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A Rapid Surge in Global Debt Global Debt at Historic Highs: Public debt worldwide is climbing at an alarming pace. The International Monetary Fund’s latest Fiscal Monitor (April 2025) warns that global public debt will rise by about 2.8 percentage points of GDP in 2025 – “more than twice the estimate for 2024” – pushing total debt to roughly 95% of global GDP . This marks an acceleration from the post-pandemic lull in debt growth, and projections show the upward trend continuing. At the current trajectory, global public debt could approach 100% of GDP by the end of the decade  , surpassing even the pandemic-era peak. In the IMF’s severe adverse scenario, debt could reach 117% of GDP by 2027, a level not seen since World War II  . Widespread Increases: This debt buildup is broad-based. About one-third of countries – representing 80% of world GDP – now have public debt higher than pre-pandemic levels and rising faster than before . More than two-thirds of economies studied carry heavier debt burdens today than in 2019 . Advanced economies average government debt around 110% of GDP, while emerging and developing economies average about 74% – a gap, but one that is narrowing as debt loads increase across the board. The map below illustrates the landscape of government debt-to-GDP ratios around the world (2025), with many countries now in the high-debt territory (often defined as above 75% of GDP). Turkonomics * (Above: Global government debt-to-GDP by country in 2025. Darker shades indicate higher debt ratios.) This surge reflects pandemic-era fiscal support, new spending pressures, and slowing growth. Government budgets are strained by higher interest costs, defense outlays, and social demands even as revenues struggle to keep up . The IMF notes that recent trade tensions – such as steep tariffs by the U.S. and retaliations – have further weakened growth prospects and increased risks, complicating debt dynamics . In short, the world’s fiscal health has worsened in a climate of uncertainty, raising fresh concerns about long-term sustainability . Policymakers face a delicate balancing act: reduce debt and rebuild fiscal buffers while still investing in economic priorities  . Mounting Investor Concerns Rising Default Fears: As debt piles mount, investor anxiety about sovereign default risk is intensifying. Servicing this debt has become a “top concern for investors, public-sector bankers, and central banks” in the current high-rate environment . One telling indicator is the increased attention to debt risk in popular discourse. In many countries, public interest in terms like “debt crisis” and “default” has surged – for example, the UK now sees over 2,300 Google searches per 100,000 people for debt and credit-related terms, the highest such volume globally . This suggests that both investors and the public are closely watching sovereign debt news, attuned to potential warning signs. Financial media and Google search trends echo this heightened concern, reflecting a collective memory of past crises and fear of history repeating. Market Stress Signals: In the markets, the cost of insuring against defaults and the risk premiums on government bonds have been flashing caution. Yields on sovereign bonds have climbed sharply for vulnerable nations, and credit default swap (CDS) spreads – essentially the price of default insurance – have widened. Even globally, benchmark yields are up: rising U.S. and European interest rates have a knock-on effect, “leading to higher financing costs” for emerging markets . Investors are demanding greater compensation to hold risky sovereign debt, driving widening spreads in emerging markets  and prompting some debt indices to spike. For instance, JPMorgan’s EMBI Global index of emerging sovereign spreads has been under pressure as investors reassess which countries might be next to restructure debts. A telling example is Argentina’s “country risk” index – the extra yield investors require over U.S. Treasuries. It blew out to 2,500 basis points during the worst of its recent turmoil, but remains around 900 bps even after policy reforms . Such elevated spreads signal lingering skepticism. Investors have also been frantically repricing bonds of other financially strained nations, driving some deep into distressed territory. This was evident when Pakistan and several African frontier markets saw bond prices sink to levels implying high default probability earlier in the year. Rising global interest rates have effectively tightened the vice on high-debt countries: their borrowing costs rise just as their debt loads swell – a potentially toxic combination. Case Studies: Emerging Markets on the Brink Investor concern is not abstract – it’s grounded in real stress visible in several economies. Recent months have seen market turmoil in multiple emerging markets, as evidenced by soaring bond yields, ratings downgrades, and pleas for international support. Below, we examine a few emblematic cases: Argentina: Long a poster child for sovereign defaults, Argentina has defaulted nine times in its history . Years of chronic deficits and high inflation have left the country perpetually on the brink. By end-2023, Argentina’s public debt had ballooned to roughly 155% of GDP (partly due to a collapsing currency)  . Decades of “original sin” – reliance on short-term and foreign-currency debt – means any shock can quickly undermine the peso and the government’s ability to service obligations . Indeed, the country’s U.S. dollar bonds have been trading at distressed levels; yields hovered in the low double-digits (~10–12%) recently as investors awaited signs of stability. A change in leadership late 2024 sparked a market rally: the libertarian president Javier Milei implemented radical fiscal cuts, managing to erase a deficit over 4% of GDP in one year. This austerity drive “drove down country risk” and even tamed triple-digit inflation . Argentina secured a new $20 billion IMF program and other support, pulling it “back from the brink” for now . Its sovereign spread fell below 900 bps – the lowest since 2019  – and analysts now see “practically no risk of default until 2027”  . Still, enormous challenges remain: public discontent over soaring poverty, a deeply polarized political scene, and huge foreign-currency maturities in coming years. Argentina exemplifies both the ever-present risk of default and the possibility of reprieve when credible reforms are enacted. Egypt: Egypt’s debt dynamics have deteriorated sharply, placing it high on watchlists. Public debt reached about 96% of GDP in 2023 , and more critically, external debt has skyrocketed – topping $165 billion (around 40% of GDP) by late 2024  . Servicing this debt is consuming an alarming share of government resources: Egypt’s debt service (interest + repayments) hit a record $42.3 billion in 2024, over half of government revenues . Such a burden severely squeezes spending on essential services and development. The Egyptian pound has been devalued multiple times, losing over 50% of its value in the past two years, which inflated the local-currency value of foreign debt and stoked inflation. Investors have responded by demanding high yields on Egypt’s bonds. Eurobonds due 2027, for example, trade at about 11– 12% yield  – a sign of perceived high default risk (Egypt’s credit rating is deep in speculative territory). Indeed, Moody’s rates Egypt at Caa1, implying a default spread of around 7.4% (over 700 bps) above risk-free rates . The government has turned to the IMF for relief, securing a $3 billion program (on top of previous loans), and Gulf allies have injected funds, but reforms have lagged. A stark indicator of stress: over 50% of Egypt’s budget is now absorbed by interest payments . With global conditions tightening, Egypt faces what one analyst termed a potential “sudden stop” in external financing . Without significant currency and fiscal adjustments, the country could be pushed into restructuring. Investors remain jittery, as evidenced by Egypt’s CDS premiums staying elevated near 800–900 bps in recent months. Türkiye (Turkey): Türkiye presents a somewhat unique case – its government debt ratio (around 30% of GDP) is relatively low , yet markets have treated it as high-risk due to other factors. Years of unorthodox economic policies (including an era of ultra-low interest rates under political pressure) fueled 40%+ inflation and a plunging lira, undermining investor confidence. To combat inflation, the central bank executed dramatic rate hikes in 2023–2024, lifting the policy rate to 40%+, and bond yields followed suit. Yields on lira-denominated 10-year government bonds surged to roughly 30% by mid-2025 – among the highest nominal yields in the world . (Even 2-year notes were yielding over 32% .) These staggering yields reflect both inflation expectations and credit risk. While public debt is modest, Türkiye has significant foreign-currency corporate debt and a history of balance-of-payments pressure, so investors remain cautious. Türkiye’s 5-year CDS spread oscillated around 300 bps in 2025 , indicating a perceived default risk higher than many peers (Moody’s rates it B1, consistent with about a 4–5% default spread  ). On the positive side, Turkey’s new economic team (appointed after the mid-2023 elections) has taken steps to restore policy orthodoxy, and inflation has started to ease from its peak. The country also benefits from a strong banking sector and the fact that general government debt is only ~25–30% of GDP , giving it more fiscal space than other high-inflation economies. Nevertheless, currency risk is the Achilles heel – with the lira still fragile, any loss of investor trust could reignite capital flight. Recent geopolitical tensions and political uncertainties (e.g. elections, policy continuity) also add to risk. In short, Türkiye shows that even low-debt countries aren’t immune to crisis if macroeconomic stability falters. Investors will be watching if the promised return to orthodox policies holds, which could gradually bring those 30% yields back down to earth. IMF Case Studies: Advanced Economies Feeling the Strain Highly indebted advanced economies are also coming under the microscope. Traditionally, rich countries could accumulate debt with relative impunity, thanks to lower borrowing costs and greater policy credibility. But with interest rates rising globally, even these giants are feeling pressure. Two notable examples are Italy and Japan: Italy: With a gross debt of about 135–137% of GDP , Italy has one of the largest debt burdens in the world (and the second-highest in the Eurozone after Greece). This has long raised fears of a crisis, especially during the euro debt turmoil a decade ago. Today, however, Italy finds itself in a “relative bond market rejuvenation”  . Counterintuitively, Italian bonds have been rallying: 10-year yields are about 3.5% – roughly back to Italy’s average borrowing cost since the euro’s inception 38   . The spread Italy pays over safe German Bunds has halved in two years to under 100 bps 39   , near its tightest level since 2010. Several factors explain this resilience. First, debt concerns have become “all relative” – other big economies have caught up. “Italy’s debt-to-GDP, though ~137%, is no longer such an extreme outlier,” as even the U.S. has sailed past 100% and France nears Italy’s level  . Second, Italy’s recent fiscal performance improved: it curbed deficits post-pandemic, and unlike many peers, Italy’s debt ratio is not projected to keep rising through decade-end . Third, political stability and ECB support have bolstered market confidence. Prime Minister Giorgia Meloni’s government (in office since 2022) has maintained a consistent fiscal course, and Italy’s credit ratings were upgraded this year (S&P raised Italy to BBB+ in April, and Moody’s moved the outlook to positive) . These developments have instilled hope that Italy can manage its debt without drama. That said, Italy remains vulnerable to interest-rate shocks given the sheer size of its debt and its reliance on market financing. Even at 3.5%, interest eats up a sizable chunk of Italy’s budget, and any return of EU recession or political instability in Rome could widen spreads again. Italy’s bond renaissance is encouraging, but it is not an all-clear – it underscores how fragile market sentiment can swing for a highly indebted sovereign. Japan: Japan stands in a league of its own with debt at roughly 250% of GDP – the highest of any advanced economy . For years, this seemed a manageable problem thanks to Japan’s unique conditions: the Bank of Japan held interest rates at 0% or negative, and “about 90% of Japan’s debt is held domestically,” largely by risk-averse Japanese institutions  . This meant Japan faced little immediate default risk despite debt twice the size of its economy – global bond vigilantes couldn’t easily punish it, and interest costs were minimal. However, 2023–2025 have brought a regime change of sorts. Inflation emerged in Japan for the first time in decades, and the Bank of Japan started to adjust its ultra-easy policy. Yields on Japanese Government Bonds ( JGBs) began rising, and volatility spiked in this once-sedate market  . In late 2024 and into 2025, long-term JGB yields hit milestones: the 20-year yield reached about 2.6% (highest since 2010), the 30-year climbed above 3.1%, and the 40-year JGB surged to a record 3.7% . While those rates may seem low by international comparison, for Japan they are the highest in many years – and critically, well above the country’s long-term nominal growth rate. The spike prompted notable alarm in Tokyo: officials warned that “higher rates could further imperil Japan’s finances”  , given the massive debt stock. Prime Minister Shigeru Ishiba went so far as to state Japan’s fiscal situation is “worse than that of Greece,” which had a debt ratio of 150% when it nearly defaulted  . To calm the market, the Ministry of Finance intervened by reducing super- long bond issuance and even considering buy-backs of long-term bonds . The BOJ, under new Governor Kazuo Ueda, has tread carefully – slowing its bond purchase taper to avoid a disorderly jump in yields . Japan’s saving grace is that its effective interest rate on debt (the average rate it pays) will rise only gradually, since much debt was issued at near-zero rates and has not fully rolled over yet. Still, the direction is clear: debt service costs are starting to mount. Japan’s 10-year bond now yields around 1% (a 15-year high) and could rise further if the BOJ normalizes policy . The yen’s weakness – partly a result of the U.S.-Japan interest rate differential – adds another layer of risk, as it pushes up imported inflation and could limit Japan’s flexibility in controlling yields. Nobody expects Japan to default (the government can ultimately print yen to pay yen debt), but the country may be entering a perilous period where it must choose between allowing higher inflation or drastically tightening its belt to rein in borrowing. Japan illustrates that even for advanced economies, there is a tipping point where debt levels and rising yields become a dangerous mix. It’s worth noting that other advanced economies are not far behind. The United States, for example, now has federal debt exceeding 120% of GDP , and its interest costs are climbing rapidly as the Federal Reserve’s rate hikes feed through (U.S. 10-year yields hit ~4% in 2024–25, the highest since 2007). The UK and France have also seen their debt ratios surge (UK ~100%, France ~112% of GDP) and have faced market scares – the UK’s 2022 gilt crisis after a botched fiscal plan is a case in point of how markets can punish perceived fiscal profligacy. In short, the debt problem is global, not just an emerging-market issue. The common thread is that high debt + higher interest rates = higher stress for any sovereign. The next section explores how specific factors like interest rates, currency mismatches, and politics feed into the likelihood of crises. Turkonomics Key Risk Factors: Interest Rates, Currency, and Politics Why are some countries more likely to tip into crisis than others, even with similar debt levels? Three interrelated factors stand out in assessing sovereign risk today: interest-rate differentials, currency risk, and political instability. Interest-Rate Differentials: The rapid rise in global interest rates – led by the U.S. Federal Reserve’s tightening – is a game-changer for sovereign debt dynamics. Higher baseline global rates raise borrowing costs for all countries, but especially for those with weaker credit. For emerging markets, the spread above U.S. Treasuries has widened as investors reassess risk in a higher-rate world . “Tighter and more volatile financial conditions in the U.S. may have ripple effects on EMDEs, leading to higher financing costs,” the IMF observes . This dynamic has already played out: many developing countries that borrowed heavily at low rates earlier are now seeing double-digit yields that make refinancing prohibitively expensive. Moreover, as rich-country rates rise, capital flows often reverse: investors pull money from risky markets to chase safer high yields at home, draining liquidity from emerging economies. The impact of a rate shock can be illustrated by a simple scenario: a uniform 200 basis-point (2%) increase in interest rates worldwide. Such a shock would jack up annual interest costs by the equivalent of 5% of GDP for a country like Japan (with debt ~250%/GDP) and about 2.7% of GDP for Italy (debt ~135%/GDP). By contrast, a low-debt country like Türkiye (30%/GDP) would see a smaller 0.6% of GDP increase (though in practice Turkey already pays much higher rates due to inflation). This simulation highlights the vulnerability of high-debt sovereigns – they are far more sensitive to rate spikes. Many emerging nations have shorter debt maturities as well, forcing them to roll over debt more often at new higher rates. That’s why rising global yields have immediately pushed some countries into distress. Simply put, high interest rates can trigger a solvency crisis if a government’s debt load is large and its revenues can’t cover the new, higher interest bills. Currency Risk: A commonly overlooked factor in sovereign debt crises is the currency composition of debt. Countries that borrow heavily in foreign currencies (typically dollars or euros) are taking on currency risk. If their own currency depreciates, the debt burden in local terms balloons – often a precursor to default. This was a key cause in many past emerging- market crises (Latin America in the 1980s, Asia in the 1990s). It remains relevant today. For example, Argentina and Egypt both have significant portions of debt in dollars. When their currencies plunged (the Argentine peso and Egyptian pound each lost value dramatically), the debt-to-GDP ratio jumped because GDP is measured in local currency while debt was owed in harder currency . This is evident in Argentina’s case: by one calculation, its debt was ~85% of GDP at the official exchange rate, but using a more realistic exchange rate after devaluation, debt shot up to 155% of GDP  . Such moves can suddenly make a previously “sustainable” debt level look unsustainable. Currency risk also ties into investor confidence – a sharp depreciation often signals investor flight and can spiral into a self-fulfilling crisis. Countries like Türkiye and Nigeria have sizable foreign-currency debts and have seen their currencies fall, putting pressure on banks and governments alike. On the other hand, Japan’s debt is entirely in yen, and Italy’s in euros, meaning they won’t see the face value of debt explode due to FX changes (though Italy gave up the lira, it effectively borrows in a “foreign” currency – the euro – that it doesn’t control). Investors closely watch foreign exchange reserves as well, since a country that cannot muster enough hard currency to pay external debt is forced into default or IMF assistance. This is why Pakistan, Sri Lanka, and Zambia – all of which faced dwindling FX reserves – ended up defaulting or restructuring recently. In essence, a country with a large foreign-currency debt and a weakening currency has a high crisis probability, as any creditor exodus quickly becomes a funding crunch. Conversely, countries that can print their own currency to pay debt (like the U.S., Japan, UK) have more leeway – they’re more likely to inflate away debt or see their currency weaken than formally default, though bondholders could still suffer losses via inflation. Political Instability: The third crucial factor is the political dimension. Debt crises are as much political events as financial ones. Often, it’s not ability to pay but willingness (or lack thereof) that tips the scales. A government facing public unrest, regime change, or policy paralysis may choose to default or may be unable to enact the tough measures needed to avoid default. We see this clearly in recent cases. In Italy, politics have surprisingly stabilized (a single government in power since 2022 is a novelty), which has helped in managing debt – as Moody’s noted, a “stable political environment” and commitment to fiscal discipline support Italy’s credit outlook. Conversely, Argentina’s political pendulum swings between populism and austerity; each swing has debt implications. Under past populist governments, Argentina printed money and ran deficits (fuelling inflation and defaults), whereas the current administration’s reforms boosted confidence but face pushback and could be reversed if politics shifts again . Egypt’s regime, while authoritarian, grapples with social pressures – high food prices and unemployment make subsidy cuts (an IMF demand) politically sensitive, limiting how much adjustment is feasible. Türkiye until recently had a highly unorthodox policy dictated by President Erdoğan, which rattled investors; only after the 2023 elections, when policy shifted under new economic managers, did some confidence return, but political risk remains if there’s any return to previous policies. Even in advanced economies, politics matter: Japan’s willingness to impose fiscal austerity is limited by electoral considerations (politicians there are currently mulling cash handouts ahead of an election  , even as officials warn about debt). In the U.S., partisan standoffs over the debt ceiling repeatedly threaten technical default – an entirely political self-inflicted risk. And in the UK, a single ill-conceived fiscal announcement in 2022 (the Truss government’s unfunded tax cuts) triggered a bond market rout, illustrating how markets can punish perceived fiscal irresponsibility overnight. Overall, countries with weak governance, policy unpredictability, or social unrest are viewed as more likely to hit a debt crisis, because making the hard choices to restore debt sustainability may be politically impossible. By contrast, nations that build broad political consensus for fiscal responsibility (or have institutions like independent central banks and fiscal rules) inspire more confidence from investors . In sum, stable and prudent governance is a key bulwark against default. These factors often interact. For example, a jump in global interest rates (factor 1) might cause a currency slide in an emerging market (factor 2), which then sparks political turmoil as living costs spike (factor 3), altogether creating a perfect storm that ends in default. That feedback loop is what the most vulnerable countries are grappling with in 2025. It’s no coincidence that many of the economies now under the most stress (Argentina, Lebanon, Sri Lanka, etc.) suffer from all three problems at once: they have high interest burdens, large external debts, and unstable politics. Conclusion: A New Sovereign-Debt Crisis Ahead? With global debt nearing 100% of GDP and financial conditions tightening, it’s natural to ask if we are on the verge of another wave of sovereign debt crises. The warning signs are certainly present: debt is rising faster now than it did in 2024 , investor wariness is evident in widening spreads and flight- to-quality, and a number of countries (both developing and advanced) are under acute strain. Historical parallels loom large – observers are reminded of the early 1980s (when U.S. rate hikes triggered defaults in Latin America) and the late 1990s (Asian/Russian financial crises), as well as the more recent Eurozone crisis. There is a growing sense that the risk of cascading sovereign defaults has materially increased. However, inevitability is a strong word. Whether a full-blown crisis materializes will depend on several factors in the coming months and years: Global Economic Growth: If global growth holds up (the IMF projects ~3% world growth ), countries will find it easier to service debts (higher GDP means lower debt/GDP and higher tax revenues). Conversely, a recession could spike debt ratios and explode deficits, pushing vulnerable sovereigns over the edge. Interest Rate Trajectory: A pause or reversal in Fed rate hikes – or an easing of monetary policy if inflation abates – could relieve pressure on debtors. Indeed, some frail countries are banking on rate cuts in 2025 to reduce their interest costs. If instead high rates persist or climb further, more governments will be at risk of “breaking.” The simulated 200 bps shock discussed earlier is a worst-case for many; avoiding that scenario (or cushioning it through refinancing help) is key to averting crises. Policy Response and Reforms: Perhaps most importantly, how governments and institutions respond will shape the outcome. Proactive fiscal adjustment and structural reforms can significantly restore confidence – Argentina’s recent experience shows that even high-risk cases can buy time with the right policies . The IMF and World Bank are also crucial players. They have been ramping up lending and pushing initiatives for debt restructuring (for example, the G20’s Common Framework) to orderly handle insolvent countries. If international support comes in time (and with realistic conditionality), some defaults can be prevented or turned into negotiated restructurings rather than chaotic collapses. The IMF’s message is clear: governments should “put their fiscal house in order” now – build buffers in good times, strengthen fiscal frameworks, and improve debt transparency – to reduce the chance of crisis. Countries that heed this advice will be better prepared if global conditions worsen. Market Sentiment Wildcards: Financial markets can be fickle. A change in sentiment can become self-fulfilling (as seen when UK gilts sold off violently in 2022, or when Italy’s spreads ballooned in 2011). On the other hand, concerted central bank action – like the European Central Bank’s emergency bond-buying programs – can backstop sovereign borrowers and calm panic. One cannot discount the possibility of central banks intervening if sovereign stress starts threatening global financial stability. For instance, if Italian yields spiked uncontrollably, the ECB would likely step in with its Transmission Protection Instrument (TPI) to cap spreads. Similarly, Japan’s BOJ still controls its yield curve to prevent disorderly moves. These tools, while not cures for poor fundamentals, could prevent a spiraling crisis of confidence. Taking all these into account, a new sovereign-debt crisis is not preordained, but the risk is undeniably higher than it has been in years. We may not see a single massive “Lehman moment” – instead, we might see a series of smaller debt events: a default here, a bailout there, a market scare prompting policy U-turns, etc. Indeed, some of this is already happening (several low-income countries have defaulted or restructured since COVID, and just in 2023–2024 we saw Zambia, Sri Lanka, Ghana, Suriname, and others in default). The question is whether a systemic wave will sweep larger emerging markets or even advanced economies into crisis. Policymakers can still lean against that outcome. By enacting credible fiscal plans, securing contingency financing (e.g. IMF credit lines), and addressing the root causes of investor fears (be it an overvalued peg, an untenable subsidy, or a political impasse), countries can buy valuable breathing room. As the IMF emphasizes, “fiscal resilience” and restoring confidence and trust are paramount  . That includes ensuring transparency in public finances and communication with stakeholders (markets and citizens alike) . For many emerging markets, a combination of debt reprofiling and reform may be needed – tackling unsustainable debts via negotiations while implementing growth-enhancing and austerity measures to stabilize the trajectory. In conclusion, the world is at a precarious juncture: global debt is near record highs and rising, and the conditions that kept borrowing cheap have faded. Investor concern is evident in both search trends and market pricing – they are essentially asking: “Who’s next?” The answer depends on how deftly nations navigate the minefield of high rates, currency fluctuations, and political pressures. A new sovereign-debt crisis can be averted if the warning signs are heeded. But without timely action, we could indeed see the dominoes of default start to fall. In the words of one IMF official, governments must “redouble their efforts to keep their fiscal houses in order”  – the stability of the global financial system may well hang in the balance. Table: Debt Metrics of Selected Economies (2025) Country Debt-to-GDP 10-Year Bond Yield Default Spread (≈5Y CDS) Argentina 155% 18 ~11% (USD bonds) ~9.0% (900 bps) 15 Egypt 96% 22 ~11.5% (USD bonds) 24 ~7.4% (743 bps) 25 Türkiye 30% 28 ~30% (TRY local) ~4.5% (446 bps) 33 Italy 135% 35 ~3.5% (EUR) 38 ~2.2% (218 bps) 65 Japan 255% 66 ~0.8% ( JPY) 50 ~0.7% (70 bps) 65 Sources: IMF World Economic Outlook, Trading Economics, Reuters, Moody’s/S&P. Debt-to-GDP figures are latest estimates (end-2023). Bond yields are as of mid-2025 (local currency 10-year rates for Italy & Japan; USD Eurobond yields for Argentina & Egypt; Turkey yield is local 10y). Default spread is the approximate credit risk premium over risk-free (derived from CDS or ratings). Higher spread = higher perceived default risk. Figure: Interest Rate Shock Simulator – 200 bps Increase Japan: +5.0% of GDP in annual interest cost (high debt magnifies the impact) Italy: +2.7% of GDP in interest cost (already spends ~3% of GDP on interest) Egypt: +1.9% of GDP in interest cost (large debt, but some on concessional terms) USA: +2.5% of GDP in interest cost (debt now ~125% of GDP) Türkiye: +0.6% of GDP in interest cost (low debt softens the blow) Illustrative scenario assuming an instantaneous repricing of debt at +2% higher rates. In reality, effects would phase in over time as debt rolls over. The exercise shows the stark difference: high-debt countries face a much heavier burden from rate shocks. Ultimately, is a new sovereign-debt crisis inevitable? Not necessarily – but without proactive management, the odds are uncomfortably high. The world’s debt clock is ticking, and the next few years will test which nations can defuse their debt bombs and which ones succumb to them. Vigilant investors, vigilant policymakers, and a bit of economic luck will determine the answer. 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Turkey https://www.paturkey.com/news/2025/middle-east-war-shakes-turkish-markets-cds-jumps-above-300-amid-rising geopolitical-risks-21473/ Fitch Affirms Turkiye at 'BB-'; Stable Outlook https://www.fitchratings.com/research/sovereigns/fitch-affirms-turkiye-at-bb-stable-outlook-31-01-2025 No longer the big outlier, Italy sees bond renaissance | Reuters https://www.reuters.com/markets/europe/no-longer-big-outlier-italy-sees-bond-renaissance-2025-06-11/ Explainer: Why is the BOJ slowing its buying of Japanese government bonds? | Reuters https://www.reuters.com/business/finance/why-is-boj-tweaking-its-buying-japanese-government-bonds-2025-06-17/ 1 2 8 10 13 14 58 62 3 9 63 4 5 52 6 7 59 11 12 57 64 15 16 60 17 19 20 21 54 55 61 18 22 28 35 66 23 24 25 33 65 26 27 29 30 31 32 34 36 37 38 39 40 41 42 43 44 45 46 47 48 49 51 56 9 50 Higher bond yields not a threat to fiscal health yet - Capital Economics https://www.capitaleconomics.com/publications/japan-economics-update/higher-bond-yields-not-threat-fiscal-health-yet 53 Egypt Could Tokenize Its Way Out of Debt in Three Years — But Won't https://medium.com/@ksaqr/egypt-could-tokenize-its-way-out-of-debt-in-three-years-but-wont-9b34c44fd64f

Elon Musk, Alex Karp The concentration of global wealth has reached unprecedented levels that would make winning the lottery feel like finding loose change in your couch cushions. 813 U.S. billionaires collectively holding $6.72 trillion and the world's ultra-high-net-worth individuals (those with $30+ million) commanding $49 trillion in assets as of 2024 represents more than the combined GDP of most nations. This extreme concentration raises fundamental questions about the mechanisms driving wealth accumulation and preservation across different political-economic systems. Understanding how the ultra-wealthy achieve and maintain their status requires examining not just individual success stories, but the sophisticated ecosystem of legal structures, political connections, and regulatory capture that enables wealth to compound at extraordinary rates while remaining largely insulated from traditional economic risks. From Silicon Valley's tech moguls to China's state-capitalist billionaires, from European family dynasties to Gulf sovereign wealth funds, the pathways to extreme wealth reflect broader tensions between market capitalism, state power, and democratic governance. The Primary Engines of Wealth Creation Modern wealth accumulation operates through several interconnected strategies that have evolved significantly since 2020. Technology entrepreneurship has emerged as the dominant pathway, with tech billionaire wealth tripling from $788.9 billion in 2015 to $2.4 trillion in 2024. This surge reflects the unique scalability of digital platforms and the network effects that enable rapid market dominance. The foundation of extreme wealth lies in equity ownership rather than traditional business income. 89% of the world's top 10 richest individuals' wealth is concentrated in company stock, demonstrating how public equity markets enable founders to retain control while accessing massive capital flows. The cases of tech titans illustrate this dynamic perfectly their wealth fluctuations of hundreds of billions demonstrate both the potential and volatility inherent in equity-based wealth. Financial services continue to generate substantial wealth through intermediation and asset management. Private equity and hedge fund structures benefit from preferential tax treatment, particularly the carried interest provision that allows fund managers to pay capital gains rates rather than ordinary income rates on their profits. This sector has produced numerous billionaires who leverage other people's capital to generate management fees and performance-based compensation. A notable shift is occurring in inheritance patterns. While currently 66% of billionaires are self-made, 2023 marked the first year when inherited wealth ($150.8 billion) exceeded self-made wealth ($140.7 billion) among new billionaires. This trend foreshadows the "Great Wealth Transfer" where over 1,000 billionaires will pass $5.2 trillion to heirs over the next 20-30 years, potentially reshaping global wealth distribution patterns and reducing economic mobility. George Soros Regional Variations: Political Economy Matters Wealth accumulation operates through fundamentally different mechanisms across political-economic systems, challenging assumptions about universal market-based wealth creation. These regional variations reveal how state power, market institutions, and individual opportunity structures interact to create different pathways to extreme wealth. In the United States and Western capitalist systems, market-driven wealth creation operates with relatively limited state intervention. The Federal Reserve's 2022 Survey of Consumer Finances reveals that the top 10% of families hold 67% of total wealth while the bottom 50% own just 2%. This concentration reflects sophisticated financial markets, strong intellectual property protections, and tax policies favoring capital gains over labor income. Chinese state capitalism demonstrates how authoritarian systems can generate extreme wealth while maintaining political control. Despite periodic regulatory crackdowns, 55 Chinese business leaders feature in Bloomberg's top 500 richest, with tech mogul Pony Ma leading at $44.3 billion. The Chinese model involves intimate collaboration between private wealth and state objectives, with major tech companies employing thousands of Communist Party members in key development roles. Gulf sovereign wealth funds represent a unique model where state control of natural resources generates massive investable capital. Collectively managing approximately $4 trillion in assets (40% of global sovereign wealth), these funds increasingly serve dual purposes: wealth preservation for future generations and advancing national strategic objectives. European family dynasties showcase remarkable wealth persistence across centuries. Research from the Bank of Italy demonstrates that families wealthy in Florence in 1427 largely remain in top income brackets 600 years later, with three of four richest medieval families still in today's top 10%. This persistence reflects sophisticated legal structures including trusts and family offices that prevent wealth dissipation across generations. The Sophisticated Infrastructure of Wealth Preservation The preservation of extreme wealth requires strategies that often operate parallel to traditional economic and legal frameworks. These mechanisms enable the ultra-wealthy to minimize tax obligations, maintain privacy, and exercise political influence while protecting assets across generations. Tax optimization represents the most significant wealth preservation mechanism. The ProPublica investigation revealed that the 25 richest Americans paid just 3.4% "true tax rate" on $401 billion of wealth increase between 2014-2018, with Jeff Bezos, Elon Musk, and Warren Buffett paying $0 federal income tax in various years. This dramatic divergence from ordinary tax rates reflects the structural advantages of wealth-based versus income-based taxation systems. The "Buy, Borrow, Die" strategy exemplifies Western wealth preservation tactics. Ultra-wealthy individuals purchase appreciating assets, borrow against their value to avoid taxable income, and pass assets to heirs with stepped-up basis that eliminates capital gains taxes. The U.S. "stepped-up basis" loophole allows heirs to avoid capital gains taxes on inherited assets. When an individual dies, the cost basis of their investments resets to the market value at the time of death, erasing unrealized gains from tax liability. Offshore structures continue expanding despite increased regulatory scrutiny. Approximately $7-12 trillion in individual wealth is held in tax havens globally (10-15% of global GDP), with Switzerland managing $2.4 trillion in offshore wealth management alone. These structures have evolved beyond simple tax avoidance to include sophisticated asset protection, privacy preservation, and jurisdictional arbitrage strategies. Family offices have grown to over 8,000 globally managing $5.4 trillion in assets, with projections reaching 10,720 offices managing $5.4 trillion by 2030. These structures provide comprehensive wealth management including investment strategies, tax planning, family governance, and succession planning, operating largely outside public disclosure mandates. The Hidden Lifestyle Infrastructure The ultra-high-net-worth population operates in fundamentally different consumption, investment, and social systems compared to upper-middle-class individuals, creating self-reinforcing advantages that compound wealth-building capabilities beyond traditional market mechanisms. Consumption patterns reveal dramatic scale differences that reflect not just luxury preferences but strategic advantages. 96.8% of private jet owners are male with average net worth of $1.66 billion, spending an average $16.4 million per aircraft while often claiming business tax deductions despite primarily personal use. These assets provide time and access premiums that enable more efficient wealth deployment and global mobility for tax optimization. Investment strategies differ qualitatively from traditional portfolios. Ultra-wealthy individuals allocate 50% of portfolios to alternative investments versus 5% for average investors, including private equity (6% average allocation), art and collectibles (3%), and direct private company investments. Art appreciation provides not only returns but tax advantages, privacy, and cultural influence benefits unavailable in public markets. Social networks and exclusive institutions create access to deal flow, political influence, and market intelligence unavailable through traditional channels. Private clubs charging up to $300,000 annually provide global reciprocal access networks, while organizations like Tiger21 and Collective Genius offer exclusive investing groups for ultra-high-net-worth families. These networks facilitate co-investment opportunities, private deal access, and political relationship building that compound wealth advantages across multiple generations. Political Capture and Democratic Implications The intersection of extreme wealth and political power represents perhaps the most concerning aspect of modern wealth concentration. Political influence and lobbying serve as wealth preservation tools through policy capture, creating feedback loops that can undermine democratic institutions and economic mobility. Corporate tax lobbying reached a record $4.5 billion in 2024, with over 13,000 lobbyist-client relationships focused on tax issues representing 11 tax lobbyists for every member of Congress. This influence has preserved key advantages including the carried interest loophole, stepped-up basis for inheritance, and pass-through deduction benefits that flow predominantly to high-income earners. Strategic philanthropy operates simultaneously as tax optimization and influence mechanism. While the ultra-wealthy control $190 billion in charitable giving (38% of all philanthropy), analysis reveals that most Giving Pledge signatories saw 138% wealth increases between 2010-2022 while their giving remained proportionally small. Private foundations require only minimal annual distributions while providing significant tax deductions and maintaining family control over charitable activities. The revolving door between government and private sector ensures regulatory frameworks favor wealth preservation mechanisms. Former policymakers often join corporate boards, leveraging insider knowledge to benefit private firms while ensuring that regulatory frameworks continue to privilege capital over labor. Systemic Implications and Future Trajectory Current trends suggest troubling implications for economic mobility and democratic governance. Every billionaire under 30 has inherited their wealth, indicating reduced wealth mobility and increased dynastic concentration. The impending transfer of trillions in billionaire wealth to heirs will likely increase inherited wealth concentration unless accompanied by significant policy changes. The estimated $483 billion in annual global tax revenue losses due to wealth preservation strategies represents resources that could otherwise fund public services, infrastructure, and social mobility programs. When wealth concentration enables systematic policy influence through lobbying, political contributions, and media ownership, the resulting feedback loops can undermine democratic institutions and economic mobility. Conclusion: The Need for Structural Reform The evidence reveals that extreme wealth accumulation operates through mechanisms that extend far beyond traditional market competition or entrepreneurial merit. Structural advantages including favorable tax treatment, political influence, and exclusive access to investment opportunities create self-reinforcing systems that enable wealth to compound at rates disconnected from broader economic performance or social contribution. Understanding these patterns requires moving beyond individual success narratives to examine the structural mechanisms that enable extreme wealth concentration. While market-based wealth creation remains important, the preservation and compounding of wealth increasingly depends on political relationships, regulatory capture, and sophisticated legal strategies that operate outside traditional market mechanisms. As global wealth concentration continues accelerating, addressing these dynamics will require transnational cooperation, robust enforcement, and reforms to tax codes that privilege capital over labor. The challenge facing policymakers is designing systems that preserve incentives for innovation and entrepreneurship while preventing the entrenchment of dynastic wealth that can undermine both economic mobility and democratic governance. The ultra-wealthy have mastered the art of turning money into more money through sophisticated financial engineering, political influence, and global mobility. Unless democratic societies develop equally sophisticated responses, the concentration of wealth and power will likely continue to accelerate, with profound implications for economic opportunity and political equality in the 21st century. Citations: OpenSecrets. (2024). Lobbying Database . Center for Responsive Politics. https://www.opensecrets.org Public Citizen. (2024). Tax Lobbying Dominance . https://www.citizen.org/article/tax-lobbying Chronicle of Philanthropy. (2023). Billionaire Giving Trends . https://www.philanthropy.com Knight Frank. (2024). Wealth Report 2024 . https://www.knightfrank.com Wealth-X. (2023). Private Aviation and the Ultra-Wealthy . https://www.wealthx.com TIGER 21. (2024). About Us . https://tiger21.com World Economic Forum. (2023). GCC Sovereign Wealth Fund Trends . https://www.weforum.org Deloitte. (2024). Global Family Office Guide . https://www2.deloitte.com/global/en/pages/tax/articles/global-family-office-guide.html Zucman, G. (2020). The Hidden Wealth of Nations: The Scourge of Tax Havens . University of Chicago Press. Tax Justice Network. (2021). The State of Tax Justice . https://taxjustice.net/reports/the-state-of-tax-justice-2021/ Atlantic. (2021). The Billionaire Loophole: Buy, Borrow, Die . https://www.theatlantic.com Federal Reserve. (2022). Survey of Consumer Finances . https://www.federalreserve.gov/econres/scfindex.htm Bloomberg Billionaires Index. (2024). https://www.bloomberg.com/billionaires/ VoxEU. (2016). The Long-Term Persistence of Wealth in Florence . https://voxeu.org UBS. (2023). Billionaire Insights 2023: The Great Wealth Transfer . https://www.ubs.com/global/en/wealth-management/insights.html The Guardian. (2024, March). Every Young Billionaire in 2024 Inherited Their Wealth . https://www.theguardian.com UBS. (2024). Billionaire Ambitions Report . UBS Group AG. https://www.ubs.com/global/en/wealth-management/billionaires.html Altrata. (2024). World Ultra Wealth Report 2024 . https://www.altrata.com Inequality.org . (2024). Billionaire Wealth in the United States . Institute for Policy Studies. https://inequality.org/facts/billionaire-wealth/ ProPublica. (2021). The Secret IRS Files . https://www.propublica.org/series/the-secret-irs-files Internal Revenue Service. (2023). Statistics of Income Data . https://www.irs.gov/statistics/soi-tax-stats-individual-statistical-tables Tax Policy Center. (2023). Capital Gains and Wealth . Urban Institute & Brookings Institution. https://www.taxpolicycenter.org

The US dollar is the most extensively owned and utilized reserve currency in the world's financial system, with major implications for international commerce, investment, and monetary policy. Accounting for approximately 90% of all foreign exchange transactions, it is a pillar of economic stability for many countries that depend upon it to sustain their currencies and economies. The Bretton Woods Conference established the United States dollar as the world's reserve currency in 1944, in the aftermath of World War II, providing a stable framework for international trade and investments, thereby cementing the U.S. dollar's prominent role in the global economy, with significant quantities held by central banks and other major financial institutions to facilitate international trade and stabilize exchange. The dollar's ascendancy marked a transition from the British pound sterling, which served as the dominant reserve currency from the mid-19th century until World War II. This historical precedent demonstrates that reserve currency status can shift, though such transitions typically occur over decades rather than years.     How did the Dollar become the leading currency?  Liquidity of the financial market and Economical strength One of the prominent reasons contributing to the dominance of the U.S. Dollar in the global trading market is its stable liquidity. As is well-established, the US treasury market proceeds to be the globe's largest and most liquid. Its rapid currency conversion into other monetary units renders it highly simple to use internationally. The more extensively the dollar is being utilized, the broader its network becomes, the more entrenched it expands, and the more costly it is for anyone to sustain themselves with it. Furthermore, the United States has a diverse economy and strong political institutions, which contribute to its stability in the currency’s value when facing sudden shifts in domestic currency due to financial disturbance or economic recession, which has further enhanced the demand for the U.S. dollar. Petrodollar trading system Petroleum is one of the most significant commodities in international trade, and it is predominantly sold and purchased in US dollars, with both oil producers and consumers relying on the petrodollar system for commodity transactions, despite BRICS nations' as well as China's efforts to diversify pricing mechanisms. The petrodollar system is a significant source of revenue for many Organization of Petroleum Exporting Countries (OPEC) members, whereas oil producers, including Saudi Arabia, the world's largest oil exporter, accept US dollars as payment due to their exchange rate stability and the size of the US economy. According to the Energy Information Administration (EIA), global crude oil production is expected to be approximately 76.51 million barrels per day (bpd) and is predicted to rise to 78.28 million bpd in 2025, with the major increase in oil production from the non-OPEC countries the United States, Guyana, Canada, and Brazil. It is predicted by the EIA to increase by 1.2 million bpd in 2025 and by 0.6 million bpd in 2026, with the assumed average price of $85 per barrel.  Military power Although the United States’s military power doesn’t directly support the dominance of its currency, through its effective efforts in exporting security through its military presence worldwide, the US’s allied nations benefit from the security provided by the US; these countries are therefore holding the U.S. Dollar as their reserve currency, which reinforces the Dollar’s global position as the top currency. In an article published in 2024 by Columbia Business School, Professor Pierre Yared stated, “If you want a global store of value, you want an asset that will preserve its value in a cataclysmic state of the world”; therefore, a powerful military force is required to safeguard the value of a nation's assets, emphasizing the importance of military might in upholding the U.S. dollar’s role in international financial exchanges. The “exorbitant privilege” of the United States As the authority in charge of the world's reserve currency, the United States may readily borrow at low interest rates while other nations trade in dollars, raising the global appetite for the U.S. dollar and reducing U.S. borrowing rates, thereby helping to maintain a stable economy. The US dollar is commonly employed in international transactions, enabling the United States’ significant financial strength while additionally impacting the monetary policy of other countries. Recent Trends and Challenges Depreciation of the Dollar Geopolitical dynamics are capable of having a significant effect on the value of the US dollar, typically resulting in depreciation via a variety of interrelated causes. In 2025, the Dollar has depreciated by approximately 9% due to several factors: Trade Policies: Tariffs and Tax-Cut Bills On April 2nd (Liberation Day), US President Donald Trump announced a minimum of 10% of “reciprocal tariff” on all US import goods from all countries to achieve the purpose of encouraging US consumers to use local goods, which has stirred up conflicts, putting the United States' currency in jeopardy. Countries in the European Union, for which Trump initially proposed a tariff of 20% and then halved it to 10% for discussion, and the tariff is postponed to increase to 50% by July 9; while the US dollar continues to decline, the value of the sterling has soared to its highest peak over the last three years, putting the UK in a better position than the present dollar fluctuation. or the sharp rise of tariffs to 40% on China, Canada, and Mexico, which are also targeted by Trump. This frequent use of tariffs has posed uncertainty in international trade relations as many countries begin to diversify away from the US economy, which reduces the foreign demand for US assets, weakening the Dollar’s position. The high tariff rate on China has also caused disruptions to the global supply chains, which dampened international trade, resulting in a decline in the US currency as the transactions are carried out using the Dollar. With a 25% tax on imports being introduced on most imports, Trump has strained the traditional alliances, such as Canada, forcing the country to explore alternatives to the Dollar for international trading. Additionally, after the downgrade to Aa1 from Aaa of the US’ Moody’s sovereign credit rating established on May 16, which has raised concerns at the US Treasury, the US House of Representatives have released President Donald Trump’s tax-cut bills, which are estimated to be $3.8 trillion, adding up to the existing $36.2 trillion debt of the US government over the past years. This reduction in Moody’s credit rating has further highlighted that the debt-to-GDP ratio of the US has exceeded 134%. As a result, the value of the U.S. Dollar; a typical instance would be the drop of the Dollar by 0.3% to 142.35 yen. Fiscal Deficits The escalated expenses of imported products have exacerbated fiscal deficits by adding to the rising inflationary strain on American consumers. By 2024, the US government's deficit expenditure will surpass its receipts by around $1.83 trillion. Additionally, interest on US debt is expected to surpass $1 trillion by 2024, raising worries among key surrounding nations and causing the Dollar to fall by 8% versus major currencies this has led to the erosion of confidence in US fiscal stability, threatening the position of the USD in the global trading system. The monetary power of the dollar to enforce fiscal penalties has prompted several governments to look for alternatives to decrease their vulnerability Reallocation of Investors In recent years, major investors such as China or Japan are reallocating themselves away from the US Treasury yields, mitigating the geopolitical risks. The historic correlation has proved that if the yields rise, it will attract foreign capital, and vice versa, therefore increasing the value of the Dollar; this results in the sharp decline of the U.S. currency.  Central Bank Gold Purchases Central banks have significantly stepped up gold purchases to hedge against dollar exposure. Central banks in 2024 have bought in excess of 1,000 metric tons of gold for the third year in a row, led by China, Poland, and central banks of emerging market nations. It is twice the historical norm and points to institutional activity to diversify away from standard dollar-denominated assets. De-dollarization? According to the euobserver on the 27th of May, 2025, President Donald Trump's trade aggressiveness has already ripped away billions from stock markets in recent weeks, sending the dollar down versus practically every major currency. While BRICS advancement offers alternative means of financing for Southeast Asian countries at present, US tariff policies have prompted substitution of currencies beyond dollar-dominated trade systems, thus making de-dollarization momentum escalate. “ASEAN nations are among those most heavily affected by the U.S.-imposed tariffs,” said Malaysia’s Foreign Minister Mohamad Hasan; therefore, they are working on reducing the reliance on the U.S. Dollar in international trading. Many ASEAN countries have recently adopted a funding structure that would, for the first time, use local currency, including the Chinese yuan, rather than the U.S. Dollar, which further contributes to the rising momentum of de-dollarization. BRICS nations, such as Iran and Russia, have completely abandoned the use of dollars in bilateral trade, instead opting for rubles and rials, as President Donald Trump's trade and foreign policies have forced these countries to reduce their reliance on the United States currency. Many countries would like to see an alternative to the U.S. dollar, as there is an emergence of alternatives such as the Euro or the Chinese renminbi (RMB), although they currently lack the infrastructure and trust that the USD commands, which the United States challenges the globe to meet. The BRICS nations have established BRICS Pay, a decentralized system of payments designed to facilitate transactions and conduct trades in local currencies, eliminating reliance on the US dollar or financial institutions such as SWIFT. However, dedollarization efforts face significant structural challenges. The dollar's 'network effects' create self-reinforcing demand: international contracts are priced in dollars, creating natural hedging needs; global commodity markets predominantly use dollar pricing; and the depth of U.S. capital markets remains unmatched. Alternative payment systems like BRICS Pay currently handle minimal transaction volumes compared to the $7.5 trillion daily forex market where the dollar dominates. Can the Euro replace the Dollar? Although the U.S. dollar has remained the leading currency worldwide, the present efforts to minimize dependency on the Dollar are gaining traction. As the world’s second-largest currency, there is an undeniable potential for the Euro to take the Dollar’s place. There has been an ongoing argument centering on whether the Euro can dethrone the U.S. Dollar to become the world’s top reserve currency. On the 26th of May, 2025, European Central Bank President Christine Lagarde indicated that there is a potential for the U.S. dollar to lose its dominant status, with the euro emerging as a viable alternative provided the European Union strengthens its financial systems and security framework. But the euro has institutional limitations that reduce its reserve currency status. The European monetary union has no single fiscal policy, and there is no single European sovereign bond market comparable to that of U.S. Treasuries. The euro area has a fragmented banking system and no real 'Eurobond,' offering structural disadvantages relative to the integrated U.S. financial system. The Future of The Dollar In accordance with the IMF's Currency Composition of Official Foreign Exchange Reserves (COFER) survey, the share of dollar holdings in allocated global reserves increased slightly from 57.30% to 57.80% in the third quarter of 2024 as other major reserve currencies depreciated against the US dollar. Despite this short-term increase in Q4 2024, the long-term trend remains concerning: the dollar's share of global reserves has fallen significantly from around 70% by an estimated 17% over the last two decades. Multiple scenarios could unfold: Gradual Decline  (15-20 year timeline) where the dollar's share slowly erodes to 45-50% while no single alternative emerges; Bipolar System  where dollar and yuan/euro divide major regions; or Continued Dominance  if the U.S. addresses fiscal challenges and maintains technological/military leadership. Most economists view rapid displacement as unlikely given the massive coordination required to replace incumbent systems, even as gradual diversification continues. Market Reality Check Despite dedollarization hype, market facts show the dollar's ongoing centrality. Cross-border yuan payments are under 3% of global figures; the majority of 'non-dollar' transactions are still converted into dollars somewhere along the way; and in 2025's market upheaval, investors ran to dollar assets, again affirming its enduring safe-haven status. The disparity between political posturing to alternatives and hard infrastructure in markets remains large. Conclusion Despite many countries’ discomfort with the dominance of the Dollar, as well as the decline of the Dollar in reserve currency allocation compared to a decade ago, the currency is still holding a significantly higher percentage compared to the 20% share of the Euro in the fourth quarter of 2024 due to the United States’ stable liquidity, its economic strength, and the gradual rate at which the allocation of monetary authority shifts will secure the dollar as the world’s dominant reserve currency in the foreseeable future.  The U.S. dollar also has legitimate long-run challenges from fiscal imbalances, geopolitical tensions, and conscious diversification. Yet, replacing a reserve currency does not simply take political will, but enormous infrastructure development, institutional trust establishment, and coordination across multiple rival economies. While the share of the dollar can continue to fall gradually, replacement could occur over decades instead of years with far-reaching consequences to the stability of global finance in any transition. The end result depends on alternatives gaining the depth, liquidity, and institutional frameworks that today make the dollar irreplaceable to global commerce.

An analysis of the most significant supply chain transformation since the end of the Cold War We are witnessing the largest reconfiguration of global production networks in modern economic history. What began as trade tensions between major powers has evolved into a fundamental restructuring of how the world economy operates, with approximately $10 trillion in trade flows set to be redistributed over the next decade. This isn't merely an adjustment it's a paradigm shift that challenges three decades of hyperglobalization. As an economist who has tracked global trade patterns for over a decade, I can confidently say that we're experiencing something unprecedented. For the first time in 25 years, global trade growth is projected to lag behind GDP growth, with trade expanding at just 2.3% annually through 2031 compared to 2.5% for global economic output. This divergence signals the end of an era where trade grew faster than production, driven by ever-longer and more complex supply chains. The Economic Logic Behind Deglobalization The traditional globalization model optimized for a single variable: cost. Companies stretched supply chains across continents to access the lowest-cost inputs, leveraging comparative advantages with surgical precision. This approach delivered remarkable efficiency gains but created a system of interconnected vulnerabilities that recent shocks have brutally exposed. The shift toward "supply chain sovereignty" represents a fundamental change in how businesses and governments calculate value. The new calculus weighs resilience, security, and control alongside cost efficiency. This transition is already visible in investment flows: U.S. foreign direct investment has pivoted away from China toward Mexico and India, while advanced manufacturing FDI increasingly flows to European countries and the UK. Consider the numbers: China, once the largest BRICS investor in the U.S. with $44 billion through 2023, has seen its investment drop by 15% over the past five years. Meanwhile, Indian investments in the U.S. have nearly tripled over the same period, reaching $17 billion. This isn't random market movement it's strategic reallocation driven by new economic and political realities. Turkonomics The Winners and Losers of Realignment ASEAN: The Primary Beneficiary Southeast Asia emerges as the clearest winner in this reshuffling. ASEAN trade with China is projected to grow by $438 billion the largest interregional increase in the new trade map. This growth isn't coincidental; it reflects ASEAN's unique position as a neutral hub in an increasingly polarized world. The region's advantages are compelling from an economic perspective. ASEAN benefits from membership in the Regional Comprehensive Economic Partnership (RCEP), currently the world's largest free trade area by GDP coverage. The bloc exports approximately $230 billion in consumer electronics annually and maintains strong intraregional trade flows, with 88% of Southeast Asian trade staying within the Asia-Pacific region. More importantly, ASEAN offers Chinese companies a way to maintain access to global markets while diversifying production bases. Chinese FDI to Vietnam and Mexico in 2022-23 increased by 170% and 300% respectively compared to 2018-19, suggesting that even Chinese firms are hedging against concentration risk. Turkonomics Mexico: The Nearshoring Champion Mexico's rise as a manufacturing hub represents perhaps the most dramatic shift in North American economic geography since NAFTA. Tesla's decision to delay Shanghai expansion in favor of a $15 billion plant in northern Mexico exemplifies this trend. Foreign Direct Investment related to supply chain relocation in Mexico grew by 47% in the first nine months of 2023 compared to the previous year. However, Mexico's success story comes with important caveats. The benefits are geographically concentrated in northern, central, and western regions, deepening existing regional inequalities. Southern states, except for Yucatán, have seen limited momentum. This uneven development pattern poses long-term economic and political challenges that Mexican policymakers must address. The Infrastructure Reality Check The most sobering aspect of this analysis concerns infrastructure requirements. Mexico's logistics capabilities have actually declined in recent years, dropping from 51th place to 66th in the World Bank's Logistics Performance Index between 2018 and 2023. Logistical deficiencies cost Mexico an estimated $8.82 billion in 2023 equivalent to 4% of GDP. This infrastructure gap isn't unique to Mexico. ASEAN faces a $2.8 trillion infrastructure deficit through 2030, threatening to constrain its ability to capitalize on supply chain diversification. The disconnect between investment flows and infrastructure capacity represents one of the greatest risks to successful economic realignment. Turkonomics The New Economics of Trade Regional Value Creation One of the most significant findings from recent research is that 70-85% of global manufacturing value added is created in the same region as final demand. This statistic fundamentally challenges the logic of hyper-globalized supply chains and supports the move toward regionalization. The share of intraregional trade has already begun rebounding, jumping from 47% in 2012 to 50% in 2019. This trend reflects not just policy changes but economic efficiency gains from shorter, more responsive supply chains. The "just-in-time" model is giving way to "just-in-case" thinking, with companies willing to accept higher inventory costs for greater supply security. Industrial Policy's Renaissance Governments are no longer passive observers of market-driven allocation. Industrial policy has made a dramatic comeback, with strategic interventions reshaping investment flows. The U.S. CHIPS and Science Act's $52 billion allocation for domestic semiconductor production, India's $24 billion Production-Linked Incentive scheme, and China's Belt and Road Initiative all represent active attempts to steer economic geography. This policy activism comes with trade-offs. While it can accelerate strategic goals and enhance economic security, it also risks creating inefficiencies and trade distortions. The challenge for policymakers is calibrating interventions to achieve security objectives without undermining competitive dynamics. Implications for Developing Economies The supply chain reshuffling creates unprecedented opportunities for developing countries, but success is far from guaranteed. The key lies in strategic positioning and infrastructure development. Countries that can offer reliable logistics, skilled workforces, and favorable business environments will capture disproportionate benefits. Vietnam and Bangladesh have already demonstrated success in labor-intensive sectors, with Vietnam's exports to the U.S. growing by 104% since 2018 to 2023 in categories previously dominated by China. However, smaller economies face significant challenges. Africa's share of global manufacturing remains below 2% due to inadequate infrastructure and fragmented markets. The lesson for developing economies is clear: passive participation in global value chains is no longer sufficient. Success requires active investment in capabilities and strategic positioning within emerging regional networks. Technology and Sustainability Dimensions The supply chain transformation is accelerating technological adoption and sustainability considerations. AI and automation are optimizing logistics with real-time pricing and predictive planning, while environmental concerns drive demand for shorter, cleaner supply chains. Container shipping emissions were up 13.8% globally in the first 10 months of 2024, creating pressure for more sustainable regional networks. The EU's Carbon Border Adjustment Mechanism exemplifies how climate policy is becoming a trade policy tool, incentivizing production closer to consumption markets. The Path Forward Looking ahead, the $10 trillion reshuffling represents more than economic adjustment it's a fundamental reconfiguration of global economic integration. Success in this new paradigm requires balancing strategic government intervention with private sector agility, international cooperation with national priorities, and efficiency with resilience. The countries and regions that master this balance ASEAN with its trade access, Mexico with its geographic advantages, India with its demographic dividend will emerge as winners in the new economic order. Those that fail to adapt risk marginalization in an increasingly regionalized global economy. As economists, we must recognize that this transformation reflects deeper changes in how societies value economic relationships. The pure efficiency maximization of the late 20th century is giving way to a more complex calculus that includes security, sustainability, and sovereignty. Understanding and navigating this new landscape will define economic success in the decades ahead. The great realignment is not just about where things are made it's about reimagining the nature of global economic integration for the 21st century. For businesses, investors, and policymakers, the message is clear: the old playbook no longer applies. Success in the new global economy requires strategies that are both globally connected and regionally anchored, efficient yet resilient, and profitable while sustainable.

As Turkey's economic indicators show modest growth in early 2025, a troubling paradox has emerged: despite GDP expansion, a significant portion of the country's workforce remains on the sidelines. This disconnect between economic growth and job creation presents one of the most pressing challenges for policymakers and citizens alike in this strategically positioned nation of 85 million people. The Unemployment Paradox: What Official Statistics Hide Turkey's official unemployment rate reached a historically low 7.9% in March 2025, down from 8.2% in February and significantly below the 8.6% recorded a year earlier. While these figures might suggest a robust labor market, they mask a much more complex reality. The broader unemployment rate which includes discouraged job seekers and the underemployed remained stubbornly high at 28.4% in early 2025. This stark disparity between official and broader unemployment metrics reveals a fundamental weakness in Turkey's labor market: growth isn't creating enough quality jobs for the population. The labor union DİSK reported in February 2025 that the broadly defined number of unemployed people in Turkey had reached 11.5 million, increasing by approximately 1.8 million in just one year. "The gap between broadly defined unemployment and narrowly defined unemployment is widening," noted DİSK-AR, emphasizing that broadly defined unemployment has returned to peak pandemic levels. Turkonomics Regional Disparities: A Tale of Two Turkeys Turkey's unemployment challenge is further complicated by significant regional disparities. According to the most recent provincial data, the southeastern province of Hakkari recorded an unemployment rate of 23.3% nearly five times higher than Sinop's 4.8%, which had the lowest rate in the country. This geographic inequality reflects deeper structural issues. The country's wealth and economic activity remain heavily concentrated in the northwest and western regions, particularly around Istanbul, while eastern and southeastern areas continue to struggle with chronic underemployment, limited investment, and fewer economic opportunities. These regional disparities create not only economic challenges but also social tensions, as internal migration from poorer regions to economic centers strains urban infrastructure and housing markets while depleting human capital from less developed areas. Demographics of Disadvantage: Youth and Women The burden of unemployment falls disproportionately on Turkey's youth and women. The youth unemployment rate reached 15.1% in March 2025, significantly higher than the overall figure. For young people entering the workforce, finding stable employment with growth opportunities remains particularly challenging. Gender disparities are even more pronounced. As of March 2025, the employment rate for men stood at 66.9%, while for women it was just 31.9% one of the lowest female labor force participation rates among OECD countries. This gender gap reflects both cultural factors and practical barriers, including insufficient childcare options and gender biases in certain industries. The female unemployment situation is further highlighted by the broadly defined unemployment rate, which stood at 22.8% for men but a staggering 37.2% for women in December 2024, marking a 14.4 percentage point gender gap. Structural Economic Challenges Turkey's labor market struggles reflect deeper structural economic issues that have persisted despite periodic growth spurts. Several factors contribute to this complex situation: Inflation and Monetary Policy After peaking at 75% in May 2024, inflation in Turkey has gradually declined to 38% by March 2025, helped by a series of significant interest rate increases. The central bank raised its benchmark rate to 50% in March 2024 before beginning a cautious easing cycle. While these measures have helped combat runaway inflation, they have also cooled economic activity and job creation in the short term. The high inflation environment has eroded purchasing power for workers, while businesses face unpredictable input costs that complicate hiring decisions. The minimum wage, which stands at ₺22,104 ($630) as of January 2025, has been subject to frequent increases to keep pace with inflation, yet real wages have struggled to maintain their value. Skills Mismatch A fundamental disconnection exists between Turkey's education system and labor market demands. Despite significant investments in education, many graduates find their skills don't align with what employers need. This mismatch is particularly evident in technical fields and advanced manufacturing, where companies often struggle to find qualified candidates despite having positions to fill. The rapid technological transformation across industries has only accelerated this problem, as traditional educational curricula struggle to keep pace with evolving workplace requirements. This leaves many job seekers particularly young graduates unprepared for available positions while employers face talent shortages in critical areas. Informal Economy A substantial portion of Turkey's economic activity and employment occurs in the informal sector jobs without official registration, tax contributions, or social security benefits. While informal employment provides income for millions, it also creates vulnerability, as these workers lack legal protections, healthcare coverage, and retirement benefits. The prevalence of informal work distorts official labor statistics and creates challenges for policymakers attempting to develop effective employment strategies. It also hampers productivity growth and prevents workers from building skills that could lead to better opportunities. Growth Sectors and Opportunities Despite these challenges, several sectors of the Turkish economy show promise for job creation: Tourism and Hospitality Tourism remains one of Turkey's most dynamic sectors, with projections indicating substantial growth in 2025. According to World Travel & Tourism Council estimates, the industry is expected to contribute ₺5.2 trillion to the national economy and support 3.3 million jobs in 2025, accounting for over 10% of total employment. The sector encompasses diverse opportunities across hospitality, transportation, food services, and cultural tourism. Manufacturing and Automotive Turkey's manufacturing sector, particularly automotive production, continues to be a significant employer. The country ranked as the 13th largest automotive producer globally, producing over 1.3 million vehicles in 2022. Turkish automotive companies like TEMSA, Otokar, and BMC have established themselves as major players in commercial vehicle production, while the development of Togg, Turkey's first domestic electric vehicle brand, represents an emerging area for high-skill manufacturing jobs. Renewable Energy Turkey's ongoing energy transition presents substantial employment opportunities. The country has already surpassed its 2025 solar targets ahead of schedule, and ambitious goals for expanding renewable capacity could create thousands of new jobs. Studies suggest investments in renewable energy could create up to 300,000 new jobs by 2030 while contributing significantly to economic growth and reducing dependence on imported fossil fuels. Path Forward: Solutions for a More Inclusive Labor Market Addressing Turkey's employment challenges requires a multifaceted approach: Educational Reform Aligning educational curricula more closely with industry needs could help reduce the skills mismatch. This includes expanding vocational training programs, strengthening university-industry partnerships, and incorporating digital skills across all levels of education. Regional Development Initiatives Targeted investments in less developed regions could help reduce geographic disparities. This includes infrastructure projects, special economic zones, and incentives for businesses to establish operations outside the major urban centers. Supporting Female Participation Expanding affordable childcare options, implementing flexible work arrangements, and addressing workplace discrimination would help more women enter and remain in the workforce. Turkey's OECD Economic Survey 2025 specifically highlighted the need for expanding early childhood education and care to boost women's participation. Formalization Policies Incentives for businesses to register workers formally, combined with gradual reductions in the tax and regulatory burdens that push employers toward informality, could bring more workers into the protected formal economy. Turkey's labor market presents a complex picture of both challenges and opportunities. While headline growth and declining official unemployment rates suggest progress, the persistently high broader unemployment rate reveals that many citizens remain excluded from economic participation. As Turkey continues its economic development path, bridging this gap between growth and inclusive employment will be essential for social cohesion and sustainable prosperity. The country's young population, strategic location, and diversified economy provide a strong foundation, but transforming these advantages into widespread job creation requires addressing the structural barriers that have kept too many workers on the economic sidelines. Creating not just more jobs, but better quality employment opportunities that offer stability, decent wages, and pathways for advancement, remains the central challenge for Turkey's labor market in 2025 and beyond. Sources: Turkish Statistical Institute (TurkStat) Official unemployment rate: 7.9% (March 2025) Regional disparities: Hakkari (23.3%), Sinop (4.8%) Monthly inflation data: 38% (March 2025) Labor force participation by gender: Men (66.9%), Women (31.9%) World Bank Turkey Overview: Development news, research, data  (2025) Broader unemployment measurement: 28.4% (February 2025) Economic growth data: 3.2% (2024), 3.1% projected (2025) Poverty rate trends and projections OECD OECD Economic Surveys: Türkiye 2025 Comparative labor market analysis across member countries Women's workforce participation recommendations Structural economic reform assessments Central Bank of the Republic of Turkey Monetary policy data: Peak interest rate of 50% (March 2024) Inflation trend analysis: Peak of 75% (May 2024) Financial sector resilience metrics Labor Market Analysis DİSK-AR (Confederation of Progressive Trade Unions Research Center) Broader unemployment analysis report (February 2025) Gender-specific unemployment: 37.2% for women vs. 22.8% for men Discouraged worker statistics: ~5 million who have given up job searching FX Empire Turkey Unemployment Rate 2005-2025  (Updated March 2025) Youth unemployment analysis: 15.1% (15-24 age group) Employment-to-population ratios by demographic group International Labour Organization (ILO) Joint report with UNDP: Going green could create 300,000 new jobs by 2030 Employment factor methodology for renewable energy sector International comparative labor analyses Sector-Specific Sources World Travel & Tourism Council (WTTC) Tourism sector: 3.3 million jobs (10% of total employment, 2025) Economic impact: ₺5.2 trillion contribution projected (2025) Long-term industry projections through 2035 Ministry of Energy and Natural Resources Renewable Energy Resource Zone (YEKA) program data Solar capacity achievements: 2025 targets reached 18 months early Energy transition employment projections Ember Energy Türkiye surpasses 2025 solar target as capacity doubles in 2.5 years  (March 2025) Green energy economic impact analyses Renewable sector job creation metrics The Net-Zero Circle An Overview on Türkiye Renewable Energy Sector  (2025) Renewable energy transition timelines and policy assessment Energy independence economic indicators

Important Note:  This article focuses on right-wing nationalist parties. Left-wing nationalist parties are not included in this analysis. We kindly ask our readers to keep this in mind while interpreting the content. Rise of Nationalism in Europe The world is changing. As the world changes, ideas and ideologies evolve and transform—sometimes resisting change, sometimes adapting to it. Nationalism is one of the leading ideologies undergoing transformation. Especially in Europe, due to Hitler and Mussolini being labeled a "nationalist", the word nationalism  was replaced by patriotism  for many years. Nationalists avoided calling themselves nationalists . However, this is now changing . The emergence of new parties—often referred to as far-right  in the literature (although there is some conceptual ambiguity here, see Wolf, 2016 )—and their development of a new discourse separate from traditional center-right and center-left parties has brought nationalism back into popularity . Meloni in Italy (Brothers of Italy), AfD in Germany (Alternative for Germany), Le Pen in France, the Reform Party in the UK, FPÖ in Austria, Chega in Portugal, SD in Sweden (Sweden Democrats), and many more… So what makes these parties so popular? To answer that, we need to look at their common characteristics. Their most significant common feature is their stance against the increasing wave of immigration worldwide . In addition, even though not all of them are in the same group in the European Parliament, they do not shy away from expressing support for one another. For example, before an election in France, Portugal’s nationalist party Chega’s leader posted a message wishing success to that party (see Figure 1). Figure 1 Another question we should ask is: if nationalism were simply about seeing one's own nation as superior to others, why would a nationalist party support a nationalist party in another country? This is precisely where we see that nationalism has changed and adapted to the times. I would like to refer to this phenomenon as International Nationalism , a term already used in various news outlets (The New York Times, 2022). My inspiration comes from the following words by Ziya Gökalp , one of the key figures of Turkish nationalism, in his book The Principles of Turkism (Türkçülüğün Esasları) : “… However, there is no contradiction between Turkism and internationalism that would prevent their coexistence. Every Turkist is, at the same time, an internationalist. This is because each of us lives two forms of social life: one national, and the other international. Our national life is the expression of our own national culture. Our international life, on the other hand, consists of drawing from two sources: one is universal civilization, and the other is the multitude of cultures—each with its own distinct and original flavor—from which we take our share .” Indeed, being a nationalist does not contradict being international . The far-right (nationalist) parties we see rising today also seem to aim at maintaining an international character.   Figure 2 Figure 3-BBC    Common Traits and Differences of Nationalist Parties The common features of nationalist parties in Europe can be summarized as follows: Speaking out against immigration issues Viewing multiculturalism as harmful to varying degrees Supporting the idea of the nation-state Criticizing the EU’s bureaucratic and ineffective structure Generally adopting liberal economic policies, with few exceptions Using populist rhetoric that challenges the current system However, there are also points on which these parties diverge: Their stance on EU membership Their stance on NATO membership Their countries’ specific problems Figure 4-International Bar Association Meloni and Western Nationalism In The Clash of Civilizations , Huntington argued that after the Cold War, conflicts would be shaped by cultural and civilizational differences. Many such conflicts have indeed occurred since then, validating his view. So how does this relate to nationalist parties? These parties express a strong commitment to preserving their own culture and civilization . They fear that mass immigration may erode the cultural fabric of their countries. For this reason, what we are witnessing today could also be described as a civilizational struggle. Italian Prime Minister Meloni confirmed this perspective during her meeting with Trump at the White House when she said: “ I believe we should look at this as Western Nationalism and say Make West Great Again. When I say ‘West,’ I mean it not geographically but as a civilization .” Meloni's statement was not made lightly. Before she became Prime Minister, the EU viewed her with suspicion—her past admiration for Mussolini was a major concern. But since taking office, Meloni has worked to strengthen the EU through reforms . She has firmly opposed Russia’s invasion of Ukraine. Today, by meeting with Trump independently of the EU, she is signaling her desire to become a new leader in Europe . It is likely that other nationalist parties will draw inspiration from her success so far.   Figure 5:Meloni and Trump   The fact that nationalist parties are adopting an international perspective may be a product of globalization. If ideologies and ideas remain fixed in their original forms, they cannot be preserved. Therefore, if a nationalist ideology aims to come to power, it must also adapt to the needs of the time . Seeing change as a step toward renewal and development is vital for the survival of any ideology. To sum up, the international character of these parties is taking shape around the transformation of nationalism and a shared set of issues. If these problems persist, it is likely that these parties will eventually replace the current mainstream parties . In response, mainstream parties are trying to reclaim votes by taking new measures— especially regarding immigration . For instance, Germany’s new CDU (centre-right party in Germany) Chancellor Merz has made immigration a central issue in his campaign . On the other hand in the UK, Labour Party leader and Prime Minister Starmer has initiated a new policy effort against illegal immigration  (SkyNews, 2025) The Trump’s impact on these populist parties should also be scrutinized because whether Trump’s support of them is beneficial or not is another important question. As the Canada elections shows Trump might be one of the most important factors affecting voting behavior in elections when he speak about internal affairs of that country(Reuters, 2025; BBC, 2025)  The Case of Türkiye: Secular Turkish Nationalism After presenting a global perspective under the name Turkonomics , we should also discuss the nationalist movements in the Republic of Türkiye. In recent years, a new ideological perspective has emerged in Türkiye, often referred to as Secular Nationalism . This perspective is distinct from traditional nationalist movements that have generally been rooted in the Turkish-Islamic synthesis , which has been prominent since the 1980s and largely embraced by supporters of the Nationalist Movement Party (MHP). Secular Nationalism carries different concerns and ideas. One of its most prominent advocates, Bahadırhan Dinçaslan , describes religious as a kind of "cancer" within the nationalist ideology, also he emphasizes that nationalism is different from racism and that viewing one’s nation as superior to others is a mistake (NewLinesMag, 2023). Secular Turkish Nationalism, while sharing similarities with Kemalism  due to its advocacy of the ideas of the founder of Republic Mustafa Kemal Atatürk , also incorporates Turanism —an ideal that envisions a grand organizational unity among Turkic states—making it a unique ideological strand. Although there aren’t many English-language resources on Secular Turkish Nationalism yet, those interested in learning more are encouraged to read the articles by Dinçaslan.     References BBC. (2019, November 13). Europe and right-wing nationalism: A country-by-country guide . https://www.bbc.com/news/world-europe-36130006 BBC. (2025, April 29). Trump made Carney's turnaround victory possible . https://www.bbc.com/news/articles/c5ypz7yx73wo Gökalp, Z. (1923). Türkçülüğün esasları . Huntington, S. P. (1996). The clash of civilizations and the remaking of world order . Simon & Schuster. International Bar Association. (2024, September 30). The year of elections: The rise of Europe’s far right . https://www.ibanet.org/The-year-of-elections-The-rise-of-Europes-far-right New Lines Magazine. (2023, August 2). A political murder reflects the rise and fracture of Turkey’s far right . https://newlinesmag.com/essays/a-political-murder-reflects-the-rise-and-fracture-of-turkeys-far-right Reuters. (2025, April 29). Canada's Liberals ride Trump backlash to comeback election win . https://www.reuters.com/world/americas/canadas-liberals-benefit-trump-backlash-claim-poll-victory-2025-04-29 SkyNews. (2025, May 12). What are Sir Keir Starmer's new immigration rules?   https://news.sky.com/story/what-are-sir-keir-starmers-new-immigration-rules-13366468 The New York Times. (2022, December 5). The rise of international nationalists . https://www.nytimes.com/2022/12/05/special-series/orban-le-pen-international-nationalism.html Washington Institute. (2022, November 10). Re-evaluating Turkish nationalism: A bulwark against the religious establishment . https://www.washingtoninstitute.org/policy-analysis/re-evaluating-turkish-nationalism-bulwark-against-religious-establishment Wolf, T. (2016). Is the Alternative for Germany really right-wing populist? Czech Journal of Political Science , 2 (2), 149–163. https://doi.org/10.5817/PC2016-2-149

Introduction From the horrendous wildfires along the Aegean Coasts to water shortages in Central Anatolia, the fingerprints of climate change are already visible all across Türkiye, including its economy and daily life. Such mounting pressure makes the climate issue a more pivotal concept for Türkiye. Türkiye has set an ambitious target to hit net-zero emissions by 2053, keeping in step with climate efforts at an international level. Introduced in 2021 in conjunction with ratification of the Paris Agreement, the 2053 target will necessitate wide-ranging alterations in the economy. Reaching "net zero" involves offsetting any residual emissions with removals (such as forests or technology) to such an extent that net emissions fall to zero. This mid-century deadline is aligned with scientific consensus that preventing more than 1.5 °C warming requires carbon neutrality by mid-century. As an emerging country and G20 nation, Türkiye's transition will bring challenges: such as reusing old energy systems and sectors, as well as opportunities, such as less dependence on imported fossil fuels, and green economic development. Aligning with its global aspirations, Türkiye's 2053 net-zero commitment puts it in the ranks of numerous other countries that have adopted mid-century targets for carbon neutrality. The majority of European Union nations, for instance, adopt 2050, followed by 2060 for China and 2070 for India. Türkiye's target date "2053" is emphatically related to domestic achievements, but in fact, represents adherence to the global timescale in the Paris Agreement to contain climate change. After years of reluctance, Türkiye became a party to the Paris Agreement in October 2021 and presented its updated First Nationally Determined Contribution in 2023. Under the revised NDC (Nationally Determined Contributions), the nation pledged to decrease emissions 41% below normal by 2030 (approximately 695 MtCO₂e in 2030) and peak emissions by 2038. This implies that emissions could keep on rising until 2038, then decline dramatically to reach net-zero in 2053, an extremely tight timeline. Upon a comparative perspective, as a mid-level emitter with about 1% of world emissions, but with per-capita emissions on an upward trend as it grows economically, achieving net-zero in 2053 would support world targets and is particularly important in being part of continued efforts to limit warming to well below 2 °C. This is also aligned with Türkiye's main trade partners' climate ambitions (particularly the EU) to avoid trade losses. The net-zero target in Türkiye is, however, noted by international analysts as not having solid near-term action outlined in it at present and being rated "poor" in terms of strength in the absence of stronger mid-term targets. Policy Developments and International Context Early Policy Milestones (2021 – 2023) Türkiye has taken concrete steps in climate policy since 2021, such as ratifying the Paris Agreement, committing to the 2053 target, issuing the 2010 – 2023 National Strategy on Climate Change, the 2011 – 2023 National Climate Change Action Plan, and the Green Deal Action Plan. However, all of these efforts are not legally binding due to the absence of an enforcement mechanism. “2053” Strategy Announcement (COP29, 2024) In 2024, Türkiye announced its “2053 Long-Term Climate Change Strategy” at COP29, which was held in Baku on 11 – 22 November¹ and later published by UNFCCC. The strategy² includes a section on “Preparation Process of the Long-Term Climate Strategy” that underlines efforts and measures. Among these, the ‘Climate Law’ stands out in particular, as it was being drafted when the strategy was announced to incorporate international agreements ratified by Türkiye into domestic legislation and to pave the way for the establishment of a legal framework for climate-change action³. The law aims to support Türkiye’s green growth, establish a legal framework for combating climate change, and achieve its 2053 net-zero emission target. The law is crucial for providing a legal ground for the reduction of greenhouse-gas emissions, planning and implementation tools, and an institutional framework⁴. The 2053 Long-Term Climate Change Strategy is crucial as a strategic roadmap with the potential to strengthen Türkiye’s 2053 net-zero emissions target. Draft Climate Law and Legislative Journey However, after the draft law was approved by the Environment Committee and presented to the Presidency of the Grand National Assembly of Türkiye—where it was expected to become law in the General Assembly—Türkiye’s first “Climate Law Proposal” was withdrawn after strong criticism from opposition parties and environmental groups. The draft law is an important step in Türkiye’s fight against climate change as it includes various planning and implementation tools to concretize the 2053 Net-Zero Emissions Target and the goals outlined in Türkiye’s Nationally Determined Contribution (NDC) within the framework of international agreements to which Türkiye is a party. If enacted, the law would have established the Carbon Border Adjustment Mechanism (CBAM), an Emissions Trading System (ETS), introduced carbon pricing, and imposed new obligations on businesses. However, the draft law also contains several shortcomings that reveal a lack of inclusiveness, commitment, and clarity in drafting and implementing carbon-reduction policies. Key Shortcomings Highlighted by Stakeholders First, the draft law does not include a policy or an absolute emissions-reduction target regarding when and how Türkiye will reduce its carbon emissions. Instead, it envisions that Türkiye’s NDC will be updated at specific intervals and submitted to the UNFCCC Secretariat⁵. While Türkiye has set an ambitious target to hit net-zero emissions by 2053, the proposed law lacks well-defined targets to achieve carbon neutrality by that year⁶. In this context, the fact that the 2053 net-zero target is mentioned only in the rationale and that there is no provision for it in the actual text of the law raises concerns about its enforceability. Second, despite emphasizing the role of public institutions in incorporating climate targets into their decision-making processes, a concrete mechanism for its application is missing⁷. The lack of an enforcement mechanism for responsibilities among relevant public institutions and authorities raises doubts about policy implementation toward reaching net-zero emissions by 2053. Public Engagement and Just-Transition Concerns More importantly, during the preparation of the draft law, there was insufficient communication with environmental and ecological associations, civil-society organizations, and experts whose input was overlooked. For a transparent, inclusive, and accountable implementation process, it is crucial to engage NGOs, professionals, and the scientific community. Finally, other criticisms of the proposal included concerns that concepts such as climate justice were being diluted. In other words, the just-transition concept remained merely at the level of discourse, with no concrete implementation mechanisms specified. This is crucial because a just transition is an important enabler for implementing the net-zero transition: including all affected parties and addressing injustices helps ensure political acceptability for climate action, ease the risk of just-transition litigation, and avoid delays in reaching the net-zero target⁸. Paris Agreement Summit Broader Geopolitical Headwinds Another factor to consider for Türkiye’s 2053 Net-Zero Commitment is the range of geopolitical risks. In his second presidency, Donald Trump’s executive actions on climate and environment included withdrawing the U.S. from the Paris Agreement, declaring a “national energy emergency” to double down on oil and gas, and eliminating a push for environmental justice—actions that will have severe implications for global climate action⁹. As a major geopolitical player and top emitter, the U.S. significantly influences global climate dynamics¹⁰. Trump’s anti-climate policies are also wearing down fragile support for net-zero targets and enhancing the opportunism of policy-makers sceptical of climate-change mitigation efforts¹¹. Furthermore, as the EU faces backlash over climate regulations and deals with the war in Ukraine, the bloc is shifting its spending priorities from greening the economy to investing in defence¹². Türkiye, already navigating a complex balancing act between domestic energy needs and climate ambitions, may face reduced international pressure or incentive to accelerate its transition. Barriers, Risks, and Opportunities In addition to international scepticism surrounding the project's feasibility within the proposed timeframe, conflicting policy objectives may hinder the Turkish administration’s willingness to accelerate its efforts on renewable development. A key obstacle to full commitment towards net zero is the trade-off between economic growth and emissions reduction. Economic growth remains a top priority in Türkiye, as reflected in President Erdoğan’s ambition to transform the country from a “regional economic centre” into a “global economic powerhouse.” Historically, there has been a strong positive correlation between economic growth and energy consumption. Fundamentally, energy facilitates economic development and the production process by complementing capital and labour inputs. Therefore, if growth is to be pursued, energy demand will likely continue to rise steadily in the foreseeable future. The implications for emissions are largely reflected in the outlook for domestic energy production. Türkiye’s ongoing reliance on coal has previously raised concerns, especially after it overtook Germany in 2024 as the largest producer of coal-fired electricity in Europe. However, significant coal projects have recently been cancelled as the state shows increasing support for renewable alternatives—an encouraging signal of a potential decline in coal dependence. A continued coal phase-out would be a major milestone in decarbonisation, given coal's severe health and environmental impacts. However, this must not come at the expense of economic growth, energy affordability, or energy independence. As a short-term measure, the Turkish government may promote less polluting fossil fuels, such as oil and natural gas, while building a broader transition to renewable sources. In line with this strategy, Türkiye has invested heavily in oil and gas exploration, with 270 drilling operations planned for 2025. While this approach does risk entrenching a more carbon-intensive energy future, it would nonetheless mark a notable improvement over the current status quo. Through this strategy, Türkiye aims to strike a balance between economic growth and emissions reduction. There is further cause for optimism as renewable energy costs continue to fall a trend expected to persist. Türkiye’s geography and climate are well-suited for solar and wind energy, offering a promising path to cost-effective and sustainable energy independence. Large-scale implementation is expected once the cost structures and reliability of renewables justify mass adoption. Continued investment in energy efficiency is also anticipated, as it serves the interests of both the public and private sectors. Thus, a future in which growth and emissions are no longer mutually exclusive but instead become complementary, with numerous positive spillover effects, appears increasingly achievable. Another crucial factor in renewable energy development is investment and capital, which are essential for building the necessary infrastructure. As a developing economy, Türkiye relies on a mix of domestic investment and foreign direct investment (FDI) to finance large-scale renewable energy projects, such as offshore wind farms. The Twelfth Development Plan (2024–2028) outlined a strategy to increase Türkiye’s share of global FDI to 1.5% and regional FDI to 12% by 2028. However, actual figures have fallen short of potential: FDI was estimated at $10.6 billion in 2024, missing the earlier projection of $14 billion. Nevertheless, a positive trend is emerging. Policymakers have implemented disciplined monetary and fiscal measures in a successful effort to tame persistent inflation. Year-on-year inflation fell to 44% by the end of 2024 and is expected to decline below 30% in 2025. Capital inflows have also recovered, with strong demand for recent bond issues and subsequent declines in yields. All three major credit rating agencies have acknowledged these improvements, upgrading Türkiye’s sovereign credit rating twice in 2024. These upgrades signal a reduced perception of risk and instability, increasing confidence among foreign lenders and investors. Although this remains a multi-year effort, Türkiye is on track to realise its FDI potential—provided it continues to restore trust and credibility in its economy. A new strategy proposed by the Republic Investment Office of Türkiye prioritises experimentation with renewable infrastructure and technological initiatives in underdeveloped regions. This aims to attract meaningful contributions toward Türkiye’s sustainable development goals. The country also hopes to deepen its integration into global supply chains through continued green transformation, digitisation, and the growth of high-value services. This will not only enhance Türkiye’s global competitiveness but also strengthen its commitment to renewable innovation, improving the plausibility of achieving net zero by 2053. Türkiye has notably kept pace with the global electric vehicle (EV) trend—one of the fastest-growing sectors of its economy. EV sales are projected to account for 30% of all automobile sales by the end of the year, driven in part by domestic automaker TOGG, which has sold over 50,000 vehicles. Additionally, Chinese EV manufacturer BYD has pledged to build a $1 billion plant in Türkiye, demonstrating international recognition of Türkiye’s renewable growth strategy. The Turkish government has matched this momentum, planning to invest over $100 billion by 2035 to expand renewable capacity and modernise energy infrastructure. This serves as further testimony to Türkiye’s dedication to achieving its net-zero target while ensuring energy security and economic growth. Transforming Key Sectors for Net‑Zero 1. Energy Current status. The energy sector is Türkiye’s single largest greenhouse‑gas source, generating 73.8 % of national emissions in 2023 (≈ 442 Mt CO₂‑eq). Electricity production is still dominated by fossil fuels, so—even with steady growth in renewables—carbon intensity remains high. Transition levers: Rapidly scale solar and on‑shore/off‑shore wind capacity. Boost system‑wide energy‑efficiency investments. Cut technical and commercial grid losses. Deploy carbon‑capture and storage (CCS) where renewables cannot yet displace fossil assets Opportunities: Local clean power reduces import dependence, lowers foreign‑exchange outflows, stimulates green‑tech jobs, and improves long‑term energy security. 2. Transportation Current status. Transport‑related CO₂ sits within the energy inventory; road vehicles are the principal source. Transition levers: Accelerate electric‑vehicle (EV) rollout with charging‑network expansion. Shift freight from road to rail and coastal shipping. Tighten efficiency standards for conventional vehicles and promote biofuels / e‑fuels where electrification is difficult. Opportunities: Cleaner mobility cuts urban air pollution, opens manufacturing niches for domestic EV producers, and slashes oil‑import bills. 3. Industry Current status. Heavy industry emitted ≈ 70.7 Mt CO₂ in 2023 (11.8 % of total). Steel, cement, and other energy‑intensive subsectors dominate that footprint. Transition levers: Upgrade to best‑available, low‑carbon process technologies. Electrify heat wherever feasible and integrate green hydrogen for high‑temperature processes. Expand circular‑economy measures—higher recycling rates and industrial‑symbiosis clusters. Require firm‑level carbon‑footprint disclosure and tie finance to decarbonisation plans. Opportunities: Efficiency gains cut operating costs, green products gain export‑market access, and new investment flows toward low‑carbon manufacturing. 4. Buildings Current status. Buildings consume roughly 30 % of Türkiye’s energy; much of the existing stock has poor insulation and outdated systems. Transition levers: Mandate high‑performance envelopes and heat‑pump/HVAC standards for all new construction. Launch nationwide retrofit programmes for older housing, with fiscal incentives. Roll out smart‑metering and building‑management systems. Promote green‑building certification (e.g., YeS‑TR) and district heating/cooling where density allows. Opportunities: Deep efficiency retrofits lower household energy bills, create skilled construction jobs, and make cities more resilient to climate extremes. 5. Agriculture Current status. Agriculture accounted for 12 % of 2023 emissions (≈ 71.9 Mt CO₂‑eq), driven mainly by livestock methane, synthetic‑fertiliser N₂O, and land‑use practices. Transition levers: Deploy anaerobic digesters and improved feed additives to cut enteric methane. Raise fertiliser‑use efficiency; adopt precision‑ag and organic alternatives. Convert agricultural residues to biogas/biomass energy. Provide farmer training and carbon‑smart extension services. Opportunities: Lower input costs, new revenue from bioenergy, healthier soils, and alignment with emerging low‑carbon food‑export standards. Türkiye’s Green Economy and Green Technology Transformation In the contemporary world, the net-zero carbon ambitions of countries in the global fight against the climate crisis call for a shift in green technology and innovation. The Republic of Türkiye's 2053 net-zero carbon ambition is not only an environmental commitment, but a comprehensive overhaul of technological infrastructure and industrial ecosystem. Here, it is pertinent to discuss the role of paradigmatic changes in green technology and innovation in the shift of our country towards a carbon-neutral economy. Renewable Energy: Solar and Wind Power Dominance On the path to Türkiye's 2053 net-zero target, solar and wind energy are projected to reach a dominant position among renewable energy sources. According to data from the Ministry of Energy and Natural Resources, as of 2023, 19.2% of Türkiye's total electricity production is supplied by wind and solar energy, with this ratio targeted to exceed 65% by 2053. Compared to traditional energy production methods, the cost-effectiveness of solar and wind energy and their radical reduction in carbon emissions highlight these two resources. Large-scale solar power plants established in regions with high solar radiation such as Konya, Karaman, and Karapınar, and wind turbines along the Aegean and Marmara coasts hold strategic importance for Türkiye's energy independence. However, it should be emphasized that the increase in production capacity of solar and wind energy necessitates the modernization of the interconnected grid. According to projections by TEİAŞ (Turkish Electricity Transmission Corporation), the required investment in grid infrastructure until 2053 exceeds $50 billion. The intermittent production characteristic inherent to renewable energy sources brings complex problems in grid management. Therefore, the integration of smart grid systems and storage technologies will play a critical role in achieving the 2053 target. Hydropower and Geothermal Integration: Modernization Opportunities Hydropower and geothermal resources have historically dominated Türkiye's energy mix. As per TÜBİTAK MAM's "Turkey Renewable Energy Potential Report" released in 2023, Türkiye's technically feasible hydroelectric potential is around 160 TWh/year, out of which approximately 70% is today utilized. However, as part of efforts to achieve the 2053 net-zero, modernization of these two sources of energy is inevitable. The use of digital twin technologies for hydroelectric power plant efficiency optimization and turbine optimizations, novel drilling technology and general acceptance of binary cycle systems for geothermal power, will have basic roles in optimizing the utilization of these resources. In this connection, as per the 2022 "Turkey Geothermal Potential and Future" report issued by JESDER (Geothermal Power Plant Investors Association), at present, only 1.7 GW of Türkiye's 4.5 GW geothermal potential has been utilized. Usage of geothermal resources of Western Anatolia even for electricity generation and district heating and cooling options by means of integrated systems holds serious implications for enhancing energy efficiency. Energy Storage and Battery Technologies Energy storage systems are one of the most critical technologies in achieving the 2053 net-zero vision. Specifically lithium-ion battery production and increasing the storage capacity are key to the feasibility of renewable energy. Through the application of TÜBİTAK Marmara Research Center-coordinated BATARYATÜRK project, Turkish domestic battery manufacturing capacity should be 60 GWh by 2030. By doing so, Türkiye will achieve a crucial infrastructural requirement, not just in the energy sector, but also in developing an electric vehicle value chain. The second-life battery concept pertains to the recycling of batteries that have expired their life of operation in electric vehicles for the use in stationary energy storage systems. According to the "Energy Storage Systems Roadmap" report published by EPDK (Energy Market Regulatory Authority) in 2024, it is feasible for 20 GWh of second-life batteries through 2040. Utilizing this opportunity in accordance with the ideas of circular economy will contribute towards decreasing the carbon footprint. Hydrogen and Power-to-X Technologies Green hydrogen will be a strategic element for Türkiye to achieve its net-zero target. The total hydrogen production capacity is set to be increased to 8 million tons by 2053, with at least 80% of it being green hydrogen, as stated in the "Turkey National Hydrogen Strategy" published by the Ministry of Energy and Natural Resources in 2022. Technological advances in electrolyzers to decrease the cost of green hydrogen and the benefits resulting from economies of scale will be critical factors in reaching this objective. Industrial decarbonization based on hydrogen is very promising, especially in the steel, cement, and chemical industries. According to TÜSİAD's (Turkish Industry and Business Association) "Decarbonization Roadmap in Turkish Industry" report dated 2023, the use of hydrogen technologies has to be brought into practice in order to reduce the total emissions of these three sectors by up to 60%. Green hydrogen as a fuel source replacement for fossil fuels will have a revolutionary effect in industrial process decarbonization. Electric Vehicles and Battery Ecosystem The utilization of electric vehicles in mass numbers is unavoidable for reducing carbon in transportation. Following the launch of Türkiye's domestic-made automobile brand TOGG, concerns regarding domestic manufacture of batteries and charging stations became even more necessary. Türkiye has 8,500 charging points as of 2024, and this is expected to increase to 100,000 by 2030 and to 500,000 by 2053, based on Ministry of Industry and Technology figures. Foreign electric vehicle manufacturers like BYD's intentions to establish production facilities in Türkiye and the electric vehicle transformation of the domestic motor industry make localization more important in battery technologies. In line with the "Automotive Supply Industry Electrification Roadmap" given by TAYSAD (Automotive Suppliers Association of Turkey), 60% of automotive supply companies will be required to transform their activities to producing electric vehicle components by 2030. It will bring great opportunities in terms of employment and technology transfer. Carbon Capture and Utilization (CCU) Technologies Carbon capture and utilization technologies are quite important for emission reduction, especially in the short and medium term. According to TÜBİTAK MAM Energy Institute research, the carbon capture potential of Türkiye is 120 million tons of CO2 equivalent annually. To take advantage of this potential, artificial photosynthesis, carbonation, and synthetic fuel production technologies need to be developed. Decreasing the cost of carbon capture technologies and making them more scalable are the greatest challenges in this area. It is targeted in TÜBİTAK's 2024-2030 R&D Roadmap to decrease the cost of carbon capture technologies per ton by 50% by 2030. Reaching this goal will be a significant step in achieving the net-zero carbon goal. R&D Ecosystem and Institutional Transformation Türkiye needs a strong R&D environment to fulfill its 2053 net-zero ambition. TÜBİTAK established in 2022 the "Net Zero Research Institute," a flagship institution that performs coordinated research on green technologies. Energy storage, hydrogen production, and carbon capture technologies are some of the research topics identified by the institute for the years 2023-2028. Raising the R&D spending of the private sector is also required at this stage. The ratio of Turkish companies' green technology R&D spendings to GDP is 0.25%, and it is targeted to increase this ratio to 1% by the year 2030, according to TÜSİAD's "Green Transformation and Business World" report published in 2024. Both for the promotion of technological innovation and for the increase in the amount of green jobs, this increase is vitally significant. Conclusion Green technology and innovations will play the central role in Türkiye's pathway to achieving its 2053 net-zero ambition. Renewable resources optimization, an increase in the capacity of energy storage, the production of green hydrogen, electric vehicle ecosystem building, and en masse use of carbon capture solutions are the key areas of interest in the success of this process. For the sake of ensuring this technology revolution, institutional framework and policy programs should also be reshaped. R&D activities to be carried out under TÜBİTAK coordination and enhancing the capacity of the private sector for innovation will lead Türkiye to the forefront of global power in green technology. The realization of the net-zero goal requires a technological transformation, and a social and economic transformation. For this purpose, policymakers, academics, entrepreneurs, and civil society actors should collaborate under a common vision towards the building of a sustainable world. References 1. Ministry of Energy and Natural Resources. (2023). Turkey Energy Outlook 2023. (https://enerji.gov.tr/bilgi-merkezi-enerji-istatistik-rapor-gosterge) 2. TEİAŞ. (2023). Turkey Electricity System 2053 Projection Report. (https://www.teias.gov.tr/tr-TR/yayinlar-raporlar) 3. TÜBİTAK MAM. (2023). Turkey Renewable Energy Potential Report. (https://mam.tubitak.gov.tr/tr/yayinlar) 4. JESDER. (2022). Turkey Geothermal Potential and Future. (https://www.jesder.org/raporlar) 5. EPDK. (2024). Energy Storage Systems Roadmap. (https://www.epdk.gov.tr/Detay/Icerik/3-0-143/raporlar) 6. Ministry of Energy and Natural Resources. (2022). Turkey National Hydrogen Strategy. (https://enerji.gov.tr/bilgi-merkezi-stratejik-planlar) 7. TÜSİAD. (2023). Decarbonization Roadmap in Turkish Industry. () 8. Ministry of Industry and Technology. (2024). Electric Vehicles and Charging Infrastructure Statistics. (https://www.sanayi.gov.tr/istatistikler) 9. TAYSAD. (2023). Automotive Supply Industry Electrification Roadmap. (https://www.taysad.org.tr/tr/raporlar) 10. TÜBİTAK. (2024). 2024-2030 R&D Roadmap. () 11. TÜSİAD. (2024). Green Transformation and Business World. (https://tusiad.org/tr/yayinlar/raporlar) ¹ Ministry of Environment, Urbanization and Climate Change, “Türkiye’s 2053 Long-Term Climate Change Strategy to Be Announced at COP29,” accessed 7 May 2025. ² Republic of Türkiye, Türkiye Long-Term Climate Strategy , 11 November 2024. ⁵ Sinan Ülgen and Alina İltutmuş, Türkiye’nin İlk İklim Kanunu , EDAM, March 2025, p. 6. ⁶ Sabancı University Istanbul Policy Center, Public Policy and Cultural Narratives in a Global Europe , 29 March 2024, p. 3. ⁷ Ibid. ⁸ Ibid. ⁹ See relevant U.S. executive orders, 2025. ¹⁰ Global Climate Policy Institute, Geopolitics of Net-Zero , 2025. ¹¹ Ibid. ¹² European Commission, “Budget Re-Prioritisation Brief,” 2025.

Turkey stands at a critical crossroads in its energy and economic development. As one of the fastest-growing energy markets among OECD countries with electricity demand growing significantly over the past two decades, the nation faces a fundamental challenge: balancing rapid economic growth with high energy import dependency that threatens its economic stability. This strategic predicament has made energy transition not merely an environmental aspiration but an economic imperative for Turkey's future prosperity and security. The Import Dependency Dilemma Turkey's energy dependency presents one of its most significant economic vulnerabilities. The country currently imports approximately 75% of its total energy needs, creating a structural burden on the economy and exposing it to geopolitical risks. This dependency costs Turkey between $65-90 billion annually representing roughly 20% of its total import bill and contributes significantly to its persistent current account deficit. The stark reality is that Turkey imports 99% of its natural gas and 93% of its petroleum products, making it highly vulnerable to global energy price fluctuations and supply disruptions. According to the Centre for Economics and Foreign Policy Studies, in the 2010s, fossil fuel imports were "probably the largest structural vulnerability of the country's economy" and were a large part of Turkey's debt problems. This vulnerability was starkly demonstrated during recent global energy crises, when price spikes severely impacted the Turkish economy and contributed to inflationary pressures. Diagram by Turkonomics The Renewable Revolution: Progress and Potential Against this challenging backdrop, Turkey has made remarkable strides in renewable energy development. As of 2024, renewables represent 54% of Turkey's installed electricity generation capacity, with 40% of actual electricity produced from renewable sources in 2023. The country has particularly excelled in hydropower development but is now rapidly expanding its wind and solar capacity. Turkey's solar capacity has grown impressively, doubling from 9.7 GW in July 2022 to exceed 19 GW by the end of 2024, surpassing its 2025 target ahead of schedule. This acceleration demonstrates the country's ability to rapidly scale renewable infrastructure when policy and investment conditions align. Wind power, currently at about 12 GW, generates approximately 10.5% of Turkey's electricity, with ambitious plans to reach 30 GW by 2035, including 5 GW offshore. Diagram by Turkonomics The economic case for this transition is compelling. New wind and solar installations are now more economical than running existing coal plants dependent on imported fuel. The LCOE (Levelized Cost of Energy) for solar and wind has fallen dramatically, making renewable energy not just environmentally preferable but economically advantageous. According to industry analyses, every gigawatt of solar power installed saves Turkey approximately $100 million on gas import costs. Coal Dependency: A Transitional Challenge Despite progress in renewables, Turkey faces challenges in reducing its coal dependency. In a surprising development, Turkey overtook Germany in early 2024 to become Europe's largest producer of coal-fired electricity. Coal currently accounts for approximately 35.2% of Turkey's electricity generation, with a concerning trend showing increased reliance on imported coal. This coal dependency complicates Turkey's energy transition and climate commitments. Coal-fired power stations are the largest source of greenhouse gas emissions in Turkey, producing about one tonne of CO2 per person annually. To achieve its 2053 carbon neutrality target, experts suggest Turkey would need to phase out coal power by the mid-2030s. However, the first half of 2024 has shown promising signs. Turkey increased its clean electricity generation by more than 25% compared to the first half of 2023, while cutting fossil fuel-fired output by 9%. Clean power also registered its highest-ever share of Turkey's generation mix during this period, supplying 53% of all electricity, demonstrating that progress is possible with the right policy frameworks and investments. Policy Framework and Investment Landscape Turkey has established several policy mechanisms to accelerate its energy transition. The government has implemented feed-in tariffs, procurement auctions, and subsidies for rooftop solar installations. The National Energy Plan (NEP) sets ambitious targets, aiming for renewable energy to reach 50% of total energy supply by 2030 and 80% by 2053. To meet these targets, Turkey needs to invest approximately $100-110 billion by 2035. According to October 2024 announcements by Energy Minister Alparslan Bayraktar, Turkey is committing to invest $80 billion in renewable energy capacity expansion and an additional $30 billion in grid infrastructure improvements. Recent clean energy investments have shown significant growth, with $4.9 billion invested in 2023, representing a 69% increase from 2022. The current investment climate is increasingly favorable for clean energy, with the government offering attractive incentive packages for renewable energy development. Recent amendments to regulations have been made to complement the government's targets, including measures to encourage domestic renewable energy equipment manufacturing. The Green Industry Project, a government-led initiative, promotes energy and water efficiency in Turkish industries by providing financial incentives to businesses that invest in energy-efficient technologies. This holistic approach recognizes that energy transition extends beyond power generation to encompass industrial transformation and efficiency improvements. Economic Impacts and Future Trajectory The economic benefits of Turkey's energy transition extend far beyond reducing import dependency. Studies suggest that an accelerated transition to renewable energy could generate net socioeconomic benefits estimated at 1% of GDP by 2030. These positive impacts include reduced health and climate change externalities, and wage income growth driven by higher-skilled, better-paid jobs in the clean energy sector. A comprehensive energy transition could potentially reduce Turkey's energy import dependency from 75% to 25%, dramatically improving the country's trade balance and economic resilience. The shift would also position Turkey favorably in relation to carbon border adjustment mechanisms being implemented by trading partners, particularly the European Union. Looking ahead, several factors will determine Turkey's success in this transformation: Grid Modernization:  Studies indicate Turkey could double its planned solar and wind capacity to 40 GW by 2026 with minimal changes to grid operations, though integration of up to 60 GW would require additional investment in transmission infrastructure and system flexibility. Storage and Integration:  The intermittent nature of renewable sources requires investment in energy storage solutions. Turkey has already agreed with Electricity of France (EDF) to develop battery storage systems to help balance grid variations. Financing Mechanisms:  Innovative financial instruments, including green bonds and specialized clean energy funds, will be essential to mobilize the capital needed for this transition. Regulatory Reform:  Continued refinement of energy market regulations, carbon pricing mechanisms, and subsidy structures will be necessary to create a level playing field for renewable energy. Against this backdrop, Turkonomics proposes the following ten-point policy package to accelerate the march toward true energy independence Launch the Turkish Emissions-Trading System (TR-ETS) by 2026. Finalise the Climate Law and set a ₺450 /tCO₂e floor price, recycling 70 % of auction revenue into a Clean Energy Fund for grid and storage projects. Stage annual 5 GW “storage-first” YEKA auctions. From 2025 onward, every winning solar or wind bid must pair at least 20 % of capacity with four-hour batteries, targeting 5 GW of storage online by 2030. Set a transparent coal-exit date of 2040. Publish a binding retirement schedule and create a ₺20 billion Just Transition Fund for mining regions (Zonguldak, Manisa). Turbo-charge rooftop solar. Lift the net-metering cap from 25 kW to 250 kW, grant instant VAT refunds on PV components, and issue a smart-inverter standard by 2026. Mandate near-zero-energy building codes from 2028. All new urban buildings must hit ≤ 45 kWh /m²-year; retrofit 250 000 homes a year using EBRD-backed green mortgages. Green industrial export corridor. Offer 24/7 clean-power contracts to steel, aluminium, and fertiliser exporters so they avoid EU CBAM charges, anchored by Sakarya gas and offshore wind. Build 3 GW of pumped-storage hydro and 300 MW of synchronous condensers. These assets stabilise frequency and absorb surplus solar/wind power. Double cross-border interconnectors to 6 GW by 2035. Fast-track HVDC links to Bulgaria and Greece to monetise surplus renewables and balance peaks. Scale green-hydrogen clusters to 2 GW of electrolysers. Prioritise petrochemicals in Ceyhan and steel in İskenderun; grant a 10-year ₺1.2 /kg H₂ production credit. Electrify transport: 30 % EV share by 2030. Extend the TOGG rebate to imported EVs under €30 000, roll out 120 000 public chargers, and cap fleet averages below 50 g CO₂/km from 2029. The Path Forward Turkey's energy transition represents both a challenge and an opportunity of historic proportions. By accelerating the deployment of domestic renewable resources, especially solar and wind power, Turkey can simultaneously address its energy security concerns, reduce its carbon footprint, create high-value jobs, and improve its economic competitiveness. The progress already achieved tripling renewable electricity generation over the past decade and reaching new clean energy generation records in 2024 demonstrates that this transition is not just possible but already underway. However, the persistence of coal dependency and ongoing investments in fossil fuel infrastructure suggest that the path will not be linear. For Turkey to fully realize the benefits of energy transition, a clear roadmap with binding interim targets, consistent policy support, and substantial public and private investment will be required. The stakes are high: success would mean not just a transformed energy system but a more resilient, independent, and prosperous Turkish economy for generations to come. As Turkey continues to navigate this transition, the government's commitment to renewable energy targets, coupled with favorable economics for clean technologies, provides reason for optimism. The coming decade will be decisive in determining whether Turkey can transform its energy dependency challenge into an opportunity for sustainable economic development and leadership in the clean energy economy.

What did Trump say about NATO? To understand Trump’s impact on US-NATO relations, we must first look at what he said about NATO during his campaign and shortly after his election. Throughout the campaign, Trump accused European countries of failing to meet NATO’s requirement that members spend at least 2% of their gross domestic product (GDP) on defense. Especially before Russia's invasion of Ukraine, many European nations had reduced their defense spending and were falling short of this commitment. The situation had become so dire that in 2019, French President Emmanuel Macron went so far as to claim that NATO was experiencing "brain death." Trump didn’t let up on his criticism and even implied that if the situation didn’t improve, the United States might withdraw from NATO. Table 1:   Displays the defense spending of NATO member countries as a percentage of GDP from 2014 to 2024. European countries, which had long ignored the 2% defense spending rule, were reminded of it following Russia’s attempt to invade Ukraine. According to NATO data, by 2024, 24 member states are now meeting the 2% spending target (Slovakia is exactly at 2%). Trump is elected—what now? After Trump’s election, the world began to wonder how much of his NATO rhetoric he would actually turn into policy, since the actions taken by the United States could directly influence the outcome of the Russia-Ukraine war. Although many European leaders stated that they would continue to support Ukraine regardless of Trump’s decisions, this support alone might not be enough. According to a study by Germany’s Kiel Institute , if U.S. aid to Kyiv is fully withdrawn under a Trump administration, the value of weapons supplied to Ukraine could fall from €59 billion to €34 billion. Table 2: Over the past two years, documents prepared by Trump’s team have mentioned the need for a “radical redirection” of the alliance, referring to NATO as “idle.” They also discuss the possibility of a two-tier alliance structure where members that meet the defense spending requirement would receive more favorable security guarantees from the U.S. To prevent such drastic changes, attention is now focused on the relationship between Trump and NATO Secretary General Mark Rutte. The Mark Rutte–Donald Trump Relationship Trump gave a positive message by holding his first high-level international meeting post-election with newly appointed NATO Secretary General Mark Rutte. In this meeting, a wide range of important issues were discussed, including the 2% contribution rule, relations with Russia, China, and North Korea. From what we know from past experiences and various sources, Rutte and Trump have a good relationship, and Rutte knows how to influence Trump. During his time as Dutch Prime Minister, Rutte’s meetings with Trump were generally positive. Moving forward, Rutte will need to handle his relationship with Trump very carefully. Europe’s Decision Germany has reached the 2% GDP spending goal for the first time since the end of the Cold War, and France has also met the requirement. One of the first steps of the new government to be formed through the coalition between the CDU and SPD will be to increase the defense budget. The UK aims to reach 2.5% as soon as possible. Meanwhile, French President Macron says that the 3.5% target is not unattainable. The European Union, on the other hand, believes it may be able to implement a defense spending plan reaching up to 800 billion dollars. Many countries bordering the conflict zone—such as Estonia, Finland, Romania, Hungary, and Poland—have already increased their defense budgets. NATO data shows Poland is close to reaching a 5% spending rate. According to the Financial Times , European sources claim that Trump wants all European nations to aim for 5% in defense spending. While this is a difficult target to achieve, there is talk of raising expenditures to around 3% or 3.5%. For European countries already struggling with economic problems, this is one of the toughest decisions they will face. Spain, with support from tourism and skilled immigration, is entering a relatively stable economic period compared to others. Therefore, it may change its status as the NATO country with the lowest defense spending in 2024 by the year 2025. This could increase the number of nations responding positively to Trump’s demands, potentially strengthening US-NATO relations. However, Spain has stated that it could reach the 2% spending target by 2029. So, Spain is moving forward modestly and without haste. Conclusion Ending the Russia-Ukraine war is likely to be one of the top priorities for a Trump administration, as well as the tariff issue. One of Trump’s possible strategies could be to increase NATO’s military spending capacity to intimidate Putin. In addition, Trump’s team claims that the burden of global security is being carried by the United States. Therefore, an increase in defense budgets by European countries could help reduce the security burden that the U.S. claims to bear. As we look ahead to uncertain developments, the steps that European countries take regarding their defense budgets will likely play a crucial role in shaping Trump’s decisions and the future of US-NATO relations.

I do not affiliate myself with any political parties or beliefs, and this analysis is presented as an objective examination of Turkey's religious-political landscape. All sources have been thoroughly documented at the end of this article to ensure transparency and factual accuracy. The sources that I have utilized are mostly prestigious institutions however some may lack trust or controversy, I apologize for that. To Begin.. Turkey stands as a unique case study in the complex relationship between religion and politics in the modern world. Officially secular since the founding of the Republic in 1923, Turkey has nevertheless experienced an ongoing negotiation between secular governance and Islamic identity that continues to shape its political landscape. This tension reflects broader questions facing many societies: How does a nation balance religious heritage with modern governance? Can democracy accommodate both secular principles and religious values? What happens when these forces compete for influence over state institutions and social norms? As Atatürk himself (according to Grace Ellison with an interview with him in 1927) declared, “I have no religion, and at times I wish all religions at the bottom of the sea… Superstition must go. Let them worship as they will; every man can follow his own conscience.” This foundational stance contrasts sharply with President Erdoğan’s modern vision of creating a “pious generation” that will “work for the construction of a new civilization.” Between these two positions lies the story of modern Turkey. This article examines the historical evolution of Turkey’s relationship with Islam in the political sphere, from the late Ottoman period through the founding of the secular republic, the multi-party era, the rise of political Islam, and finally the transformation under President Recep Tayyip Erdoğan’s leadership. By understanding this trajectory, we can better comprehend the unique character of Turkish secularism, the resurgence of Islamic politics, and the implications for Turkey’s future. Part I: The Ottoman Legacy and the Birth of Turkish Secularism (1839-1923) The Late Ottoman Period: Seeds of Secularization Long before the Republic of Turkey was established, the Ottoman Empire had begun a gradual process of secularization through the Tanzimat reforms (1839-1876). These reforms, aimed at modernizing the empire and countering European powers’ growing influence, introduced significant changes: The establishment of secular schools alongside traditional religious education Legal reforms including the introduction of commercial and penal codes based on European models The creation of new judicial institutions that limited the scope of Islamic courts Administrative reforms that diminished the ulema’s (religious scholars) traditional authority The reforms represented the Ottoman state’s attempt to adapt to a changing world while preserving its Islamic character. During this period, three main intellectual currents emerged that would influence Turkey’s future relationship with religion: Islamists  who sought to revitalize Islamic institutions while selectively borrowing Western technology Westernists  who advocated for comprehensive adoption of European models including secularism Turkish nationalists  who aimed to forge a distinctly Turkish identity, often with secular leanings The Young Turk Revolution of 1908 and the subsequent Committee of Union and Progress (CUP) government further advanced secularization efforts, bringing religious institutions under greater state control and promoting nationalist ideologies over pan-Islamic unity. Mustafa Kemal Atatürk and Radical Secularization The collapse of the Ottoman Empire after World War I and the subsequent War of Independence (1919-1923) created the conditions for a more radical break with the Islamic past. Mustafa Kemal Atatürk, the republic’s founder and first president, implemented sweeping reforms that fundamentally altered the relationship between religion and state: Abolition of the Caliphate (1924) : Ended the symbolic leadership of the Muslim world that had been held by Ottoman sultans Dissolution of religious orders (1925) : Banned Sufi brotherhoods and closed their facilities Adoption of the Swiss Civil Code (1926) : Replaced Islamic family law with secular legal codes Constitutional secularism (1928/1937) : Removed Islam as the state religion and formally established laicism as a constitutional principle Educational reforms : Unified education under state control, eliminated religious schools, and adopted the Latin alphabet Cultural reforms : Banned traditional religious garb in public offices, introduced Western calendar and time systems, and changed the weekly holiday from Friday to Sunday Atatürk’s views on religion were blunt and uncompromising. He famously declared, “I have no religion, and at times I wish all religions at the bottom of the sea… Superstition must go. Let them worship as they will; every man can follow his own conscience.” He maintained that religion was “between an individual and God” and warned against political exploitation of faith, quipping that evil people were those who “use religion for their own benefit.” In practice, Atatürk’s regime adopted a strict, French-style secularism (laïcité): the state actively intervened to “secularize society by imposing a way of life that had no visible trace of traditional religion,” as later scholars have noted. The Turkish model of secularism, known as laiklik (derived from the French laïcité), differed significantly from Anglo-American secularism. Rather than creating a separation that allowed religious freedom, Turkish secularism involved state control over religious expression and institutions. The Directorate of Religious Affairs (Diyanet) was established to regulate and supervise religious activities, effectively bringing Islam under state authority. Part II: Contested Secularism in the Multi-Party Era (1950-1980) Democratic Party and the First Religious Revival The transition to multi-party democracy in 1946 and the Democratic Party’s electoral victory in 1950 marked the beginning of a new phase in Turkey’s religious politics. The Democratic Party (DP), under Adnan Menderes, did not openly challenge Kemalist secularism but adopted a more accommodating approach to religious sentiment: Reintroduced Arabic call to prayer (previously banned) Expanded religious education in schools Increased funding for mosque construction Relaxed restrictions on religious publications and organizations These policies reflected both electoral calculations and a genuine belief that Atatürk’s radical secularism had gone too far in suppressing Turkey’s religious identity. However, the DP’s decade in power ended with the 1960 military coup, conducted partly in the name of protecting secularism. The Rise of Explicitly Islamic Political Movements The 1960s and 1970s saw the emergence of explicitly Islamic political parties, beginning with the National Order Party (Milli Nizam Partisi) founded in 1970 by Necmettin Erbakan. After its closure by the constitutional court, Erbakan established the National Salvation Party (Milli Selamet Partisi) in 1972. Erbakan’s “National Outlook” (Milli Görüş) ideology combined: - Islamic moral values and identity - Economic development and industrialization - Anti-Western and anti-Zionist positions - Emphasis on Turkey’s Ottoman-Islamic heritage The National Salvation Party participated in several coalition governments in the 1970s, giving Islamists their first experience in governance. This period also saw the growth of Islamic civil society organizations, religious publications, and business networks that would later provide the foundation for political Islam’s expansion. Military Intervention and the “Turkish-Islamic Synthesis” The 1980 military coup, while ostensibly defending secularism, paradoxically facilitated a greater role for Islam in public life. The military junta promoted the “Turkish-Islamic Synthesis” as an ideological bulwark against leftist movements: Introduced compulsory religious education in schools Increased the budget and authority of the Directorate of Religious Affairs Supported the expansion of Imam Hatip religious schools Allowed greater religious content in state media This pragmatic accommodation of religion reflected the military’s view that “controlled religion” could serve as a unifying force and counter to radical ideologies. However, it also created space for the further development of Islamic political and social movements. Part III: The Political Islam Movement and its Transformation (1980-2002) Erbakan’s Welfare Party and the “Just Order” The 1980s economic liberalization under Turgut Özal’s leadership coincided with the growing strength of an Islamic-oriented business class and civil society. These developments created favorable conditions for the rise of Erbakan’s Welfare Party (Refah Partisi), established in 1983. The Welfare Party expanded its support base through: - Efficient grassroots organizations in urban neighborhoods - Social services to the urban poor - Appeals to small and medium business owners - Critiques of Western-style capitalism and secularism The party advocated for a “Just Order” (Adil Düzen) that promised to combine Islamic ethics with economic development while reducing dependence on Western powers and institutions. The Welfare Party’s watershed moment came in the 1994 municipal elections when it won mayoral races in several major cities, including Istanbul (where Recep Tayyip Erdoğan became mayor) and the capital Ankara. This was followed by the party’s victory in the 1995 general elections, leading to Erbakan becoming prime minister in a coalition government in 1996. The “February 28 Process” and the Reconfiguration of Islamic Politics Erbakan’s brief tenure as prime minister (1996-1997) and its aftermath proved pivotal for Turkish political Islam. His government’s perceived challenges to the secular order including proposals for closer ties with Muslim countries, attempts to lift the headscarf ban, and appointments of religious conservatives to bureaucratic positions prompted a harsh reaction from the military and secular establishment. On February 28, 1997, the National Security Council issued a series of ultimatums to roll back Islamic influence in public life, leading to Erbakan’s forced resignation in what became known as the “postmodern coup” or the “February 28 process.” The aftermath included: Closure of the Welfare Party by the Constitutional Court in 1998 Political ban on Erbakan and other party leaders Purges of religious conservatives from the military and civil service Stricter enforcement of the headscarf ban in universities Closure of many Imam Hatip middle schools These events caused a strategic reassessment within the Islamic political movement. A reformist faction led by Erdoğan and Abdullah Gül concluded that direct challenges to Turkey’s secularist establishment were counterproductive and began advocating for a more moderate approach that emphasized democracy, human rights, and economic development rather than explicitly Islamic governance. The Birth of the AKP: Reframing Islamic Politics The split between traditionalists and reformists within the Islamic political movement became formalized with the establishment of two separate parties following the closure of the Virtue Party (Fazilet Partisi, the successor to the Welfare Party) in 2001: The Felicity Party  (Saadet Partisi), which maintained Erbakan’s National Outlook tradition The Justice and Development Party  (AKP), founded by Erdoğan and reformists, which described itself as a “conservative democratic” party comparable to European Christian Democratic parties The AKP strategically avoided explicitly Islamic rhetoric, focusing instead on: - Democratic reforms and EU accession - Economic liberalization and growth - Opposition to military tutelage - Protection of religious freedom within a secular framework This reframing proved electorally successful, allowing the AKP to attract support beyond the traditional Islamist base and win a decisive victory in the 2002 elections with 34.3% of the vote. Part IV: The AKP Era: Conservative Democracy and the Evolution of Turkish Secularism (2002-Present) Early AKP Period: Democratic Reform and Economic Growth The early years of AKP rule (2002-2007) were characterized by significant democratic reforms aimed at EU accession, economic stabilization, and the gradual expansion of religious freedoms: Constitutional amendments reducing military influence in politics Legal reforms improving human rights protections Economic policies that brought rapid growth and reduced inflation Diplomatic initiatives to resolve the Cyprus dispute Incremental steps to ease restrictions on religious expression During this period, the AKP operated within the constraints of Turkey’s established secular system while working to transform it. The government framed its policies not as Islamization but as democratization arguing that true secular democracy required freedom of religious expression, not its suppression. Consolidation of Power and Growing Conservative Influence The AKP’s second term (2007-2011) marked a more assertive phase. After surviving an attempted judicial closure of the party in 2008 and winning a constitutional referendum in 2010 that reformed the judiciary, the government began to implement more openly conservative policies: Attempted lifting of the headscarf ban in universities (2008), which was initially struck down by the Constitutional Court as a violation of secularism Eventual lifting of the headscarf ban in universities and later in public institutions (2013), with Erdoğan triumphantly declaring: “We have abolished an archaic provision which was against the spirit of the republic… Headscarf-wearing women are full members of the republic” Expansion of religious education, including reopening Imam Hatip middle schools Increased restrictions on alcohol sales and advertising Growing religious rhetoric in public discourse Appointment of religious conservatives to key bureaucratic positions Increased budget and authority for the Directorate of Religious Affairs These changes reflected both the government’s increased confidence after electoral successes and the gradual emergence of a new conservative elite in Turkish society educated professionals who maintained their religious identity rather than adopting secular lifestyles. The Post-2013 Period: Authoritarian Turn and Religious Nationalism The Gezi Park protests of 2013 and the subsequent breakdown of the AKP’s alliance with the Gülen movement (a religious community that had previously supported the party) marked another turning point. The government’s response included: Increased emphasis on Ottoman-Islamic heritage and symbols More explicit religious rhetoric and appeals to Islamic solidarity Growing restrictions on opposition media and civil society Promotion of “pious generations” as an educational goal Expanded use of religious symbolism in state ceremonies Erdoğan has openly spoken about his desire to “raise a religious generation” in Turkey, declaring that he aims to create “a generation that will work for the construction of a new civilization.” This vision explicitly intertwines Islamic identity with national purpose and represents a significant departure from Atatürk’s secularist vision. After the failed coup attempt of July 2016, Erdoğan, now president with expanded powers following a 2017 constitutional referendum, embraced a form of religious nationalism that combined Turkish identity, Islamic values, and strong leadership. Symbolic actions during this period included: The conversion of Hagia Sophia from a museum back to a mosque in 2020, which occurred just hours after Turkey’s highest court annulled the 1934 cabinet decree that had designated it a museum The conversion of the ancient Chora Church to a mosque in the same period The expansion of religious education requirements in schools Increased funding for religious institutions and activities (the Diyanet’s budget increased from approximately TL 35.9 billion in 2023 to a staggering TL 91.8 billion in 2024 a 150% increase) Greater prominence of religious ceremonies in state functions Revival of Ottoman commemorations and symbols The government’s approach to secularism evolved from early calls for greater religious freedom toward what some scholars describe as a “post-secular” model where religious values play a more prominent role in public policy and national identity. Part V: Contemporary Dimensions of Religion and Politics in Turkey Religion in the Constitutional Order Turkey’s constitution still defines the state as secular, but the interpretation of this principle has shifted significantly. The AKP government has maintained formal secularism while redefining it to allow greater religious expression and influence in public life. This has created an ambiguous situation where: State institutions remain officially secular Religious education and services receive substantial state funding Islamic symbolism is increasingly incorporated into national identity The Diyanet (Directorate of Religious Affairs) has expanded its role and budget This represents a move away from the strict French-style laïcité toward a model that some scholars compare to the “accommodationist” approach found in Germany or established church arrangements in some European countries. Religious Education and the “Pious Generation” Education has been a central battleground in Turkey’s religious politics. Under AKP governance: Compulsory religious education has been expanded Imam Hatip (religious) schools have proliferated dramatically: from 434 schools with 188,896 students (10.88% of all high school students) in 1996 to 1,693 schools with 514,630 students (10.34% of all high school students) in 2022 Religious content has increased in standard curriculum Alternative theories to evolution have been introduced, with the removal of evolutionary theory from high school biology textbooks in 2017 as part of a new “values-based” curriculum Ottoman history and Islamic civilization receive greater emphasis The 2014 introduction of specialized İmam-Hatip “project schools” further diversified curricula toward religion and Arabic Year IH High School Students IH Students % of All High Schools # of IH High Schools 1996 188,896 10.88% 434 2004 84,898 2.37% 442 2012 285,203 7.02% – 2022 514,630 10.34% 1,693 The number of Imam Hatip schools dramatically declined after the 1997 “postmodern coup,” falling to just 2.37% of all high school students by 2004. The AKP government prioritized rebuilding this religious education infrastructure, returning the percentage to pre-1997 levels by 2022. President Erdoğan has explicitly stated the goal of raising a “pious generation,” reflecting the belief that education should transmit religious and traditional values alongside modern knowledge. One Education Minister justified removing evolution from high school curriculum by stating it was “best left to be taught at the university level; it’s a theory that requires a critical mind.” Women, Gender, and Family Gender relations and family policy have been particularly contentious areas in Turkey’s religious politics: Government promotion of traditional family structures and higher birth rates Debates over women’s participation in the workforce The headscarf issue as a symbol of religious freedom and identity Concerns about the erosion of gender equality in law and practice Conservative rhetoric about gender roles from political leaders Withdrawal from the Istanbul Convention on preventing violence against women (2021) These issues reflect deeper debates about the proper relationship between religious values and gender equality in a modernizing society. Religious Minorities and Pluralism Turkey’s religious landscape extends beyond Sunni Islam to include significant Alevi, Christian, and Jewish communities. The treatment of these minorities provides another lens for understanding Turkish secularism: Ongoing Alevi demands for equal recognition of their religious identity and places of worship The complex status of the Greek Orthodox, Armenian, and other Christian communities Limited progress on property restitution for minority religious foundations Occasional interfaith initiatives alongside persistent discrimination The concept of citizenship increasingly linked to Sunni Muslim identity The treatment of religious minorities highlights the tensions between different conceptions of secularism: one that treats all religions equally versus one that privileges the majority faith while tolerating others. The Diyanet: Religion Under State Control The Directorate of Religious Affairs (Diyanet) represents the distinctive Turkish approach to managing religion. Under AKP rule, the Diyanet has: Seen its budget and staff expand dramatically: in 2023, the Diyanet’s budget was roughly TL 35.9 billion (about USD 1.2 billion), and the approved 2024 budget soared to TL 91.8 billion (USD ~3.2 billion) – a 150% increase Extended its activities internationally to Turkish diaspora communities Taken more conservative positions on religious and social issues Become more closely aligned with government policies Expanded beyond religious services into areas like family counseling and social media This vast budget growth – now exceeding all but a handful of cabinet ministries – underlines the AKP’s prioritization of religious institutions. By comparison, the Diyanet’s funding in the early 2000s was only a few billion TL. The Diyanet exemplifies the Turkish model where secularism means state control of religion rather than separation of religion and state. Ironically, the institution created by Atatürk to contain and regulate religion has become a powerful vehicle for expanding religious influence under the AKP. Islamic Civil Society and Business Beyond formal politics, Islamic influence has grown through civil society organizations and business networks: Faith-based charitable organizations providing social services Islamic business associations like MÜSİAD (Independent Industrialists and Businessmen’s Association) Religious foundations (vakıf) funding education and cultural activities Islamic media outlets and publishing houses Growing “halal” economy including Islamic banking, modest fashion, and halal tourism Interest-free banking has grown into a sizable sector. Today Turkey has several major participation banks (Albaraka Türk, Kuveyt Türk, Vakıf Katılım, Türkiye Finans) alongside smaller institutions. Their combined assets have expanded rapidly, with funds collected by participation banks jumping from about TL 39 billion in 2011 to TL 322 billion in 2020. As a share of the banking system, Islamic banks held roughly 9% of total banking assets by 2023. This growth reflects political backing and customer demand among conservative Turks who prefer sharia-compatible finance. Since the 1980s, a new class of conservative entrepreneurs has emerged. Dubbed “Anatolian Tigers” (Anadolu Kaplanları) or “Green Capital” (yesil sermaye), these are often Sunni businessmen from central provinces (Konya, Kayseri, Gaziantep, Malatya) who broke into manufacturing and exporting. They built textile mills, furniture factories, and food industries, often reinvesting profits into pious charities and avoiding interest. Their provinces have steadily increased their share of national output and exports in recent decades. These developments have created an infrastructure for Islamic influence that operates partly independently of state power. The rise of this “green capital” illustrates the AKP era’s interplay of faith and profit: banks, factories, and construction companies financed by religious conservatives thrive under an AKP that encourages both Islam and capitalism. Part VI: International Dimensions and Comparisons Turkish Secularism in Global Context Turkey’s experience with secularism and religious politics can be compared to several other models: French laïcité with its emphasis on removing religion from public life American secularism based on separation of church and state with religious freedom “Twin tolerations” model where democracy requires both religious actors accepting democratic principles and the state allowing religious expression “Multiple secularities” framework recognizing different historical paths to secular governance Turkey’s model of secularism has been distinctive. As one analyst summarized, “the main concern of Turkish secularists was freedom from religion, and almost never freedom of religion.” The Constitutional Court has repeatedly emphasized that Turkish secularism “has a historical particularity” different from Western models. For instance, in a landmark 1991 ruling, it invalidated a parliamentary law easing headscarf restrictions, stating that permitting scarves would violate laiklik. More recently, Turkey has moved away from strict French-style laïcité toward a model that some scholars compare to the “accommodationist” approach found in Germany or established church arrangements in some European countries. This shift represents what experts call “another moment in which the definitions of secularism and the relationship between government, religion, and the public sphere are all in flux.” Turkey’s evolving approach demonstrates that secularism is not a fixed concept but a contested principle that develops differently according to historical, cultural, and political factors. Religion in Turkish Foreign Policy Religious identity has become increasingly significant in Turkey’s foreign relations: Advocacy for Muslim causes in international forums Support for Muslim minority communities worldwide Religious diplomacy through the Diyanet and Turkish aid agencies Complex relations with other Muslim-majority countries Religious dimensions of regional conflicts Tensions with Western allies over religious freedom issues This represents a departure from the strictly secular foreign policy of earlier republican periods toward what some analysts call “neo-Ottomanism” a more multidimensional approach that incorporates Islamic solidarity alongside national interests. Rather than a simple narrative of secularization or Islamization, Turkey represents a complex case of ongoing negotiation between these forces. The country’s experience raises important questions about the compatibility of democracy, secularism, and religious values that resonate far beyond its borders. The future trajectory of religious politics in Turkey will depend on many factors: - The sustainability of the AKP’s conservative democratic model - Economic performance and social development, Generational changes in religious practice and identity - Regional dynamics and international influences ,The resilience of secular opposition What seems certain is that the relationship between religion and politics will remain central to Turkey’s national identity and democratic development for the foreseeable future. Sources: Ipsos Global Advisor – Global Religion 2023 Report (May 2023)   Ipsos Ipsos Global Advisor – Religion 2023 Master Press Release (May 2023)   Ipsos Turkish Statistical Institute (TÜİK) – İmam Hatip Lisesi İstatistikleri   TÜİK Veri Portalı Diyanet İşleri Başkanlığı – 2023 Kurumsal Mali Durum ve Beklentiler Raporu   stratejigelistirme.diyanet.gov.tr Diyanet İşleri Başkanlığı – 2024 Kurumsal Mali Durum ve Beklentiler Raporu   stratejigelistirme.diyanet.gov.tr BrainyQuote – Mustafa Kemal Atatürk Quote: “I have no religion, and at times I wish all religions at the bottom of the sea.”   BrainyQuote Goodreads – Andrew Mango, Atatürk: The Biography of the Founder of Modern Turkey  (quote collection)   Goodreads UNESCO – “Hagia Sophia: UNESCO deeply regrets the decision of the Turkish authorities…” (10 July 2020)   UNESCO World Heritage Centre NPR – “In Turkey, Schools Will Stop Teaching Evolution This Fall” (20 August 2017)   NPR Wikipedia – Turkish textbook controversies   Vikipedi Wikipedia – Religion in Turkey   Vikipedi Optimar Araştırma, “Gençlik ve Din: Türkiye Raporu 2019” (June 2019). https://optimar.com.tr/wp-content/uploads/2019/07/2019-Genclik-ve-Din-Raporu.pdf Pew Research Center, “Religion in Turkey: A 2019 Global Attitudes Study” (December 2019). https://www.pewresearch.org/religion/2019/12/19/religion-in-turkey/ 1926-27 yıllarında Atatürk ile röportaj yapan Grace Ellison'ın 1928 yılında yayımlanan "Turkey Today" adlı kitabı KONDA Research & Consultancy, “How Religious Are We? 10-Year Trends in Religious Orientation” (December 2018). https://konda.com.tr/en/comprehensive-reports Milli Eğitim Bakanlığı (MEB), “2021–2022 Eğitim Yılı İmam Hatip Liseleri İstatistikleri” (September 2022). https://yigm.meb.gov.tr/meb_iys_dosyalar/2022_istatistik/ihl_2021-2022.pdf Milli Eğitim Bakanlığı (MEB), “2023–2024 Eğitim Yılı İmam Hatip Liseleri İstatistikleri” (September 2024). https://yigm.meb.gov.tr/meb_iys_dosyalar/2024_istatistik/ihl_2023-2024.pdf France : Loi du 9 décembre 1905 sur la séparation des Églises et de l’État. https://www.legifrance.gouv.fr/loda/id/JORFTEXT000000319474/ Germany: Grundgesetz für die Bundesrepublik Deutschland, Artikel 140. https://www.gesetze-im-internet.de/gg/art_140.html Carnegie Endowment for International Peace, Kemal Kirişci, “Turkey’s Evolution in the Middle East” (2023) – discusses use of religious soft powerhttps:// carnegieendowment.org/2023/06/12/turkey-s-evolution-in-middle-east-pub-89402 Brookings Institution, Sinan Ülgen, “Between Isolate and Integrate: Turkey’s Foreign Policy Dilemma” (2021) – analyses Diyanet’s diplomatic rolehttps:// www.brookings.edu/articles/between-isolate-and-integrate-turkeys-foreign-policy-dilemma/ Chatham House, “Turkey’s Soft Power Strategy” (2022) – includes a section on religious diplomacyhttps:// www.chathamhouse.org/2022/turkey-soft-powerstrategy https://www.ipsos.com/en/two-global-religious-divides-geographic-and-generational#:~:text=generations%20in%20the%20prevalence%20of,or%20of%20some%20other%20faith

Analysis of European Union Structure The European Union (EU) represents one of the most complex political and economic partnerships in the world, comprising 27 member states as of October 2023. This analysis provides an in-depth look at the structure of the EU, detailing its institutions, decision-making processes, and the challenges it faces in an increasingly multipolar world. Historical Context The EU's structure is deeply rooted in the aftermath of World War II, as European countries sought to foster economic cooperation, prevent further conflicts, and promote political integration. The foundational treaties most notably the Treaty of Rome (1957) and the Maastricht Treaty (1992)laid the groundwork for an integrated Europe. The Lisbon Treaty (2009) further refined the workings of the EU, enhancing its institutional framework. Institutional Framework The EU's structure is characterized by a unique blend of intergovernmental and supranational elements, facilitated by a set of key institutions: • The European Commission The European Commission serves as the executive body of the EU, where it proposes legislation, implements decisions, and upholds EU treaties. Comprising 27 Commissioners, one from each member state, the Commission plays a central role in drafting policies related to trade, environmental standards, and consumer protection. The President of the Commission, currently Ursula von der Leyen, is crucial in setting the policy agenda and representing the EU internationally. Functions: 1. Legislation Initiator: Proposes laws and policies. 2. Policy Implementation: Responsible for executing EU laws and policies. 3. Guardian of Treaties: Ensures that member states abide by EU law. • The European Parliament As the directly elected legislative body, the European Parliament represents the interests of EU citizens. It consists of 705 Members of Parliament (MEPs) elected every five years. The Parliament shares legislative power with the Council of the European Union and plays a significant role in shaping laws, approving the budget, and holding the Commission accountable. Function: 1. Legislative Power: Co-decision with the council on proposed legislation. 2. Budgetary Authority: Adopts or amends all the annual budget and expenditure plans. 3. Democratic Oversight: Conducts inquiries and oversees the work of the commission. • The Council of the European Union Often referred to as the Council of Ministers, this body represents the governments of each member state. The Council's composition changes depending on the topic being discussed, allowing for collaboration across various sectors, such as health, finance, or agriculture. It shares legislative power with the European Parliament, making decisions through a complex system of voting that often requires a qualified majority. Functions: 1. Legislative Role: Reviews and negotiates legislation proposed by the commission. 2. Policy Coordination: Coordinates policies among member states. 3. Decision Making: Often acts in conjunction with the EP in a co-decision procedure. • The European Council The European Council consists of the heads of state or government of member countries, along with the President of the European Council and the President of the European Commission. This body defines the EU's overall political direction and priorities, serving as a strategic forum where member states negotiate consensus on significant issues. Functions: 1. Strategic Guidance: Sets the EU’s overall political direction. 2. Crisis Management: Addresses significant issues affecting the union. • The Court of Justice of the European Union (CJEU) The CJEU ensures the uniform interpretation and application of EU law across member states. It adjudicates disputes involving EU institutions, member states, and citizens, ensuring compliance with EU treaties. Its rulings are binding, resulting in a legal framework that underpins the EU's operations. Functions: 1. Legal Interpretation: Interprets EU law and ensures its uniform application. 2. Dispute Resolution : Resolves disputes between institutions ,member states and individual regarding EU law. Diagram 1:EU Institutional Structure Decision-Making Process The EU employs a multi-layered decision-making process characterized by: Legislative Initiatives: European Commission initiates legislation, which must then be approved by both the European Parliament and the Council of the European Union. Qualified Majority Voting: In many policy areas, decisions are made through Qualified Majority Voting (QMV), requiring a majority of votes weighted by population size. Consensus and Compromise: Given the diverse interests of member states, the decision-making process often involves extensive negotiation and compromise to reach an agreement. Diagram 2: Ordinary Legislative Procedure Challenges and Critiques Despite its robust structure, the EU faces several challenges: 1. Democratic Deficit Critics argue that the EU suffers from a democratic deficit, where decisions are made by bureaucrats disconnected from citizens preferences. Although the European Parliament is elected, many EU policies and decisions occur behind closed doors, raising concerns about transparency and public accountability. 2. National Sovereignty vs. Supranational Authority Member states often grapple with the balance between maintaining national sovereignty and ceding powers to the EU. This tension manifests in contentious debates over issues like fiscal policy, immigration management, and environmental regulations. 3. Expansion and Integration The enlargement of the EU poses challenges in terms of integration. New member states often bring varying degrees of readiness and differing political landscapes, complicating the pursuit of a unified policy framework. 4. External Relations The rise of populism, along with geopolitical tensions with nations such as Russia and China, challenges the EU's capacity to present a unified external policy. Divergent foreign policy priorities among member states can weaken the EU's bargaining power on the global stage. Conclusion The European Unions structure is intricate, blending intergovernmental and supranational elements while adapting to the needs and aspirations of its diverse member states. It has successfully fostered peace and economic cooperation across Europe, but it is not without challenges. The EU must navigate the complexities of democratic engagement, sovereignty considerations, and external pressures, all while striving for deeper integration and sustainability. As the EU evolves, its ability to adapt its structures and processes in response to both internal and external challenges will determine its future relevance and effectiveness in an increasingly multipolar world.

Reading capital mCapital Mobility and Culture: Beyond Economic Rationalityovements solely through market rules or rational individual assumptions oversimplifies the matter. This is because capital often finds its counterpart in society's historical memory, cultural codes, and even religious references. In this regard, I would like to summarize and convey my observations about how capital exists not only as an economic phenomenon but also as a social subject. The "homo economicus" assumption in neoclassical economic theory positions individuals as rational actors trying to maximize their utility. However, in the real world, the factors that shape capital movements are too complex and multidimensional to be expressed in mathematical models. Frankly speaking, it is quite ironic that this reductionist approach still prevails in the discipline of economics. Douglass North's institutionalist approach shows us that capital is shaped not only by law but also by tradition, belief, and trust relationships. The "path dependency" phenomenon emphasized by North explains why capital does not function the same way in every society. This becomes particularly evident in social structures like Turkey, where traditional and modern dynamics are intertwined. The Difference in Capital Formations in Turkey In the case of Turkey, conservative capital structures that have developed in Central Anatolia appear not only as an economic choice but also as a community, a sense of belonging, and a way of life. Here, capital operates within a solidarity network interwoven with religious discourse, hometown ties, and local values. This capital structure, referred to as "Anatolian Tigers" after the 1980s, has gathered around organizations like MÜSİAD, becoming a manifestation of shared value systems and worldviews. In regions like Marmara, however, capital advances on a more secular, individualistic, and competitive path. This capital fraction, organized under the TÜSİAD umbrella, has a character more compatible with the founding ideology of the Republic, oriented towards the West, and maintains closer relationships with international finance and trade networks. This difference tells us: The movement of capital is related not only to "how much profit it brings" but also to "how it is legitimized in which cultural ground." Social Capital and Collective Solidarity Especially since the 2000s, solidarity mechanisms of local capital groups have gained importance in the face of neoliberal policies that began to find a space for themselves in Turkey. This phenomenon, termed "social capital" in economic terminology, refers to the effect of social networks, norms, and trust relationships on economic development. As emphasized in Robert Putnam's studies, communities with high social capital solve collective action problems more easily and reduce transaction costs. In capital mobility in Turkey, social capital built through hometown ties and religious communities has played a critical role in the success of rising capital groups, especially in Anatolian cities. In this respect, the sources of legitimacy for capital also show regional and cultural differences. While emphasis on "halal earnings" compatible with Islamic values is an important source of legitimacy in conservative capital circles, Western standards and global integration are more important in secular capital circles. Distribution of Industrialists and Businessmen Associations in Turkey on a Provincial Basis(February 2025) Embedded Economy and Social Context The concept of "embedded economy" put forward by Karl Polanyi in his work "The Great Transformation" emphasizes that economic activities cannot be isolated from the network of social relations. According to Polanyi, market society is a modern invention, and historically, economic activities have always been "embedded" in social, political, and cultural contexts. Of course, changes in political and social perspectives have also transformed capital structuring. Today, businesses in Turkey are in search of not only profit maximization but also social responsibility, sustainability, and cultural legitimacy. This transformation raises questions about whether traditional forms of capital are changing or values are being disregarded. The Relationship Between Capital and Public Space Although the concept of capital is interpreted as an accumulation or dynamic system, in Turkey, this situation also brings about an essential and public integration. Criticisms in the past that capital was monopolized by certain segments and that the countryside was kept outside the public structure have now given way to a more inclusive understanding of capital. This is because at the core of capital lies the idea that no region is superior to another and that everyone should have equal opportunities. I believe that the reasons for our society's propensity for economic polarization and our proximity to public capital can be clarified by experts conducting a political-economic survey of approximately 250 years, beyond the recent economic history of the Republic of Turkey. The fact that capital is limited to formal institutions or laws, that is, the lack of social conscience, could be a valid reason for conducting this survey. Conclusion: The Social Dimension of Capital Therefore, capital transforms into a social subject as much as it is an economic object. This perspective helps us better understand the interaction between economic development and capital formations with cultural values. To understand capital movements, we need a multidimensional analytical framework that includes historical, sociological, and anthropological perspectives instead of the reductionist approaches of neoclassical economics. With these feelings and thoughts, I emphasize the necessity of considering capital not only as an economic but also as a social and cultural phenomenon.