Policy Documentation Center

Elbakidze, Marina

Assessment of reform in education system

Helmer, Roger

Samy, Joel Anand

2009 International Property Rights Index

Holtom, Paul

Implementation of the EU Common Position on the Control of Arms Brokering

Janashia, Simon

The Quality Assurance System in Georgian Schools

Kentchadze, Thea

The promise of eastern partnership

Krzak, Maciej

Walewski, Mateusz

Polish Economic Outlook
No. 1/2009 Polish economic outlook - deflation scare - not in Poland

Sedrakyan, Sargis

Rural poverty and democracy

Sonin, Konstantin

  
 
The Populist Threat 
All politicians know how difficult it is to take a position that is not popular with the public. If even
autocrats must consider the will of the people in certain situations, you can imagine how carefully
democratic leaders, whose jobs depend on the public's support, must weigh every decision they make
against public opinion.  
This month, U.S. President Barack Obama had his first run-in with the enormous force of public
opinion. The anti-crisis measures directed at saving the largest financial institutions adopted in the fall
by the administration of former President George W. Bush -- many of which were continued by the 
Obama administration -- have turned out to be extremely unpopular. In part, this is because the
proposal to use taxpayer money to bail out unprofitable firms is a bad idea. Moreover, a major part of
the $170 billion allocated for the bankrupt AIG ended up in the hands of its counterparties, such as 
Goldman Sachs, Citi and Bank of America. In other words, the government compensated AIG's
business partners for losses incurred as a result of doing business with AIG.  
 
Part of the problem is also that in order to save the financial system as a whole, it is sometimes 
necessary to bail out individual companies that don't necessarily deserve the aid. This is done to avoid
a chain reaction that could lead to a meltdown of the entire financial system. And every such episode
only increases the public's dissatisfaction with politics in general. Last week, we witnessed highly
critical hearings in the U.S. Congress, a bill to slap a 90 percent tax on executive pay bonuses for
companies receiving federal bailout funds and a defensive stance taken by the Obama administration,
all of which show that the government takes public opinion -- and public indignation -- very seriously. 
 
Voter anger in the United States threatens the existence of financial institutions in their current form.
After the 1929 stock market collapse, Wall Street's economic, intellectual and political influence also
took a beating, and it was only fully restored in the mid-1980s. Current events could take a significant 
toll on that institution again.  
 
The threat of populism is even stronger in Russia. In the months ahead, public opinion will push the
government into inflationary spending and protectionism. Of course, nobody likes inflation.
Protectionism is an even more politically and economically dangerous issue. The only economically 
justifiable use of protectionism is to assist a new manufacturing sector to gain a foothold in global
markets. Instead, the crisis gives special interest lobbyists a chance to exploit the public's
dissatisfaction with the economy to serve their own narrow protectionist interests. 
 
Until recently, Russia's authorities had managed to cope with the public's demands. But now, almost all
of the populist promises Prime Minister Vladimir Putin made last autumn -- to help businesses across
the board and to prevent a devaluation of the ruble -- have been rescinded in one form or another. 
 
In one case, President Dmitry Medvedev took the initiative by declaring that it would be impossible to
maintain the ruble's artificially high exchange rate. In other cases, economic ministers and advisers 
corrected Putin's promises in favor of greater budgetary restraint. That delineation of roles continues to
this day. Putin promises to extend aid to industry and social groups, and everybody else makes sure
that nothing derails the government's conservative monetary policies and budgetary discipline.
 
But what happens if Putin finally wins out? Crises are a good time for populism.
 
 
Konstantin Sonin, a professor at the New Economic School/CEFIR, is a columnist for Vedomosti.  
 
26 March 2009 
 
 
© Copyright 2007. The Moscow Times. All rights reserved.  
 


The populist threat

Vasilescu, Victoria

Summary 
This policy brief aims to detect major dilemmas faced by Moldovan economy in terms of approaching 
and eventually joining the European Union. In the current situation of economic crisis drafting clear and 
well-thought-out policies represents a premise for stabilizing and redressing the economic situation and 
ensuring a sustainable economic growth. The Government has to play a very difficult role, being pressed 
by the pessimistic economic reality on the one hand and necessity of negotiating with IMF in default of 
an anti-crisis program on the other hand. The last Government did not care much that starting the 4th 
quarter of 2008 the Moldovan economy was completely following regional recession trends and did not 
work out an anti-crisis program (to anticipate and prevent current difficult consequences of crisis). In 
these conditions, policy recommendations are required to consider the current constraints. Given these 
facts, the following issues will be analyzed:  
• The current economic condition and economic policy framework promoted at national level; 
• The economic attractiveness of the Republic of Moldova in the current crisis conditions; 
• The policy recommendations aimed to enhance the attractiveness of economy from the perspec-
tive to join the EU. 
 
 
The current economic conditions and economic policy framework  
The aspirations of the Republic of Moldova to join the European Union are rather an optimistic vision, 
as many aspects of the country’s economic life should be adjusted categorically or even require radical 
changes. These adjustments/reforms imply a political will and immediate political risks, but promise 
clear results at macro level and in terms of human development in the medium or long run.  
The current economic condition of the Republic of Moldova is very precarious. The last Government did 
not propose and promote a program against economic crisis. Even more, it pretended not to observe the 
degrading economic reality, while the Moldovan economy was following all regional recession trends. 
An anti-crisis program is irrelevant for the current Government; it should focus on an economic stabili-
zation and recovery program.   
At present, the main economic indicators reveal a deplorable situation in all areas: 
• While GDP was worth 28,842 million lei (nominal value, current prices) in January-June 2008 and 
increased by 5.4 percent compared with the similar period of 2007, it was worth 27.869 million lei 
in January-June 2009 and decreased by 7.8 percent, compared with the similar period of 2008. Paces 
of basic economic activity have slowed down constantly both in the 1st and 2nd quarter of 2009. 
The extractive industry, construction and transportation sectors suffered very much [1]. Following 
the decline in production volume and imports, taxes on products and imports have decreased by 12.8 
percent, compared with the similar period of 2008 and thus hitting the budget.  
DILEMMAS OF THE ATTRACTIVENESS OF MOLDOVAN ECONOMY  
IN THE CONTEXT OF MOLDOVA’S EUROPEAN INTEGRATION  
 
Victoria Vasilescu 
Policy Brief №6, October 22, 2009 
Association for Participatory Democracy 
• According to data for the 1st quarter of 2009, the final consumption has decreased by 9 percent com-
pared with the similar period of 2008. The final household consumption has dropped by about 10.2 per-
cent. This trend was maintained in the 2nd quarter as well, according to official statistics. The fall in 
consumption, particularly of foodstuffs and first-need products is a major challenge for the current 
Government. The population consumption is declining along with the 1/3 fall in remittances.  
• The export and import of goods and services dropped by 14.7 percent and 28.2 percent in the 1st quar-
ter of 2009, compared with the similar period of 2008. According to half-yearly data, Moldova’s ex-
ports declined by 22.2 percent and imports by 33.5 percent in 2009 [2]. The decrease in foreign trade 
was the key cause of the fall in VAT collections to the budget.  
• The decline in remittances was a major channel to spread the financial crisis in Moldova, as more than 
40 percent of households depend on remittances at a large extent. According to the World Bank data, 
overall remittances ranked Moldova in the top countries with largest share of remittances in GDP (36.2 
percent) in 2008. The cut in remittances may be also observed from the volume and structure of popula-
tion’s available incomes. If considering the data of the National Bureau for Statistics (BNS), one may 
observe that the share of remittances has stepped down from 19.7 percent in the 1st quarter to 16.6 per-
cent in the 2nd quarter of 2009. The decline in remittances hits both the private and public consump-
tion.  
• The adverse national budget could account for 8.5 billion lei (about 800 million dollars) by the end of 
2009 or even 14 percent of GDP, according to the Ministry of Finance. This budgetary deficit could be 
redressed through emergent measures aimed to reduce budgetary expenses, postpone salary rises 
planned for some categories of budgetary employees. This happens when a deficit of less than 5 percent 
expected in Romania in 2009 is tabulated as heavy for the neighbouring economy.  
The current Government has worked out an economic stabilization programme and began negotiations with 
IMF. According to certain statements on negotiations, IMF does not have plans to give up the strict condi-
tions, especially in terms of the leu depreciation and less popular conditions such as postponement of any 
2 
budgetary salary rises. In addition to major political risks, the Moldovan Government has an extremely lim-
ited field of manoeuvre to negotiate with IMF and it will likely have to accept stricter IMF conditions, too. 
Painful reforms (i.e. reduction in the number of employees in public sector) are unavoidable and they 
should be started sooner or later. The governmental consumption in Moldova did not correspond at all to 
existing resources in the past years.  
 
Attractiveness of the Moldovan economy during the current crisis  
Attractiveness of Moldovan economy must and can be regarded in the light of dilemmas faced by big ma-
jority of economic sectors. At least four dilemmas are outlined in this context, and they are briefly analysed 
below. 
Stability of leu 
The stability of domestic currency, especially of prices is an important factor to define the attractiveness of 
domestic economy in general. Domestic currencies of neighbouring countries underwent divergent evolu-
tions in 2009 in spite of permanent sustenance by central national banks. They constantly depreciated ver-
sus Euro, except for Romanian leu, which was sustained massively. According to World Bank data, Roma-
nia invested 4.5 billion Euros in stability of domestic currency in January-September 2009. The sudden de-
preciation of Romanian leu pressed the solvency of the banking system and inflation. Even more, the main-
tenance of an easily overrated Romanian leu exchange rate prevented the bankruptcy of companies and 
people who have debts in Euros.  
The Moldovan leu has generally appreciated in the past three years and faced a constant depreciation versus 
US Dollar and Euro in 2009 (Diagram 1 and Diagram 2). 
 
Diagram 1. Evolution of Moldovan leu exchange rate versus Euro, MDL/EUR 
 
Source: NBM 
 
In other terms, regional trends of depreciation of domestic currencies were observed in the Moldovan econ-
omy, too, but the leu depreciation was controlled by constant efforts of NBM to maintain the exchange rate. 
The basic dilemma in these conditions is to further maintain MDL or to allow its depreciation, as demanded 
by IMF. The sudden depreciation could raise grave problems to the already declining and mainly importing 
economy, as well as would have negative social repercussions. Maintaining MDL would require a consoli-
dated input from outside since the current pressures are too heavy for existing capacities. NBR has spent 
more than 4.5 billion Euros to maintain the stability of RON, much of which with IMF contribution. The 
logic of an easily overrated exchange rate of RON is translated into lower inflation, avoidance of additional 
pressures on solvency of domestic banking system, as well as positive psychological effects on people, 
which cannot be underrated in the current crisis conditions.  
 
3 
Diagram 2. Evolution of Moldovan leu exchange rate versus US Dollar, MDL/USD 
 
Source: NBM 
 
But an overrated leu, as seems to be at present could deepen the crisis, affecting in particular the exporters 
and forcing urgent and painful adjustments in terms of budgetary salaries, which is an unpopular measure 
for the newly-elected Government. The Government should find out the “golden middle” through a con-
trolled and limited depreciation of MDL. The experience of European neighbours such as Slovakia in terms 
of inflation control and monetary policy could be applicable, though the accession of this country to the 
Euro area marked a very important moment regarding the detachment of economy from old settings. 
 
Moldova – importing country 
The Republic of Moldova is a net importer of many products inclusively strategic. The trade balance deficit 
is serious, counting for 3,307.4 million dollars [3], with imports exceeding more than three fold the value of 
exports in 2008. Neighbouring economies seem to be more equable in this respect. Slovak imports ex-
ceeded the exports by 1.4 percent only in 2008; those of Romania exceeded 1.7 fold the exports (in 2007), 
and exports balanced out imports in Hungary in 2008.  
 
Diagram 3. Evolution of Moldovan exports, thousand USD 
 
Source: NBS 
 
Since both Moldovan imports and exports to EU member states have increased compared with those from/
to the CIS area. The EU market is clearly becoming more important for national exports, as well as a source 
of imports (Diagram 3 and Diagram 4). The controlled depreciation of MDL versus Euro could advantage 
Ţările CSI - total; 623047,0
Ţările Uniunii Europene - total; 
820090,4
0
250000
500000
750000
1000000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
4 
national exporters which focus on EU market. From economic perspective based on statistics, the EU 
enlargement to the East has opened new export and investment opportunities and more jobs for citizens 
from old member states. However, the topic of Moldovan market’s attractiveness for EU exporters, espe-
cially for investors capable to build production capacities remains open. 
 
Diagram 4. Evolution of imports to the Republic of Moldova, thousand USD 
 
Source: NBS 
 
Budgetary deficit 
The budgetary deficit of the Republic of Moldova could be higher than 14 percent by the end of 2009, which exceeds 
the 3-percent convergence criterion of GDP. This indicator is much higher than the regional average. In Bulgaria, for 
example, the budgetary deficit is estimated at 0.5 percent by late 2009. In Hungary the budgetary deficit could reach 
3.4 percent of GDP in 2009, while in Romania - 4.4 percent of GDP [4]. 
 
Political stability 
The country’s immunity to economic crisis, claimed by the previous Government, was actually illusory. The Moldo-
van economy has entered the full crisis completely unprepared because of the total discrepancy between statements 
and concrete actions. Even more, the period coincides with electoral race and the nomination of the new Cabinet of 
ministers. It’s up to the acting Government to ensure political stability, which is a key precondition for economic sta-
bility and attractiveness of Moldova.  
 
Policy recommendations to enhance the attractiveness of Moldovan economy from a 
 perspective to join the EU  
The above-mentioned dilemmas faced by the current Government are a visiting card though pessimistic of the Repub-
lic of Moldova in the context of ongoing negotiations with IMF. If negotiations with IMF are successfully accom-
plished by October 28, Moldova could begin negotiations with EU, so guaranteeing external support, especially finan-
cial, so necessary for stabilising the economy. It is worth noting that the EU conditions the start of talks with positive 
outcome of negotiations with IMF. In this respect, an important assessment of the IMF capacities to provide solutions 
to economic problems in special conditions, such as those faced currently by Moldova is required. IMF will not be 
able to guarantee the stabilisation of situation, as this institution does not usually recommend anti-crisis solutions, but 
just answers to economic issues in normal conditions.  
The precarious economic situation has frozen out Moldova’s perspective to join the EU. However, the crisis could be 
also regarded in the light of advantages that EU economic agents could enjoy. Under Article 140 of the Treaty of 
Maastricht, performances of EU member states are studied in view of four criteria, and namely ensuring the stability 
of prices, strong nature of public funds, respecting normal fluctuation limits foreseen by the exchange rate mechanism 
of the European Monetary System for at least two years, without devaluating the currency versus Euro, as well as the 
Ţările CSI - total; 1737261,3
Ţările Uniunii Europene -
total; 2105264,0
0
500000
1000000
1500000
2000000
2500000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
5 
lasting convergence achieved by the member state which is the subject of a derogation, and its participation in the ex-
change rate mechanism reflected in long-term interest rates. Moldova has problems in all four areas, especially regard-
ing the stability of prices that is difficult to ensure in crisis conditions and under IMF pressures and regarding the 
budgetary deficit that exceeds much those of neighbouring countries, including EU members.  
Thus, concrete and urgent steps are required to stabilise the economic situation. Finalising the economic recovery plan 
before October 25 is welcome but cannot guarantee success of the Government in the three key areas and notably sta-
bilisation of public funds, recovery of economy activity and efficient social protection, especially of vulnerable groups 
of people, particularly because external pressures are too heavy while internal capacities are too limited.  
Two measures with potential immediate effects could be considered:  
• Giving up the policy of maintaining an overrated leu (which would line up Moldova to regional trends of con-
trolled depreciation of domestic currencies). This measure could encourage domestic exporters only if the 
economies from the Euro area would recover. On the other hand, if the depreciation will not be controlled, this 
could have grave repercussions on living standards of people. According to the data of Household Budget Sur-
vey for the 1st quarter of 2009, the internal consumption of food products, education and health has declined. 
The leu depreciation and eventual related inflation growth could hit the internal consumption more. One should 
not forget that the depreciation of leu versus main reference currencies could mark up all imported goods and 
services, or Moldova is a net importer in many sectors.  
• Stabilisation of public funds – the budgetary deficit of about 14 percent of GDP is a too heavy burden in the 
current precarious economic conditions. The Government shall increase efforts to reduce public expenses, and 
less popular but necessary solutions may be adopted for this purpose, inclusively and especially reducing the 
share of salary-related expenses.  
Although these two measures could have a relatively clear short run effect, ensuring and guaranteeing political stabil-
ity in country, especially regarding the election of the chief of state, is the best tool so far. The political stability is part 
of minimum conditions for foreign investors despite limited investment resources.  
Sources: 
[1] Gross Domestic Product in January-March 2009, National Bureau for Statistics of Moldova, http://
www.statistica.md/newsview.php?l=ro&idc=168&id=2636  
[2] The balance of payments of the Republic of Moldova for the 2nd quarter, 2009, National Bank of Moldova, http://
www.bnm.org/files/index_10099.pdf  
[3] http://www.statistica.md/category.php?l=ro&idc=336&  
6 
This Policy Brief is published within the project “EU-
Moldova Relations – Monitoring progress within the frame-
work of the Eastern Partnership”, implemented by Association 
for Participatory Democracy ADEPT and financed by the  
Soros Foundation-Moldova . 
ADEPT is an independent centre of analysis and consultation 
on the decision-making, political, electoral and socio-
economic processes in the Republic of Moldova and in the 
wider region.  
ADEPT's mission is to promote the democratic values and 
support citizen active participation in public affairs.  
Strategic Objectives 
• Contribute to the efficient implementation of the govern-
mental strategies aimed at the socio-economic develop-
ment and democratization of Moldova; 
• Promote and consolidate the democratic institutions and 
procedures; 
• Encourage and facilitate citizen participation in the deci-
sion-making and governance processes.  
 
The author is solely responsible for statements and 
conclusions, which are not necessarily shared by the Soros 
Foundation-Moldova and ADEPT. 
 
© ADEPT Association, 2009. 
All rights reserved. 
 
 
Association for Participatory Democracy ADEPT 
Address: V. Alecsandri str. 97 
Chisinau, MD-2012,  
 Republic of Moldova 
Tel.: (+373 22) 21 34 94 
Fax:  (+373 22) 21 29 92 
E-mail: adept@e-democracy.md 
Web: www.e-democracy.md  
Policy Brief  № 6, 
October 22, 2009 


Dilemmas of the Attractiveness of Moldovan Economy in the Context of Moldova's European Integration

Eralp, Yalim

 Istanbul Kultur University 
Atakoy Campus,Bakirkoy, 34156 Istanbul-TURKEY 
T: +90 212 498 44 76 | F: +90 212 498 44 05 
www.gpotcenter.org 
Iran, the Bomb and Turkey 
Yalım Eralp 
October 5, 2009 
Abstract : 
The question of Iran “ going nuclear” is of global concern. Iran has up to now used devious methods 
to violate the Non-Proliferation Treaty and has indeed misled the world community. The Obama 
Administration is concerned about these developments as much as the previous Bush Administration 
was. However, President Obama’s approach to nuclear weapons in general and talks with Iran have 
been different both in essence and form. Another matter of concern has been the attitude of Israel and 
the manner in which the US has tried to handle the Israeli dossier towards Iran. The October 1st 
negotiations with Iran have been considered constructive by the West. These negotiations will take 
time and probably prove to be difficult. Turkey’s attitude towards a “nuclear” Iran seems to be 
ambivalent in recent times, whereby while Turkey does not want a nuclear Iran, it seems to be 
pointing a finger to nuclear Israel. 
   Iran’s nuclear activities have been on the 
international agenda for a while. The latest 
disclosure about the existence of a second 
uranium enrichment facility added to the 
prevalent suspicion. In reality, Iran and its 
nuclear work go back in history. Bruno 
Tertrais examines this topic in depth in his 
book “The Black Market Bomb: A Secret 
History of Nuclear Proliferation”.  
Negotiations between Pakistan and Iran go 
as far as 1984; it is apparent that Abdul 
Qadeer Khan, the father of Pakistan’s bomb, 
has helped Iran, often without the 
knowledge of, and sometimes despite the 
directives of Pakistani political authority. 
Imam Khomeini, who initially opposed all 
nuclear activity started during the Shah’s 
reign, seems to have changed his opinion 
following the Iraq war and Iraq’s use of 
chemical weapons. Nuclear activity then 
picked up pace after the Imam’s death. In 
1990s, there was some cooperation with 
China, but the bulk of the information and 
assistance came from Pakistan.  
 
   Iran, which is party to the Nuclear Non-
Proliferation Treaty (NPT), has sour 
relations with the International Atomic 
 
GLOBAL POLITICAL TRENDS CENTER 
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Energy Agency (IAEA), as it sometimes 
blocks the Agency from carrying out the 
necessary inspections, as well as having a 
bad record. Iran has also admitted to having 
misled the Agency in 2000s. Now it looks 
like the existence of the second uranium 
enrichment facility has been added to the 
record. 
 
   While Iran, rich in gas and oil, has 
declared its nuclear program is peaceful, the 
suspicion created within the international 
community and Iran’s so far negative 
attitude towards the IAEA inspections have 
led to serious uneasiness for not just the US, 
but Iran’s neighbors as well.  
 
The Nuclear Non-Proliferation Treaty 
 
   The document, which was adopted by the 
United Nations General Assembly in 1968 
and later became an international treaty, 
aims to prevent the proliferation of nuclear 
weapons. Apart from the five countries 
known to have nuclear weapons (the US, 
USSR {later Russia}, China, the UK and 
France), parties to the treaty would not try 
to acquire nuclear weapons, and would be 
subject to IAEA inspections to ensure the 
peaceful use of nuclear energy. India, Pakis-
tan and Israel never became parties.  India 
stressed the uneven character of the Treaty. 
The aparheid regime in South Africa joined 
the Treaty following the regime change in 
that country. North Korea, which initially 
was a party, later withdrew and made its 
own bomb. 
 
   According to the NPT, the five countries 
that have the bomb would not help other 
parties to acquire it. They would also be 
under the obligation to not transfer nuclear 
technology to non-parties, even for peaceful 
purposes. 
 
   A generally accepted point is that the NPT 
did not reach its goal; by now there is an 
understanding of the necessity to 
accomodate countries that want to make use 
of nuclear energy in a peaceful manner. 
However, the 2007 Review Conference did 
not witness any progress. President 
Obama’s promise of universal nuclear 
disarmament, the latest UN Security Council 
decision on this topic, and Obama’s strategy 
to accomodate countries that want to use 
nuclear energy for civilian purposes are all 
promising developments for the next 
scheduled conference in 2012. 
 
Double Standards 
 
   Previously there have been sanctions 
against North Korea, India and Pakistan, 
which have developed nuclear weapons. 
The ones on North Korea are still in place, 
and on and off negotiations continue with 
this country. Pakistan is an important ally of 
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www.gpotcenter.org 
the West in terms of the terror in 
Afghanistan. India, on the other hand, has 
come to an almost privileged position 
following a recent agreement signed with 
the US. The NPT has banned the transfer of 
technology to non-parties from nuclear 
states that are party to the Treaty. Despite 
this provision, the US has made an 
agreement with India for transferring 
nuclear technology to be used in a peaceful 
manner, provided it will be subject to 
inspections by the IAEA. India has come to 
this privileged status thanks to being a 
democracy and its prospective support of 
America’s global approches. As can be seen, 
the treatment a nuclear state is subject to can 
have different criteria, based on its position, 
regime or the role it can play globally. Iran is 
in some sort of conflict with the West on 
almost all matters. Additionally, Iran’s 
leader had made a remark about wiping 
Israel off the map. Iran’s politics, especially 
in the Middle East, are in opposition with 
that of the US and the West. This is why the 
approach to Iran is different. 
 
President Obama’s Approaches 
 
Obama’s approaches are different than 
Bush’s; he has stated before that he’s ready 
to be in a dialogue with Iran. He made a 
Nowruz gesture to Iran, making provocative 
statements regarding the dubious Iranian 
elections and invited Iran to the meetings on 
Afghanistan. He also delivered a separate 
speech addressed to the Muslim world in 
Cairo. In addition to these, he has signalled 
that the NPT, which is accepted to be 
unequal by many states, can be amended. In 
short, he has opened the way for a new 
page. 
 
   Put forth by France, the UK and Germany 
for the EU, previous proposals of aid and 
accomodations in the fields of trade and 
technology in exchange for Iran giving up its 
uranium enrichment effort have been 
fruitless. Certain sanctions adopted by the 
UN Security Council have harmed Iran to a 
certain extent. It is also hard to say any 
progress was made during the negotiations 
among the 5+1 (five permanent Security 
Council members and Germany). On the 
contrary, Iran has adopted an increasingly  
bellicose attitude and has in a way defied 
the international community by putting its 
missile training on open display. Finally, On 
the eve of the negotiations on October 1st, 
Iran announced the existence of a second 
enrichment facility in Qom (It is understood 
that the US and the IAEA have long been 
aware of this facility).  
 
What Happened on October 1? 
 
   The five permanent members of the 
Security Council and Germany started 
negotiations with Iran, which acted against 
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its previous statement that it would not 
discuss its nuclear activities. Iran announced 
that it would open the new facility to 
inspection and that it would send a 
“significant” portion of the enriched 
uraniaum to Russia for it to be converted to 
fuel. These are important developments, sin-
ce Iran had before rejected an offer for the 
uranium enrichment to be done in Russia 
and sent to Iran to produce fuel. It is being 
calculated that this way Iran’s –if 
determined- production of nuclear weapons 
will be stalled. Obama and the Western 
sources have characterized the October 1 
negotiations as constructive. That being said, 
the West is not wholly convinced yet. What 
does a “significant” portion of the uranium 
mean? Are there other hidden facilities? And 
most importantly, how is Iran’s capacity to 
make nuclear weapons to be stopped? There 
are no answers to these questions yet. 
 
   If the change of attitude in Iran is serious, 
why did it happen just recently? It is hard to 
make a definite prediction. Although, it is 
known that so far Russia and China have 
been dragging feet in terms of imposing 
tougher sanctions on Iran. That being said, it 
is obvious Obama expects reciprocation 
from Russia in turn for his gesture of 
scrapping his plans for a missile defense 
shield. That Medvedev gave the green light 
for tougher sanctions before the October 1 
meeting might have affected Iran. If Iran 
rejected Obama’s “considerate” attitude, 
which is different and softer than that of 
Bush’s, could push the Obama 
administration to consider a military option. 
Moreover, president Obama has warned 
Israel to not engage in a military operation 
against Iran and promised for tougher 
sanctions against Iran. The Obama 
administration has cool relations with the 
Netenyahu administration. The possibility 
of Israel acting alone in the case of no 
progress on Iran cannot be ruled out 
completely. If this should happen, the US, 
even if it does not want to, will have to be on 
Israel’s side both to protect it and to prevent 
Iran from laying mines in the Strait of 
Hormuz. Did Iran become worried about the 
US not being able to stop Israel? It is hard to 
predict how much the price of oil will 
increase in such a disaster scenario, but it is 
certain that Russia will financially profit 
from this, along with the damage to the 
relations between Obama and the Muslim 
world.  Most importantly, however, both 
Iran and Russia should worry about 
Obama’s initiatives not being reciprocated, 
and a new change in US foreign policy. If 
Obama is perceived as “weak” and 
unsuccessful in his foreign policy, he might 
change his stance under domestic pressure. 
 
   It is expected that negotiations with Iran 
will not be easy. The US has not played its 
most important card yet, and neither if it 
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www.gpotcenter.org 
ever will nor if that card will work is clear. 
This card is giving Iran security guarantees, 
meaning to guarantee that the US will come  
to Iran’s aid in the case of an attack. Such a 
guarantee could be realized in the form of a 
Security Council decision. 
 
Turkey 
 
   Prime Minister Erdoğan initially 
acknowledged Iran’s right to use nuclear 
energy for civil purposes while opposing its 
military use. Lately the Prime Minister has 
been using a rhetoric of “but Israel also has 
nuclear weapons” and giving the 
impression, whether intentionally or not, 
that Israel having nuclear weapons 
legitimizes Iran’s possession of them as well. 
The forgotten point is that at the time Israel 
opted for nuclear weapons, Arab countries 
had a policy of destroying Israel; having 
nuclear weapons at the time was vital for 
Israel.  Ahmet Davutoğlu, Minister of 
Foreign Affairs, stated during a press 
conference on September 30 that Turkey is 
against both a military operation and UN 
Security Council sanctions against Iran. 
“Carrots and sticks” is an indispensible tool 
in diplomacy, and Davutoğlu himself is in 
the position to know this best. Indeed, the 
fact that he made the approval of the 
documents signed with Armenia by the 
Turkish Parliament conditional upon the the 
solution of the Azeri-Armenian conflict is 
nothing other than carrots-and-sticks. At this 
press briefing, Davutoğlu asked everyone to 
be agreeble, but unfortunately we do not 
live in a fairy tale world. It is regrettable that 
what Davutoğlu wished for cannot be 
realized. Turkey, being neighbors with an 
Iran that has nuclear weapons, cannot 
remain inactive. This is why stopping Iran is 
crucial for Turkey. If Iran got nuclear 
weapons, Turkey could either go the same 
route, or could be forced to ask the US and  
NATO additional guarantees on top of the 
already existing ones under the “nuclear 
umbrella.” 
 
 
 
 
 
 
 
 
GLOBAL POLITICAL TRENDS CENTER 
Page 6 
 Istanbul Kultur University 
Atakoy Campus,Bakirkoy, 34156 Istanbul-TURKEY 
T: +90 212 498 44 76 | F: +90 212 498 44 05 
www.gpotcenter.org 
Ambassador (R)Yalım Eralp 
 
Yalım Eralp is a member of the High Advisory Board at the Global Political Trends Center, a 
faculty member at the Department of International Relations of Istanbul Kültür University 
and a diplomatic commentator at CNN TÜRK. Yalım Eralp was born in 1939 in Istanbul. In 
1958, he graduated from Forest Hills High School, New York City. In 1962, he graduated 
from the Faculty of Political Sciences, Ankara. Between 1962-1983, he served as a diplomat 
in New York, Greece, and in Rome NATO Defense College from where he graduated. Later 
on, he was appointed as Counselor at the Turkish Delegation within NATO, Brussels. He 
served in Washington D.C. as the Deputy Chief of Mission. Having served as the 
Spokesman of the Ministry for four years, he became Ambassador to India in 1987. Between 
1991-1996, Ambassador Eralp served as Principal Advisor to Prime Ministers Mesut Yılmaz 
and Tansu Çiller and was also the Director of NATO Affairs at the Ministry. In 1996, he 
became Ambassador to the Organisation for Security and Cooperation in Europe (OSCE) 
Delegation in Vienna. In 2000, Ambassador Eralp retired from the Ministry of Foreign 
Affairs. 
About GPoT  
 
Global Political Trends Center (GPoT) was established as a research unit uder the auspices of 
Istanbul Kultur University in 2008. 
 
GPoT Center aims to produce innovative and distinctive policy recommendations by 
analyzing the contemporary trends in regional and international politics. 
 
 
*The opinions and conclusion expressed herein are those of the individual author and does not necessarily 
reflect the views of GPoT or Istanbul Kultur University. 


Iran, the bomb and Turkey