20 October 2006

1167) An 'innovative' open letter to a French presidential candidate

Mme. Segolene Royal:

This letter is to salute your courageous and visionary call last Thursday for expenditures by European Union governments in the areas of research and development (R&D) and in innovation to be exempt from the budgetary constraints of the Growth and Stability Pact, the so-called “Maastricht Criteria.” . .

Your “blueprint” outlined last week touched on many important areas, from labor standards to agriculture. It is consequently my hope that the breadth of your vision and blueprint does not lead to neglect by the media and others of the specific incentives to boost intelligent spending on R&D and innovation. For yours is without question the most original idea I have heard in recent years to revitalize Europe's technology-based industries and prepare them for a future in which they can compete without resorting to “flight” to the United States or “outsourcing” to low-cost China and India. In short, this dimension of your set of proposals deserves a thorough airing.

I hope you will forgive the temerity of a journalist's resort to the device of an “open letter” to offer my praise. But given the fact your R&D proposal came on the same day as the unfortunate vote in France's Parliament to censure those who disagree with a particular interpretation of events surrounding the collapse of the Ottoman Empire at the beginning of the 20th century, I am sure you will understand my motives. The history of the tragedy that befell the Armenian people in 1915 is a separate matter. But as that vote has set in motion a train of political events that may well stalk relations between France and Turkey for many years, the timing of your proposal on European economic regeneration may well be a source of hope for the continuation of productive dialogue and collaboration between the two countries.

The reasons for this are two:

First, Turkey is deeply engaged in its own debate about nurturing and supporting the concept of innovation. Books on the topic go through multiple printings, innovation is frequently in the headlines of virtually all the press and the importance of innovation is one we champion in my own newspaper, Referans, the national business daily. With strong academic networks and a student population that is more than twice as large as that of any other European country, Turkey has much to contribute to innovation in the broader European context in life sciences, IT, engineering, agro-industry and in many other sectors. Turkey's resources in this area are, in my view, key to restarting the so-called “Lisbon Agenda” of 2000 that seeks to make Europe the world's most competitive economic bloc.

The second reason goes to the underlying logic in your proposal of exempting expenditures in support of long-term economic sustainability from the constraints of short-term fiscal accounting. As you are aware, Turkey is well on the way to orienting its own economy to the terms of the EU's “Growth and Stability Pact.” But Turkey also faces an additional fiscal burden imposed by the International Monetary Fund (IMF). I refer to the IMF-imposed requirement to maintain a budgetary surplus exclusive of interest of 6.5 percent. This criterion leaves planning for Turkey's 2007 budget with a current shortfall of some YTL 6 billion, a sum equivalent to about 3.25 billion euros. At this juncture, the logic and elegance of your proposal is something that should be brought to the attention of the IMF, not just as it relates to the case of Turkey but perhaps as its potential relates to the health of other emerging economies as well.

I wholeheartedly support your view as you expressed it last Thursday that “There is a demand for the French in Europe and a demand for Europe in the world.” There is also a demand in Turkey, in Europe and the world for the kind of economic thoughtfulness you so articulately put forward last week at a moment when our attentions were elsewhere.

I would certainly appreciate your forwarding of this letter to those members of your economic policy team who might assist us in exploring the specifics of what you propose. Similarly, if either you or anyone on your team might envision a trip to Turkey, we would be pleased to host you as guests and provide you with a broad forum for the further sharing of your ideas.

With kind regards and best wishes for your success,

David Judson
Managing Editor
Referans
October 20, 2006

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