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                    <text>3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo

duties, to evaluate its effectiveness, discover weak points in its operation and propose
measures
to
eliminate
the
appearance
of
weakness.
In other words, the internal audit activity is organized by the management of the business
entity or other business entities to assist in the evaluation of the operation as a whole or to
individual segments. In terms of business and management functions in enterprises, internal
audit can be monitored as part of steering control, where business functions are subject to
examination in order to perform more efficiently, thus ensuring the functioning of an
information subsystem
which however, the guide provides information for making
appropriate business decisions. According to the definition of the Committee of audit practice
(Auditing Practice Committee-APC) Internal audit is an element of internal control sistem set
by management of the business entity, banks or other institutions for examination, evaluation
and reporting function of accounting and other controls in operation. Internal audit is
introduced in order to improve the decisions of managers or to satisfy statutory requirements.
Institute of Internal Audit in the UK, apart from this definition, the internal template defines
as an independent activity in the corporate assessment of the operation, established as a
service office of the corporation. It is a control function that works by evaluating the
adequacy and effectiveness of other controls and supervision. From these definitions can
freely conclude that the primary task of Internal Audit, through sight and evaluation to assess
the activities of the business entity, to provide adequate assistance to owners and management
of the business entity in order to more effectively engage them to perform undertaken
professional activities. For this goal to be achieved, the internal audit of users of this type of
service offers numerous analyzes, suggestions, recommendations, advice and information
directly related to activities subject to internal audit.

Do Private Savings Offset Public Savings in Turkey?
Muhittin Kaplan1, Hüseyin Kalyoncu, Hasan Göcen1
1Meliksah University, Faculty of Economics and Administrative Sciences, Department of
Economics, Kayseri, Turkey
2Meliksah University, Faculty of Economics and Administrative Sciences, Department of
International Trade and Business, Kayseri, Turkey
Email: mkaplan@meliksah.edu.tr, ,hkalyoncu@meliksah.edu.tr,hgocen@meliksah.edu.tr
Abstract
The issue of whether public savings offset private savings, and visa vice, has important
implications for the effectiveness of fiscal policy. This study examines long-run relationship
between public and private savings rates using annual Turkish data for the period 1975-2005.
The result of Engle-Granger cointegration test has shown that there is no long-run relationship
between private and public savings ratios. However,once endogenously determined structural
break is allowed, the test results confirm the existence of the cointegration relationship
between private and public savings. Econometric estimation of the offset coefficients using
both FMOLS and DOLS yields values of between -0.11 and -0.82. The results also indicate
that the potency of fiscal policy significantly reduced with the liberalization of financial
markets.
230

�3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo

Keywords: Savings, Offset coefficient, Ricardian Equivalence, DOLS, FMOLS.
JEL Classificiation: E6, H6, E21.
1. INTRODUCTION
The relationship between private and public savings has been central issue in both the
theoretical and the empirical literature. The importance of the subject stems from the fact that
the effectiveness of fiscal policy is closely related to the responsiveness of private saving to
changes in fiscal stance. The relationship between lower public deficits and national savings,
however, remains controversial both theoretically and empirically. Theoretically, while
Keynes (1936) assumes no relationship between private and public savings, Friedman (1957)
and Modigliani (1946) develop models showing full substitution between private and public
savings.Barro (1974) also introduced the notion of perfect substitutability between private and
public savings, which is called RicardianEquivalence Proposition (REP).
Although there area number of opposing views in the theoretical literature, ultimately, it is an
empirical issue to determine the extent to which private savings offset public savings. In the
empirical literature, the relationship between private and public savings is investigated for
different countries using different econometric methodologies. However, there is no
consensus over the size offset coefficient (for a survey see Seater, 1993, Holmes 2006 and
Ricciuti 2007). Studies on advanced economies have shown that about half of the change in
public savings is offset by an opposite change in private saving (Masson et. al. (1998);
Hemming et. al. (2002); Holmes (2006); Mandal and Payne (2007); Seater and Mariano
(1985); Leiderman and Razin (1988); Makin and Narayan (2009); De Castro andFernandez
(2009)). Although empirical studies are limited in number, offset coefficients were found to
be higher for developing countries than for developed countries (Loayza et. al. (2000); Lopez
et. al. (2000); De Mello et. al.(2004); Edwards (1996); Masson et. al. 1998; Bulir and Swiston
(2009)).
This study provides evidence on the validity of the REP by applying powerful econometric
techniques of DOLS and FMOLS to time series data a developing country, Turkey. This
paper is organized as follows. Section II sets out the econometric methodology and the data
employed in this study. Section III presents the results. Section IV concludes.
2. Methodology and Data
Empirical studies on testing the REP estimate the following model:
(1)

where
refers to private sector savings as a proportion of GDP,
is public sector
savings as a ratio to GDP; is the long-run public-private offset (substitution) coefficient is
the intercept term and represents usual error term. takes value between 0 (no offset) and 1 (full offset). If
, then a decrease in public sector savings is fully offset by an increase
in private sector savings.
231

�3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo

The data employed in our empirical analysis is an annual private and public sector as a
percentage of GDP obtained from State Planning Organization (SPO) publications for the
years 1975 and 2005. Before estimating the long-run offset function given in equation (1), we
first need to investigate the time series properties of the private and public sector saving
ratios. Results obtained from unit root tests which are performed to determine whether
savings variables have a unit root are presented in Table 1a (ADF, DF-GSL, PP, KPSS and
ERS unit root tests) and Table 1b (Ng-Perron). Examination of the Tables show that the null
hypothesis of unit root could not be rejected for both private and public sector savings ratios.
Table 1a. Unit Root Test Results
PSR

GSR

Constant

Constant and Trend

Constant

Constant and Trend

ADF

-1.432876

-1.133958

-1.473065

-2.322051

DF-GLS

-1.367547

-1.595668

-1.384922

-1.798766

PP

-1.454917

-1.253357

-1.479741

-1.480789

KPSS

0.538798

0.110454

9.029962

0.380299

ERS

8.002194

13.83224

8.084297

12.96383

Note: ADF, DF-GSL, PP, KPSS and ERS stand for Augmented Dickey-Fuller (1979), Phillips Perron (1988),
Elliot, Rothenberg, and Stock (1996), Kwiatkowski, Phillips, Schmidt and Shin (1992), Elliot, Rothenberg, and
Stock point optimal (ERS, 1996) unit root tests.

Table 1b. Ng-Perron Unit Root test Results
MZa

MZt

MSB

MPT

PSR

-3.24375

-1.25975

0.38836

7.53622

GSR

-3.23349

-1.27022

0.39283

7.57531

Asymptotic critical values*:
1%

-13.8000

-2.58000

0.17400

1.78000

5%

-8.10000

-1.98000

0.23300

3.17000

10%

-5.70000

-1.62000

0.27500

4.45000

Note: The number of lags used in Ng-Perron (2001) unit root test is determined by Schwarz Information Criteria
(SIC) and turned out to be zero for all specifications.

Having established that private and public savings ratios are I(1) variables, we need to test for
cointegration between private and public savings to avoid spurious regression.To determine
whether there is long-run relationship among these variables, the Engle-Granger (1987)
methodology is employed. Testing for cointegration within this methodology involves
232

�3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo

extracting the residuals from equation (1) and testing for unit root in residuals. The EngleGranger bivariate cointegration equation and the ADF tests applied to residuals are reported in
Table 2. The optimal lag determined by using Schwarz and Akaike information criteria turned
out to be zero. The cointegration test statistic is -2.086 with a probability value of 0.251
implying non-rejection of the null of unit root in residuals. Hence, there appears to there is no
long-run relationship between private and public sectors savings ratios.
Table 2. Engle- Granger Cointegration Test
Dependent Variable
PSR

ADF test statistics (probability):

Constant

GSR

20.157

-1.009

(0.531)*

(0.101)*

-2.086 (0.251)

Test Critical values:

1% level

-3.671

5% level

-2.964

10% level

-2.621

Note: The values in parenthesis are standard errors. * indicate significant at 1% level.

However, the residual based cointegration tests have a low power in the presence of a
structural break (Gregory and Hansen, 1996). For this reason, we applied Gregory-Hansen
cointegration procedure to test whether there is long-run relationship among private and
public savings. Specifically, Gregory and Hansen (1996) provide the following three
structural break alternatives given by equations (2a-2c):
(2a)
(2b)

(2c)

where D represents a dummy variable equal to 0 if is less than or equal to unknown timing
of change , otherwise it is equal to one; is time trend; other variables are defined as before.
The first cointegration regression (2a) is allowed to have a level break, the second model
includes level shift and time trend and third model includes regime shift variable.
Given that the structural break point is unknown, Gregory-Hansen procedure involves
computing the cointegration test statistics for each possible break and taking the minimum
233

�3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo

test statistics (ADF test) across all possible break points. That is, the break point is unknown
and determined by finding the minimum value for the ADF statistic. The Akaike Information
criterion (AIC) is used to determine the number of lags of the change in the residual used in
computing the ADF statistic and turned out to be zero for all three models. The results of the
Gregory-Hansen Cointegrationprocedure for all specifications indicate that the null of no
cointegration is rejected with an endogenous break year of 1989. The ADF statistics for
equations (2a-2c) are -5.082, -5.34836 and -5.15361 respectively and they are statistically
significant at 5 percent level.
3. Empirical Results
Having found evidence of cointegration and having established that private and public saving
are I(1), the equations (2a-2c) are estimated using the Dynamic OLS (DOLS) proposed by
Stock and Watson (1993) and the FMOLS proposed by Phillips and Hansen (1990). The
results obtained from FMOLS and DOLS estimators are presented in Tables 3a-3c.
Examination of the Tables indicates that while the FMOLS coefficients of offset (betas)
ranges between -0.82 and -0.46, the DOLS coefficients of betas ranges from -0.74 to -0.11
yielding a partial offset.For models (2a) and (2b), coefficient on government savings is
statistically significant at 1% level. However, the offset coefficient is insignificant in the
model (2c). The long-run offset coefficient estimated by FMOLS (DOLS) is -0.458 (-0.11)
but they are both statistically insignificant. However, there was statistically significant (at 5%
level) change in the slope coefficient,
, after 1989 for DOLS estimates. Thus
allowing for the slope change in the regime shift specification in the DOLS case, the long-run
coefficient is -0.72 (
. The structural break dummy, D, is significant across alternative
estimates implying the presence of structural break in the data. Taken together, the results
show that a structural break did occur in the long-run relationship between private and public
saving in 1989.
Table 3a. FMOLS and DOLS Estimates for Level Shift Model, 1975-2005

Constant

GSR

D

FMOLS

DOLS

16.129

15.734

(1.002)*

(0.682)*

-0.709

-0.741

(0.129)*

(0.0967)*

5.112

5.377

(1.268)*

(0.891)*

Note: *, **, *** indicate significance at 1%, 5% and 10% level of significance respectively. The values in
parenthesis are standard errors.

234

�3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo

Table 3b. FMOLS and DOLS Estimates for Level Shift with trend Model, 1975-2005

Constant

GSR

D

TREND

FMOLS

DOLS

18.263

13.892

(1.310)*

(1.393)*

-0.819

-0.577

(0.124)*

(0.148)*

7.320

4.693

(1.503)*

(1.049)*

-0.193

0.137

(0.084)**

(0.088)

Note: See the note in Table 3a.

Table 3c. FMOLS and DOLS Estimated for Regime Shift Model, 1975-2005

Constant

GSR

D

DGSR

FMOLS

DOLS

14.571

11.685

(2.977)*

(2.263)*

-0.458

-0.109

(0.462)

(0.349)

6.627

9.355

(3.032)**

(2.318)*

-0.268

-0.613

(0.483)

(0.322)**

Note: See the note in Table 3a.

4. Concluding Comments
This study examines the long-run relationship between private and public sector saving ratios
using FMOLS and DOLS methodologies. Empirical findings of this study can be summarized
as follows. First, there is no long-run relationship between private and public savings unless
235

�3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo

endogenous structural break in the cointegration relationship is allowed in Turkish case.
Secondly, the extent of offset coefficients ranges from -0.82 to -0.11 supporting weak form of
Ricardian equivalence. Statistically significant change in the slope coefficient in DOLS case
also shows that the substitution (offset) between private and public savings are stronger after
1989. This point is particularly worth mentioning because financial repression in Turkish
economy was fully removed at this date. Thirdly, the results of the paper suggest that the
effectiveness of fiscal policy implementations by the government has decreased significantly
after achieving financial liberalization in 1989.The statistically significant and relatively large
coefficient (
) on regime shift variable can be taken as an evidence for this
argument.
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237

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                    <text>1st International Conference on Foreign Language Teaching and Applied Linguistics
May 5-7 2011 Sarajevo

Do we need a specific grammar for non-canonical expressions? A
description and analysis of definitions of some NC constituents
José M. Oro Cabanas
Departmento de inglés y alemán.
Universidade de Santiago de Compostela
e-mail: josemanuel.oro@usc.es
Abstract: Needless to say that from a linguistic point of view a clear and cut distinction
between canonical and non-canonical expressions is to be made for language explanations
but especially for translation analyses, due to the fact that a good number of realizations
belonging to the Gray Areas (GA) of language may arise from recurrent combinations of
specific types of combined lexical items. The resultant lack of interaction between L1
propositions and L2 representations, identical or not, is often explainable and clarified by
the Error Analysis (EA) method. Data collected and analysed here for this presentation
have been chosen at hazard from different sources.
Key words: error analysis, canonical expressions, non-canonical expressions,
collocations, idiomatic expressions, identity, equivalence, adequacy, diversity, linguistic,
socio-cultural, world referents, linking, cohesion.

Introduction
As the title of this theoretical and analytical proposal indicates, it is our intention to clarify some
controversial aspects of linguistic behaviour within the field of the gray areas of language, to give light both to
understand theoretical proposals and to contribute and correct practical deviations in his type of language
realisations.
This study is based upon a corpus of present day English. We have analysed the general and more
specific behaviour of idiomatic expressions, considering either their semantic or formal different linguistic
nature.
All data have been taken at random, from the Sunday Times and Internet sources. Some oral
productions which I have heard at some time or other while in England, have been included but they are not
representative, since not all data included in the corpus have not been recorded.
It is our intention to provide linguistic explanations of Non-canonical Phrases and illustrations of their
formal, functional and semantic behaviour.

State of the art
For the purpose of this study we need to clarify what do we understand by canonical and non-canonical
expressions.
In English, for example, lame is a simple word or a simple lexical unit of adjectival nature which begins
with a different sound than fame or with a different second sound than lane but which rhymes with them and it
means someone having a deformed leg and duck contains the same final consonantal sound as pack and as park,
but they differ on their vowel phonemes and their initial consonantal segments, and means a type of swimming bird
lamed in one leg, but when we say that Bill Clinton behaved as a LAME DUCK in his affair with M. L., it seems a bit
difficult for natives and especially for non-native to predict the meaning of the whole out of the meaning of the parts,
as what it means is [ineffectual person, one who has no power to bring about change]. This kind of knowledge of the
vocabulary belongs to the study of the mental lexicon, an area which has, over the years gradually emerged from
obscurity to occupy a central stage in the study of language.
The expressions of all levels which show some kind of formal or semantic atypical deviation might be
considered non-canonical. This items can be organized in groups forming new lexical items by extension and
movement far from canonicity at least from a semantic point of view.
In English grammars, these expressions are often referred to, among other labels, as: idiomatic expressions
and figures of speech. They are usually the very last result of linguistic involution with cognition and they represent
the most advanced linguistic representations elaborated by mental processes, resulting in realisations of the type a),
and resulting from processes such as those in b)
2
a) Idioms, collocations, figures of speech (metaphors, etc.) Some are far from formal canonical representations and
others, though formally canonical, are far from the basic meaning of the words composing the resulting lexical unit.

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b) and also the misuse of the language, expansion, movement &amp; enlargement of basic meanings, the tendency to
economise, etc.
They include a great variety of linguistic realisations, showing both typical and atypical behavior as far as word order
and meaning are concerned, such as: idioms, proverbs, sayings, collocations, inner terms, etc. Some scholars
distinguish between canonical expressions or free combinations, and non-canonical expressions (including in the latter
are collocations or in Chomsky's terminology loose associations between words and also those items characterised by
showing some sort of either formal or/and semantic idiomacity). Besides, terminology varies according to the different
linguistic levels under which language was/ is and will be analysed.
Thus, canonical expressions refer to regularity of behaviour and non-canonical expressions to irregularity and
in most situations to idiomacity. Besides there is a formal view and a semantic view of language which is to intervene
in their analysis.
It is a general idea that description of language and linguistics is a technical activity consisting in a system for
choosing, realising and signalling meanings as result of linguistic behavior, through formal realisations, following
either canonical patterns or belonging to the gray areas of language.
Due to several aspects that will be analysed all along this paper, a rule-based description of the facts is very
difficult as cause-time effects change the language. The evolution and reactions of the individuals conforming the
society itself have a lot to do with it as well.
As is well-known, the English language, as well as many other languages, varies in space (USA, Australian,
African and other Englishes of the world). Besides, variation in situation has to be taken into account as different rolls
change linguistic realisations in the home, office, police station, park, etc. given rise to hurried, unhurried and formal
spoken realizations and also to written counterparts in certain situations.
Lexical variation [Morphological, Syntactical and Semantic variation], according to style or even location
seems to be normal though sometimes unnatural. In this sense you can buy a condom, French letter - prophylactic rubber - sheath - condom - Durex in Britain and other English spoken places but you might buy a frenchie1 using
colloquial Australian English, a hypochoristic form from French which makes the word condom be considered of the
nature of a pet name. This way of showing pejorative connotations denote an irregular behaviour, very often capricious
of the community to express situations through language data and this type of actuation is what is provided by concrete
manifestations of language as far as arbitrariness and unsystematic procedures are concerned. Besides, all this deserves
a specific treatment that would make a theory of lexicon meeting levels of adequacy more and more complex.
Thus, we will be immersed within the concept of appropriateness rather than correctness considering that
languages vary in time, space and situation, analysing inherent properties in English and specific difficulties which
arise during the process of translation to other languages.
Research shows, on the one hand, that language expressions which follow canonical patterns, morphologic general
patterns to form the items which composed them, cover a wide variety of meanings within the same pattern through
common syntactic processes such us substitution, addition, deletion, elision, combination andtransformation. NonCanonical expressions, on the other hand, do usually show a much more restricted behaviour from a lexical point of
view. In the tradition, NCs are conditioned by their idiomatic nature and they are treated as irregular items. In some
cases they cannot be altered; in other cases their meaning cannot be deduced adding together the meaning of the items
that compose that piece of language. Non-canonicity moves from word-level to phrase and clause level; some of the
latter labels have to be treated as proper lexical items, at least from a semantic point of view. They often show formal
irregularities of specific performances which block the general behaviour of similar canonical patterns. A great many of
them do not usually affect the use of normal language (written and spoken); they are most often used for literary
purposes and they are often included under the general term: figures of speech.
1 Frenchie (plural Frenchies)
1.Alternative spelling of Frenchy.
2. (Dated) (Australian) a condom, abbreviated form of French letter. Retrieved from
"http://en.wiktionary.org/wiki/Frenchie"
3
And the question is, are these expressions so abundant and complex in the English language to deserve a specific
treatment at least for advanced native and non-native students of English?
Do we really need specific grammar books, essays or a thorough research on opaque idiomatic expressions? Should
grammars be categorised as canonical and non-canonical, assigning the former for elementary levels and the latter
for advanced students? In the last decade some scholars have intended to grammaticalise differently the spoken
medium from the written medium; others have suggested the need of specific grammars for different standard
representations. In general, we can say that non-canonical expressions are structure dependent on fixed canonical
patterns from a formal point of view and that the same canonical structure can be subject to various formal
modifications and to semantic expansion. Canonical expressions, however, are used as units of form and meaning
showing certain limitations at some or all lexical levels,

Method of the Study
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The central core of research for this descriptive study is the morphological, syntactic and semantic blocking of
general principles applied to canonical expressions in English, or as it might be called in traditional references
focusing on grammar behaviour, especially in relation to 'the breaking off the rules‘ concerning a good number of
realisations and the specific behavior of non-canonical lexical items. The fact that languages can be considered of
unlimited linguistic production leads us to distinguish noncanonical expressions from regular expressions. A regular
expression is a pattern that describes a set of strings. In concrete manifestations of language regular expressions are
constructed in a similar way to arithmetic expressions, by using various operators to combine smaller expressions.
For example, a sentence is said to be canonical if it follows the normal patterns that a language follows; thus, it
might consist of a predicate (the essential constituent), and the sometimes optional ones, the subject and
complement. At the level of phrase that constituent which contains or is not restricted to include the normal
constituents the various types of phrases do accept. At the level of word, those realisations following the
conventional rules of formation.
Lexical items at any of the levels above, which do not follow formal or semantic conventional parameters, are
considered to belong to the gray areas of language and to be non-canonical from either a formal or a semantic point
of view. Though they can be considered to be of irregular nature, they do not belong to the field of irregularities
already incorporated into the language. From the point of view of teaching, this field in general, has not been
exhaustively analysed since it has been maintained as something that has to be learnt by heart. This is probably true,
due to the fact that attention has been paid to form, and to internal meaning deciphering, but not to internal
grammatical understanding. It is our purpose to provide new ways of focusing the treatment of these structures in
combination. To prepare this study the following steps have been followed:
-to-date data in Mass Media (written and oral data) and other sources, such as recording
spontaneous oral data, lectures, and TV material.
linguistic levels
and some of the main ways of focusing them.
order to have information about
the number of occurrences.
g them into general or specific principles

State of the art
Until now, formal canonical expressions, with the exception of a great number of atypical semantic deviations,
would depend on grammar centrality as interpreted during the classical and Chomsky‘s earlier period. Ross (1967),
for example, proposed several syntactic constraints on the operation of grammatical rules. Constraints 4 on canonical
expressions have been stated either in purely syntactic terms, which reflect organising principles apparently unique
to grammar that are assumed to be universal or applying in semantic concepts, especially those concerned with
meaning interpretation. Within the GAs of language, constituents that form lexical modules proper in their own
right, at least from a semantic scope, do often range from a transparent or semi-transparent interpretability to the
totally opaque one. Especially the latter, are formed by units which very often present problems for internal
interpretation, due to the fact that they are normally fixed expressions, which are not frequently used, that refer to
very specific and concrete actuation of a community or of individuals in a community. Canonical expressions are
regular expressions. A regular expression is a pattern that describes a set of strings. Regular expressions are
constructed analogously to arithmetic expressions, by using various operators to combine smaller expressions. These
expressions –from a lower to a higher rank- follow general formation, realisation and functional patterns, either
alone or in combination. In general, they do not present problems neither for the native users at any linguistic level
nor for foreigners understanding of most constructions during the learning process. They normally range from basic
and transparent communicative messages to semi-transparent interpretable realisations. They constitute essential
basic communicative constructions for all or most communities, as shown in
table 1
SUBJECT Verb Indirect Object Direct Object
ENGLISH I BROUGHT YOU [FOR YOU ------THIS MATERIAL
SPANISH

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ESTE MATERIAL
(YO) TRAJE [OS ]PARA VOSOTROS--GALICIAN (EU)
TROUXENVOS
ESTE MATERIAL
RUMANIAN TI-AM
ADUS
TI-¿
ACEST MATERIAL
Table 1: Sentence pattern IV

The corpus of data
Put at its simplest, the data, object of this study, were the result of an exhaustive and contrastive reading as well as of
the analysis of different textual sources. Examples for this study were culled from daily press mass media and oral
sources chosen at hazard, at an initial stage,
ing should distinguish specific
principles from general ones or rules,
rences, which could reject this
hypothesis.
The corpora in GA are being annotated at various levels and in two mediums to enhance their value in linguistic
research. At the written level, reportage‘s from Internet: The Sunday Times and other Internet sources, prose and
poetry literary texts and students' essays have been analysed. Annotations include the following types of noncanonical pieces of language inserted in canonical texts and they are tagged for word class: o Idioms (I):
(Transparent (T); Opaque (O), Extended from or in relation to a Canonical referent
(ECR)
o Clishés (CL)
o Non-canonical expressions proper or inner terms (NC)
o Collocations (CO)
At the spoken level, casual conversations, Academic lectures and some TV programmes have been and will be taken
into account for this purpose, of which only a few samples have been recorded for this purpose; Some instances have
been recorded but the majority of them were transcripted directly.
The tagset is largely based on the way Quirk et al (1985) A Comprehensive Grammar of the English Language has
presented canonical realisations, and previous works on statistical data, as well as those of Cofer
(1975), Oro (1987, 1988,1989) and Biber et all (1999) The Longman Grammar of English.5
The main intention is to propose a suitable method to study the gray areas of language and through this contribute to
interpret some of the inherent features of this type of expressions. The unscripted data to be analysed thoroughly in
order to select scripted data were selected at random in order to avoid subjectivity and conditioning. Put at its
simplest it is our purpose to propose a clear idea in the sense Pierce2 1878: 286 has put it, of the behavior of some of
these units of language which might behave as lexical items proper from a semantic point of view, from a formal
point of view or both.
Table nº 1 labels the sources used for the selection of one of the types of items of our corpus of data and shows the
number of occurrences of one of the four types of lexical items, idioms, compiled and studied for this purpose.
Those showing an opaque semantic nature have been distinguished from those with a semi-transparent nature (see
tables 3, 4 &amp; 5). The connection between the frequency of the different types of non-canonical expressions presented
in spoken and/or in the written medium reflects their difference in use as well as their complexity and their
importance for instructional or informative purposes.
IDIOMS
Spoken
Texts
(70)
Dialogues (20) Private (10) face-to-face conversations 6
Public (10) classroom lessons
broadcast discussions
10
4
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Monologues (50)
Unscripted (20) spontaneous commentaries
demonstrations
15
5
Scripted (30) Broadcast film
broadcast talks
non-broadcast speeches
7
11
12
Written
Texts
(430)
Non-printed (45) Non-professional
writing (45)
student essays
student examination scripts
internet mail
15
10
20
Printed (100)
Non-Academic writing
Reportages
The Sunday Times &amp; internet
sources
(239)
CRYING OF
A LOT
PRAIRIE SKETCHES
Idioms at clause level
(73)
(RP) Daily press
( RI) Internet
(INS) Daily press
(INS) Internet
26
47
0
0
Idioms at word level
(6)
(RP) Daily press
(RI) Internet
(INS) Daily press
(INS) Internet
3
3
0
0
Idioms at phrase level
(24)
(RP) Daily press
(RI) Internet
(INS) Daily press
(INS) Internet
24
0
0
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0
Verbs and particles
(86)
(RP) Daily press
(RI) Internet
(INS) Daily press
(INS) Internet
66
14
0
16
Creative writing
--20Idioms at clause level
Idioms at word level
Idioms at phrase level
10
0
10
Table 2: sample of the corpuses studied for unit one
2 A clear idea is defined as one which is so apprehended that it will be recognized wherever it is met with, and so
that no other will be mistaken for it. If it fails of this clearness, it is said to be obscure.
6

Sampling selected at hazard
The corpus contains samples of speech (SD) and writing (S.T. /CDI) by both males and females, and it includes a
wide range of age groups. The following behave, belonging to our spoken corpus of data, very much in the same
way, at least from a semantic point of view. Some of them, for example number 7 below, no doubt, do block the
general morphological rules of language behavior, as far as the formation of verbs is concern.
1. You put all your generative knowledge before the horses, etc. (SD)
2. Many kids who run away from unhappy homes discover they‘ve jumped out of the frying pan and
into the fire. (S. T.)
3.
a) You know, he is at it again but he really wants you know just to sit down (SD)
b) Like they just talk about how they both feel
a) Out of the frying pan into the deep freeze this time
4. Teaching at the local college is his bread and butter.
5. Unemployment and taxes are the bread and butter issues of this campaign. [CDI]
6. At the moment, she says, all Saints are flavour of the week (S.T. teen. 8-9:11)
7. You can chomsky-adjoin the sentence now.
In spite of being grammatically peripheral and somewhat or completely idiomatic, they form part of language and
they make us believe that some of them will probably have their own place in grammars in a near future.
Table III, below, includes examples of non-canonical expressions or inner terms from a formal point of view. They
include expressions which might be considered by some as atypical expressions or even errors from a grammatical
point of view. In general, they are specific realizations which block realizations considered to be canonical. Thus,
considering these realizations, a common question arises: is a new grammar needed for spoken and/or informal
writing? The number of occurrences, as shown in table 1, and examples used in this paper will prove that there is a
tendency to use utterances which do not follow the common patterns grammars of English tend to teach us: *I seen
him, etc.
Spoken language
Sources Examples
(The Devil‘s own)
8 Sheila, pass the vegetables, please. -Yes. May I serve you?
9 Because they say the word peace, you know, but end of the day all they
want is surrender.
10 -D´you wanna know what´s the single biggest problem trying to raise money
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in this country?
11 -How much time? -Six, eight weeks.
Written
language
Poetry
(Prarie Sketches: 64)
12My Sara is as rare as Indian Pearl!
Internet
&amp;
Non academic
writing
13Don't have the cable hook-up yet?
http://www.lfmn.com/r/sr.asp?u=100374762&amp;v=4911&amp;s=73&amp;url=1&amp;p=13&amp;c=6
033
14A new ABCNEWS poll finds patients‘ rights and Social Security outranking
taxes and gun control.
15What's going on at the OTA http://www.hcu.ox.ac.uk/ota/public/index.shtml
(Saturday , 11th. September, 1999)
16What's up?
17What's up with 9/9/99?
18What about my cup of tea?
19 I seen him (student‘s essays, grammar sampling, etc.)
[Reportages,
Daily press]
20 the number of five to seven-year-olds in large classes, (...) (S.T. 26th December)
21 The Roslin researchers say that overall their results show that (...) (S.T. 26th Dec.)
22 (...) but it is a fraud on a consumers. (S.T. 26th December)
23 Villa continued to create the better opportunities, and (...)(Sport,p.1).(S.T.8Nov.1998)
Table3: examples &amp; sources
The examples in table 3 show salient deviations from normal linguistic patterns and as Quirk and Startvik (1966),
among others, would indicate, they do not form part of a ‗linguistic core‘, as for they would block general linguistic
patterns of structures and vocabulary applied to use.
7

Findings and Discussion
In this part of the study, questions concerning whether the grammaticality, acceptability and potentiality in use of
some of the expressions included can, of course, be formulated and discussed.
A good number of expressions of various ranks (word, phrase, sentence) of idiomatic nature or showing formal
irregularities have been found and incorporated to our data corpus.. Among the former the following types will be
briefly analysed here:
- Idiomatic and figurative expressions in general, that is expressions the meaning of which cannot be deduced adding
together the separate items which make up that piece of language. Their formal behavior is fixed. Thus, some accept
optional modifiers and others do not. They do not accept determiners variability, Plurals take O article. Numeratives
are nominalized. The syntactic order cannot be altered. In sum, they cannot be modified by any of the syntactic
processes which modify canonical expressions. They include: Proverbs, proverbial expressions, anti-poverbs or
preverbs3, Phrasal verbs4 [Phrasal: look after; prepositional: look up; and phrasal-prepositional: look forward to].
Non-canonical expressions proper or inner terms which follow formal canonical patterns or not, such as: (minor
sentences : just a minute, ) (what about‘s types) (if only‘s) etc. (NC) expressions include expressions5 of what
about's type, as in What about the financial assistance?; expressions like if only (...), as in If only we haven't lost our
way; here one needs a type of tense control, but one is free to fill the gaps very freely; For example, Spanish and
Galician languages would follow different patterns to represent the identical lexical meaning, a canonical expression
in the former and a subjunctive mode in the latter; or even expressions like 'The more (....) the more', whereas,
certainly you expects a comparative form as the second constituent as in: The more you ask the less you get or Better
for women better for men (S.T. Title of the article: Teen girls urged to admire Role Model Spice) - Collocations:
[sequences of words or terms that co-occur more often than would be expected by chance: so as to, by accident,
strong tea, heavy drinker, black shoes, etc] The collocational process is a general linguistic process in language
behaviour that can be split into: The associational process which ranges from loose to tight lexical units and derives
into proper collocations or idiomatic phrases, normally set phrases or compounding. In most occasions they
constitute the first step for the compounding resultant state (well known rd
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ard-inlaw; bull‘s eye), which is the result of combining two or more words to form a single unit. Clishés; expressions
whose basic and conceptual meaning has been lost. They are used as connectors in conversation and their use should
be avoided in the written medium, especially in formal language in favour of proper linguistic connectors. These are
ready-made expressions but not necessarily idiomatic. From a formal point of view they are usually built up with
canonical constituents; However, some are non-canonical expressions in the sense that they block the general
principles of grammar, as in A little knowledge is a dangerous thing [kowdlege for learning] or in The Devil can
quote Sripture for his purpose [quote for cite] though it can be argued that quote is common in AE, where they don't
say cite).
Due to semantic variation by extension and movement of meaning a normal canonical expression, or a minor
sentence can very easily become clichés when they lose their conceptual meaning and they are applied for a different
purpose as in ‗Can I help you?‘ or ‗Good morning!‘. In general, a cliché is a metaphor characterised by its overuse.
3 According to Mieder 1985:119; also in Mieder 1993:24, proverbs, i.e. unchangeable sentences and proverbial
expressions, i. e. sentences which permit alterations to fit their grammar [sentences of the folk which contains
wisdom, truth, morals, and traditional views in a metaphorical, fixed and memorised forms, handed down from
generation to generation]; antiproverbs or preverbs [the transformation of a stereotype word sequence – as e. g. a
proverb, a quotation or an idiom for humorous effect. To have full effect, an anti-proverb must be based on a known
proverb
4 According to Tom McArthur: (...) the term ‗phrasal verb‘ was first used by Loagan Pearsall Smith in ―Words and
Idioms‖ (1925), in which he states that the OED Editor Henry Bradley suggested the term to him]
5 Here there can also be included expressions which block the general syntactic principles in relation to canonical
expressions, as in: "Historians will look back on this project as most important thing we did (S.T. Chronicle Future,
p.12), (...) but it is a fraud on a consumers. (S.T. 26TH DECEMBER)
8
Table 4 shows a good number of items which can be categorised under any of the labels indicated above. Some are
considered opaque6 as the meaning cannot be deduced out of their separate parts and others are considered as
semitransparent7 as they can be deduced adding together the parts.
This is important for both native and non-native speakers. However, non-native speakers would have more problems
for contextualisation. Native speakers, in general, do have some sort of probabilistic relationship which might help
them to deduce the meaning of both types, opaque and semitransparent, after considering them in detail.
TYPE OF ENGLISH EXPRESSIONS TRANSLATION INTO TYPE EXPRESSION MEANING SPANISH
GALICIAN
IDIOMS Kick the bucket To pass away
To die
Estirar la pata,
palmar
Estirar la pata,
palmar
To be sent to Coventry To be excluded from society
Take after To take care, to care Cuidar Coidar
COLLOCATIONS
Lame duck Inconclusive Patoso Patoso
CLISHES
Can I help you? High!,
Hello!
Good morning
¿Qué desea? ¿Qué quere?
INNER TERMS
What about you? And you?
what do you ---- of this, about it?
Y tö, que? E tì, qué?
Table4
Table 5, below, includes idiomatic units consisting of two or more lexical or grammatical units, which behave
formally and/or semantically differently. For example, whereas prepositional verbs, consisting of a verb + a
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preposition which cannot be separated in ‗construtctio‘, as in he is looking after the dog and they need to take a
direct object, phrasal intransitive verbs can be separated as in he turned it down.
It also includes different types of idiomatic expressions which range from collocations to compounding and in spite
of being formed by more than one lexical constituent. The translation into Spanish shows, as well as many other
languages, that attending to the basic or conceptual meanings of their collocates might lead to funny realisations in
the other language. In spite of this, some are integrated into other languages, especially those used for commercial
purposes. There are many cases of calques from English into Spanish but also of loan translations as illustrated with
the word for word translation of ‗hotdog‘ into Spanish. Very specific cases which block all the general formal
patterns of word-formation are the English resultant noun ‗bull‘s eye‘ unique compound made up 6 Opaque
realisations:
- can't be deduced adding together the meaning of the parts, [put away/put something where it belongs]
- can't be deduced linguistically, as the meaning goes beyond its conceptual meaning.
Some can't be deduced through socio-cultural understanding [battling windmills]; They probably have to be learnt as
separate lexical units, by heart and the meaning goes back to diachronic meaning, at least that of one of the parts that
compose
the whole.
7 Transparent realisations: the meaning can be deduced from the separate parts that constitute these pieces of
language,
[take care/ care]
- from an already fixed idiomatic expression by extension [her children had flown the nest/ Flow from one place to
another]
- from the expansion of a canonical term (...) towers above (One computer manufacturer towers above (=is bigger
and more
successful than) all the rest). [I usually + adv/prep] from socio-cultural undefined interrelations (nest egg)
9
from a Saxon genitive or the Spanish blended one puenting (bungee jumping), i.e. describing the action, adding the
English –ing form to the Spanish noun Puente(bridge).
NON- CANONICAL EXPRESSIONS IN ENGLISH [OF (O) OR (ST) INFORMATION]
IDIOMS
PHRASAL
VERBS
LEXICAL ITEMS MEANING
O To put away
to give up
to account for
to look into
to pass away
to take after
To put something where it belongs
To stop
To explain
To examine
To die
To care
ST To take care To care
SAYINGS O [kick the bucket *kick the enormous bucket]
Teaching at the local college is his bread
and butter.
Bright and breezy
Stand head and shoulders over
Straight from the horse‘s mouth
Flying by the seat of your pants
A blind alley (INL)
A close shave/call (INL)
A red letter day (INL)
Pull someone‘s leg
To die
Basic needs of life
To be happy and confident.
Clearly superior to someone or something.
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Straight from the source, right from the origin.
(To do something without planning, (SD)/
Decide a course of action as you go along.
-A situation or method that you have tried and
discovered to be of no use. (CDI),
-(A situation where something unpleasant or
dangerous nearly happened. (CDI),
-(A day that is very important or very special.
(CDI).
[informal: to tell someone something that is
not true as a way of joking with them]
ST Run up a bill and run up a big bill.
With friends like these (who needs
enemies),
To put people on a pedestal‘
To put in prison
Still in the darck
Be in the blank
To be in the red
Accumulating a debt
friends behave like your worst enemy
To admire
Imprison
Still unsure about it
(be operating at a profit)
In debt
Table 5
(CO)8, a problematic linguistic term is interpreted as a lexicalization of two or more lexical and/or grammatical
items put together producing one single unit of meaning. The concept of (CO), which plays an important role in
British linguistics where it originated, seems to be vague and neutral in dealing with word classes and to which
element acts as to modifier or head. This term, however, is one of the key concepts of functional 8 Even though the
invention of the term collocation as applied in linguistics was attributed to Firth and extended by Halliday, the
process itself has worried many scholars as mentioned above since classical times. Mellville, A. 1946. Spoken
English. An Idiomatic Grammar for foreign students. Edimburg: Oliver and Boyd, (originally designed as a manual
of English Grammar for Dutch students), includes a good number of examples with collocates:
1) I have never seen him so out of temper (angry); 2) The violinist is out of the tune (discordant, not in harmony)
In fact he concentrates on collocates of various kinds, combined with prepositions, compound conjunctions and verb
combinations. Neither must one forget the non-canonicity of certain verbs in English, commonly known as
irregulars.
10 grammar proposed by Firth9 and developed by Halliday. Probably we could, even say that it has its origins in
wordassociation of the syntactic type in spite of the word-class, due to the fact that they are paradigmatically linked
by this process. According to Firth, it seems to be the case that we know a word by the company it keeps and he
considers collocation to this 'relationship between words', to be part of its meaning (see also, Palmer 1976: 94ff,
Carter 1987: 36 ff. And 48 ff.)
In sum, the idea of (CO) is extremely far reaching, and furthermore, the users must realise that some language is
deliberately eccentric and creative in that kind of way. Not all languages ( as can be seen in the Spanish translation,
in the table below) would use the same formal correlates to represent these semantic lexical units.
NON- CANONICAL EXPRESSIONS IN ENGLISH [OF (O) OR (ST) INFORMATION]
COLLOCATIONS
COLLOCATIONS
LEXICAL ITEMS MEANING
O
Lame duck (patoso *pato cojo)
Clever bunny
A person or thing that is not able to
function properly
What a clever boy!
ST
709

�1st International Conference on Foreign Language Teaching and Applied Linguistics
May 5-7 2011 Sarajevo
Fill in the gaps (cubrir los huecos)
Solve a problem (solucionar un problema)
Cure a decease (curar una enfermedad
So as to ( de manera que, para)
rough draft (borrador)
Fill in the blanks
Find a solution, resolve
Restore to health, make well.
In order to, in order that, so that
A plan or sketch
COMPOUNDS
O
Hotdog [perrito caliente]
Greenhouse [invernadero]
Bull‘s eye [ojo de buey]
Frunkfurter sausage in a bun
A house where vegetables grow
Small circular window or opening
ST
Dog days (dias de perros)
A blind date ( Una cita a ciegas)
A blind spot (Un punto ciego)
A red-letter day (un dìa especial,
memorable)
A blind alley (Un callejñn sin salida)
Very hot days in summer
Date between two people who have
never met
Area in the retina of the eye which
cannot see.
A special day
A route that leads nowhere, a dead
end
Table 6

Conclusions and Recommendations
On the basis of this empirical research, we can conclude that only some of these expressions are to be considered
lexical items proper. The majority of them follow normal formal canonical patterns and meaning may rouse raging
from the transparent or semitransparent of the constituents to the totally opaque, or they keep on going with the
conceptual meaning. Opaque expressions are more formally restricted than semitransparent ones. Whereas he former
would not accept transformation on some way or other the latter can be transformed to widen or reduce the intended
meaning.
Results show that the collocational process is a general Linguistic process in Language behaviour that can be split
into: the associational process and the resultant new lexical units: proper collocations or idiomatic phrases, normally
set phrases, but other processes of language are as well involved in. In general this process can be understood as the
previous step for compounding, i.e., the movement from syntagmatic relations of language to a paradigmatic state or
function.
Everyday non-canonical and idiomatic phrases are an integral part of the English language that are used and heard
constantly. Some of them are very common phrases widely and frequently used, well understood and generally
agreed upon meaning. However, very often, the widely understood meaning of the phrase seems to have nothing to
do with the words that compose the phrase and they keep forming a big area of realisations in both oral
and written mediums. Given that language is in constant development, they need to be revised constantly in order to
incorporate new realisations, but care must be taken, as some only enjoy a certain period of time. Now and thanks to
development of technology this task, in spite of its complexity is easy to hold.
In general one can assume that those expressions are to be treated independently both for theoretical analysis and for
tuition purposes.

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12
Statistics (all included)
Pages: 11
Words: 5656
Paragraphs: 441
Lines: 924

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                <text>Needless to say that from a linguistic point of view a clear and cut distinction  between canonical and non-canonical expressions is to be made for language explanations  but especially for translation analyses, due to the fact that a good number of realizations  belonging to the Gray Areas (GA) of language may arise from recurrent combinations of  specific types of combined lexical items. The resultant lack of interaction between L1  propositions and L2 representations, identical or not, is often explainable and clarified by  the Error Analysis (EA) method. Data collected and analysed here for this presentation  have been chosen at hazard from different sources.</text>
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                    <text>BİLDİRİ ÖZETLERİ - UTEK 2014

terms of language and style regarding these works which have important
information of Turkish language and the history. It will be generally evaluated
in this study through language and style in the ghazavatnamahs which are
written in 15th and 16th centuries. It will be tried to explain how these works
stand out and what similarities and differences they have.)

DOBRUCA TATAR TÜRKÇESİNDE HAYVAN ADLARIYLA
KURULMUŞ ATASÖZLERİ ÜZERİNE BİR DEĞERLENDİRME
Sinan UYĞUR
Artvin Çoruh Üniversitesi, Artvin /Türkiye
Anahtar Kelimeler: Dobruca Tatar Türkleri, Dobruca Tatar Türkçesi,
Atasözleri.
ÖZET
Asya’nın ortalarından gelip Dobruca’yı yurt tutan Tatar Türkleri,
beraberlerinde kültürlerini ve kültürlerinin yansıması dillerini de bu
coğrafyaya getirmiş ve kültürlerini ve dillerini burada geliştirip yaşatmaya
devam etmişlerdir. Tatar Türklerinin sözlüklerindeki her bir kelime onların
geçmişini aydınlatacak bir fener hükmünde olduğu gibi, onların çeşitli
mevzularda anlamı güçlendirmek, ifadeyi canlandırmak için kullandıkları
deyimler ve özellikle de atasözleri milletin geçirmiş olduğu safahatı gözler
önüne sermede yararlanılacak öncelikli kaynaklardan biridir. Bunlardan
hayvan isimleri ile kurulmuş atasözleri ise mazide milletin hayvanlar ile olan
münasebetini, milletin yaşantısını bunanla birlikte müşahede becerisini
yansıtması bakımından önemlidir. Daha da önemlisi bunların Tatar
Türklerinin çeşitli kavramlara karşılık bulmada soyutlama becerilerinin ne
denli olduğunu ortaya koymasıdır. Bu bildiride Dobruca Tatar Türklerinin
atasözleri taranarak elde edilen hayvan isimleriyle kurulmuş atasözleri ve
hayvan isimleri çeşitli açılardan değerlendirilecektir.

49

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                <text>Asya’nın ortalarından gelip Dobruca’yı yurt tutan Tatar Türkleri,  beraberlerinde kültürlerini ve kültürlerinin yansıması dillerini de bu  coğrafyaya getirmiş ve kültürlerini ve dillerini burada geliştirip yaşatmaya  devam etmişlerdir. Tatar Türklerinin sözlüklerindeki her bir kelime onların  geçmişini aydınlatacak bir fener hükmünde olduğu gibi, onların çeşitli  mevzularda anlamı güçlendirmek, ifadeyi canlandırmak için kullandıkları  deyimler ve özellikle de atasözleri milletin geçirmiş olduğu safahatı gözler  önüne sermede yararlanılacak öncelikli kaynaklardan biridir. Bunlardan  hayvan isimleri ile kurulmuş atasözleri ise mazide milletin hayvanlar ile olan  münasebetini, milletin yaşantısını bunanla birlikte müşahede becerisini  yansıtması bakımından önemlidir. Daha da önemlisi bunların Tatar  Türklerinin çeşitli kavramlara karşılık bulmada soyutlama becerilerinin ne  denli olduğunu ortaya koymasıdır. Bu bildiride Dobruca Tatar Türklerinin  atasözleri taranarak elde edilen hayvan isimleriyle kurulmuş atasözleri ve  hayvan isimleri çeşitli açılardan değerlendirilecektir.</text>
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                    <text>2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo

Does (De)regulation Matter in Financial Crises?
Examining the Obama Administration's New Bank Plan
Talat ULUSSEVER
Dr.,Department of Finance and Economics
King Fahd University of Petroleum and Minerals
Dhahran, Saudi Arabia
talat@kfupm.edu.sa
Recai AKYEL
Dr., Office of the President
The Turkish Court of Accounts
Ankara, Turkey
recaiakyel@hotmail.com
Yusuf TEKĠN
Dr., Faculty of Security Sciences
The Police Academy
Ankara, Turkey
ytekin@pa.edu.tr

Abstract: The fact that financial crises have happened with regular intervals and probably
will happen in the future in much the same way has attracted great attention on the
dynamics of crises from scholars as well as policy makers, and causes and remedies have
been intensively discussed in the literature. Some have argued that deregulation of
financial markets have significantly contributed to the recent crises, and thus they very
much favor for sound regulation on financial markets, especially on big investment banks.
Conversely, the other view strongly disfavors the aforementioned vision, and supports the
liberal idea that the state should not intervene the market with any tool including the
regulation. The objective of this study is to analyze the dynamics of the recent crises,
investigate their causes, and discuss whether the states can be held responsible against
them in the sense of (de)regulating the markets and ensuring the stability of the system.
As a case study, the Obama administration's new bank plan is examined to shed lights on
the current discussion.
Key words: Financial crisis, (de)regulation, Obama's new bank plan

Introduction
The recent financial crisis has been widely acknowledged as the most serious one since the Great
Depression and thus world financial system, and particularly the world banking system, has been affected as bad as
any since the stock market crashes of 1929. Accordingly, banking systems in many countries have suffered from an
impaired ability to play their vital role in credit extension to the real economy. Despite the fact that the world
political and financial systems, particularly US system, have been tilted in favor of business deregulation and against
new rules, the recent global financial crisis that has negatively affected almost whole society has somehow changed
the thoughts. Now, governments all over the world, especially the US government, have been forced to intervene in
the highflying financial industry to avert an economy-wide crash, which will typically result in an expansion of the
government's role in financial markets. Obviously, if not directly entering the market, the government's role in
financial markets means more regulations. In other words, the new popular motto is regulation in deregulation out.
Needless to say that new regulations should not ignore important concepts like efficiency and effectiveness.

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It is a well-known fact that financial markets, especially banks, are subject to more developed regulatory
mechanisms than other sectors of the economy in order to safeguard the public's savings, bring stability to the
financial system, and prevent abuse of financial service customers. In fact, banks lie at the heart of the world's
financial system and have indispensable functions in business life. In addition, banks play crucial role in the
economic life of the nations. The economic performance of the nations, thus, is strongly related to the soundness of
their banking systems. Although banks create no new wealth, their borrowing, lending, and related activities
facilitate the process of production, distribution, exchange and consumption of wealth. Consequently, banks are
considered as one of the building blocks of the nations' economic development.
No need to mention that the size, variety and characteristics of financial transactions may produce awfully
harmful effects on the entire economic system, which justify the more developed regulatory and supervisory regime
of the banks and financial institutions, with the explicit objective of ensuring the soundness and stability of the
system. There are countless examples of how weak or incomplete regulatory mechanism of banks and financial
institutions has created dramatic financial, economic, and social problems. However, regulation is still an unpleasant
word on many people's eye, especially on managers and stockholders, who often see the rules imposed upon them by
the governments as costly, burdensome, and unreasonably damaging to innovation and efficiency. This state of mind
with help of some popular concepts of economics and finance, like freedom, efficiency, international competition
and economies of scale, gained momentum in 1980's, and the rules of the game in financial arena rather changed in
1990's; more and more financial service regulations were set aside or weakened, and free market place, not
government dictation, was relied upon to shape and restrain what financial firms could do. A well-known example is
the 1999 Gramm-Leach-Bliley Act, also known as Financial Services Modernization Act. This act removed the
regulatory walls of the Glass-Steagall Act, which is an important legislation from the Great Depression era that
imposed a number of regulations on financial institutions like separating banking from security trading, underwriting
and insurance industry.
The objective of this study is to analyze the dynamics of the recent crises, investigate their causes, and
discuss whether the states can be held responsible against them in the sense of (de)regulating the markets and
ensuring the stability of the system. The remaining part of the paper is as follows: The section 2 briefly discusses the
causes and characteristics of the recent crisis. In the third section, bailout debate is presented. The forth section
investigates the regulation-deregulation discussion. The Obama's bank plan is scrutinized in the fifth section. Finally,
the final section provides concluding remarks.

The Recent Financial Crisis: Causes and Characteristics
The financial crisis began in early 2006 when the sub-prime mortgage market in the U.S. began to show an
increasing rate of mortgage defaults. In late 2006, these defaults led to a decline in US housing prices after nearly a
decade of remarkably high growth. By late 2007, the prime mortgage markets were showing higher than normal
default rates. Collateralized Mortgage Obligations (CMOs), a type of collateralized debt obligations (CDOs),
allowed these problems to spread from the mortgage market to other sectors of the economy, having especially
widespread effects on financial markets as a whole. CMOs were mortgage-backed securities issued by investment
banks and other financial institutions, which since they were not part of the commercial banking system, were
allowed to operate unregulated by the federal government. As the value of mortgages fell owing to increasing default
rates, the value of these securities fell as well.
The risk significantly increased in the early 2000s as sub-prime loans became the primary mortgage used in
securitization. As the housing bubble deflated, many portfolios of these securities fell below book value. Since the
big investment banks and large hedge funds were allowed to borrow excessively on the huge margin described in the
previous paragraph, the drop in value due to mark to market accounting forced the investment banks to write down
the value of the security or portfolio as a defensive measure against even greater losses. The rapid drop in value of
securitized assets also forced margin calls as some hedge funds, for example, did not have sufficient additional
collateral to protect against the margin call. Creditors who lent money to investment banks required certain margin
and capital ratios and refused to extend additional credit to funds or investment banks as the value of their assets
dwindled. This is what happened to Bear Stearns, which had to be taken over by JP Morgan with the assistance of the
government and to Lehman Brothers, which was forced into bankruptcy. It is also what forced Merrill Lynch to
merge with Bank of America and Goldman Sachs and Citigroup to cease to exist as Investment Banks.
The credit crisis dramatically collapsed the market cap values of many of the key players in the mortgage
industry (whether they made risky loans or not) and in the investment banking community which had successfully
securitized all forms of credit for so long. As the table 1 illustrates, investors in these stocks lost over $1 trillion of

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market cap value (these stocks dropped 92% from their mid 2000 value) as a result of the mortgage securitization
process based on securitizing risky loans and allowing excessive leverage to acquire such assets.
Mortgage
Companies

Mid 2000s

Company

Price

Fannie Mae
Freddie Mac

$80
$50

Washington Mutual $45

Mar-09

Shares
(mil.)
1000
1400

Mkt
Cap
Price
(mil.)
$80,000
$0.40
$70,000
$0.17

Mkt
(mil.)
$400
$238

1700

$76,500

$0.05

$85

$30,160

$6.00

$3,480

Acquired by Bank of America

$1,750

-

$55

Bankruptcy

Countrywide
$52 580
Financial
New
Century
Financial Corp.
Investment Banks Mid 2000s
Goldman
Sachs
$240 460
Group
Bear
Stearns
$133 135
Companies
Citigroup
$52 5450
Merrill Lynch
$92 2000
Lehman Brothers $60 689
Other
Financial
Mid 2000s
Institutions
Bank of America $52 5000
American
$72 2500
International Group
Combined Mkt Cap
of Above Financial Institutions

Cap

Notes
Government conservatorship
Government conservatorship
Bankruptcy banking ops sold to J P
Morgan Chase

Mar-09
$110,400

$100

$46,000

No longer an investment bank

$17,955

$2.00

$270

Acquired by J P Morgan Chase

$283,400
$184,000
$41,340

$2.00
$6.00
$0.04

$10,900
$12,000
$28

No longer an investment bank
Acquired by Bank of America
Bankruptcy

Mar-09
$260,000

$6.00

$30,000

Received $45B in bailout funds

$180,000

$0.35

$875

Received $180 bln in bailout funds

$104,331

$1.2 Trillion in Mkt Cap Lost

$1,335,505 -

Table 1: The Market Capitals of Major Companies Before and After 2008 Crisis
Source: http://www.wikinvest.com
The problem was augmented by the Credit Default Swap (CDS). CDSs were nominally insurance contracts
on CMOs, but they became a tangled web, which dragged the financial system down as sellers of CDSs bought
matching CDSs to protect themselves against default risk until nearly all the players in the investment banking
market were linked together by these liabilities. Thus, these CMOs and CDSs became the infamous ―toxic assets‖.
The defaults in the mortgage markets caused a collapse in the value of the corresponding CMOs, which created a
cascade of additional problems as the multitude of CDSs were executed, dragging down the balance sheets of the
major players in investment banking. This led to the freezing of private credit markets. Finally, the collapse in value
of CMOs lead to a significant problem: since no one was trading CMOs, it was no longer clear what they were
worth. The fact that the financial system is based on trust, the evaporation of trust meant that no private financial
institution was willing to lend its scarce cash to any other since the former couldn‘t trust that the latter was correctly
revealing the extent of its CMO holdings, and neither could be sure what those holdings were worth.
These liquidity problems turned to insolvency in September of 2008, when private lending froze completely
in a number of important credit markets, such as commercial paper. As a result, non-financial businesses were unable
to get access to the financing they required to function normally, leading to problems in the real economy.
The real economy began to exhibit problems related to the financial crisis as early as March 2006, when
investment expenditure on residential structures began to decline. In early 2008, this decline spread to investment in
business equipment and consumer spending on durable goods. It wasn‘t until the summer of 2008 that consumer
spending broadly and GDP began falling, signs of a recession. In December 2008, the National Bureau of Economic
Research, official arbiter of business cycles dated the formal beginning of the recession as December 2007. While

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the public had been concerned about recession for much of the year, it wasn‘t until the fall that the economy began to
decline at more than a 6% annual rate. Congress responded by passing the TARP plan to assist failing financial
institutions. This plan was meant to decrease the severity of the recession by treating its cause: the financial crisis.
The financial crisis and recession in the U.S. spread globally through both financial and trade linkages.
Seeing housing prices in the U.S. rising, foreign banks sought opportunities to invest in the U.S. housing market,
such as through CMOs issued by investment banks. When the mortgages backing these securities began to fall in
value, the value of the securities themselves began to fall. Seeing their asset prices falling, investors attempted to
liquidate their holdings beginning in August of 2007. These assets became frozen because of a lack of buyers in the
market. As credit became scarce and in response to a lack of confidence in U.S. financial institutions, international
banks began to raise the interest rate at which they lent money to one another, known as the LIBOR.
Additionally, the economic slowdown in the U.S. led to declining U.S. imports from its major trading
partners, the European Union, Mexico and China. When export sales languished, foreign GDPs fell too, spreading
the recession worldwide. Despite recent claims that the US is no longer the locomotive of the world economy, the
current crisis shows those claims to be false.
To summarize the origins of the recent financial crisis step by step 28;
 Banks and thrift institutions make mortgages, loans with a piece of real estate as collateral. Mortgages can
be sold on a secondary market.
 Corporations such as Freddie Mac and Fannie Mae were set up in the 1930s to create a secondary market in
mortgages. They would buy mortgages from the banks, then package multiple mortgages and sell them to
other lenders, these packages are called, ―mortgage backed securities.‖
 The root of the current financial crisis were ―mortgage backed securities.‖ Bundles of ―mortgage backed
securities‖ were known as Collateralized debt obligations were also placed on the market
 Along with low interest rates and rising house prices, banks and other lenders began making loans to riskier
borrowers and requiring less equity from borrowers. The ―risk‖ of these loans could be diversified by
bundling many loans in the ―mortgage backed securities
 When housing prices began falling the summer of 2007, lenders worried about the credit worthiness of the
loans in the bundles they held.
 As people began worrying about the credibility of the mortgage backed securities, the price of those bonds
fell and interest rates rose. Individuals and institutions who held these bonds thought it was easy to
liquidate, but found that they could do so at a loss. Further selling only depressed the price more.
 Investment banks including banks and mortgage lenders were more involved in the creation of the
―mortgage crisis securities.‖ Many investment banks retained some interest in these assets because they
were also involved in debt servicing.
 In the summer of 2007, the investment banks were under pressure, and their attempts to obtain liquidity by
selling assets made the crisis worse.
 A new kind of financial instrument, the Credit Default Swap, played a major role in the crisis in 2008.
This new instrument is an insurance policy against bond default. Just like ―mortgage backed securities‖, the
assets being traded were not uniform, nor was the prices of these assets was visible to all the traders.
 When investment banks and insurance companies such as AIG had large positions in Credit Default Swap,
came under pressure, and the bond prices started falling. Some Credit Default Swaps required the insurer to
make partial compensation to the policy owners.
 The uncertainty over the net position and liabilities of the investment banks brought several of them down.
The buyers had the incentives to understand the risk of the underlying assets, but was caught up in the
bubble mentality, others saw large profits and wanted to get in on the action

Bailout Discussions
In consequence of the 2008 financial crisis, several giant financial firms failed and, as expected, they
claimed the government bailout. Even though there was a strong public opposition to the failed firms' bailout call, the
US government bailed them out with little exception.

28

http://www.sourcewatch.org

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As a result, taxpayers have had to foot a huge bill to save the nation's debt-ridden banks because the government and
pro-bailout people claimed that if those failed financial institutions were not saved, then the economy could collapse.
They, furthermore, have argued that if there are losses to be covered and it is a matter of saving the financial system
from collapse, then taxpayers do have to pay and always have done. They implicitly send message to the taxpayers
by saying that if you want the financial system to collapse, you do not bailout anybody. If the system collapses,
everybody will suffer and the economy will face a serious depression, which definitely creates more catastrophes
then the bailout.
Nearly two year has passed since Congress and former President Bush gave the Treasury Department the
authority to distribute hundreds of billions of taxpayer dollars to failed banks, automakers, and AIG. Treasury gave
money to more than 700 companies, but a handful of firms received Troubled Asset Relief Program (TARP) money
in especially massive amounts. On the other hand, Congress neither specified how the money must be spent, nor
dictated how the money must be used by aided institutions (e.g., not to pay CEO bonuses), nor imposed any system
of checks and balances. As some people predict, banks may be using the bailout money to advance their own selfinterest (they are, after all, for profit entities) rather than to thaw the credit freeze since there is no any system of
checks and balances as mentioned above.
Under what conditions would multi-billion-dollar bailouts of private businesses be acceptable? What are the
criteria that would be used for deciding when it is prudent to use public money to save private business? It is possible
to ask more questions like those. They are obviously terrific questions with no obvious common answers. Different
group of people can answer the above questions, however they possibly cannot satisfy others. Even the other people
can claim that the answers and/or justifications are biased and cannot help the economy at all especially in the long
term.
While researchers, academics as well as practitioners were still discussing the recent financial crisis and
bailout issues, the big banks in the US announced that they made large profits and handed out huge bonuses only a
year after one of the biggest banking crises and bailouts in the history. Thus, thousands of top traders and bankers on
Wall Street were awarded huge bonuses and pay packages, even as their employers were battered by the financial
crisis.

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CORP.

Y
E
WHAT HAPPENED
A
R

COST

Bear
Stearns

2
0
0
8

JP Morgan Chase and the federal government bailed out Bear Stearns when the
financial giant neared collapse. JP Morgan purchased Bear Stearns for $236 million;
the Federal Reserve provided a $30 billion credit line to ensure the sale could move
forward.

$30
billion

Fannie
Mae /
Freddie
Mac

2
0
0
8

On Sep. 7, 2008, Fannie and Freddie were essentially nationalized: placed under the
conservatorship of the Federal Housing Finance Agency. Under the terms of the
rescue, the Treasury has invested billions to cover the companies' losses. Initially,
Treasury Secretary Hank Paulson put a ceiling of $100 billion for investments in each
company. In February, Tim Geithner raised it to $200 billion. The money was
authorized by the Housing and Economic Recovery Act of 2008.

$400
billion

(A.I.G.)

On four separate occasions, the government has offered aid to AIG to keep it from
2
collapsing, rising from an initial $85 billion credit line from the Federal Reserve to a
0
combined $180 billion effort between the Treasury ($70 billion) and Fed ($110
0
billion). ($40 billion of the Treasury‘s commitment is also included in the TARP
8
total.)

Auto
Industry

In late September 2008, Congress approved a more than $630 billion spending bill,
2
which included a measure for $25 billion in loans to the auto industry. These low0
$25
interest loans are intended to aid the industry in its push to build more fuel-efficient,
0
billion
environmentally-friendly vehicles. The Detroit 3 -- General Motors, Ford and Chrysler
8
-- will be the primary beneficiaries.

Troubled
Asset
Relief
Program

2
0
0
8

Citigrou
p

Citigroup received a $25 billion investment through the TARP in October and another
2
$20 billion in November. (That $45 billion is also included in the TARP total.)
0
$280
Additional aid has come in the form of government guarantees to limit losses from a
0
billion
$301 billion pool of toxic assets. In addition to the Treasury's $5 billion commitment,
8
the FDIC has committed $10 billion and the Federal Reserve up to about $220 billion.

Bank of
America

2
0
0
9

In October 2008, Congress passed the Emergency Economic Stabilization Act, which
authorized the Treasury Department to spend $700 billion to combat the financial
crisis. Treasury has been doling out the money via an alphabet soup of different
programs. Here‘s our running tally of companies getting TARP funds.

Bank of America has received $45 billion through the TARP, which includes $10
billion originally meant for Merrill Lynch. (That $45 billion is also included in the
TARP total.) In addition, the government has made guarantees to limit losses from a
$118 billion pool of troubled assets. In addition to the Treasury's $7.5 billion
commitment, the FDIC has committed $2.5 billion and the Federal Reserve up to
$87.2 billion.
Table 2: The major bailouts in 2008 and 2009
http://www.propublica.org/special/government-bailouts

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$180
billion

$700
billion

$142.2
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This has unavoidably attracted much criticism given how instrumental the banks were in causing the crisis.
It is obviously immoral and insincere: If they win, they walk away with the profits; if they lose, the taxpayer picks up
the tab. Consequently, this picture beyond doubt created widespread public anger against Wall Street bankers.
A report29, released by Andrew M. Cuomo, the New York attorney general, provides a little more details
about the bailouts. The report confirms that nine of the financial firms that were among the largest recipients of
federal bailout money paid about 5,000 of their traders and bankers bonuses of more than $1 million apiece for 2008.
For instance, bonuses of more than $1 million went to 953 traders and bankers at Goldman Sachs, while Morgan
Stanley awarded seven-figure bonuses to 428 employees. Even though they are weaker banks, Citigroup and Bank of
America distributed million-dollar bonuses to hundreds of their workers.
Thus, many people raised their voice by saying, "risk is being socialized, yet profits are privatized." That
means the rich elite makes money at the expense of the taxpayers. That is completely unfair and not what it should
be.
It is morally revolting that the architects of the crisis had huge bonuses only a year after being bailed out by
the taxpayer. With large profits made by the banking industry allowing the payment of the massive bonuses, it not
just created widespread public anger as mentioned above, but also justified the argument that the new regulation for
the banking industry is must. Thus, it has become obviously necessary to regulate the banking industry in such a way
that excessive risk taking becomes not possible.

Deregulation in Financial Market
Financial regulation is a form of supervision, which subjects financial institutions to certain requirements,
restrictions and guidelines, and aims to maintain the integrity of the financial system. As Warren Buffet noted,
‗Credit Default Swaps are the financial weapons of mass destruction‘ (The Economist, September 2008). However,
shadow banking and credit default swaps (CDSs), allowing betting instruments, remained unregulated.
The lack of regulation of credit default swaps and the shadow-banking sector caused the financial system to
grow larger, even more insolvent, and even more unstable. As noted, CDSs were initially used to transfer the risk on
a bond onto someone else, but the deliberate lack of oversight meant traders could use these insurance-type contracts
to place bets on bonds they did not own; eventually this led to the selling of the insurance contracts themselves when
demand became high.. The CDS market grew enormously, but the lack of regulation allowed the gambling on
insurance contracts to spiral out of control, until it consisted of more ‗bet money‘ than actual bonds. The market
eventually came to encompass $60 trillion of bets on bonds, while only $5 trillion worth of bond money was
circulating. This meant certain companies were promising billions of dollars in the form of protection that they did
not have. American Insurance Group (AIG), for instance, owed over $400 billion worth of CDSs that it could not
produce, necessitating its bailout by the US government. In addition, the non-regulation of CDSs and shadow banks
allowed CDS deals to be made in private, generating in turn a lack of transparency extending to the finances of
anyone vested in the market and obscuring the stability of transactions and of finances in general (Stiglitz, 2009).
When the crisis hit and the extent of the opacity became apparent, confidence plummeted and credit froze, and
because of the market‘s interconnectedness, the failure of one bank meant the demise of them all. The taxpayer
would ultimately pay for these mistakes through the government bailout of the fallen institutions.
Had hedge funds and investment banks been required to hold proper reserves to back the CDSs with liquid
assets, the financial crisis would likely not have reached the level it did. Such regulatory measures would have
prevented companies from taking the significant risks that have characterized finance in the 1990s and early twentyfirst century, and the CDS market would not have been likely to ‗balloon‘ as it did in the first place (Blumberg
2008).
The non-regulation of CDSs and America‘s shadow banking sector during the decade leading up to the
global crisis was therefore an occurrence that could have been avoided. US policymakers and regulators had ample
warning that unregulated CDSs and bank-like institutions would undermine the system‘s credibility, and cause a
global financial calamity.

Obama's Bank Plan
In response to the distress and turmoil created by the financial firms and banks, the Obama administration
proposed a two-part plan regulation, suggesting the comprehensive changes to the financial sector regulation.
29

http://www.nytimes.com/2009/07/31/business/31pay.html

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President Obama first proposed a new tax or fee on the 50 largest U.S. financial institutions related to the costs of the
government bailout of the financial industry. The idea is to discourage excessive risk-taking, to re-balance a tilted
playing field and to generate needed revenue. The fee is expected to raise $90 billion over the next 10 years, and
$117 billion over about 12 years. Although the tax would be imposed on 50 largest banks, insurance companies and
large broker-dealers, roughly 60% of the revenue is expected to come from the 10 largest financial firms. If approved
by lawmakers, the fee would go into effect June 30, 2010 and last at least 10 years. It would amount to 0.15% of total
assets minus high-quality capital, such as common stock, and disclosed and retained earnings.
Yet even if Congress goes along with this fee proposal, it will practically not be enough. Because the
executives who run these institutions are likely to force shareholders to bear the burden of the tax, while they just
keep on much as before. In fact, shareholders have already suffered as the executives undertook mergers, paid out
bonuses and took other actions that have diminished shareholder value. Moreover, a new tax would probably give the
bankers one more excuse not to restart lending.
Mr. Obama made a second and more direct proposal by adapting the ideas of Paul Volcker, the former Fed
chairman, on 22nd of January, 2010. This regulation restricts banks from making investments that are not intended to
benefit customers, which is known as proprietary trading. Mr. Obama's new proposal put new limits mainly on the
size and activities of the largest banks by intending to toughen existing limits on the size of financial firms and force
them to choose between the protection of the government's safety net and the often-lucrative business of trading for
their own accounts or owning hedge funds or private-equity funds. Mr. Obama highlighted this point by saying,
"Never again will the American taxpayer be held hostage by a bank that is too big to fail."
The second proposal focused on two points.
The first concerns restrictions on the scope of activities. In the case of having insured deposits, and hence
accessing to emergency funds from the central bank, the banks would not be allowed to own or invest in private
equity or hedge funds nor would they be able to engage in ―proprietary‖ trading though they could continue to offer
investment banking for clients, such as underwriting securities, making markets and advising on mergers.
The second focuses on size. Banks already face a 10% cap on national market share of deposits. This would
be updated to include other liabilities, namely wholesale funding. The aim is to limit concentration, which has
increased greatly over the past 20 years, accelerating during the crisis as healthy banks bought sick ones. The four
largest banks now hold more than half of the industry‘s assets.
This second proposal is easily considered as, at least, seeking to return the "spirit of Glass-Steagall Act" and
will for sure impede the growth of the largest banks and bar them from making what Mr. Obama called "reckless"
investments.
Citibank's merge with Travelers Group in 1998 had been seen as a violation of the Bank Holding Company
Act (BHCA), and Citibank had thus been given two-year forbearance. Following the GLB act, however, not
Citigroup/Traveler Group merger just became legal but several new mergers also took place.
This is an undeniable fact that the repeal of important portions of the Glass-Steagall Act made banks seek
high returns by investing money from checking and savings accounts into "creative" and "innovative" financial
instruments such as collateralized debt obligations (CDOs), mortgage-backed securities (MBSs) and credit default
swaps (CDSs). These risky investments have been blamed to be caused to the collapse of the financial markets in
2008 and the resulting global financial crisis.
The original idea of freeing up the banks or justification of the GLB act was to allow the US banks to
compete at the national and international scale especially with European banks. However, many US banks engaged
in very aggressive and riskier investments seeking higher returns following the GLB act. These aggressive behaviors
were amplified as banking companies grew more complicated, drawing funding from more sources and investing in a
wider range of activities. Increasingly, some investments were made to profit the firms' employees and shareholders,
which are unrelated to the needs of customers. Those banks had been making increasingly massive profits until the
bubble burst in 2008. Although the impetus for the climb in profitability primarily came from the investment banking
activities, the key area of growth was in securities with especially mortgage assets. Furthermore, the banks‘ activities
had been increasingly funded from the wholesale market by lending between banks on narrow margins and not the
traditional depositor base in the commercial part of the banks‘ business. The problem was not truly recognized
before 2008. When the bubble burst, it became not just obvious how risky these activities had been but the enormous
scale of securitization combined with high leverage also almost led to a collapse of the whole financial system. In
fact, being derivative products there were many third parties that had significant exposure to asset-backed securities

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(ABS). Consequently, the investment activities of those banks, aggressively seeking higher profits and market share
regardless of the risk, pervaded the whole economy.
Another bill, known as the Commodity Futures Modernization (CFM) Act, had been passed just a year after
the GLB Act. I do not think it is false that those two acts together undoubtedly contributed to the 2008 crisis. The
(CFM) act unleashed the derivatives market and paved the way for banks to become more aggressive about investing
in mortgages. This is basically how it ended up with the largest banks filled with toxic assets, off-balance sheet
commitments, and in-house hedge funds among other "investments."

Concluding Remarks
As it is known, commercial banks function as intermediary between depositor and borrower and provide the
loans and services to households and companies that are the life-blood of business activity and job creation.
Investment banks, by contrast, have often engaged in activities that are more intensive use of complex instruments
subject to high-risk volatility, and invested bank capital in hedge funds and private equity firms, which are in high
return-high risk category. Nobody has problem with hedge funds and other speculative clubs, so long as they are not
risking taxpayer money, whether directly like Fannie and Freddie or indirectly by threatening to bring down the
system.
The recent financial crisis has provided a clear lesson against allowing excess leverage and risk-taking
through financial innovations that do not correspond to corporate and retail customers‘ banking needs. In retrospect,
one can trace the origins of the crisis to a shift over time away from the ‗credit culture‘ of commercial banking
towards an ‗equity culture‘ focused on generating profits for shareholders and management by exploiting new
financial innovations and leveraging them while taking advantage of regulatory and tax loopholes. Therefore, as
proposed in Mr. Obama's plan, separating these from mainstream activities like deposit-taking and lending, as well as
some investment banking activities that correspond to customer needs, such as underwriting, market-making,
broking and some derivatives services, could definitely bring important benefits for commercial banking. The
separation could notably decrease contagion and counterparty risks, and help sustainable growth by focusing
management attention on the core needs of bank clients without major distractions and disruptions.
As Acharya (2009) claims, the goal of bank regulation is to restrain systemic risk rather than the individual
risk of institutions. Accordingly, imposing a fee especially on the largest financial institutions, both for their
expected losses when individual institution's failure and for expected losses when whole market's failure in the case
of the financial system as a whole becomes undercapitalized, minimizes the systemic risk, thus suggest a solution,
possibly good and efficient solution. As a consequence, even though it may have some possible flaws, given this
framework for regulating systemic risk, Mr. Obama's proposal of imposing a fee against systemic risk of institutions
is not just fair on the eye of public but also makes true economic sense.
Moreover, again even though there are some concerns, separating commercial banking and other forms of
financial intermediation from proprietary trading definitely limit systemic risk without affecting financial sector‘s
ability to function its core activities.
Obviously, one can easily count several points that need to be fixed and raise some concerns with Mr.
Obama‘s new bank plan. On balance, however, both, a fee against systemic risk and scope restrictions, deserve a
serious consideration and seem to be right steps in the right direction. The plan will help creating a sound and more
reliable financial system and separating core commercial banking from some higher-risk activities in financial
conglomerates and placing a moratorium on further consolidation could help to avoid the new financial crises by
resolving some major risks inherent to the current financial system.

References
Acharya, Viral. (2009). A Theory of Systemic Risk and Design of Prudential Bank Regulation. Journal of Financial Stability,
5(3), 224-255.
Blumberg, A. (2008). Another Frightening Show About the Economy. This

American Life Episode Transcript, Program 365.

Stiglitz, J. (2009). Capitalist Fools. Vanity Faire. January, 2009. Online available at
http://www.vanityfair.com/magazine/2009/01/stiglitz200901.
The Economist, September 2008

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http://www.wikinvest.com
http://www.propublica.org/special/government-bailouts
http://www.nytimes.com/2009/07/31/business/31pay.html

110

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                    <text>3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo

Does predefined ERP implementation methodology work for public companies in
transitioning country?
Adnan Kraljić, Denis Delismajlović, Tarik Kraljić
Information Technology Department,International Burch University
Sarajevo, Bosnia and Herzegovina
E-mails: akraljic@ibu.edu.ba, tkraljic@ibu.edu.ba, ddelismajlovic@ibu.edu.ba
Abstract
The main objective of this paper is to answer a question “Does predefined ERP
implementation methodology work for state owned companies in transitioning countries?”
The focus will be on state owned companies from Bosnia and Herzegovina, as it is typical
transitioning company. Paper will treat selected issues which could trouble ERP
implementation trough predefined ERP implementation methodology for SAP ERP. This
paper presents observations/remarks based on experience of authors in SAP ERP
implementation projects in public sector in Bosnia and Herzegovina. Author’s goal is to
provide useful insight into predefined ERP implementation methodology (in theory) and
issues that arise in real life ERP projects. Also, it should provide structural knowledge for all
stakeholders involved in the process of ERP implementation in public sector.
Keywords: enterprise resource planning (ERP), implementation, state owned company, post
socialist transitioning country, ASAP methodology
1.Challenge known as ERP implementation
Enterprise resource planning (ERP) system is a business management system which
comprises integrated sets of comprehensive software, which can be used, when successfully
implemented, to manage and integrate all the business functions within an organization.
These sets usually include a set of mature business applications and tools for financial and
cost accounting, sales and distribution, materials management, human resource, production
planning and computer integrated manufacturing, supply chain, and customer information.[1]

References
1 Sheu, C., Yen, H.R., and Krumwiede D.W.: The effect of national differences on multinational ERP
implementation: an exploratory study. TQM &amp; Business Excellence, Vol.14, Issue 6, August,
pp.641657. (2003)

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So, the main feature of ERP is computer-based integration of the whole organization into one
system and database. It provides higher efficiency and real time reporting. Data entered in
one module of the system are immediately accessible for other organization’s functions.
Figure 1. presents typical functional ERP architecture.

Figure 1. Typical ERP system architecture
People often contemplate ERP as software provided out of box. We consider ERP more as a
concept. Target of any ERP implementation in organization is to provide benefits for all
stakeholders by improving business operations and decision making process. It is important
to state that ERP’s benefits are a direct result of effective preparation and implementation,
and appropriate use of system. This seems obvious, but nine out of 10 companies don’t get it
right the first time around. [2]
Story about ERP implementation
ERP implementation is set of activates, normally leading to the fully operating system. It
mixes business, technical and clerks’ sides which should work harmonized during the
implementation. Every employee in the company is involved in ERP implementation process;
either they are technical support in company (IT department) or end users of information
system. Obviously it is not easy to manage all of these project members. There are many
examples of ERP implementation failures.
The world of IT and business consulting is full of stories of ERP projects gone wrong.
Companies such as Whirlpool, Hershey Foods, and Allied Waste Industries have had exposed
2 ( September 1998 issue of Midrange ERP “There Is No Magic in ERP Software: It’s in Preparation of
the Process and People,” p. 8]).
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court cases against ERP software vendors (such as SAP A.G. and Oracle) because of their
unsuccessful implementations.
It is interesting that according to a statement cited in an ITWorld.com article, Waste
Management claims SAP deceived it by creating "fake software environments" for product
demonstrations. The project went bad almost immediately after a sales agreement was signed
in October of 2005. Though SAP promised a pilot version of the system would be up and
running by Dec. 15, 2006, "it is not even close to being completed today." [3]
Another famous story about SAP implementation failure is Shane Co. The family-owned
jewelry retailer that sought bankruptcy told a U.S. judge the company’s decline was triggered
partly by delays and cost overruns for a $36 million SAP AG inventory-management system.
SAP, the world’s biggest maker of business-management software, took almost three years to
install and implement the system instead of one year, while costs “ballooned” to $36 million
from a projected maximum of $10 million, Shane said in papers filed in U.S. Bankruptcy
Court in Denver. [4]
In general an implementation is seen as successful if it is completed within budget and time
frame; addressing all implementation deliverables measured by ROI, KPIs etc. Lots of
variables are involved in ERP implementation such as; personnel (business side, technical
side, support side, users), implementation partner (for example local integration software
PeopleSoft, JD Edwards, Salesforce.com etc.), and implementation strategy. [5] With a
number of issues that arise together, in a few months or year for implementation, it is
important to address critical factors that shape an implementation. Also, as we mentioned, it
is important not to underestimate the nature of public institution and all bureaucracy you have
to cope with during the implementation.
2. No one is immune - country specific issues of public sector
There is no industry or business activity that is not influenced by B&amp;H’s social environment.
Complex picture of transitioning post conflict country will be described in next few
paragraphs. The stress will be on state owned companies.

3 Whos to blame for failed ERP project that prompted lawsuit,
http://www.itbusinessedge.com/cm/blogs/all/whos-to-blame-for-failed-erp-project-that-promptedsap-lawsuit/?cs=11588
4 Shane Says SAP Costs Helped Cause Jeweler’s Decline,
http://www.bloomberg.com/apps/news?pid=newsarchive&amp;sid=awweg53wmmJw&amp;refer=germany
5 Bhagwani, A.: Critical Success Factors In Implementing SAP ERP Software, An EMGT Field Project
report submitted to the Engineering Management Program and the Faculty of the Graduate School
of The University of Kansas, (2009)
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In Bosnia and Herzegovina there are some big state owned companies that implemented an
ERP or are in the process of implementation. According to SAP User Community in B&amp;H
SAP ERP is the main ERP vendor for big public companies. It could be useful information so
we will name those companies: EPBiH, BH Telecom, JP EPHZ HB, HT Mostar and Clinical
center University of Sarajevo.
One of the issues of public sector in B&amp;H is very complex stakeholder structure due to
political system as a result of post conflict circumstances. (Dayton and Paris political
agreement resulted in four different levels of government – 14 governments, 180 ministers; 1
prime minister per 300 000 people, one the most complex and expensive governmental body
in the world). According to the 2005 CMI report, this bloated public sector accounts for 54%
of the annual GDP - more than in any other European country. [6] Another issue is widely
spread corruption as one of the common characteristics of post socialist developing country.
After war in B&amp;H and privatization, which was conducted doubtfully, hundreds of state
owned companies finished in bankruptcy. However, still few state owned companies, mainly
utility and telecom companies, are the backbone of country’s economy. Unfortunately, public
sector in Bosnia and Herzegovina is very complex and due to the last surveys one of the most
corrupted in Europe, especially in its employment policy.
As mentioned previously 54% of GDP is consisted of public sector what implies the
importance of this sector and long term consequences if fraud is part of it. Same report states
that corruption pattern in B&amp;H is characterized by (a) high level of public concern with
corruption, (b) low level of public trust in the governments, (c) state capture and conflict of
interest, (d) public administration inefficiencies reflected in widespread bribery in public
offices, (e) distorted business environment and (f) a significant burden on poor households,
exacerbating poverty and inequality. Public tenders (defined by public procurement law)
could provide opportunity for corruption if they are done with a lack of transparency. [7]
Also process of choosing the bid winner is complex with not strict definition of vendor
selection criteria. According to the World Bank report, in the most cases in B&amp;H, tender
policy is based on price, which weights for more than 70% of possible points which vendor
could earn in selection procedure. This leads to artificially low price offered. It ensures
wining the bid, but do not ensure the quality of service.
3.How ERP vendors want to help implementations
As mentioned in previous chapter, ERP software vendor is one to blame when expected
results do not occur after ERP implementation.
ERP vendors believe that tracking of tested implementation methodology is a prerequisite for
successful ERP implementation. All implementation methodologies e.g. Oracle Application
Implementation Methodology (AIM), Accelerated SAP (ASAP) etc suggest at least five
6 Corruption and Anti-Corruption in Bosnia and Herzegovina (B&amp;H);
www.u4.no/helpdesk/helpdesk/query.cfm?id=221
7 Bosnia and Herzegovina Diagnostic Surveys of Corruption, World Bank;
http://www1.worldbank.org/publicsector/anticorrupt/Bosnianticorruption.pdf

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phases of ERP implementation: Define; Design; Build; Transition; and Go Live &amp; Support.
[8]
To avoid uncomfortable project situations ERP vendors developed predefined ERP
implementation methodologies. One of the most famous is delivered by the biggest ERP
vendor - SAP. It is ASAP methodology (ASAP – Accelerated SAP). In next few paragraphs
we will describe ASAP methodology in details.
Accelerated SAP (ASAP) is SAP’s standard implementation methodology. It is consisted of 6
phases, and those are: Project preparation, Blueprint, Realization, Final preparation, Go-Live
Support and Run. It is serial relationship, so predecessor phase has to be completed in order
to move on next phase. In figure 2. those phases are shown.

This roadmap is a step-by-step guide that incorporates experience from many years of
implementing R/3. Along with that, Accelerated SAP contains a multitude of tools,
accelerators and useful information to assist all team members in implementing R/3. Quality
checks are incorporated at the end of each phase to easily monitor deliverables and critical
success factors. ASAP is delivered as a PC-based package, so that – if required – an
implementation project can begin prior to having an R/3 System installed. [9]
We will give more details regarding each phase.
3.1.Project Preparation
Goal of this phase is to plan our project and lay the foundations for successful
implementation. It is at this stage that we make the strategic decisions crucial to your project:
define your project goals and objectives, clarify the scope of your implementation, define
your project schedule, budget plan, and implementation sequence, establish the project
organization and relevant committees and assign resources
3.2.Business Blueprint
During this phase we create a blueprint using the Question &amp; Answer database (Q&amp;Adb),
which documents your enterprise’s requirements and establishes how your business processes
and organizational structure are to be represented in the SAP System. We also refine the
original project goals and objectives and revise the overall project schedule in this phase.
3.3.Realization
In this phase, we configure the requirements contained in the Business Blueprint. Baseline
8 Nazir, M. M.: ERP Implementation in Oil Refineries, Daily Business Recorder, Karachi (2005)
9 Miller, S.: Asap Implementation at the Speed of Business: Implementation at the Speed of
Business, Computing Mcgraw-Hill (1998)
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configuration (major scope) is followed by final configuration (remaining scope), which can
consist of up to four cycles. Other key focal areas of this phase are conducting integration
tests and drawing up end user documentation.
3.4.Final Preparation
After project realization phase, we complete our preparations, including testing, end user
training, system management, and cutover activities. We also need to resolve all open. At this
stage we need to ensure that all the prerequisites for your system to go live have been
fulfilled.
3.5. Go Live &amp; Support
In this phase we move from a pre-production environment to the live system. The most
important elements include setting up production support, monitoring system transactions. [8]
3.6.Run
Optimizing overall system performance and obtaining permanent business process
optimization.

Phase objectives shown in Figure 3.

.
Figure 3. Phase objectives

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ERP implementation in transitioning country in state owned companies –It is shown in table 1. Expected objectives for each ASAP phase and
constraints that occurs in practice
Phase

Excepted objectives

Constraints in practice regarding the phase objects

Project
Preparation

Defined your project goals and objectives

Unskilled project managers

Clarified the scope of your implementation

Corruption in tendering procedure (inadequate tendering procedure)

Defined your project schedule, budget plan, Poorly written tendering documentation
and implementation sequence
Leak of project management knowledge (no clear goals and objectives)
Established the project organization and Poorly prepared project work break structure
relevant committees and assign resources
Employee does not care about resource spending - state money.
Budget and project schedule planned with no serious approach
Blueprint

Created blueprints using the Question &amp; Too much / little time spent on blueprint preparation due to lack of project
Answer database (Q&amp;Adb)
management knowledge, and requirements set by political not business persons /
reasons
Mapped business processes
Overview of all business process

No localize ASAP documentation for smaller countries (example Bosnian
language)
Leak of business process mapping skills
Leak of professional business environment in state owned companies, which
support this extremely important phase
Managers and supervisors mostly not centers of competence

Realization

136

Configured the requirements contained in Leak of project management
the Business Blueprint
Leak of change management (Change management not consider as important)
conducted unit tests
Responsibility issue - “there is someone else who will do it”

�3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo

Go – Live
Support

Run

Conducted integration tests

Integration test not taken seriously from end users

Prepared end users documentation

Very slow internal knowledge and information transfer - several managers has
to sign document to be approved .

Moved from a pre-production environment Help desk not established by the company
to the live system
Defined communication channels not respected
Includes setting up production support, Often, poor management decision made under huge pressureof Go Live phase
monitoring system transactions
Employees working habits- mistakes are there to be hidden
Optimizing overall system performance

No optimization and improvements

Permanent business process optimization

Lack of understanding that the ERP system is “live” system
After project is finished all ERP story ends.
Problems with tendering procedure for support
No competent support in country as Bosnia and Herzegovina - low spending on
consultant education

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4. Most threatening constraints in practice regarding ASAP methodology
In next few paragraphs we will discuss the most prominent constraints from the list above.
Inadequate tendering procedure for state owned company - The Public Procurement Law
adopted in 2004 generally complies with the main principles of the EU public procurement
system. [10] However, in practice, procurement process for public companies still provides
significant space for fraud. One of the most questionable aspects of public tendering law is
determining price as the most important factor in bidding. So winning the bid is based
significantly, if not exclusively on price. This leads to artificially decreased price by some
bidders. Other companies are in the risk to become uncompetitive if the price is set according
to the real market price for the project scope. This provide space for risky system integrators
who are not skilled to provide ASAP methodology and cannot provide skilled SAP
consultants who can implement ASAP methodology in SAP ERP implementation.
No localization for ASAP documentation for smaller countries (example Bosnian language) –
ASAP methodology provides dozen of documents well written in English language. It is
profound help for consultants and substantially accelerates the process of implementation.
Unfortunately, this documentation is not translated on local languages of small, transitioning
B&amp;H market.
Time consuming decision making flow process (from bottom to top) – Decision process in
big, public companies can be very slow. It clearly does not support name of SAP standard
methodology – Accelerated SAP. One of the reasons could be very complex and complicated
organization structure. Specific for some public companies is lack of modern information
infrastructure, like e-mails.
Working habits of management and employees – Probably someone would ask what
communism has with ASAP. However, as former communist country, Bosnia and
Herzegovina has kept some of the practices from that period (especially in state owned
companies). These habits could include: no real authority of the management, work is not
valuated by achievement but personal relations; there is no incentive by employees to make
some effort and improve work environment. Also, salary is determinate by salary coefficients
for each working position. Coefficient is provided by legislation.
Public companies are short of qualified employees. Most of employees are with lack of
knowledge and practice in business domain they are hired for. The reason for this could be

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corruption in employment process (some public companies advocate publicly that they prefer
daughters
and
sons
of
their
current
employees
in
hiring
process.
Leak of professional business environment in state owned companies – ASAP methodology
requires business educated professionals who can follow ASAP predefined tasks. Very often
employees in state owned companies do not have appropriate skills that can support ASAP
activities. Even if the project managers deliver tasks to their employee the feedback is
missing or is delivered in very poor manner.
Leak of change management (Change management not consider as important) - Change
management is a process which aim is to make easier implementation, as well as transition
during ERP project. Since ERP project is usually very complex, change management can
play significant role to improve employees to understand why the project has been
implemented and to make organizational changes and BPR easier. These activities can be
summed into 3 basic ones: education of employees, communication among stakeholders and
involvement in project process. Lack of change management can affect quality of project
implementation, and make results smaller.

5. CONCLUSION
As it is stated in abstract the main objective of this paper is to answer a question “Does
predefined ERP implementation methodology work for state owned companies in
transitioning countries?” We tried to answer on this question with experience gained with
several projects in state owned companies done in Bosnia and Herzegovina. We will call it
“hands on” experience. As we are working as SAP consultants, we chose SAP Accelerated
methodology as referent methodology for our paper. We found it relevant as it is provided by
the biggest ERP vendor – SAP A.G. In general ASAP methodology is well developed with
hundreds of well-structured documents which support all ERP implementation activities.
Unfortunately, in practice, this ERP implementation methodology hardly works for state
owned. As experienced SAP consultants we have impression that ASAP methodology is
constructed for private companies with professional business environment. At the end we will
state the most remarkable constrains we found during ASAP methodology implementation:
Inadequate tendering procedure for state owned company
No localization for ASAP documentation for smaller countries (example Bosnian language)
Time consuming decision making flow process
Working habits of management and employees
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Leak of professional business environment in state owned companies
Leak of change management (Change management not consider as important)
We hope that this paper will be useful in further ERP implementations and ERP research.

A Cross – Sectional Analysis of Environmetal Sustainability Practices
Toksari Murat1, Uçan Okyay2
1Nigde University, Department of Business,
2Nigde University, Department of Economics,
E-mails: mtoksari@nigde.edu.tr, okyayu@hotmail.com
Abstract
In 1970s and 1980s the concept of sustainability developed as a process of protection for the
elements that social, economic and eceological systems need. During the Environment and
Development Summit held in 1992, decisions were made about the works to protect and
improve the environmental sustainability with the help of objective policies. By revealing
sustainability specifically focuses on the social, economic and ecological target, Brountland
report states that meeting Socia-Economic needs is limited to the carrying capacity of ecosystem.
Environmental sustainability is divided into three categories. They are resource management,
energy management and product sustainability. While, solid waste and water conservation
compose the resource managament, energy managament includes energy conservation,
renewable energy, GHG emission reduction, energy sufficient. Finally, product sustainability
involves product transportation, supply chain audit, product stewardship and Life Cycle
Program.
In this context, environmental sustainability index and environmental performance index
were prepared by the universities of Yale and Colombia. With environmental sustainability
index, it is intented to reach perfection in the current and future environmental qualities of the
countries. This index, is a tool when aiming to be qualified and is an important mechanism
for testing the environmental performance. As for environmental performance index, it has
been developed by using result-oriented indicators.
140

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                <text>The main objective of this paper is to answer a question “Does predefined ERP  implementation methodology work for state owned companies in transitioning countries?”  The focus will be on state owned companies from Bosnia and Herzegovina, as it is typical  transitioning company. Paper will treat selected issues which could trouble ERP  implementation trough predefined ERP implementation methodology for SAP ERP. This  paper presents observations/remarks based on experience of authors in SAP ERP  implementation projects in public sector in Bosnia and Herzegovina. Author’s goal is to  provide useful insight into predefined ERP implementation methodology (in theory) and  issues that arise in real life ERP projects. Also, it should provide structural knowledge for all  stakeholders involved in the process of ERP implementation in public sector.  Keywords: enterprise resource planning (ERP), implementation, state owned company, post  socialist transitioning country, ASAP methodology</text>
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                    <text>1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo

Does Sector Make a Difference in HRM Practices?
Turkish Companies in Marmara Region
Gültekin YILDIZ
Sakarya University-Business Administration Department
Serkan BAYRAKTAROĞLU
Sakarya University-Business Administration Department
Yasemin ÖZDEMĐR
Sakarya University-Business Administration Department
Özlem BALABAN
Sakarya University-Business Administration Department

Abstract: HRM discipline, occurring in 1920’s in the USA, has been predominant in the
USA and the European countries and there has been evolving phases throughout the 20th
century (Storey, 1989). It has been observed that the activities, objectives, dimensions, and
importance of the human resource function have changed dramatically since the 1970s
(Lundy, 1994). This is a result of social, political, economical, legal and technological
developments and the changes of work life, organisational features, labour. HRM functions
and practices are also affected by many other factors like national and organisational
circumstances (Andersen, 2000), sector, market type (Beer et al., 1984).
In Turkey, there is similar development. The Turkish HRM literature has a paralel rhetoric
especially to USA and Europe but the reality HR practices are not at the level that is told in
the literature (Ercek, 2006). The reality is different as a result of internal and external factors
effect to organisational structure and so to HRM functions. These factors are organisational
features, interpersonal relations, job’s features and personal characteristics are the internal
factors and external labour, external resources, rivals and regulators are the external factors
(Kaynak et al., 2000; Bingol, 2006; Sabuncuoglu, 2000), the current situation of the market in
which the company operates (Uyargil and Ozcelik, 2001). Also in Turkey organisational
structure (Ercek, 2006) and the number of employees (Çakmak et al., 2007) in other words
organisational size affect the HR practices and causes differentiation. Organisational size is
also one of the factors that determine the efficiency of HR practices (Aycan, 2001; Ozcelik
and Aydinli, 2006; Tanova and Nadiri, 2005).
The circumstances of the HR practices in Turkey must be investigated more (Ercek, 2006).
This paper starts from this point and will investigate if sector is an important factor that affect
HRM practices.
This paper critically explores if sector makes a difference in HRM practices and according to
this aim the research will be based on questionnaires conducted within companies of
manufacturing and service sectors who have HR departments in Marmara Region of Turkey.
The data gained from the questionnaires are analyzed statistically using SPSS 17.00.
Keywords: HRM, HRM in manufacturing sector, HRM in service sector

Introduction
Human resource management (HRM) discipline, occurring in 1920’s in the USA, has been
predominant in the USA and the European countries and there has been evolving phases throughout the 20th
century (Storey, 1989). It has been observed that the activities, objectives, dimensions, and importance of the
human resource function have changed dramatically since the 1970s (Lundy, 1994). This is a result of social,
political, economical, legal and technological developments and the changes of work life, organisational
features, labor. And also sector (Kaufman, 2007) and market type (Beer et al., 1984) are effective on HR
departments structure and HR practices based on functions.
There are many HRM models in America and Europe which are descriptive for determining the HRM
understanding of an organisation or a country. These models are maps factors that affect the HRM structure in a
general manner or and HR functions in a more specific view. The Model of Brewster and Bournois underlines

86

�1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo

the importance of sectors effect on HRM practices (Brewster and Bournois, 1991; from Pinnington ve Edwards,
2000: 19).
The importance of human in the organizations and the features of the jobs/works are different in
different sectors. In manufacturing sector automation and information technologies are used more than service
sector. But in service sector the production and consuming are simultaneous, the intensity of labor is high so a
structure that is consisted of a face-to-face relationship between the personnel and customers. A production
focused management style is dominant in manufacturing sector and in service sector, a customer focused
management style is dominat (Gök, 2006). Because of these main differences of sector features and
management styles, in two sectors different HRM practices are expected.

The Background of HRM Practices in Turkey
In Turkey, there is similar development. The Turkish HRM literature has a parallel rhetoric especially
to USA and Europe but the reality HR practices are not at the level that is told in the literature (Ercek, 2006).
The reality is different as a result of internal and external factors effect to organisational structure and
so to HRM functions. These factors are organisational features, interpersonal relations, job’s features and
personal characteristics are the internal factors and external labour, external resources, rivals and regulators are
the external factors (Kaynak et al., 2000; Bingol, 2006; Sabuncuoglu, 2000), the current situation of the market
in which the company operates (Uyargil and Ozcelik, 2001). Also in Turkey organisational structure (Ercek,
2006) and the number of employees (Çakmak et al., 2007) in other words organisational size affect the HR
practices and causes differentiation. Organisational size is also one of the factors that determine the efficiency
of HR practices (Aycan, 2001; Ozcelik and Aydinli, 2006; Tanova and Nadiri, 2005). In addition HRM
functions and practices are also affected by many other factors like national and organisational circumstances
like sector (Andersen, 2000).
The circumstances of the HR practices in Turkey must be investigated more (Ercek, 2006). This paper
starts from this point and will investigate if sector is an important factor that affect HRM practices.

Objective of the Research
This paper critically explores if sector makes a difference in HRM practices. Because in the literature it
is mentioned that sector is one of the important factors that affect the HRM practices. And also if our hypothesis
is true, this can give an opinion to the organisations for realizing their HRM decisions according to sectoral
circumstances.

Research Methodology
According to the objective of this study, the research will be based on questionnaires conducted within
companies of manufacturing and service sectors who have HR departments in Marmara Region of Turkey. The
data gained from the questionnaires are analyzed statistically using SPSS 17.00.

General Findings
The datas are gained from 62 manufacturing organisations and 63 service sector organisations, totally
125 organisations. In this section, the findings of our research will be indicated.
Initially the frequencies about our sample’s features like sector and personnel number will be given in
Table 1.
Table 1: The Frequencies about Sample’s Features (Sector)
Manufacturing
Service
Sector
N
%
Sector
N
Textile
12
19,4
Tourism
29
Construction
13
21,0
Banking
18
Iron and steal
8
12,9
Insurance
12
Automotive
17
27,4
Other
4
Food
11
17,7
Information technologies
1
1,6
TOTAL
62
100
TOTAL
63

%
46,03
28,57
19,04
6,3

100

87

�1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo

According to literature organisational size is an important factor that affect the HR structure so
frequencies about this is like in Table 2.
Table 2: The Frequencies about Sample’s Features (Personnel Number)
Manufacturing
Service
Personnel number
N
%
Personnel number
N
1-49
26
41,9
1-49
16
50-99
8
12,9
50-99
4
100-250
5
8,1
100-250
16
More than 250
23
37,1
More than 250
27
TOTAL
62
100
TOTAL
63

%
25,4
6,3
25,4
42,9
100

The personnel number frequencies show that there is similarity and balance in our sample in both
sectors.

Findings about HR Practices
In this part the findings of our research about HR practices will be given in two parts; for
manufacturing and for service sector, then will be compared generally.
As it is indicated in the previous researches the name of the department related with human resources is called
human resources. The distribution of frequencies on the name of the department is in Table 3.
Table 3: Distribution of Frequencies on the Name of the Department
Manufacturing
Service
Department name
N
%
Department name
N
Personnel
16
25,8
Personnel
8
Administrative and financial 6
9,7
Administrative
and 6
works
financial works
Accounting and financing

3

4,8

Human resources
Other
(Personnel
and
administrative works, personnel
and human resources)
TOTAL

32
3

51,6
4,8

Accounting
financing
Human resources
Other

62

100

TOTAL

and

%
12,7
9,5

4

6,3

40
5

63,5
7,9

63

100

There is similarity in the name of the department related with human resources and in both sectors
human resource department is used mostly with great rate.
In manufacturing sector, human resources managers/directors (N= 15, 24, 2%) and human resource and
financial works managers (N= 14, 22, 6%) are at the position for the responsibility of HR function. And the
93% of the people who is responsible of HR department are graduated from university and from business
administration (N= 31, 50, 0%). And in service sector, human resources manager/director are at the position for
the responsibility of HR function with 28, 6%. And the 93, 7% of the people who is responsible of HR
department are graduated from university and 47, 5% of them from business administration. There is also a
similarity in the graduation of the people who is responsible of HR department.
*From this point it is necessary to indicate that the person who filled the questionnaires could select
more than one choice. So the most selected choices are mentioned here and the totals can be more than 100%
for each question.
As it is mentioned in the theoretical background, there are many internal and external factors that
affect HR practices. Here are the findings about these factors;
• In manufacturing sector, the most important internal factors that affect the structure of HR function are
indicated like total quality management (N=44, 70, 9%) and features of the employees (N=36, 58, 0%).
• And in service sector, the most important internal factors that affect the structure of HR function are
indicated like features of the employees (N=47, 74, 6%), strategic management (N= 42, 66, 6%) and
the top managers’ management style (N=38, 60, 3%).
The ranking of the internal factors that affect the HR practices is different. Features of the employees
are the only common factor mentioned above.

88

�1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo
•
•

•
•
•
•

•
•
•
•
•
•
•
•
•
•

•
•
•
•

•
•
•
•
•

In manufacturing sector, the most important external factors that affect the structure of HR function are
indicated like labour structure (N= 46, 74, 1%) and competition density (N= 42, 67, 7%).
And in service sector, the most important external factors that affect the structure of HR function are
indicated like labour structure (N= 54, 85, 5%), competition density (N= 49, 77, 7%) and technology
(N=39, 61, 9%).
The external factors that affect the HR practices and their ranking of is the same.
The findings about HR functions in manufacturing sector can be indicated as below;
The necessity of ISO/TSE standards (N= 24; 38, 7 %) and HR/personnel selection (N= 24; 38, 7 %) are
the most important aims of the job analysis.
HR planning time is especially between 6 months and 1 year (N=29; 46, 7 %).
Using application form for HR selection is the most common used method (N=55; 88, 7%).
The most common used employee/ HR supply methods are overtime working (N= 32; 51, 6%) and
external employee/HR supply application (N= 31; 50%). Previous applications (N=34; 54, 8%) and
personal advices (N= 29; 46, 7%) are especially used as the type of external personnel supply
resources.
Organisations use conferences (N= 31; 50 %) and probation (N= 26; 41, 9%) as training methods most
commonly. The training result are evaluated by measuring previous and latter performances (N= 39;
62, 9%) and previous and latter tests (N=29; 46, 7%).
Job evaluation is used for employee selection according to job (N= 30; 48, 3%) and internal
movements like promotion and transfer (N=29; 46, 7%).
The most important factor that affect the wage level is effective performance appraisal (N= 44; 70,
9%) and the other market wages level (N= 22; 35, 4%).
Incentive wage system based on personal performance is the most common used wage system (N= 34;
54, 8%). Main wage plus premium/bonus is also being used frequently (N= 24; 38, 7%). The wage
increase is mostly affected by inflation rate adding performance results (N= 42; 67, 7%).
Salaried day off expect legal requirements for death, accident, marriage, etc. (N= 30; 48, 3%), bonus
(N= 30; 48, 3 %), cafeteria services and year permission money (N= 27; 43, 5%) are the most common
used social aids and services.
Performance lowness (N= 42; 67, 7%) and disciplinary (N=40; 64, 5%) are the most common layoff
reasons.
The findings about HR functions in service sector can be indicated as below;
Constituting job descriptions (N= 31; 49, 2 %) and job requirements (N= 31; 49, 2 %), job evaluation
(N= 27; 42, 9 %) are the most important aims of the job analysis.
HR planning time is especially between 6 months and 1 year (N=30; 47, 6 %).
Using application form for HR selection is the most common used method (N=56; 88, 9%). The other
ones are interview of one person (N= 34; 54, 0 %) and references (N= 33; 52, 4 %).
The most common used employee/ HR supply methods are external employee/HR supply application
(N= 37; 58, 7%) and internal movements like promotion and transfer (N= 28; 44, 4%). Previous
applications (N=38; 60, 3%) and personnel advices (N= 31; 49, 2%) are especially used as the type of
external personnel supply resources.
Organisations use conferences (N= 36; 57, 1 %) and probation (N= 21; 33, 3%) as training methods
most commonly. The training result are evaluated by measuring the usage level of what is learned
(N=32; 50, 8%) and pervious latter performances (N= 31; 49, 2%).
Job evaluation is used for internal movements like promotion and transfer (N=28; 44, 4%), equal wage
principle (N=27; 42, 9%) and also determining education necessity (N= 26; 41, 3).
The most important factor that affect the wage level is performance appraisal (N= 37; 58, 7 %) and
also market wages level is the effective factor (N= 31; 49, 2%).
Incentive wage system based on personal performance is the most common used wage system (N= 28;
44, 4%). Main wage plus premium/bonus is also being used frequently (N=23; 36, 5%). The wage
increase is mostly affected by inflation rate adding performance results (N= 38; 60, 3%). The other
important factor that affect the wage increase is average market raise (N= 21; 33, 3%).
Salaried day off expect legal requirements for death, accident, marriage, etc. (N= 32; 50, 8%), bonus
(N= 25; 39, 7%) and clothing aid (N=22; 34, 9%) are the most common used social aids and services.
Disciplinary (N= 46; 73, 0%) and performance lowness (N= 37; 58, 7%) are the most common layoff
reasons.
As a result we can generally say that;
The aims of job analysis in two sectors are different.
HR planning time is between 6 months - 1 year and is same in two sectors.
Using application form for HR selection is the most common used method in two sectors.

89

�1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo
•

The employee/ HR supply methods are different in two sectors but the type of external personnel
supply resources is the same.
• The training methods and the training evaluation methods are the same.
• The areas of job evaluation usage in two sectors are different.
• The factors that affect the wage level are the same.
• The wage systems and the factors that affect the wage increase are the same.
• The social aids and services are also the same.
• The most common layoff reasons are same in two sectors.
The general evaluation of the findings shows that there more similar aspects in HR practices than
differences.

Conclusion
Most of the HR functions and especially HR requirement and selection, training and development,
wage management, performance appraisal are nearly used in all organisations and in all sectors.
HR functions are affected by organisation culture, structure, organizational size and sector. So it is
thought that there is a difference between the HR practices of the organisations in manufacturing and service
sector.
This study’s findings shows that generally there are similarities in HR functions like HR planning time,
HR selection methods, HR supply resources, training methods and evaluation methods, wage management,
social aids and layoff reasons. But it must be said that although the methods used in these HR functions are
similar, the ranking and the factors that affect the HR practices are different. Also the aims of job analysis, HR
supply methods and the areas of job evaluation usage are different. As a result sector makes a difference in
some HR practices. But this result can’t be generalized. So many other researches that have bigger samples is
required to make general decisions and find the reasons of the differences in HR practices.

References
Andersen, A. (2000) “2001’e Dogru Insan Kaynakları Arastırması”, Sabah Yayıncılık, Istanbul.
Aycan, Z. (2001) “Human Resource Management in Turkey-Current Issues and Future Challenges”, International Journal
Of Manpower, Vol. 22 No. 3, pp. 252-60.
Beer, M., Spector, B., Lawrence, P.R., Mills, D.Q. and Walton, R.E. (1984), Managing Human Assets, Free Press, New
York.
Bingöl, D. (2006) Insan Kaynakları Yonetimi, Arıkan Yayınları, 6. Baskı, Đstanbul.
Brewster, C. ve Bournois, F. (1991) “Human Resource Management: A European Perspective”, Personnel Review, Vol. 20,
No. 6, pp. 4-13.
Ercek, Mehmet (2006) “HRMization in Turkey: Expanding the Rhetoric-Reality Debate in Space and Time”, International
Journal of Human Resource Management, Vol. 17, No. 4, pp. 648-672.
Gok, Sibel (2006) 21. Yüzyılda Insan Kaynakları Yonetimi, Beta Basım Dağıtım, Istanbul.
Kaynak, Tugrul, Z. Adal and et al., (2000) Insan Kaynakları Yonetimi, Istanbul Universitesi Isletme Fakultesi Isletme
Iktisadı Enstitusu Arastırma ve Yardım Vakfı Yayını, No: 7, Istanbul.
Kaufman, Bruce E. (2007) “The Development of HRM in Historical and International Perspective”, in The Oxford
Handbook of Human Resource Management, edit: Boxall, Peter, John Purcell ve Patrick Wright, Oxford University Press,
New York, pp. 19-47.
Lundy, O. (1994), “From Personnel Management to Strategic Human Resource Management”, The International Journal of
Human Resource Management, Vol. 5, No. 3, pp. 687-720.
Pinnington, A. ve T. Edwards (2000) Introduction to Human Resource Management, Oxford University Press, New York.
Storey, J. (1989) New Perspectives on Human Resource Management, Routledge, London.
Uyargil, C. and Ozcelik, O. (2001), “Some Characteristics of the Turkish HR Managers/Professionals and a Comparative
Study with Three European Countries (United Kingdom, Germany and Spain)”, Paper Presented At Global HRM
Conference, June 19th-22, Barcelona.

90

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                <text>HRM discipline, occurring in 1920’s in the USA, has been predominant in the  USA and the European countries and there has been evolving phases throughout the 20th  century (Storey, 1989). It has been observed that the activities, objectives, dimensions, and  importance of the human resource function have changed dramatically since the 1970s  (Lundy, 1994). This is a result of social, political, economical, legal and technological  developments and the changes of work life, organisational features, labour. HRM functions  and practices are also affected by many other factors like national and organisational  circumstances (Andersen, 2000), sector, market type (Beer et al., 1984).  In Turkey, there is similar development. The Turkish HRM literature has a paralel rhetoric  especially to USA and Europe but the reality HR practices are not at the level that is told in  the literature (Ercek, 2006). The reality is different as a result of internal and external factors  effect to organisational structure and so to HRM functions. These factors are organisational  features, interpersonal relations, job’s features and personal characteristics are the internal  factors and external labour, external resources, rivals and regulators are the external factors  (Kaynak et al., 2000; Bingol, 2006; Sabuncuoglu, 2000), the current situation of the market in  which the company operates (Uyargil and Ozcelik, 2001). Also in Turkey organisational  structure (Ercek, 2006) and the number of employees (Çakmak et al., 2007) in other words  organisational size affect the HR practices and causes differentiation. Organisational size is  also one of the factors that determine the efficiency of HR practices (Aycan, 2001; Ozcelik  and Aydinli, 2006; Tanova and Nadiri, 2005).  The circumstances of the HR practices in Turkey must be investigated more (Ercek, 2006).  This paper starts from this point and will investigate if sector is an important factor that affect  HRM practices.  This paper critically explores if sector makes a difference in HRM practices and according to  this aim the research will be based on questionnaires conducted within companies of  manufacturing and service sectors who have HR departments in Marmara Region of Turkey.  The data gained from the questionnaires are analyzed statistically using SPSS 17.00.</text>
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                    <text>International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo

Does Turkey’s Stance on Iran’s Nuclear Development
Program Reflect an Axis-shift in Turkish Foreign Policy?
Nguyen Mai Lan Thanh
Fatih University, İstanbul, Turkey
lan.thanh@fatih.edu.tr
The world is being nourished with tremendous development in technology,
which causes the greatest destruction of civilization from the intrinsic
civilization itself. It is believed that nuclear weapons states hold a handful
of nuclear arsenals, strong enough to eradicate completely life on earth.
With the experience of the devastating atomic bombs marking the end of
the Second World War, it is not difficult to say that the whole world is
shaking when there is any state attempting to develop nuclear armaments.
In the case of Iran recently, different approaches and resolutions have
been discussed. Consequently, several of them have been implemented, in
order to prevent the Islamic Republic from pursuing nuclear arsenal,
despite Tehran’s discourses on her intention to have her own nuclear
program for peaceful and civilian purposes. Turkey, as an active regional
player, reflects her position on the issue via the state’s foreign policy. That
Turkey has been hesitating at complying with the West’s sanctions on Iran
poses not only questions but also confusion among the international
community. “Does Turkey’s stance on Iran’s nuclear development program
reflect an axis-shift in Turkish Foreign Policy?”
This paper seeks to answer that question, by analyzing the context that
endorses the Iranian nuclear program in pursuance of nuclear technology,
and by focusing on the discourses offered by the Iranian and Turkish
representatives to the international community concerning the ambiguities
of the Iranian nuclear development program.
In contrast to much in the literature which perceived Turkey as a
moderator, this paper argues that Turkey is more like a facilitator, besides
proposing mediation grounds like the previous Baghdad and Moscow
sponsored mediations between the US/EU and Iran. From this perspective,
Turkey’s stance seems clear in supporting the idea that instead of imposing
sanctions, the West must think of other effective ways to resolve the
nuclear energy. In other words, Ankara believes that diplomatic talks and
negotiations shall be continued and attributed to Iranian nuclear debacle.
Overall, this paper concludes that Turkey’s decision of no sanctions on Iran
does not indicate that Turkish foreign policy is anti-Western. Rather, it
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�International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo

illustrates Turkey’s growing independence as a regional power and
flexibility in decision-making process with regard to her own interests, such
as gaining image in the Middle East with the new foreign policy doctrine,
less independence on Russian energy imports by Iran’s alternative, and
prioritizing domestic solutions, while not upsetting the West’s mutual
interests.
In addition, this study will contribute to the existing literature on the part
of the explanation of Iranian diplomacy with regard to the religious
understanding of “taqiyya” (deception) and “qitman” (concealing).
Keywords: Nuclear Program, Iran, Middle East, NPT, Turkish Foreign Policy,
Western Orientation, Axis-Shift.

228

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                    <text>International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo

Does Turkey’s Stance on Iran’s Nuclear Program Reflect an Axis-Shift in
Turkish Foreign Policy?
Mai Lan Thanh Nguyen
Fatih University, Istanbul, Turkey
lan.thanh@fatih.edu.tr

Abstract
Iran‟s nuclear development program has been one of the hot topics in the agenda of
a vast number of states‟ foreign policies. The Islamic Republic has declared her
intention toward this nuclear plant as for peaceful purposes in compliance with the
international treaty. However, the state‟s sovereignty seems to be degraded when
the West has disregarded Iran‟s discourses. Turkey with her history of being an ally
with the West, especially the U.S, and constant attempt to be a member of Western
organizations, NATO during the Cold War, and the EU since its establishment, has
demonstrated the country‟s friends and foes. However, her reluctance to comply
with Western sanctions on Iran recently poses a question among the international
community whether Turkish Foreign Policy towards nuclear-aspiring Iran changes
its Western orientation. This paper endeavors to explain Turkish interests in shaping
Turkey‟s position regarding Iranian nuclear program. It is believed that Turkey has
attempted to play neutrally her role in mediating the dispute between the West and
Iran, with Turkish Foreign Policy served both sides as long as it would not hamper
Turkish national interests and priority concerns. In contrast to much in the literature
which perceived Turkey as a moderator, this paper argues that Turkey is more like a
facilitator, besides proposing mediation grounds like the previous Baghdad and
Moscow sponsored mediations between the US, EU and Iran. Overall, Turkey‟s
decision of no sanctions on Iran does not indicate that Turkish foreign policy is
anti-Western. Rather, it illustrates Turkey‟s growing independence as a regional
power and flexibility in decision-making process with regard to her own interests,
such as gaining image in the Middle East with the new foreign policy doctrine, less
independence on Russian energy imports by Iran‟s alternative, and prioritizing
domestic solutions, while not upsetting the West‟s mutual interests. The paper also
focuses on the discourses offered by the Iranian and Turkish representatives to the
international community concerning the ambiguities of the Iranian nuclear
development program. In addition, this study will also contribute to the literature
addendum on the part of the explanation of Iranian diplomacy with regard to the
religious understanding of “taqiyya” (deception) and “qitman” (concealing).
Keywords: Nuclear program, Iran, Middle East, NPT, Turkish foreign policy, axisshift, Iranian diplomacy, sanctions, taqiyya, qitman.

Introduction
The world is being nourished with tremendous development in technology, which causes
the greatest destruction of civilization from the intrinsic civilization itself. It is believed
that nuclear weapon states hold a handful of nuclear arsenals, strong enough to eradicate
completely life on earth. With the experience of the devastating atomic bombs marking the
end of the Second World War, it is not difficult to say that the whole world is shaking
when there is any state attempting to develop nuclear armaments.
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�International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo

In the case of Iran recently, different approaches and resolutions have been discussed.
Consequently, several of them have been implemented, in order to prevent the Islamic
Republic from pursuing nuclear arsenal, despite Tehran‟s discourses on her intention to
have her own nuclear program for peaceful and civilian purposes. Turkey, as an active
regional player, reflects her position on the issue via the state‟s foreign policy. That Turkey
has been hesitating at complying with the West‟s sanctions on Iran poses not only
questions but also confusion among the international community. “Does Turkey‟s stance
on Iran‟s nuclear development program reflect an axis-shift in Turkish Foreign Policy?”
This paper seeks to answer that question, by analyzing the context that endorses the Iranian
nuclear program in pursuance of nuclear technology, and by focusing on the discourses
offered by the Iranian and Turkish representatives to the international community
concerning the ambiguities of the Iranian nuclear development program. In contrast to
much in the literature, which perceived Turkey as a moderator, this paper argues that
Turkey is more like a facilitator.
The structure of the paper is as follows. Part two analyzes Iran‟s problem and Iranian
diplomacy. Part three introduces Turkey‟s position. Then, part four evaluates if the policy
is diverting from Western-oriented tradition in Turkey. Consequently, part five explains
such stance. Finally, part six concludes the paper.
Iran’s problem and Understanding Iranian diplomacy
Iran‟s recent history especially during the 19th and 20th centuries is one of foreign
domination. Today, apparently, it is the U.S that the Islamic Republic finds itself
constantly confronted with. Militarily speaking, Iran‟s capability is considered an inferior
to other regional opponents, namely, Israel and perhaps, Turkey. What the world is
observing now, as a result, is an Iran that longs for exercising leadership of the Muslim
world (Villelabeitia, 2012), a membership to the exclusive “nuclear club”, and balancing
Israel‟s nuclear weapons. (Waltz, 2012)
In fact, nuclear development program is not something new in Iran. Since the 1957 there
have been several attempts. Prominently in the 1979 Revolution with the U.S support, the
state has already obtained the skills via “Atoms for Peace” program under the instruction
and provision by the U.S. What an attracted attention of the international community,
Turkey included, is that the IAEA since 2005, kept reporting its inability to access to
Iranian nuclear plants in full scale.1 The West has, interestingly, immediately responded
with deterrence and sanctions, etc. despite Iranian discourses on her so-claimed genuine
intention.
Since Iran is an Islamic Republic, a religious perspective might certainly help understand
Iranian diplomacy. After the revolution, the regime‟s leader, Grand Ayatollah Khomeini,
announced a fatwa forbidding nuclear weapon development program in his country. Some
scholars employed this fatwa as a means to judge Iran‟s nuclear plant today that it is not
peaceful as the government declared. Iranian diplomacy, nowadays, along with this
fatwa,exposed to the world the two concepts of religious understanding of “taqiyya” and
“qitman”.2
Taqiyya, meaning deception or disinformation, is a term generally used by Shiite Muslims,
who believe that they may lie and pretend to hide their religious identity under perceiving
1

For the latest news on key findings by the ISIS analysis of IAEA report regarding Iranian nuclear potentials,
please see the appendix.
2
The terms were first mentioned in Todayszaman newspaper by Dr. Bulent Kenes, a scholarly figure
regarding Iranian politics and issues.

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�International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo

threats. As an integral part of Muslim military strategy, taqiyya is also employed to trick or
deceive enemies.3 Another synonymous term is “qitman” meaning concealing. It refers to a
cautious reservation and dissimulation of genuine intentions. As such, the two terms have
been used as means of defense and concealment by Shiites against unbelievers. Iranian
diplomacy, thus, can be understood with the skillful use of the two terms.4
Needless to say, however, without foreign assistance, nuclearization of Iran seems vague
due to her poor industrial and technological base. Believing so, the Obama administration
insists on imposing economic sanctions on the country. One of the explanations for such a
reaction is that the U.S is not ready for Iranian nuclear weapon existence. (Parasiliti, 2009)
Iran is perceived as playing the Israel game. Although Iran is aspiring to have a nuclear
ambiguous status like Israel, she will stay in the NPT for legitimate cover. History has
proved that no one can stop nor attack once one goes nuclear, considering the cases of
Israel, North Korea, Pakistan, and India. Iran is different from Iraq. Israel conducted
surgical strikes in the mid-1980s and took out the Iraqi nuclear facility. Iran has over 20
and all are on different locations. A surgical operation is more or less impossible. Iran is
aspiring to acquire nuclear technology and continues to play the game excellently. She has
her own mediation as well as delaying strategy. Moreover, Iran did receive civilian nuclear
technology and materials in the Atoms for Peace program by the U.S so they knew what to
do. Since there is not a lot of difference between civilian and military technology- only
weaponization procedures- Iran knew the roadmap, which in turn makes it harder for other
actors to response.
On August 30, 2012, UN Secretary General Ban Ki-moon contended Iran‟s right to nuclear
development program. He proclaimed and showed expectations toward fruitful talks
between the Islamic Republic and the P5+1. In addition, the 120 Non-Aligned Movement
states also openly supported Iran‟s right to development nuclear power for civilian
purposes after their meeting together in Tehran. In response, the Foreign Minister of Iran,
Ali Akbar Salehi asserted a strong statement about the intention of the Islamic Republic.
“I would like to re-emphasize that we do not see any glory, pride or power in the nuclear
weapons, quite the opposite based on the religious decree issued by our supreme leader, the
production, possession, use or threat of use of nuclear weapons, are illegitimate, futile,
harmful, dangerous and prohibited as a great sin.” (PressTV, 2012)

Moreover, Ebrahim Nekou, an Iranian lawmaker said that the Islamic Republic favors
resolving its nuclear standoff through negotiations, “The Islamic Republic of Iran still
insists on resolving the [nuclear energy] issue through diplomatic ways and is ready for
negotiations.” However, instead of recognizing Iran's right, the United States and other
Western countries are imposing pressure and sanctions, such policies have controversially
debated to lead to ineffective diplomatic progress between Iran and the P5+1. Iran's

3

The definition of the concept can be founf in Esposito, J. (2003). The Oxford Dictionary of Islam. Oxford
University Press.
4
It is believed that Mahmoud Abbas in his interview with the EU on Palestine issue, Arafat and Oslo dispute,
and some other Middle Eastern leaders have at least once employed such means. Since this paper only
introduces the terms to the literature, there is no deliberate analysis, because its main focus is Turkish foreign
policy. One can find the art and legitimacy of the use of taqiyya and qitman during the prophethood as well
as in one of the hadiths: “he who keeps secrets shall soon attain his objectives.”

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nuclear pursuit, as a result, has become the state‟s securitized issue with regard to the
challenges and threats to the national identity.
Turkey’s position
Turkey is believed to have played a neutral role in this Iran‟s nuclear energy issue.
Although Turkey complies with U.N. decisions, Taner Yildiz, Energy and Natural
Resources Minister of Turkey, said, Turkey did not abide by unilateral sanctions imposed
by other countries. (Farznews, 2012) Until 28th April 2013, according to CNS news,
Turkey is still preserving her trade relations with Iran. The volume of gasoline as well as
other petroleum products sold to Iran keeps sustaining and increasing despite U.S
sanctions. (CNS News, 2013)
Turkey, on the other hand, being preoccupied with domestic concerns, has not really
regarded Iranian nuclear program as an immediate threat in comparison with other priority
concerns. Besides, Turkey is already covered by the US and the NATO allies; therefore,
nontraditional security for Turkey is not a posed challenge. (Kibaroglu, 2011) Turkey has
other priorities, such as the issue of internal security and does not want a nuclear arms race.
(Ustun 2010, 19) There are a lot of separatist movements by the Kurds; and the issue of
Kurdistan in Northern Iraq is also aggravating this. Therefore, Turkey will neither initiate
any steps nor will she support further sanctions on Iran. Since Turkey is a legitimate and
internationally well-balanced actor, she would firmly express her position and Turkish
Foreign Policy on Iran neutrally in the region while she is preoccupied with domestic
security policy. Since, it would be illogical to think that Turkey would step into an
unsecured and dangerous zone while she has already been trying to avoid one at home.
“No one has the right to use force against a country whose nuclear capabilities are used for
peaceful purposes,” said Prime Minister of Turkey, Recep Tayyip Erdogan after his talk with
Iranian Vice President Mohammad-Reza Rahimi. “Anyone who has common sense opposes
the use of nuclear power as a weapon, but at the same time, nuclear activity for peaceful
purposes should not be opposed.” (The Times of Israel, 2012)

This statement of the Prime Minister has clearly defined Turkey‟s position in the
international community regarding nuclear energy program in Iran. That is, Turkey
officially recognizes the right of Iran to pursue nuclear energy program. However, those
nuclear plants should be accessible for the IAEA. In this way, the international community,
and so to say, Turkey and the West would be able to increase their confidence in this
peaceful development plan.
The U.S and the EU have come up with several solutions regarding Iranian nuclear
development program. Even though threats of use of force were also employed, things do
not show positive results. Consequently, several sanctions have been imposed on Iran‟s
economy, especially on the country‟s oil and financial sectors, believing that the outcome
would affect the Central Bank of Iran to carry on any business. From financial sectors
angle, as a result of sanctions, the U.S and the EU together expected a drop in foreign
investors and customers of Iranian crude oil. However, it seems that all those efforts
created a counter-effect. That is, Tehran is feeling threatened and weak confronting the
superpowers; therefore, together with her own citizens suffering now from the economic
sanctions, Iran developed even a stronger will to have her own means of protection. A
nuclear weapon Iran is a very likely outcome if the West has no better alternative solutions,
as several critics discussed.

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�International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo

Turkey, as a consequence, reserved her foreign policy‟s view at this point. Turkey as a
regional moderator is only to propose mediation grounds like the previous Baghdad and
Moscow sponsored mediations between the US/EU and Iran, which makes Turkey “feel”
more into the game. From this perspective, Turkey‟s stance seems clear in supporting the
idea that instead of imposing sanctions, the US and the West must think of other
effectiveways to resolve the nuclear development issue in Iran. In other words, Ankara
believes that diplomatic talks and negotiations shall be continued and attributed to Iranian
nuclear debacle. It is increasingly observed that soft power has been the main logic and
nature of Turkish foreign policy under the current AKP government since 2002. Turkey
has conducted diplomatic talks especially in the melting pot of the conflicting Middle
Eastern zone. The first apparent attempt of Turkey as being a mediator in the region has
been seen through the tri-partite Joint Declaration by Iran, Brazil and Turkey in 2010.5
Giving such a decision, Turkey believed that economic cooperation and diplomatic talks
would bring positive outcome to the solution of Iran‟s nuclear issue.
Turkey does not want a nuclear-armed Iran, neither but does she would like to close the
access to nuclear energy technology in her country. (Kibaroglu, 2009)Lesser (2004) argued
that Turkey could act more radically to prepare for a nuclear Iran as well as consider her
potential to go nuclear. He further explained in his paper if Turkey can live with a nuclear
Iran.
“Could the emergence of a nuclear Iran be accommodated comfortably in the Turkish
security scene? Or would it spell a fundamental and negative transformation of the strategic
environment? The answer to this question should inform the Turkish calculus as the
international community grapples with the challenge of a near-nuclear Iran.” (Lesser, 2009)

If Iran fails to pursue her nuclear energy development due to the opposition of the West,
then other states would certainly be concerned on their future likeliness of self-enrichment
and reprocessing nuclear technology and peaceful uses of nuclear energy. Ankara,
consequently, is precautious that the rights given to non-nuclear NPT states will no longer
be guaranteed.6 Hence, a proper strategy and foreign policy should be devised carefully. A
deliberate strategy to deal with Iran’s nuclear ambition will have to address both the supply
and demand sides of the nuclear equation, (Bahgat, 2006) Pressuring foreign governments
and companies to stop cooperation with Tehran is not enough. Iran’s security concerns
need to be addressed since it would definitely affect the balance of power in the region.
Improving the security environment in the Persian Gulf and the broad Middle East would
substantially reduce Tehran’s incentives to pursue nuclear capability. As Kemp (2003)
asserted, there is a need for “multilateral and multi-tiered efforts that would involve carrots
as well as threatened sticks.”
Turkish decision of no sanctions: An act of anti-Western orientation?
Turkey since the birth of the republic has been perceived, especially by the Middle Eastern
states, as a puppet of the West, that she only listens and acts according to the West‟s will.
Moreover, Turkish secularism has been one of the factors that disintegrate Turkey from the
region, in which majority of population are Muslims. After the refusal to the U.S to employ
5

See Tehran Declaration, www.fas.org/nuke/guide/iran/joint-decl.pdf
Further discussion about the agreement see Fitzpatrick, M. (2011). Containing the Iranian nuclear crisis: The
useful precedent of a fuel swap.Perceptions, 6 (2), 27-42.
6
Official from the Turkish Ministry of Foreign Affairs (name withheld due to conference format and
Chatham house rules), Ankara Workshop on Nuclear Proliferation, Ankara, Turkey, June 2011.

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�International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo

her territory during Iraq invasion in 2003, however, now, Turkey again denies
implementing her traditional Western allies on imposing sanctions on Iran; this confused
both the East and West. Whether this act of Turkey an anti-Western orientation or not is an
intriguing question to investigate.
Shortly, there is not enough evidence to confirm that Turkish Foreign Policy towards
nuclear-aspiring Iran has changed its Western orientation. On the contrary, Turkey and the
internal priorities as well as a neutral status serve both the West and Iran. This is
internationally observed through her compliance to the NPT obligations by Iran and no use
of force by the West. In his paper, Sinan Ulgen defenses Turkish foreign policy regarding
Iran with the notion of the new activist approach requiring more thorough analysis to
understand, not simply a change or shift in axis as recently Turkey has been “accused of.”
(Ulgen, 2010) Similarly, Gurzel argues that since 2002, under the AKP government,
Turkish foreign policy has rotating her role toward Iran‟s nuclear development program.
Turkey is believed to have been an observer only, then recently a facilitator and a
mediator. That is to say, Turkey‟s own national interests concerning future possibility of
nuclear development plant have shaped its stance. (Gurzel, 2012)
Similarly, Kanat (2010) argued that changes in Turkish foreign policy are not aimedto deWesternize Turkey; instead they are attempts to create an autonomous, self-regulating, and
self-confident foreign policy agenda while normalizing the previous crisis-driven
policymaking in Turkey’s foreign relations. As a result, Turkey will not take blindly the
sanctions of the West, more specifically, the U.S. Surprisingly, the U.S would not be upset
about this. Apparently, Washington has two allies in the region, Israel and Turkey.
However, Israel is neither a mediator nor a trustworthy partner or friend with any state in
the Middle East. Without Turkey, the U.S could not dominate its rule in the Middle East.
Especially after the Arab spring and the global economic crisis, the power of the U.S did
not only decline inside but outside the country as well, apart from the Middle East, where
Turkey is doing the mediation role. Moreover, the tension between Turkey and Israel has
left an important imprint on the relationship between Turkey and Iran. (Bacik, 2012)
Certainly, Turkey is playing this role not for the favor of the U.S but indirectly for the
regional and international politics. Hence, Turkish foreign policy has not diverted its
direction from the West while still exposing good relation with the Islamic Republic.
Ankara continuous economic relations with Tehran have proved to be effective regarding
Turkey‟s interests. For Ankara, changing Turkey‟s pro-Western orientations is not of main
focus. Instead, ability and capability to act on its own are main concerns of the state.
According to the Prime Minister, “Turkey cannot designate its foreign policy in line with
someone else‟s directives but on its own”.7

How to explain Turkey’s stance?
It is important to understand Turkey‟s stance towards Iranian nuclear program because
indeed, Turkey‟s relations with Iran are important not only for domestic but also for
regional and international politics of Turkey. (Aras, 2001) As a matter of fact, it is believed
7

World Bulletin. (2009, December 23). Turkey‟s PM in Syria defends “independent” foreign policy.
http://www.worldbulletin.net/index.php?aType=haberArchive&amp;ArticleID=51712.

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�International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo

that Turkish foreign policy towards Iran with increasing attentions from the international
audiences today is a result of Turkey‟s soft power which has been exposed intensively
especially under the AKP government.
Turkey is, by nature, geopolitically important. Turkish Foreign Policy reflects the nation‟s
interests in both the East and the West. Regarding the Iranian nuclear issue, Turkey serves
both the West and Iran. Ankara does not risk any foreign policy decisions to dampen her
relations with both the Western countries and Iran. (Kibaroglu and Caglar, 2008) Apart
from Turkey‟s long history of being alliance with the U.S, Turkey, as a candidate of the
EU, is expected to pursue a policy in line with that of the EU‟s Iran policy, apart from
sanctions. (Alcaro, 2012)
First of all, from economic perspective, the EU is Turkey's largest trading partner and
Turkey is at top seven among importers of EU products and top five in exporting states.8
Meanwhile, Turkey's main exporting markets are the EU, Iraq, Russia, USA, United Arab
Emirates and Iran.9 On the other hand, Turkey imports also largely from the EU, Russia,
China, USA, Iran and South Korea.10 Turkish Foreign Policies, hence, on Iran is not only
determined by Iran‟s aspiration to possess nuclear energy but also on that Iranian and
Turkish diplomatic relations have improved significantly as a result of rising economic
relationship and security cooperation (Ulgen, 2012).
Secondly, Turkey is known as being a large energy importer. One of the motives for
Turkey to continue importing energy from Iran despite the sanctions placed by the Western
countries is believed to be Turkish effort in reducing dependence on Russian energy
import. The figure below shows that Turkish crude oil import from Iran has increased
dramatically and exceeded that from Russia. In 2009, Turkey had to rely her oil
consumption demand on Russia for 40% and on Iran for 26%. The figures reversely
changed in 2011 with Russian oil imported as 12% and that of Iran as 51%. This means
that Iran is increasingly an alternative main oil supplier for Turkish growing market.
Table 1. Crude Oil Imports – 2009/2011

Source: Babali, T. (2012). The role of energy in Turkey‟s Relations with Russia and Iran.The Economic
Policy Research Foundation of Turkey, March 29.

Turkey wants to be a regional power?
Another argument to explain Turkey‟s position regarding Iran is Turkish‟s “zero problems
with neighbors” foreign policy and “strategic depth” doctrine by Foreign Minister Ahmet
8

European Commission Statistics
Ibid.
10
Ibid.
9

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Davutoglu. Turkey, to some extent, fits the definition of regional power. With the objective
of “strategic depth”, Turkey considers herself and is considered as an important player in
several regions due to her geopolitics, namely, the Middle East, the Balkans, the Caucasus,
and the Mediterranean.
To begin, Turkey has strong partners in the Middle East, and close friends in the West,
among others, the United States. In this regard, Israel and Iran might be considered as
regional powers; nevertheless, neither of the two possesses such status as Turkey. More
broadly speaking, none of the Arab countries has the same position and plays the same
rules that Turkey is playing. Turkey is seen as a bridge between the East and the West and
she is well aware of this fact.
Turkish policy till 2002 was perceived as passive one towards the Arab world in regard
that the regime in Turkey was heavily Western oriented, and distant itself from the Arab or
Islamic world as part of the legacy of Ataturk. Turkey was completely directed by her
government towards the West and Israel was the only friend in the Arab world back then.
The fact that AKP came into power in 2002 made a remarkable turning point for Turkey
with especially its prominent foreign policy “zero problem with neighbor countries.”
Practically, the new government enhanced Turkish position in the Middle East. As a
consequence, economic cooperation and trade relations have been established and the ties
among Turkey with the Arab countries have never been that strong before. Some critics
may undermine that the policy might not help achieve zero problems, however, it helps
Turkey improve her economic cooperation and political rule, neither did Turkey lose her
legitimacy of being the combination of East and West, as well as the mediator of them as a
bridge between cultures.
In this respect, energy, among others, is one of Turkey‟s strategic cards to play a role of a
regional power. The securitization of energy has been reflected mostly in Turkish foreign
policy. That is, it attempts to reduce Turkey‟s heavy dependence on imported energy
resources. To illustrate, Iran is among those suppliers that Turkey conceived in her
diversification strategy for alternative energy resources. As a result, Turkey‟s energy
strategy is aimed at both domestic demand and contributing to energy security issue in
Europe. Turkey, in this sense, is ambitious to become a pivotal energy bridge between not
only East and West, but also between North and South.
Is Iran a competitor?
Regarding developments in the Middle East in the aftermath of the Arab Spring, Turkey,
Iran, and Saudi Arabia are aspired to assume the power vacuum as being a regional leader.
(Guzansky et al., 2012) As a result of the Arab uprising, each state seems to be more
cautious in formulating and implementing foreign polices to maintain the peace at home as
well as not to lose credit in the region among other strong players. A vast amount of
literature has been discussing the quest of Iran for nuclear technology and infrastructure. If
Hashemi Rafsanjani and Muhammad Khatami once wished to use nuclear weapons as a
means of deterrence, the present president Mahmoud Ahmadinejad and the Revolutionary
Guards consider them as a critical tool to proclaim Iran's regional power.
Regional ambitions of Iran are not something new. Historically, Iran was an empire until
the 19th century. If one refers to the legacy of Ottoman Empire to address Turkey in her
ambition for the leading chair, it is the Persian Empire nostalgia that can be said for

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today‟s Iran to reemerge. The direct and indirect interference of the Great Powers in
Iranian affairs in the 19th and 20th centuries were also main escalators for Iran to become a
regional power. (Ayman, 2012)
From Turkish side, it is believed that Turkey has been constantly mirroring Western values
to the region on the ground that she is a secular state. This fact somehow upset the
Muslims in the Middle East. Yet, at the same time, it may also be understood that the
attempt of Turkey to democratize the country simultaneously reflect Islamic civilization
could not be found elsewhere. The United States, especially, has denoted Turkey as the
role model for the Middle Eastern countries. Moreover, Turkish Foreign Minister
Davutoglu kept emphasizing a “just” and “inclusive” global order. In his view, “Turkish
state as the successor state of the Ottoman Empire that has responsibilities toward
neighboring regions should be among the countries that will lay the foundations of this
order.”11
However, neither Turkey nor Iran could be successful in assuming the regional leader‟s
position yet.
“So far neither Turkey nor Iran seems to be able to acquire a preponderance of power in the
Middle East that succeeded in building institutions to regulate regional affairs. It does not
seem that anything like that could also happen in the near future because of major powers
opposed interests, the mutual balancing acts of Turkey and Iran and the complicated but not
harmonious interests of regional states that motivate them to align with external powers as
well as with Turkey and Iran. But their stakes are in great danger and both states’ actions
have the power to change the course of developments whereas the risks of becoming enemies
would risk their existential interests.” (Ayman, 2012)

Nuclear or military capability used to be regarded as a means to measure power. Recently,
nevertheless, the world seems to be more content with a peaceful use of soft power. In this
regard, Turkey has been one of the states that have arisen as such. (Ulgen, 2011) This may
lead to a Europeanization of Turkish Foreign policy, as the EU has long been notorious for
soft power employment in solving disputes and conflicts.
More specifically, when one looks at the foreign policy domain, one observes that the AKP
government has given Davutoglu the steering wheel to handle Turkish foreign policy.
(Sozen, 2010) Except for a few incidents, such as Hamas leader Khalad Mashal‟s visit to
Turkey (Zaman, 2006) the prime minister‟s denunciation of Israel‟s policies towards
Palestinians (Today‟s zaman, 2010), and the invitation of the Sudanese prime minister to
Turkey (Turkish Daily news, 2010), Davutoglu‟s policies have not significantly irritated
the Turkish foreign policy establishment. Although the foreign minister has been criticized
by some for driving Turkey away from George W. Bush‟s actions, the EU‟s not-sofriendly policies towards Turkey in a way justified his attempt to bring Turkey closer to
countries in the region.

Conclusion

11

Today’s Zaman. (2009, May 4). New FM Davutoglu to Build Order-Instituting Role for Turkey.

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It is believed that hard power means waging war or attacking Iran coercively is very costly
affair while the world is now under an economic fragile zone. By contrast, soft power as
economic sanctions and diplomacy has been employed so far to counteract to Iranian
nuclear program. It is realized that economic sanctions applied by the U.S and the
European Union have indirectly led to Iran‟s recent crisis. However, this method only
suffered the civilians inside the country, but did not discourage Iran‟s ambition to go
nuclear. Diplomatic negotiations, hence, are more desired. Turkey is, therefore, in favor of
this way of resolving the problem.
In short, Turkey‟s decision of no sanctions on Iran does not indicate that Turkish foreign
policy is anti-Western. Rather, it illustrates Turkey‟s growing independence as a regional
power and flexibility in decision-making process with regard to her own interests, such as
gaining image in the Middle East with the new foreign policy doctrine, less independence
on Russian energy imports in place of Iranian one, and prioritizing domestic solutions,
while not upsetting the West‟s mutual interests.
Turkey‟s stance on Iran reflects her neutral stance and mediating effort. Although it is a
fact that Turkey does not apply unilaterally sanctions by the U.S on Iran, it does not mean
that Turkey has deviated from the West. Instead, Turkey is actively playing her mediating
role in resolving the conflict as a bridge between East and West, while preserving her own
internal security and multilateral interests.

References
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Appendix
The International Atomic Energy Agency (IAEA) released on February 21, 2013 its latest report on the
implementation of NPT safeguards in Iran and the status of Iran‟s compliance with Security Council
resolutions.
Key Findings:
1) Number of installed centrifuges at Natanz Fuel Enrichment Plant (FEP) increases substantially;
2) IR-1 centrifuge installation is occurring at a faster than expected rate at Natanz FEP;
3) New IR-2m advanced centrifuges are being installed at Natanz, although when they will start enriching or
how well they will operate remains unknown;
4) Number of cascades producing near 20 percent low enriched uranium (LEU) is constant;
5) Iran has less than enough 20 percent low enriched uranium hexafluoride for one nuclear weapon, if further
enriched to weapon-grade;
6) Almost all of the cascades at Fordow are now vacuum tested and likely ready for enrichment; 7) Iran
resumes converting near 20 percent LEU hexafluoride to oxide form;

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�International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo

8) Iran will use the Tehran Research Reactor (TRR) to test IR-40 Arak reactor fuel; continued construction of
the IR-40 reactor is in violation of UNSC resolutions; and,
9) No progress on "structured approach" to resolve outstanding questions about military dimensions and no
access to Parchin, which Iran continues to sanitize.

13

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                <text>The world is being nourished with tremendous development in technology,  which causes the greatest destruction of civilization from the intrinsic  civilization itself. It is believed that nuclear weapons states hold a handful  of nuclear arsenals, strong enough to eradicate completely life on earth.  With the experience of the devastating atomic bombs marking the end of  the Second World War, it is not difficult to say that the whole world is  shaking when there is any state attempting to develop nuclear armaments.  In the case of Iran recently, different approaches and resolutions have  been discussed. Consequently, several of them have been implemented, in  order to prevent the Islamic Republic from pursuing nuclear arsenal,  despite Tehran’s discourses on her intention to have her own nuclear  program for peaceful and civilian purposes. Turkey, as an active regional  player, reflects her position on the issue via the state’s foreign policy. That  Turkey has been hesitating at complying with the West’s sanctions on Iran  poses not only questions but also confusion among the international  community. “Does Turkey’s stance on Iran’s nuclear development program  reflect an axis-shift in Turkish Foreign Policy?”  This paper seeks to answer that question, by analyzing the context that  endorses the Iranian nuclear program in pursuance of nuclear technology,  and by focusing on the discourses offered by the Iranian and Turkish  representatives to the international community concerning the ambiguities  of the Iranian nuclear development program.  In contrast to much in the literature which perceived Turkey as a  moderator, this paper argues that Turkey is more like a facilitator, besides  proposing mediation grounds like the previous Baghdad and Moscow  sponsored mediations between the US/EU and Iran. From this perspective,  Turkey’s stance seems clear in supporting the idea that instead of imposing  sanctions, the West must think of other effective ways to resolve the  nuclear energy. In other words, Ankara believes that diplomatic talks and  negotiations shall be continued and attributed to Iranian nuclear debacle.  Overall, this paper concludes that Turkey’s decision of no sanctions on Iran  does not indicate that Turkish foreign policy is anti-Western. Rather, it illustrates Turkey’s growing independence as a regional power and  flexibility in decision-making process with regard to her own interests, such  as gaining image in the Middle East with the new foreign policy doctrine,  less independence on Russian energy imports by Iran’s alternative, and  prioritizing domestic solutions, while not upsetting the West’s mutual  interests.  In addition, this study will contribute to the existing literature on the part  of the explanation of Iranian diplomacy with regard to the religious  understanding of “taqiyya” (deception) and “qitman” (concealing).  Keywords: Nuclear Program, Iran, Middle East, NPT, Turkish Foreign Policy,  Western Orientation, Axis-Shift.</text>
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