Kurdish solution process, a credit positive for Turkey
The economic growth generated from a successful resolution of the conflict between Turkey and Kurdish separatists will help the government’s finances, say experts

The solution process, which refers to government efforts to resolve a decades-old conflict with Kurdish separatists, would be a credit positive for Turkey , according to experts, implying that the economic growth generated from a successful resolution will help the government’s finances.

The solution process appears to be one step closer to resolution after Abdullah Ocalan, imprisoned head of outlawed Kurdistan Workers’ Party, or PKK, called for disarmament of his group on Feb. 28.

"If the solution process is accomplished properly, obstacles before Turkey to pass over middle income trap and increase domestic savings rate will be diminished,” head of Japan Credit Rating (JCR) Eurasia Orhan Okmen said. "Not only residents of East and Southeast Anatolia regions... all Turkish people will benefit from this process and the burden of unproductive incentives in the region on public finance will ease off.”

Paul Fage, Emerging Market Chief Economist at TD Securities, also showed optimism regarding Turkey's economic growth in the eventuality of a successful outcome to the peace process.

"It should boost growth in the Kurdish regions and allow the government to divert resources away from internal security, to more productive areas.” he said.

PKK has fought for an independent Kurdish state since 1984, and the conflict has claimed around 36,000 lives in Turkey, while costing the state approximately more than one trillion Turkish Liras ($400 billion).

However Fage warned that the process was far from a done deal as Ocalan also presented 10 articles as the basis for negotiations. It is not clear whether they will be accepted by the government.

Last Modified: 2015-03-04 10:46:52
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