'A Good Anchor'

It's not often that you can sit down to tea in one room with the bulk of a nation's economic power. But at the recent World Economic Forum in Davos, representatives from Turkey's four largest industrial families gathered together with NEWSWEEK to discuss the future of their country as it moves toward historic changes. Ali Y. Koc is CEO of Koc Information Technology Group, Ferit Sahenk is chairman and CEO of the Dogus Group, Mehmet Ali Yalcindag is CEO of Dogan Media Group and Suzan Sabanci Dincer is a board member of Sabanci Holding and managing director of Akbank. Their family holding companies control many of the nation's top banks, service firms and manufacturers. Below, they sound off to NEWSWEEK'S Christopher Dickey and Rana Foroohar about European double standards, headscarves, military might and hot money.

NEWSWEEK: Turkey has strong growth, a much more stable economic environment than it did a few years ago, and there's been so much progress around inflation, why bother with Europe? Why put so much energy into joining the European Union? Would it not make more sense for Turkey to simply keep the status that it has with Europe in terms of trade, but remain outside of the EU, with all of its red tape and restrictions?
It's no secret that growth is in the East, starting with oil-rich countries like Russia, then the Eurasia area, and the Gulf area. Most of the world's growth is expected around Turkey and to the East of Turkey. We have all the ingredients that could allow us to become the leader of this region. But, at the same time … transparency, trust, comfort and stability—these are elements contributing to wealth in the Western countries. In order to be like that, you have to install and implement rules of transparency, human rights and fair competition. By fulfilling the EU membership requirements, this is what [Turkey] is trying to reach. Even if Turkey had no EU aspiration, we should still be taking those steps to reach our economic potential.

Sabanci Dincer: It is a good anchor. It gives us good discipline. We have to look at it as a whole process.

Sahenk: Investors and people around the world want to see the country going forward, socially speaking. That anchor [of EU membership] kind of put us onto the road. I totally agree with my friend Suzan that the EU for Turkey … is a vehicle, or a set of values, and for us to be focused on this, we have to name that target. And that is the EU. And as the days go by, I hope that this gets into the roots of Turkish society, where we really go for the values, rather than just the sole target of being a member of the EU. And I hope that one day, Turkey will have the luxury of saying yes or no [to the EU]. We already have these values in our pockets. Turkey will be a great partner for Europe.

Already, Turkish firms are outsourcing to other nations because of rising labor costs. Will this become a bigger issue with full EU membership?
Well, when you look at the EU, it's not the most competitive group of people [laughter]. So, this is a question that is in people's minds—whether you become partial members or potential members, which is not very well liked within Turkey. People think it has a connotation of being a second-class citizen. Now, my connotation is that it gives me enough flexibility to be a regional leader. But … most Turks look negatively towards this process when you feel there are double standards and that you are not treated like everybody else. In the last eight to 10 years, we have done all the right things, and lifted all sorts of barriers … [yet] there are still obstacles, and Turkey is being used as a bargaining chip during elections in certain countries.

Let's be clear—you mean in France?

There are certain fundamental things about Turkey that are problematic for Europeans. Let's put aside the question of Islam. French President Nicolas Sarkozy has asked whether Europe wants to have on its borders Iran, Syria and Iraq.
Sabanci Dincer: The European Union is a matter of values; it's not a matter of geography, because geography changes. When you look at Europe, there used to be "the Balkans." Now we call them something else. The EU has to decide what they want and what they are categorizing. Because if the principles are changing all the time …

Sahenk: African countries, East Asian countries, Middle Eastern countries, they are all waiting to see how Europe is going to treat Turkey. If Europe makes Turkey go further away from [the accession] process, there have to be answers—not only to Turkey, but also for the rest of the world. Turkey will be such an important bridge between colorful ethnicity, religion, all these things. Why be so afraid of this?

Koc: My short answer is: if the EU can accept Georgia and Russia on their borders after the Ukrainian membership, they can very easily accept the Middle Eastern countries you mentioned.

Turkey has a very young population, but you still have a Constitution that is based on some very old ideas, and the role of the military, which dates back to the Ottomans, is something that Europeans are often uncomfortable with.
In discussions today, I heard some people saying that the Army is against the EU. I don't think this is accurate. The idea that the Turkish military is against democracy and is weakening democracy is a farce. If you look at all the institutions, the first Turkish institution that would be ready to join the EU today would be the military.

Yalcindag: I would like to add something—that it is right that Turkey has a very strong military, one of the strongest forces in NATO. Of course, the main reason for having that strong military is that we have a lot of the countries you've mentioned on our borders. And the second reason is that Turkey is facing very strong terrorist attacks, and that has been a problem for the last 15 years. Turkey has already spent more than $100 billion on this problem. The Turkish military stands for secularism and democracy. The military standing for democracy may sound a bit confusing, but it's right.

Sabanci Dincer: IT'S in the origins of the Republic.

Let's talk about the possibility of headscarves being worn in Turkish universities. What are your views on this?
Sabanci Dincer: As a woman, I'm against covering your face, because for me personally, it's going to separate women from men. But on the other hand, I think that a woman wearing a headscarf at university could be normal as long as there is respect for those who don't. I think the most important thing is that women have the economic power at a certain age that they can decide by their own will what they want to do. If they want to use the headscarf, fine. But I would be against it at primary- and secondary-school level.

Koc: The headscarf has become a major issue in Turkey. It's a political system, so it's not simply an issue of not wearing this or that. I went to school at Rice University in Texas, and they had a sign that said NO SHOES, NO T SHIRT, NO CLASS [laughter]. It is a major internal problem in Turkey. But I truly believe that Turkey has all the ingredients and capability to solve it, and I think that in the near future, this problem is going to be overcome.

What are your expectations and desires regarding changes in the Constitution?
I'm not a lawyer, so I can't say "OK, the Constitution has these holes … " but there are two things I would like to say. One, the [process of revamping the Constitution] is not being done in a very collaborative way, including institutions, academic, other parties, the general public. The process in which it is done creates a lot of questions. I don't think that there are any of us in this room that know with full details what is being proposed.

Yalcindag: I am totally against the methodology of changing the Constitution. After the military takeover in 1982, the current constitution was adopted by 95 percent of the Turkish people. Since then, there have been some small changes, and that is fine. But not a totally [new] Constitution.

Sabanci Dincer: What's important for us, for the business community, are simply policies aimed at economic progress, and human rights.

On that note, let's talk about your perception about Turkey's economic future in the midst of the current global market turmoil.

Sahenk: Until now, we've tried to save the world from the wrongdoings and inefficiencies of the emerging-market economies. Lately, the wrongdoings are coming from the big developed markets. Because, I think, risk management has been forgotten. The Turkish economy has grown so fast that we didn't have the need to buy these exotic financial instruments you see coming out of the West [tied to subprime lending]. I think Turkey's financial sector is still functioning very well. Of course, if the whole world slows down, so will Turkey. So, we have to continue with our reforms, in order to be a hub of investment in the region.