm starts operation in turkey from the ground up.