 Ladies and gentlemen, warm welcome to our one-to-one session with His Excellency, Deputy Prime Minister of the Turkish Republic, Mehmet Simsek. Mehmet, warm welcome. Thank you. As you all know, Mehmet is a very good friend of the forum since many years, at least since 2007 when you have been for the first time here at our annual meeting. But you're also engaged in many regional activities, last but not least in our regional summits. And before we start, let me express my respect, but I guess the respect of all our Davos participants to the Turkish people. They stood up during the military coup attempt. They stand for their country, their democracy and their freedom. And we're also suffering with the Turkish people if we see so many terrorist attacks. Unfortunately, that brings up some first domestic topics and issues. So allow me the question, because as good friends we can be very frank to each other, that after the military coup attempt, so a lot has happened in your country, in your nation. So many people put into jail and at the same time constitution is discussed, was raised many questions at least from outside. So I would like to ask you now, so what is the rationale, what is happening in Turkey and who can give us more information than a deputy prime minister? Mehmet, the floor is yours. Thank you very much. Good morning everyone. It's good to be here. Yes, on July 15 last year, Turkish people probably in global democratic history had a unique opportunity and probably there were unique scenes where people would bear food and hence they were able to stop tanks and of course Turkish democracy survived that vicious attack. Now coming back to your question, first of all let's put things in a context. The coup attempt seems like it's a product of almost 40 years of planning, infiltration and finally execution by a religious cult that is power hungry. In many parts of the world they may come across as a benevolent sort of movement that focuses on interfaith dialogue, on good causes, charity, staff, education. But in Turkey that certainly is a different product, different animal, in the sense that it's a large business empire, it has recruited kids from very early ages and sort of put them in various government departments for 40, 50 years and had a cozy relationship with every single government since then. So July 15 was not an ordinary event that you can just say, oh there was a failed coup attempt by military and that you just should carry on. There was actually a rogue state, state within state and that's why there is difficulties in our, in parts of the world to understand what's happening in Turkey. You're talking about a religious cult that had a military grade encryption software where 215,000 members of which were just communicating exclusively. So much of the purges and much of what followed the military coup is actually within the context of what any democracy rule of law country would have done because the aim of that coup was to destroy rule of law, was to destroy democracy. So I really believe that while Turkey has gone through this traumatic experience and having to respond to it, the outlook is that Turkish democracy is likely to prove to be stronger and the rule of law is likely to be strengthened. But a combination of the coup attempt and continued terrorist attacks by Daesh and PKK clearly has made it necessary to have the state of emergency. But this is a temporary situation. Turkey is rightly to rebuild and in fact what it begun, we've already done a significant reform that in a normal circumstance would have been applauded by our European partners. We have enhanced dramatically the civilian control over military, for example. So we did not waste this opportunity. We have now reformed and so that never ever such an attempt would take place. We continued even with other reforms, even in the midst of all that. But sadly, this religious cult had massive media presence. They had a bank, they had logistics firms, manufacturing, all sorts of stuff. So this was constituted part of terrorist financing and therefore had to be dealt with it. So much of the headlines sadly don't provide enough details to give the right perspective. I'm not saying that we are perfect. Of course we have a long way to go. We are committed to enhancing standards of democracy in Turkey to continue to boost fundamental rights and freedoms, to continue to strengthen rule of law. But you cannot talk about liberal democracy when you're faced with a massive terror threat on a daily basis. And the vicious coup attempt. So let's put things in a context, but the commitment to European values, the commitment to rule of law, to better standards of democracy, which Turks deserve, Turkish people deserve, is there. And that hasn't changed. Turkey is not breaking up with the West. We may have disagreements every now and then, but that's normal. Turkey is not going to be inward looking. We are actually pushing very aggressively for new generations of free trade agreements and upgrading of customs union with EU. So we remain on the right track. It just has been a lot of dust in the air and we just have to work our way through. And I'm sure it will work out. Now, as far as the constitution is concerned, the current system is a parliamentary democracy. But after 1980 coup, the presidential post was designed with a lot of authority and no responsibility. In 2007, we changed the constitution so that people can elect the president. So now you have a president that is elected by people with a lot of authority. And that is actually prone to massive conflicts in the future. Hypothetically speaking, if you have a government from different party and a president from different party with these overlapping powers, huge powers in the hands of president who is not accountable and responsible, then it's prone. And that's why to avoid future coalition governments and also conflicts between president and governments, we now adjusting the constitution so that we have a president that is elected by people. We have a parliament that will do the scrutiny and do the legislation, proper separation of powers, and a judicial department that is independent. Clearly, these are the core components of the new constitution. Many people, sadly based on headlines, would argue that this is about grabbing more power. You didn't say it, but that's typical interpretation. That's not true. The president already can chair cabinet meetings whenever he wishes. He can only be prosecuted if he commits acts of treason. That's it. Every single decree has to be approved by him or she or he or the presidential post. Every single appointment has to go through that. He is the chief of the army, like commander in chief. So already the existing constitution gives this broad sort of authority or powers. The new constitution is a product of a compromise with the opposition. We have an opposition party that supports it because we don't have the qualified majority to change the constitution. And that's why there's actually proper checks and balances. We are paving the way for presidents to be impeached for, you know, if they commit something wrong. I mean, if they do something wrong. With a simple majority can be referred to Parliamentary Investigation Committee. With a qualified majority can be referred to Supreme Court. That's first. Secondly, the president will have no authority to issue decrees except for appointments and restructuring of various government departments. All other legislation lies, the power lies with the parliament and parliament will continue to have the same level of auditing and scrutiny. Thirdly, right now, we have a judiciary that is directly, indirectly affected, of course, by all these mix. The new setup for judiciary will be majority of judges and person will be appointed. I mean, I'm talking high, I mean, high board will be appointed by the parliament, seven out of six. Only four of them will be appointed by the president. So what I'm trying to say is that actually there is even better separation of power. There is even better, you know, legislative branch. And there is an executive branch that has to deliver. And president can only be elected two times, max, and the period is limited to five years. And the president clearly is much more accountable, much more transparent based on the new constitution. I know that's not the perception, but if you actually read the text, you will see that's exactly why. Because we needed the opposition support and probably this was clearly the best way forward anyway. So why go for such a deal? It ensures stability in administration and it could also bring fairness in representation. Stability in administration in the sense that we no longer have coalition governments. And there will be candidates. If you get 100,000 petitions, you can be a candidate like everywhere else. And so, but at the end, one person will be a president and have a five year term. On the other hand, right now you have a 10% threshold to be represented in the parliament. That's a very high threshold to avoid coalition governments. This way you can reduce the threshold and introduce fairness in representation. So my point is Turkey suffered in 70s from coalitions when bankrupt. It suffered from coalition governments in 1990s when from one crisis to another. This is now the real opportunity for Turkey to ensure stability in administration, fairness in representation, proper checks and balances. So that would be my defense of the new constitution. I would argue that by sometimes mid-April, people will have the final say on the constitution. We made a commitment, we said even if we get the qualified majority to change the constitution, we will not do it at the parliament. The parliamentarians will okay it, but ultimately will give the people the opportunity to decide and that's exactly what we're doing. So people will have the final say if they approve it, in my view, that would be a new era. It will provide a closure to this traumatic experience of last few years and give us a new perspective. And the regime doesn't change. Turkey remains a democratic country. It remains a secular country. Those characters are enshrined and rule of law country. I know there are issues we're grappling with, but who don't have it? Who doesn't? So clearly, we'll work our way through. Thank you, Mehmet. I think this was a good overview about the constitution and what you mentioned. Finally, it's on the Turkish people. They have the last say, they have to vote in a referendum and then they have to decide about the question of checks and balance. The only question I would like to raise and then we should move to the economic part of domestic issues. You mentioned the first part, I understand why you put so many people into prison, but one question is still raised at least outside from Turkey. It's a freedom of press and the freedom of speech because you put a lot of journalists into prison as well. And from the outside, it looks at least with some question marks, so I would like to ask you the question. Of course, the constitution will organize the checks and balance between the different powers in the state, but call it the force power. The media is for free society quite crucial. So my question is, what about the freedom of press and freedom of speech in Turkey? Well, thank you. It's unfortunate that we have a situation where out of 17,000 media employees based on the numbers around up to 150 are in jail. It is not something we like. I agree that freedom of press is a fundamental component of any functioning democracy. No question about it. The question is this. Let's just go back to my earlier. We have a religious cult that attempted a coup and had massive media assets and had reporters a few years earlier involved in various conspiracies. So we're talking about literally criminal activity here. So let's go back to 2010. Media was an instrument at that time that was used by this religious cult to actually prosecute many secular generals and at that time, secular reporters and, you know, writers, because they were critical of this religious cult within various pretexts where those assets were used and abused. So it is the judicial process that is taking place. So it's for judicial, ultimately, it's for courts to decide whether or not there has been any criminal activity. So that's first. So the big chunk of what we talk about here in terms of media crackdown, it's within the context of this religious cult and financing of this massive terrorist act because on July 15, more than 2,200 people were critically injured and close to 250 people were killed during this coup attempt. You can see when they raid Turkzat, which provides the platform for broadcasting of all media. They had workers, employees of media groups of this ghetto, this terrorist group to actually shut down satellite. It's what I'm trying to say, to blacken so that the coup is successful. You can see it on CCTV. Now, when these people are jailed, they're considered to be, of course, media employees. So there is that component. Now, second one, Turkey has obviously a problem with also PKK. PKK is a terrorist organization on U.S., it's on U.S., E.U., a U.N. terrorist. But PKK has a lot of platforms and they do praise and advocate violence and terror. And in our anti-terror bill, this is banned. I think as far as I know, in some European countries, you have similar restrictions. Today, hypothetically speaking, if you had a press outlet that would promote al-Qaeda or Daesh or whatever, you know, violence and praise, I don't think any of you would be happy with it, but as far as I know, some European countries have criminalized this type of... And so here we go. This is the second component of what seems like in a Turkish crackdown on the press. So if Turkey, if it wasn't Turkey, if any European countries, including the most democratic, the most liberal countries, if they had faced with the type of coup attempt, with the type of continuous constant terror threat, I can tell you, you would probably have more draconian measures than what Turkey has today. I'm not justifying. Don't get me wrong. What I'm trying to say is simply this. Unless you look at it within a context, it's extremely hard, then it becomes a dialogue of deaths. But those who are not involved in criminal activity, I am absolutely sure that the judicial process is working and it will work and it is working. Thank you very much. And I think we should all take what you mentioned at the beginning that, you know, Turkey will not break up with the Western or even with the Western values and rules. Well-knowing both of us that the reputation of a country belongs, of course, to the domestic part, but also to the economic part and foreign part, I would like now to move to the economic question. We all know that, you know, the entire economic strategy is focused on 2023, the 100th birthday of the Turkish Republic. So can you give us some milestones of these economic strategies towards 2023? Well, thank you. First of all, in the last 15 years, we've, despite being a reasoned upheaval, Turkish economy has done really well. This has been one of the best, longest running period in terms of an impressive performance. To put things in a context, if you go back to 2001, by then I was based in London, you know, Turkey was on the brink, literally. Turkey was bankrupt, 2001. 2002, my, you know, the current ruling party came in, government came in. At that time, interest expenses totaled 86% of tax revenues. So if this was a company, it was essentially bankrupt. Just interest expense, not debt servicing. Last year, our debt to GDP ratio is down on a gross basis to 27% of GDP, roughly speaking. We have been having surpluses on the budget. So we fixed that on a fundamental basis. Right now, interest expenses make up only 11% of tax revenues. Just to see where Turkey has, how long it's going to last first. We've created, you know, prosperity and jobs. Real GDP growth has averaged since 2002 to 5.9%. This is quite a strong performance. Even if you take Global Financial Crisis, meaning if you take 2008-2016, real GDP growth rate is somewhere around 4.5 to 5%. This is still very impressive considering, you know, the rest of the world and considering what happened in Turkey. We've created, since 2007, 7.2 million jobs. So Turkey has actually been transformed. We've done well. So back in 2007, we put together a very ambitious long-term plan for 2023. Sadly, a lot of things got in the way. So it seems like some of those numbers are hard to achieve. But, you know, you have to first aim to put a man on moon to actually do that. So meaning you have to have these ambitious targets. My point is this. Last few years, a combination of Eurozone debt crisis, which has been a big drag on Turkey. A combination of chaos in the Middle East, which we've just talked about it in the earlier session. A combination of four elections and a coup attempt. And God knows what, a spat with Russia. Despite all that, Turkey has done it. I think Turkey can deliver over the next few decades, two or three decades, based on demographics, based on path of productivity that will be generated by investments and reforms. And based on continued sort of affiliation or anchor, remaining sort of anchor to Europe in terms of qualities, I really believe that Turkey can grow comfortably five, six percent for the next couple of decades. Working age population in Turkey is still growing at 1.7 percent per year. Working age population growth for EU 28 is actually 0.1 percent. This is huge. That means a huge demographic window. So all it takes is you utilize this. And that's why labor market is being made flexible to create more employment. Just to give you again some color, our female labor participation rate, sadly, was 23 percent a decade ago. 23 percent. One fifth, only one fifth of women were in the labor. Today is 32 percent. Still nothing compared to 60 plus for EU and OECD. If we were to catch up with EU, which will happen over the next two or three decades, it's rising very fast. Turkish per capita GDP simply due to the increase in female labor participation rate will go up by 22 percent, just on the back of that. The reason why it's rising so fast is because access to education has gone through the roof. If you go back to a decade ago, the ratio of girl students per boy students in secondary school, it was only 65 percent. Today it's converging. So demographics is one key component. The second component is we've done a lot of reforms in the year 2000, after 2002. Now we are on the verge of a new reform initiative that will help boost productivity and create the type of resilience that is needed in the current global environment. That's the second engine. The third engine, I continue to think that Turkey will continue to converge with EU in terms of quality institutions, in terms of standards of democracy, fundamental rights and freedoms and rule of law, which are absolutely essential to lasting prosperity. And that's why Turkey needs EU. We don't need EU for handouts. We don't need European help. We just literally need a source of inspiration. We just need an anchor. And that's exactly why we're so obsessed with EU. And that's why I don't understand occasionally European noise. And I keep telling my colleagues who are financially literate, I say, look, you have a free put option on Turkey, and you talk about exercising it yesterday. Doesn't make sense. It's a free put option. So what I'm trying to say is this, the Turkish story is still in the making. Yes, there's been a disruption. Yes, it looks like right now, you know, like a mess. It looks like a lot of dust in the air. I mean, I'm being very open here. But this is a temporary rough patch immediately after the referendum. I'm convinced that there is a very high probability that we will go back to factory settings. We will go back to some sort of a more mundane agenda. And hopefully, with all that geopolitical drag diminishing, because we meant fences with Russia, we meant fences with Iraq, with Israel. And now we're trying to find a solution to the problem in Iraq and in Syria. As soon as that drag is elevated with the new political perspective, with all these stuff behind us, I think we'll be ready for the next takeoff. Now, you know, we have a new narrative, and I think it's doable. And there is enough ingredients to achieve that. So Deputy Prime Minister, I fully understand that, you know, a long track road needs a long time to explain. So we have not that much time anyway, but I would like to ask you the last question. We have listened to, I think, a remarkable speech, if not historic speech, by the Chinese president here during our annual meeting in Davos. And it underscores at least the multipolar world. And my question is, having listened to you in the political as well as economic era, how would you position and where would you position Turkey in its geographical, economic, political role? Maybe in the year 2020, so three years before your 100th anniversary, given that we are truly living in a multipolar world based on all this, and my main question is, hopefully integrated as much as possible in a western, value-based community? Yes or no? Absolutely, yes. Because we cannot look up to elsewhere in our neighborhood for source of inspiration for the things that are essential to lasting prosperity, lasting prosperity. I mean, look, the United States has roughly 330 million, you know, this is a large country, and it has per capita GDP that is higher than $50,000. Yes, there are richer countries, but they rely on hydrocarbon resources. Turkey today with refugees is an 83 million population with a huge... I mean, they have dreams, they have aspirations like everybody else, but these are young people, so that's first. And these people, I mean, there are a lot of entrepreneurship there. We don't have oil, we don't have gas, thanks God, maybe, that's a blessing in disguise. But guess what? The only way we can achieve lasting prosperity is through the model that you've just described. So don't focus on immediate noise. There has been, of course, trauma in our relationship, occasionally with our friends, US, EU, but let's face it, we didn't get enough empathy, understanding, benefit of doubt, and even there was very little solidarity. Of course, there was lip service, oh, who was horrible, and congratulations, you stopped it. But they never came to listen to us what it meant to deal with a religious cult that has infiltrated in the state apparatus. They never listened to us what sort of existential threat it feels like when you have a constant threat from PKK that has been emboldened by the gains in Syria and Iraq and is moving into Turkey and abusing all these democratic freedoms and stuff. So my point is Turkey hasn't given up on those aspirations. Turks deserve it. We'll solve our problems through more democracy, more fundamental rights and freedoms, and better rule of law. I'm absolutely convinced. But we're going through a rough time. Give us benefit of doubt, please. Just you would do it with anybody else. So Deputy Prime Minister, dear Mehmet, we know you personally as a good friend of the forum since many years, what I mentioned, and we will see you as a friend and partner in the future, and that will be the same with Turkey and the Turkish people. So thank you very much for your time and thank you very much for some insights. I'm very grateful for the opportunity.