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Deloitte Appeals For Calm To Investors

One of the largest institutions in the world in auditing, tax, management consultancy and corporate finance services, Deloitte made an announcement regarding the recent political tensions in Turkey surrounding the Presidential elections, appealing for calm to investors. In the announcement, made by Deloitte Turkey, it is emphasized that Turkey would sustain its economic growth and the macroeconomic situation in the country will be ever stronger regardless of what transpires among state institutions. The statement, signed by Barış Öney, Deloitte Turkey Corporate Finance Partner is as follows:

“Current political developments surrounding the Presidential election, have the potential to raise concerns and questions in the minds of foreign strategic and financial investors. We therefore would like to provide our assessment of the situation from the perspective of a long-term investor.

Turkey is entering into a period of political uncertainty for the next several months. Resolution of the serious issues among state institutions regarding the election of the president and the new parliament will take some time. We expect this political uncertainty to continue in varying degrees until the parliamentary elections scheduled to be held in November 2007. However, a general consensus seems to emerge that the parliamentary elections may be rescheduled for an earlier date. Many observers expect a consensus on the name of the new president to be reached by the new parliament rather than the current one. The primary reason for this belief is the demonstrations that took place on April 14th in Ankara and April 29th in Istanbul, both of which reached unprecedented scales. However, the situation may get more difficult should the government insist on concluding the election process for the president underway despite demonstrations and objections both by opposition parties and major actors of the Turkish State.

During this period, capital markets carry the potential to be affected from the events and therefore a traders market is on the horizon. During this period capital markets investors should be careful not to be caught in the midst of fluctuations in the equities and bond markets. Long-term strategic and private equity investors, on the other hand, should stay calm as we have the full confidence that the long term direction where Turkey is headed will keep unchanged. Regardless of what transpires between state institutions, Turkey will continue to grow. For 25 years or more, the average growth rate of Turkey has been 5-6 %. No matter how heated the debates, how strong the pro-secular demonstrations, and however oddly received in Western capitals the reactions of the armed forces are, Turkey will remain a strong, secular, and democratic state. Taking a look at the past 84 years of the Republic of Turkey, we have no reason to believe otherwise.

With all its economic and financial regulatory institutions in place, macro economic situation in Turkey is stronger than ever and is resilient to such uncertainties. The private sector in Turkey, which received a total of over USD 35 billion in FDI since the beginning of 2005, is ever more resilient today. General Electric, Vodafone, Citibank, Dexia Bank, Fortis Bank, BNP Paribas, and OMV as well as private equity groups such as Texas Pacific Group, Providence and Advent have all made sizeable investments recently. Turkish companies investing abroad such as Turkcell, Dogan Holding and Anadolu Group are on the way to becoming true global players. Despite all macro economic crises Turkey has undergone in the past, we do not recall any long-term foreign investor leaving Turkey. The few who left during crises periods tried hard later to come back.

Our message to foreign strategic and private equity investors therefore is to keep their calm and continue evaluating investment opportunities in Turkey.”

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