Wednesday, July 20, 2016

Turkey's Schizophrenic Civil War

By Burak Bekdil*

Turkey's July 15 coup, as cartoonist Assad Binakhahi suggests, was a gift for President Recep Tayyip Erdoğan.

It is amazing that the Crescent and Star never ceases to shock with the most unexpected insanity. The capacity to shock is a feature most observed at times of war. And Turkey is at war – a schizophrenic civil war.

The May 1960 coup was a conventional coup d'état but, like July 15, was outside the chain of command. So it was simply called a coup d'état.

March 1971 was called a "soft coup." September 1980 was a conventional coup – this time inside the chain of command. Some called it the "people's coup" after more than 90 percent of Turks approved its constitution and generals as their leaders.

Turkey had a "post-modern coup" in February 1997 and an "e-coup" (in reference to the anti-government, pro-secularist memorandum posted on the military's website) in April 2007.

If history will have to name the failed coup of July 15 the best way to recall it would be as the "absurd coup." The events of July 15 looked less like a coup and more like a Turkish opera buffa, a tragic one though, with the curtain closing with more than 200 people getting killed.

Fortunately, even an absurd coup can give an unruly nation a temporary sigh of unity. Pro- and anti-president Turks seem to have united - which is great - probably until they start firing at each other again, which is not so great.

With or without unity against any military intervention in the democratic system, absurd or not, the great Turkish divide is there and will probably deepen, exposing Turkey's hybrid democracy to further risks of "road accidents" of this or that kind.

Turkey's "war of religion" will not disappear just because the pro- and anti-president forces of the country have united against a coup attempt. It is a war of religion between the adherents of the same sect of the same religion.

It was not without a reason why the anti-coup crowds that bravely stood against the troops and their commanders did not mostly chant pro-democracy slogans when they took to the streets but rather passionately chanted "Allah-u Akbar" (God is the greatest).

They were there not to defend democracy in the word's liberal meaning. They were there to defend the man whom they view as the guardian of their faith, hence their readiness to kill or die, or to lynch the pro-coup troops, and a journalist who was just photographing the scene. Willing lynchers who defend democracy chanting Islamist slogans? Nice one.

Whether the perpetrators belong to the clandestine Gülenist terror organization or were a bizarre coalition of secularist and Gülenist officers, they were simply moronic thugs in military uniforms. Speaking to a "pro-democracy" crowd of fans who interrupted his speech with the slogan "we want the death penalty [back]," President Recep Tayyip Erdoğan said that the Gülenists had been secretly – and illegally - trying to capture the state over the past 40 years. And now they finally staged a coup.

The president was probably right. But he did not explain why he allied with them during the 37.5 years of the Gülenist campaign to capture the state – until he and the Gülenists broke up in December 2013. Remember his famous complaint: "Whatever they [Gülenists] wanted, we gave them."

This is the last act in the hundreds-of-years-long opera buffa of in-house fighting between various Islamist factions, not just Turkish. Despite the bloodshed and tragic scenes, like in any other Turkish opera buffa, it often can be amusing, too.

Newswires dispatched a story that said Saudi King Salman congratulated President Erdoğan for the return to "normality" – normality here must mean the defeat of undemocratic forces and return to the democratic regime. Hybrid or not, Turkey at least features a ballot-box (head-count) democracy. Let's hope one day King Salman's Kingdom too returns to normality.

·         * Burak Bekdil is an Ankara-based columnist for the Turkish newspaper Hürriyet Daily News.

·         * This article was published first by Hürriyet Daily News on July 20, 2016

Monday, July 18, 2016

Islamic Finance Expanding Its Footprint In Oman

Recent regulations on sukuk (Islamic bonds) are helping drive growth in Oman’s Islamic banking sector, with sharia-compliant lenders gaining ground.

Image result for Islamic finance expanding its footprint in Oman

Growth of Islamic banking is far outstripping that of the conventional banking segment with Islamic banking assets up more than 62% year-on-year (y-o-y) at the end of March, according to a report issued by the Central Bank of Oman (CBO) in mid-May.

New rules released by the Capital Market Authority (CMA) in April regarding the issuance of sukuk should further broaden the segment’s base by encouraging corporate issues.

Rise in Islamic banking

Total assets held by Islamic banks and the Islamic banking windows of conventional lenders in March amounted to OR2.5bn ($6.5bn), compared to OR1.5bn ($3.9bn) one year earlier, according to the CBO.

This took the Islamic banking’s market share from 5.1% of the financial system’s overall assets in 2015 to 7.8% by March 2016.

Financing to the public and private sector is also on the rise, with sharia-compliant entities having extended OR1.93bn ($5bn) worth of financing as of end-March, up 58% over the OR1.2bn ($3.1bn) recorded in March of last year.    
Growth was also strong on a month-on-month basis, with assets held by Islamic banks and windows up OR100m ($260m) over February, deposits expanding by OR90m ($234m) and financing rising by OR80m ($208m).

For their part, sukuk are expected to play an important role in the country’s Islamic financial markets as they offer an alternate means of fundraising for local companies, according to Abdulaziz Al Balushi, group CEO of Ominvest, an Oman-based investment company.

“Growth in total sukuk issuance is driven by a number factors, including: fiscal deficits led by low oil prices  – necessitating government borrowing in the local and international markets, corporates seeking alternative funding options in the wake of tighter liquidity and Islamic financial institutions’ desire to grow their financing books,” he told OBG.

The growing penetration of sharia-compliant finance is in line with a forecast made by ratings agency Moody’s late last year.

In its November outlook on the Omani financial sector, Moody’s predicted the Islamic banking segment would continue to gain traction, with Islamic assets to account for between 10% and 12% of total banking assets within the next two years.

The sector will benefit from expansion in new lending and through the conversion of customers from conventional to Islamic banking services, the report said.

Conventional competition

In contrast with the performance of the Islamic segment of the market, assets of conventional commercial banks rose by 9.1% y-o-y to the end of March to OR28.6bn ($74.3bn).

While still a strong result, the pace of expansion of the Islamic segment indicates growing demand for sharia-compliant products in the marketplace.

Oman’s Islamic banking sector has two dedicated sharia-compliant banks, Bank Nizwa and alizz islamic bank, which both began commercial operations in 2013.

In addition, six of Oman’s seven domestic conventional banks have opened Islamic banking windows, giving them access to the growing market for sharia-compliant products.

New regulations to spur corporate sukuk

Looking ahead, the country’s Islamic financial sector stands to benefit from new regulations from the CMA that clarify requirements for issuing sukuk and provide a legal framework.

In particular, the new rules aim to provide greater transparency and protection to investors in sukuk transactions by building on existing codes covering company law and capital markets.

The regulations, which came into effect in mid-April, introduce a trust structure and terms for sukuk programmes, providing flexibility for corporations looking to raise money through sukuk.

Importantly, there are no restrictions on the amount of the sukuk based on the company’s capital.
The new regulations are expected to expand the range of investment instruments available in the sector, gradually generating greater investor interest, according to Sheikh Abdullah bin Al Salmi, executive president of the CMA.

“Companies have been waiting for this guidance, and there are a number of sukuk in the pipeline, which have been aided by the issuance of the first government sukuk,” Sheikh Abdullah told OBG.  “However, most corporations will likely wait a bit longer for the government to issue more in order to provide a benchmark for corporate bonds.” 

The CMA is hopeful that codifying sukuk requirements will further develop Oman’s Islamic financial sector and the broader capital markets by giving companies and investors a more stable fundraising platform.

“A vibrant fixed-income market is essential to the development, financial stability and diversification of the regional economy, including Oman,” Sheikh Abdullah said in early June. “This is also an integral part of the overall strategy of the CMA to enable the capital market to play its vital role as an alternative fundraising platform for companies in the economic development of Oman.”

* This report was published by Oxford Business Group on 26 June 2016