The Case of Business Service Companies in Bulgaria Evgeny Petrov Stanimirov, Vladimir Sashov Zhechev, Maria Radoslavova Stanimirova 9-23

Volume 2 Number 1 June 2016

Journal of the Faculty of Business and Administration International University of Sarajevo

P-ISSN 2303-7105 INQUIRY: Sarajevo Journal of Social Sciences

EDITOR-IN-CHIEF: Prof. Dr. Recai Aydin, International University of Sarajevo & Turkish Police Academy

ASSISTANT EDITOR: Dr. Emil Knezovic

EDITORIAL BOARD: Dr. Abdurrahim Siradag, King Fahd University of Petrol and Minerals, Saudi Arabia Dr. Ashraf El-Houbi, Lamar University, USA Dr. Barton Smith, University of Houston, USA Dr. Celil Aydin, Mus Alparslan University, Turkey Dr. Erdal Karagol, Yildirim Beyazit University, Turkey Dr. Georgi Marinov, Varna University of Economics, Bulgaria Dr. Hasan Korkut, International University of Sarajevo, Bosnia and Herzegovina Dr. Hristo Mavrov, Varna University of Economics, Bulgaria Dr. Huseyin Yilmaz, University of South Florida, USA Dr. Ibrahim Dursun, International University of Sarajevo, Bosnia and Herzegovina Dr. Ismail Hakki Genc, American University of Sharjah, UAE Dr. Issa Haji Ziddy, State University of Zanzibar, Tanzania Dr. Irfan Arikan, University of Applied Sciences Krems, Austria Dr. Joe C. Ueng, Universtiy of St. Thomas, USA Dr. Joseph Jon Kaminski, International University of Sarajevo, Bosnia and Herzegovina Dr. Larry Allen, Lamar University, USA Dr. Mehmet Barca, Ankara Social Sciences University, Turkey Dr. Metin Aksoy, Selcuk University, Turkey Dr. Metin Toprak, Istanbul University, Turkey Dr. Mevludin Ibish, International Balkan University, Macedonia Dr. Murat A. Yulek, Istanbul Commerce University, Turkey Dr. Murat Cemrek, Necmettin Erbakan University, Turkey Dr. Mustafa Yayla, Turkish Police Academy Dr. Nermin Oruc, IMPAQ International, Bosnia and Herzegovina Dr. Peter Plenta, International University of Sarajevo, Bosnia and Herzegovina Dr. Roger Morefield, University of St. Thomas, USA Dr. Rovshan Ibrahimov, Baku State University, Azerbaijan

DESKTOP PUBLISHING: Abdulhamit Bolat Emir Hambo ABOUT THE JOURNAL: Inquiry is a be-annual publication affiliated to Faculty of Business and Administration, at the International University of Sarajevo in Bosnia and Herzegovina. The journal aims to promote transdisciplinary studies that cross many disciplinary boundaries to create holistic approach. In general, Inquiry publishes articles in the areas of Social and Behavioral sciences, Journalism, Business, Administration and Law.

The Journal is currently indexed in following databases: • Directory of Open Access Scholarly Resources (ROAD) • Scientific Indexing Services (SIS) • Scholarsteer EDITORIAL BOARD: • CiteFactor Dr. Abdurrahim Siradag, King Fahd University of Petrol and Minerals, Saudi Arabia • Bielefeld Academic Search Engine (BASE) Dr. Ashraf El-Houbi, Lamar University, USA • The Cabell’s journal directory Dr. Barton Smith, University of Houston, USA Dr. Celil Aydin, Mus Alparslan University, Turkey EDITORIAL CORRESPONDENCE: Dr. Erdal Karagol, Yildirim Beyazit University, Turkey Journal correspondence and submission of articles should be addressed to: Dr. Georgi Marinov, Varna University of Economics, Bulgaria Editor-in-chief, Inquiry, Sarajevo Journal of Social Sciences, International University of Sarajevo Dr. Hasan Korkut, International University of Sarajevo, Bosnia and Herzegovina (IUS), Faculty of Business and Administration (FBA), Dr. Hristo Mavrov, Varna University of Economics, Bulgaria Dr. Huseyin Yilmaz, University of South Florida, USA Hrasnička cesta 15, 71210 Ilidža-Sarajevo, Bosnia and Herzegovina Dr. Ibrahim Dursun, International University of Sarajevo, Bosnia and Herzegovina Tel: (387) 33 957 310; Dr. Ismail Hakki Genc, American University of Sharjah, UAE Fax: (387) 33 957 105 Dr. Issa Haji Ziddy, State University of Zanzibar, Tanzania Email: [email protected] Dr. Irfan Arikan, University of Applied Sciences Krems, Austria Dr. Joe C. Ueng, Universtiy of St. Thomas, USA Dr. Joseph Jon Kaminski, International University of Sarajevo, Bosnia and Herzegovina Dr. Larry Allen, Lamar University, USA Dr. Mehmet Barca, Ankara Social Sciences University, Turkey Dr. Metin Aksoy, Selcuk University, Turkey Dr. Metin Toprak, Istanbul University, Turkey Dr. Mevludin Ibish, International Balkan University, Macedonia Dr. Murat A. Yulek, Istanbul Commerce University, Turkey Dr. Murat Cemrek, Necmettin Erbakan University, Turkey Dr. Mustafa Yayla, Turkish Police Academy Dr. Nermin Oruc, IMPAQ International, Bosnia and Herzegovina Dr. Peter Plenta, International University of Sarajevo, Bosnia and Herzegovina Dr. Roger Morefield, University of St. Thomas, USA Dr. Rovshan Ibrahimov, Baku State University, Azerbaijan

P-ISSN 2303-7105 Inquiry Sarajevo Journal of Social Sciences

Publisher International University of Sarajevo

Editor-in-chief Prof. Dr. Recai Aydin

Press run: 200 copies

Printing house: Dobra knjiga d.o.o Sarajevo CONTENTS:

Strategic Readiness for CRM Process Management: the Case of Business Service Companies in Bulgaria Evgeny Petrov Stanimirov, Vladimir Sashov Zhechev, Maria Radoslavova Stanimirova 9-23

Euro-Scepticism In Turkey of AKP Period in the Context of Temporary Tensions and Permanent Interests Hulya Eski Uguz, Rukiye Saygili 25-46

An Evaluation of Fashion Involvement: A Study on Generations X and Y Hatice Aydin 47-63

Moments and Significance of Balkan Diplomacy at the Start of the Twentieth Century Cotirlet Paul-Claudiu 65-80

International Cooperation on Law against Terrorism: The Harmonization of Antiterror Laws of Turkey and Macedonia Fehmi Agca, Nicola Dacev 81-89

A Quintessential Lesson from European Union Integration to African Union Hasan Korkut, Endris Mekonnen Faris 91-102

A Projection for the Turkish Economy in 2023 with a Bayesian Approach Mesut Murat Arslan, Fatma Ozgu Serttas, Recai Aydin 103-117

An Assessment of Consumer Ethnocentrism Tendencies Scale among University Students: The case of Turkish and Bosnian Students Merjema Becic 119-130

Effects of the EU Originated Debt Crisis on Turkey’s Export Serife Merve Kosaroglu, Haci Ahmet Karadas, Esengul Salihoglu 131-141

Factors Shaping Attitudes towards Niche Luxury Cars Resulting from Brand Extensions Vladimir Sashov Zhechev, Evgeni Stanimirov 143-160

Crime Prevention Techniques and Crime Prevention in Turkey Ufuk Ayhan 161-174

How does Incentive Affect Kidney Donation Rates: Turkey Case Yavuz Demirdogen 175-189

Strategic Readiness for CRM Process Management: the Case of Business Service Companies in Bulgaria

Dr. Evgeni Petrov Stanimirov University of Economics-Varna Dr. Vladimir Sashov Zhechev University of Economics-Varna Dr. Maria Radoslavova Stanimirova University of Economics-Varna

ABSTRACT Customer Relationship Management (CRM) represents an iterative process aimed at improving interactions with customers and balancing companies’ client portfolio. From the viewpoint of organizational measures taken, the key factors that influence the effectiveness of this process can be divided into: sharing of fundamental principles for managing customer relationships; accurate positioning of the particular CRM components; acknowledgment of the interdependencies between various stages of the CRM process. This allows identifying CRM components crucial to the management of the process of interaction with customers. The article explores the individual components of the CRM process, the latter being a premise on which adequate management of customer relationships is built. The paper proposes a methodology for assessment of the different components of the CRM process. It looks at the results from a study on the strategic readiness of companies, engaged in business services from four different sectors in Bulgaria, to manage their customer relationships. The empirical research is limited to investigation of the CRM vision and CRM base of the aforementioned companies. For the purposes of the study the researchers have collected and processed data in corporate areas as: management principles; practices for analysis and assessment of clients; corporate and organizational culture; customer databases management. The results serve as basis for inferences in the context of development of CRM practices for the business services sector.

Keywords: CRM process, CRM vision, CRM base, Business services. 9

1. INTRODUCTION CRM has become a new paradigm of the modern marketing, main priority and an important tool for many companies which want to build long-term and profitable relationships with their customers (Kim et al. 2010). CRM is a logical process oriented towards balancing of the customer portfolio of the companies and in this sense it is related to their marketing results. Positive effects of the implementation of CRM are visible in many areas: consumer behavior (Barone E. P. Stanimirov et al.

et. al. 2000), better market performance and sustaining desired competitive position (Alsmadi & Alnawas 2001), improvement of the financial results (Lamparello 2000), reduction of the mistakes made in customer service and increasing of the efficiency of the marketing campaigns (Gudkova 2005) etc. Key factors which influence the efficiency of this process are: sharing of the fundamental principles of management of the relationships with customers; the correct positioning of the individual CMR components; acknowledgment of the interdependence between the individual phases of the CRM process. This allows the identification of CRM components which are of key importance for managing the process of interaction with customers. However, the success of the CRM projects is not unconditional. Between 30% and 80% of them do not achieve the planned objectives (Kinikin 2000; Nelson 2002). The main reasons for their failure are: incorrect understanding of CRM as a technological solution (Johnson 2004), lack of strategic vision and plan (Day 2003), lack of the necessary skills for efficient management and integration of the CMR technologies in the sale process of companies (Erffmeyer, Johnson 2001) etc. The said reasons for the disappointment of some companies by the launching of CRM projects show that the problems mainly consists of misunderstanding or false implementation of CMR as a concept and / or strategy. Therefore, from a practical point of view it is interesting to explore the practices of companies in the management of relationships with customers by monitoring the presence/absence and the use of key elements of the CRM strategy in this process. Therefore, the goal of this article is to establish the strategic readiness of companies, specialized in offering marketing services to the B2B market in Bulgaria, to manage the CRM process. The strategic readiness for the management of the CRM process is a result of the providing of a specific vision and specific infrastructure (base) for the management of the relationships with the customers.

2. METHODOLOGY 10 As stated above, the success of the CRM projects depends on a variety of factors, some of which are of key importance: the correct 2016/1 definition and positioning of the individual CRM components; the opportunity to identify the interdependence between the individual phases of the CRM process etc. For identification of the individual components of the CRM process the “CRM diamond”, developed by Mack, Mayo & Khare (2005) can be used. It consists of the following blocks: CRM vision, CRM base and CRM activities. The CRM model developed by Alsmadi & Alnawas (2001) can be especially useful by the establishment of the interdependence between the individual phases of the CRM process. This model comprises a series of steps which the managers have to undertake for successful realization of CRM projects in their companies. Strategic Readiness for CRM Process Management

The components of the model “CRM diamond” of Mack, Mayo & Khare (2005), being dynamized by following the logic of the CRM model, developed by Alsmadi & Alnawas (2001) CRM, are used as a starting point in this study. The combining of the said models is imperative given the holistic nature of the CRM concept. The model of Mack, Mayo & Khare informs of the CRM components and in this sense it is descriptive in nature. On the other hand, the model offered by Alsmadi & Alnawas shows the development (or phases) of the said components which makes it process-oriented. Both models discussed here are used as a base to offer an adapted model of the strategic CRM process (cycle) by the authors. The adaptation is needed for more correct classification of some CRM components to the different blocks (vision and base) which are subject to this study. The study was conducted through planning of research instruments (a questionnaire) to collect primary information. The study covered subjects with economic activities in the territory of the Republic of Bulgaria regardless of their place of registration. The questionnaire is structured in blocks (vision and base) representing consecutive stages of the strategic CRM cycle. All questions are evaluated using a standardized 5-point scale (from 1 - “the statement does not describe our environment at all” to 5 - “the statement fully describes our environment”). The unified approach to assessment at all stages of the strategic process aims to provide conditions for direct comparisons between the individual CRM components. The assessment scales are tested for reliability using the Cronbach’s Alpha criterion. The assessment of the CRM vision is formed based on the following statement: „The company has a clear vision for its customers which allows it to effectively manage the relationships with them“. The CRM vision is represented by two components in the following blocks: Block „Guiding principles“. The generalizing variable for the assessment of the guiding principles is as follows: „Managers are convinced that systematic management of customer relationships increases the profitability of the company“. This block is operationalized through 4 statements: „The company has specific objectives in managing 11 customer relationships“, „The company has a clear strategy for managing relationships with customer“, „It is known in the company that the 2016/1 customers have different statuses (strategic, important, insignificant and unprofitable customers)“ and „The company treats its customers differently depending on their status (strategic, important, insignificant and unprofitable customers)“. Block „Analysis and assessment of clients“. The generalizing variable for this block is: „The company realizes that it is necessary to continuously analyze and assess its customers“. 4 operationalization variables are provided as follows: „The company realizes that analysis is a prerequisite for recognition of prospective customers“, „The company E. P. Stanimirov et al.

realizes that the analysis and assessment of customers is a prerequisite for the differentiation between important and insignificant customers“, „The company realizes that the analysis and assessment of customers is a prerequisite for efficient interaction with them“, „The company realizes that the analysis and assessment of customers is a prerequisite for making offers which are tailored to individual customer demands“. The assessment of CRM base is formed based on the following statement: „The necessary conditions for efficient management of the relationships with customers have been created in the company“. Within this stage 4 CRM components are provided in the following blocks: Block „Customer-oriented corporate culture“. For the objectives of the study the following generalizing variable is used: „The staff at all levels within the company believes that customers are main factor for the business development“. The operationalization variables within this block are 4: „The company organizes training for work with customers“, „The staff which communicates with customers is informed about the goals of the company“, „The staff which communicates with customers is familiar with the strategy of the company“ and „The company has clear procedures (standards) for the fulfillment of the customer- oriented activities (e.g. offering, service, handling of complaints)“. Block „Organizational structure“. The variable used for the assessment of the organizational structure is: „The organizational structure of the company allows efficient management of the relationships with customers“. The operationalizing variables hereof are as follows: „The company has a department or specialist/s/ in charge whose task is to research the customers“ and „The company has a department or specialist/s/ in charge whose task is to develop offers for different customers“. Block „Customer research activities“. For the assessment of the customer research practices the following generalizing variable is used: „The company systematically researches its customers“. This block stands out due to the highest number of operationalizing variables whose objective is to cover various nuances of the said activity in 12 the studied companies: „The company observes the satisfaction of its customers“, „The company observes the loyalty of its customers“, 2016/1 „The company assesses the customers based on the volume of their purchases“, „The company assesses the customers based on their individual contribution to the profit“, „The company assesses the customers based on the purchase frequency“, „The company assesses the customers based on their propensity to give it market information“, „The company assesses the customers based on of their propensity to give ideas for the improvement of the offer“. Block „Database management“. The generalizing variable for this block is: „The company analyses and classifies information which helps it to manage the relationships with customers“. This block Strategic Readiness for CRM Process Management consists of 3 operationalizing variables: „The company maintains data bases with personal information about individual customers“, „The company maintains data bases with information about the behavior of the customers (purchase frequency, purchase volume, number of claims etc.)“, „The company has software which helps it to analyze the customers and prepare offers“. The specifications here above allow the presentation of the operational model of the study (Figure 1).

Figure 1: Operational model of the study

Objects of the study are managers of companies specializing in 4 types of business services: accounting, financial, marketing and legal services in the territory of the Republic of Bulgaria. The choice of respondents on a senior management level arises because of the fact that they define or are familiar with the objectives and the strategic intents of the companies they manage. The number of the respondents according to the specialization of the companies they manage is as follows: accounting services – 141; financial services – 115; marketing services – 104 and legal services – 120. The said number includes the managers who have taken part in the survey whereas it must be taken into consideration that within one company more than one 13 questionnaire can be filled in. The sample is of “convenience“ type. 2016/1 3. RESULTS The data about the values of the Cronbach’s Alpha criterion show that all of the assessed constructs are of an acceptable and high level of reliability (the coefficient varies between 0,613 and 0,897). In order to study the CRM practices according to branches an analysis of the presented variables in the operational model (figure 1) has been conducted. The analysis is based on: one-dimensional distribution, calculated average estimate, standard deviations and coefficients of variation. E. P. Stanimirov et al.

The first stage of the strategic cycle of the customer relationships management is the CRM vision (table 1).

Table 1: Evaluation of the CRM vision according to branches Type of services rendered Indicators Accounting Financial Marketing Legal

Arithmetic mean 4,43 4,64 4,58 4,15 Standard deviation 0,70 0,71 0,66 1,21 Coefficient of 0,16 0,15 0,14 0,29 variation

The data in Table 1 show that the mean scores for the CRM vision are located in the positive side of the scale only. The highest mean scores are observed for companies specializing in financial and marketing services where 94% of the respondents state that they have a clear vision for their customers, which allows them to efficiently manage the relationships with them. The highest standard deviation is established for law firms where about 25% do not agree on the existence of a clear vision for management of relationships with customer. Regardless of the higher value of the standard deviation hereof, the variation does not reach the critical level of 50% in any of the branches, which means that the variance is within acceptable limits. The components “Guiding principles for the management of the relationships” and “Analysis and assessment of the customers” are assessed within the framework of the CRM vision. The guiding principles for the management of the relationships with customers are operationalized through 5 variables (Table 2). High mean scores are formed under the first three indicators within this block. The respondents believe that the systematic management of the relationships with customers increases the profitability of the company. The relative quota of the representatives of accounting, financial and marketing companies which partially or fully share this opinion lies between 94% and 98%. Only with law firms, where this question also 14 forms a positive score (4,16), the quota of the respondents which have answered positively, is about 70%. 2016/1 Scores with low variance are formed which show that the companies have specific goals for management of the relationships and undertake concrete measures in this area. Results of this kind are somewhat surprising, as their comparison to the other two statements within the studied block (“Guiding principles”) shows some inconsistencies. The discrepancies in the answers are most expressed for the companies offering accounting services. On the one hand they state that the relationships should be managed and that there are clear goals and strategies according to the customers, but on the other hand the idea that the customers have different status (strategic, important, Strategic Readiness for CRM Process Management insignificant, etc.) is not accepted. A significant part of the managers (between 30% and 43% according to branches) do not believe that customers are treated or should be treated differently according to their status. The status of the customers and the resultant personalized strategies for different customers are basic concepts for the marketing of the relationships, the personalized marketing and CRM. The data shows that there is a problem in the practical acceptance of this principal idea. On one hand it is acknowledged that relationships should be managed, on the other hand this statement is not realizable if the customer data base is not differentiated and used for purposeful interaction. The second aspect of the CRM vision is the analysis and evaluation of customers (Table 2). Two branches (finance and marketing) stand out, as distinctly higher scores compared to the accounting and law firms are formed here. As a whole a significant quota of the managers in the four studied business branches (between 85% and 91% in the area of accounting, financial and marketing services and 66% in the areas of the legal services) believe that it is necessary to systematically analyze and assess the customers and based on this to identify the prospective customers. An interesting decline of the magnitude of the mean scores is observed for the statement that the analysis and the assessment of the customers are a prerequisite for the differentiation between important and insignificant customers. A possible reason for this is that in reality in a large part of the companies no special analyses of customers are conducted (especially in companies which are small and do not have CRM software) and the importance of the customers is determined intuitively or based on metrics as: customer’s share in the sales, contribution of the customer through positive information sharing and attracting new customers, providing of important market information etc. The managers who took part in the study (65% of the respondents in the legal branch and between 85% and 90% in the other business branches) understand that the analysis and assessment of the customers are a precondition for efficient interaction with them. An interesting overlapping of the answers is observed between the last two statements. 15 Their comparison can lead to the conclusion that according to the respondents the efficiency of the interaction is determined by the ability 2016/1 of the companies to make offers which are tailored to the individual customer demands. This conclusion corresponds to the basic principles of the CRM concept, but it should be mentioned that the personalization of the offer (i.e. the ability to make an individual offer according to the demands of the customer) must correspond to the capabilities and willingness of the respective customer to provide a certain return of the cost of the personalization. Therefore, the personalization can be efficient only under the condition that the customer can directly or indirectly provide certain benefits for the supplier which cover and E. P. Stanimirov et al.

exceed the costs for the personalization of the offer. The second stage of the strategic process of the management of relationships with customer is the creation of a suitable CRM basis (Table 3). The data in Table 3 show that the mean scores for CRM basis are on the positive side of the scale. The highest mean scores are observed with companies specializing in financial services where 91% of the respondents state that they have a clear vision about their customers which allows them to efficiently manage their relationships with them. The lowest mean score and the highest value of the standard deviation are observed with the law firms where about 31% disagree that they have the necessary conditions for efficient management of the relationships with the customers.

Table 2: Mean Scores and Variance in Blocks “Guiding Principles” and “Analysis and Assessment of the Customers”

Type of services rendered

accounting financial marketing legal

Co- Co- Statements Coef- Coef- effi- effi- Arith- ficient Arith- Arith- Arith- ficient cient cient metic of metic metic metic of of of mean varia- mean mean mean varia- vari- vari- tion tion ation ation

Guiding principles

Managers are convinced that CRM increases the 4,40 0,16 4,64 0,12 4,71 0,11 4,16 0,26 profitability of the company The company has 4,27 0,20 4,59 0,14 4,54 0,15 4,18 0,25 specific CRM goals The company has a 4,28 0,19 4,57 0,16 4,58 0,14 4,21 0,22 clear CRM strategy It is acknowledged within the company that the custom- 3,83 0,35 4,37 0,22 4,40 0,23 4,24 0,23 16 ers have different statuses (strategic, 2016/1 insignificant …) The company treats its customers differ- 2,89 0,50 3,48 0,42 3,24 0,46 3,20 0,45 ently depending on their status Analysis and assessment of the customers The company realizes that it is neces- 4,16 0,24 4,47 0,16 4,33 0,21 3,68 0,34 sary to analyze and evaluate its clients Strategic Readiness for CRM Process Management

The company realizes that analysis is a prerequisite for 4,03 0,27 4,51 0,18 4,36 0,22 3,60 0,36 identifying of prospective customers The company realizes that analysis and assessment of the customers are 3,76 0,32 3,76 0,34 3,87 0,33 3,09 0,45 indispensable for the differentiation between the customers The company realizes that the analysis of customers is a 4,21 0,23 4,47 0,17 4,43 0,17 3,71 0,35 condition for effective interaction with them The company realizes that the analysis of customers is a 4,20 0,23 4,57 0,15 4,71 0,12 3,54 0,39 condition for offering personalized offers

Table 3: Evaluation of the CRM Basis According to Branches Type of services rendered Indicators Accounting Financial Marketing Legal

Arithmetic mean 4,35 4,45 4,32 3,96 Standard deviation 0,80 0,73 0,82 1,10 Coefficient of variation 0,18 0,16 0,19 0,28

Regardless of the higher value of the standard deviation for the law firms, the deviation does not reach the critical value of 50% for any of the branches, i.e. the variance lies within acceptable limits. The CRM basis is operationalized through four components: corporate culture, organizational structure, customer research activities and database management. The customer-oriented corporate culture is expressed though the 17 conviction of the employees on different hierarchical levels that the customers are a key factor for the development of the business. This 2016/1 opinion is shared by a significant part of the managers (between 81% and 93%) who had taken part in the study (Table 4). The collected information shows that high mean scores are formed, i.e. the respondents agree that the front office staff in their companies (i.e. the staff which communicates with customers directly) is familiar with the goals and the strategies of the companies regarding the management of the relationships. At the same time there is a significant overlapping of the answers in connection with the statement that the surveyed E. P. Stanimirov et al.

companies have clear procedures for the implementation of customer- oriented activities as: offering, service, management of claims etc. The arrangement of trainings of the staff for work with customers is a part of the customer-oriented corporate culture. A significant variance is observed regarding this matter which reaches the critical level of 50%. The data show (and it is perfectly logical if one takes in consideration the specifics of the respective business) that only financial and credit institutions for the most part (87%) provide training of the staff for work with customers. Such trainings are a fact (but under certain conditions) only for 36% of the accounting firms, 55% of the marketing firms and 41% of the law firms. The organizational structure is another component of the CRM basis. It refers to providing conditions for smooth functioning of the processes implementing the CRM concept. Three indicators are provided in this study for the assessment of the adaptation degree of the organizational structure for supporting the processes of management of the relationships. The data in Table 4 relating to the organizational structure of the companies in the three branches are widely divergent. At the same time the variation observed for two of the branches (accounting and legal services) is beyond the acceptable level and reaches 57%. It is remarkable that, again, as it was with the previous statements, the sector of the financial services is represented most positively in connection with provided organizational conditions for efficient management of the relationships with customers.

Table 4 Mean scores and variance in blocks: „Corporate culture“ and „Organizational structure“

Type of services rendered

accounting financial marketing legal

Co- Statements Coef- Coef- effi- Coeffi- Arith- Arith- Arith- ficient Arith- ficient cient cient of metic metic metic of metic of of varia- mean mean mean varia- mean varia- vari- tion tion tion 18 ation Corporate culture 2016/1 The staff at all levels is convinced that customers are 4,50 0,19 4,60 0,16 4,40 0,17 4,32 0,19 a key factor for the development of the business The company organizes trainings 2,89 0,49 4,32 0,25 3,52 0,36 2,90 0,47 for work with customers Strategic Readiness for CRM Process Management

The staff which communicates with customers is famil- 4,38 0,22 4,67 0,14 4,47 0,13 4,10 0,26 iar with the goals of the company The staff which communicates with customers is famil- 4,33 0,21 4,64 0,14 4,32 0,19 4,03 0,27 iar with the strategy of the company The company has clear procedures for the implementation 4,25 0,22 4,53 0,19 4,32 0,20 4,01 0,28 of customer-oriented activities

Organizational structure

The organizational structure of the company allows ef- 4,15 0,23 4,41 0,18 4,16 0,20 3,76 0,29 ficient management of the relationships with the customers The company has a department or specialist/s/ in charge 2,50 0,57 4,03 0,29 3,67 0,38 2,32 0,55 with the task of researching customers The company has a department or specialist/s/ in charge 2,67 0,55 4,34 0,24 3,95 0,32 2,62 0,55 with the task of preparing offers to different customers

For the other three branches lower mean scores are formed, but as a whole the prevailing opinion is that conditions for efficient management of the relationships exist. The difference in the magnitude of the mean scores of the different statements shows that the opinion on the organizational structure of the managers, who have taken part in the study, is theoretical and in many cases it is not based on concrete facts. When asked if there is a department or specialist in charge with 19 the task of researching customers, a significant part of those who answered positively to the first question no longer express the same 2016/1 opinion. A similar migration of the answers is also observed by the comparison between the first and the third statement. The mean scores for presence within the company of a department or specialist in charge with the task of researching customers are much lower compared to the general scores for presence of appropriate organizational structure for the implementation of the CRM concept. For each of the four studied branches higher mean scores are formed for the presence of a department or specialist/s/ in charge with the task of preparing offers for different customers compared to the E. P. Stanimirov et al.

mean scores for the presence of a department or specialist/s/ in charge with the task of researching the customers. This means that a part of the modifications of the offers is implemented on grounds of information from operative contacts with customers without conducting special research (which is not a negative observation). Another probability is that the offers are modified in the hope that in this way certain effects would be achieved, i.e. the modifications are implemented by the trial-and-error method. The next component in the framework of the CRM basis is related to customer research activities (Table 5). For this component the lowest mean scores are formed within the strategic CRM cycle. The reason for this conclusion is the lack of established practices for systematical research of the customers in different sections in all of the four branches. This is confirmed by the comparison of the mean scores between the different statements according to branches. Usually the score for the statement about the systematic customer research is higher than the mean scores for all other statements except those related to customer satisfaction and loyalty. This leads to the conclusion that a significant part of the companies (between 59% for accounting services and 80% for financial services) observe and research their customers on the grounds of specific criteria and make management decisions about how to interact based on them. However, the data show that for a part of the companies the criteria for customer research do not include the following: volume of purchases, contribution of the customer to the profit, frequency of purchases, propensity to give marketing information and propensity to generate ideas for the improvement of the offer. This conclusion is not valid for the law firms where the information does not seem to be sufficiently reliable. The reason is the high value of the variation coefficient with four (of a total of eight) operationalizing variables for assessment of the commented component of the CRM basis. The mean scores, related to the activities for the research of customer satisfaction and loyalty, are higher than the summary score for the systematic customer research. This is valid for all branches and 20 conforms the conclusion here above that, even if the companies do not research their customers systematically, the frequent contacts with 2016/1 them allow the formation of a certain opinion on the satisfaction of the customer and his commitment to the company. Strategic Readiness for CRM Process Management

Table 5: Mean scores and variance in blocks: “Customer research activities” and “Database management practices” Type of services rendered

accounting financial marketing legal

Co- Co- Co- Co- Statements effi- effi- effi- effi- Arith- Arith- Arith- Arith- cient cient cient cient metic metic metic metic of of of of mean mean mean mean vari- vari- vari- vari- ation ation ation ation

Customer research activities

The company systematically researches its 3,41 0,37 4,05 0,26 3,76 0,29 2,63 0,51 customers The company observes the satisfaction of its 4,12 0,23 4,23 0,23 4,48 0,15 3,78 0,29 customers The company observes the loyalty of its cus- 3,95 0,28 4,13 0,21 4,05 0,31 3,51 0,36 tomers The company assesses the customers based on 3,10 0,43 3,71 0,33 3,61 0,35 2,86 0,53 the purchase volume The company assesses the customers based on 3,28 0,39 3,73 0,35 3,70 0,34 3,13 0,43 their individual contribution to the profit The company assesses the customers based on 2,92 0,43 3,32 0,40 3,63 0,35 3,18 0,38 the purchase frequency The company assesses the customers based on 2,55 0,45 3,03 0,43 3,11 0,35 2,51 0,50 their propensity to give it marketing information The company assesses the customers based on their propensity to give 2,79 0,46 2,95 0,44 3,36 0,41 2,51 0,52 ideas for the improvement of the offer Database management practices 21 The company analyses information that helps it 3,93 0,29 4,47 0,18 4,37 0,18 3,57 0,35 to manage the relation- 2016/1 ships with customers The company maintains databases with infor- 4,19 0,28 4,48 0,19 4,40 0,23 3,73 0,39 mation about individual customers The company maintains databases with infor- 3,28 0,46 3,90 0,31 4,17 0,24 2,99 0,51 mation about customer behavior The company has software which helps 2,94 0,53 4,03 0,30 3,70 0,40 2,33 0,57 analyzing customers and preparing offers E. P. Stanimirov et al.

The last component of the CRM basis is the “database management” (Table 5). The distribution of the answers within this block is logical. Almost all of the companies offering financial and marketing services (90% - 92%) implement systematization and analysis of data which allows them to manage the relationships with their customers. The part of the accounting and law firms with such practices is significantly lower – between 63% and 77% and it is not a case of availability of information databases based on which to systematically conduct research of the customers. Databases with information about customers are available with over 80% of the companies. Exceptions thereof are again the law firms where the high value of the coefficient of variation does not allow making a valid conclusion. The availability of databases with information about customers does not mean a priori that it is a good basis for the management of the relationships. The matter is „what information exactly is contained in the databases and for what might it be useful?“. It turns out that a part of the information databases do not include behavioral information as to: frequency and volume of purchases, number of claims etc.). This does not allow taking into account the past behavior of the respective customer in case of large customer bases if personalization of offers is desired. Therefore, one cannot suggest that the offering takes into consideration all important aspects that relate to the future behavior of the customers. An even smaller part of the companies are equipped with specialized software to help them analyze customers and use this as a basis for the offers. The best performance in this regard show the financial companies (74% have such software) and companies offering marketing services (60% have such software).

2. CONCLUSION For the achievement of the objective formulated in the paper a tool for the assessment of the strategic readiness for CRM process management in companies specializing in marketing services in the B2B market in Bulgaria was designed and tested. The strategic readiness 22 to manage the CRM process is a result from the implementation of a certain vision and concrete infrastructure for the management of the 2016/1 relationships with the customers. The analysis shows that as a whole the companies specializing in financial and marketing services have a higher degree of strategic readiness for efficient management of the CRM process. This is confirmed by the scores of the different components of the CRM vision and the CRM basis, although initially there is a strong positive opinion of the manager from all branches on the presence of a clear vision on how to interact with customers. The discrepancy in the “Guiding principles” block is somewhat surprising. On the one hand it is stated that the relationships should be managed and that there are clear objectives and strategies according to customers, but on the other hand Strategic Readiness for CRM Process Management the idea that the customers have different statuses is not accepted. A main idea of the CRM concept is that the personalization of the offers is possible only provided that the customer base is differentiated. In terms of positive thinking the conclusion can be made that according to the managers who took part in the study the efficiency of the interaction is determined by the ability of the companies to make offers tailored to the individual customer demands. At the same time a high degree of variances of the answers regarding activities for trainings of the staff for work with customers is observed. The most critical result observed is the lack of an established practice of systematic research of customers in different sections. The main conclusion which arises from the conducted analysis is that businesses with a higher degree of competitive pressure and higher intensity of transfer and replication of leading international practices (financial and marketing services) invest more efforts and resources for the implementation of the principles for management of the relationships with customers which makes them more suitable for successful implementation of CRM projects.

REFERENCES Gudkova S., (2005). CRM! Pochemu vnedrenie, a ne “korobka”? Zhurnal “Bankovskoe obozrenie”, N3, (source: http://www.cmdsoft.ru/about/pressa/007/; last access – 20.09.2015). Alsmadi, S., Alnawas, I., (2001). Empirical Investigation of the CRM Concept in the \ Jordanian Context: The Case of Banks and Financial Institutions. International Journal of Business and Management, Vol. 6, N 2, February, p. 183. Barone et.al., (2000). The Influence of Cause-Related Marketing on Consumer Choice: Does One Good Turn Deserve Another? Journal of the Academy of Marketing Science, 28, Spring, pp. 248-262. Day, G., (2003). Creating a Superior Customer-Reating Capability. Sloan Management Review, Vol. 44, N 3, pp. 77-83. Erffmeyer, C., Johnson, D., (2001). An Exploratory Study of Sales Force Automation Practices: Expectations and Realities. Journal of Professional Selling & Sales Management. Vol. 21, N 2, p. 167. Johnson, J., (2004). Making CRM Technology Work. British Journal of Administrative Management, Vol. 39, N 3, pp. 22-23. Kim, H. et al., (2000). Integration of Firm’s Resource and Capability to Implement En terprise CRM: A Case Study of a Retail Bank in Korea. Decision Support Sys 23 tems, Vol. 48, N 2, pp. 313-322. Kinikin, E., (2000). Top 10 CRM Success Factors: Doing It Right. IdeaByte, August, p. 2. 2016/1 Lamparello, D., (2000). Doing More for the Right Customers. Bank Systems and Tech nology, Vol. 37, N 1, pp. 10-11. Mack, O., Mayo, M., Khare. A. (2005). A Strategic Approach for Successful CRM: A European Perspective. Problems and Perspectives in Management, 2, p. 100. Nelson, S., (2002). CRM: From “Nice to Have” to Necessity. Gartner Group, August 2002 (source: q3h3vwb.tripod.com/msce630.../assignment.html; last access – 18.12.2015). 24

2016/1 Euro-Scepticism In Turkey of AKP Period in the Context of Temporary Tensions and Permanent Interests

Dr. Hulya Eski Uguz Selcuk University Rukiye Saygili Selcuk University

ABSTRACT Turkey’s relationship with the European Union (EU) has a long history that reaches back to its application for associate membership in the European Economic Community (EEC) in July 1959 and the resulting Ankara Agreement in 1963. Turkey made its official membership application in 1987 and was granted official candidate status in 1999. Throughout this long process, Turkish political elites perceived EU membership as an ideal for Turkey and highlighted their commitment to their alization of Turkish accession to the EU. However this ideal, began to change towards the second half of the 2000s. Many commentators take October 2005 the official start of membership negotiations between Turkey and the EU, as the beginning of the end, the turning point where the ‘golden age’ of the EU membership project ended, after which it gradually began to Euroscepticism. There are more than enough reasons for the growing Euroscepticism in Turkey. In this context, the study aims to analyze the reasons of Euro- skepticism in Turkey with particular focus on Adalet ve Kalkınma Partisi-AKP (Justice and Development Party) and how this suspicion would affect the membership course.

Keywords: Euro-Skepticism, Turkey, Justice and Development Party.

1. INTRODUCTION Formation of the European Union had its objective in the beginning to improve the economic development in the 25 member states and to promote exchange of goods. At that stage, another objective of the formation was to reduce the effect of the national factor in the relations between the states. European people had learnt,in a tragic way through two world wars, which both had strong ethno-nationalist emphasis, that a share communal domain was a means for socio-economic and national egoism specific to the sovereign states. For these reasons architects of the European Union had focused on prioritizing the economic issues with the thought that an increase in the overall welfare level would enhance the level of H. E. Uguz & R. Saygili

tolerance (Condruz-Bacescu, 2014). This argument has been supported with a great faith by many countries. Nevertheless, the faith in the European Union has turned into a suspicion, initially, due to economic concerns, then, due to political reasons following the Maastricht Treaty. Thereby, this counter stance referred to as Euro-skepticism has become the basic policy of several political parties in member and candidate countries over time. While initially the rhetoric of “becoming part of Europe-the civilized world” was passionately embraced by both political elites and intellectuals in Turkey and EU membership was evaluated in an idealist framework; the developments inthe course of membership have eroded the said idealism in Turkish society, and changed the relationships with EU into a more pragmatist and skeptical structure. In this context, the study aims to analyze the reasons of Euro-skepticism in Turkey with particular focus on Adalet ve Kalkınma Partisi - AKP (Justice and Development Party) and how this suspicion would affect the membership course.

2. FROM FAITH TO SUSPICION : ORIGINS AND EVOLUTION OF THE EUROSCEPTICISM The concept of Euroscepticism is first seen to have been used on the newspaper The Times on 11 November 1985 to define the skeptic opposition to the European Union and its policies. Nevertheless, the concept would gain popularity worldwide with the well-known “Bruges Speech” of Margaret Thatcher, the Prime Minister of Britain, on 20 September 1988. The opposition in the speech of the Prime Minister in Brussels that sovereignty of the European Union would supersede and annihilate the sovereignty of Great Britain was going to make a considerable impression (Apodaka, 2015): “We have not successfully rolled back the frontiers of the state in Britain, only to see them reimposed at a European level, with a European super state exercising a new dominance from Brussels”. The speech of Thatcher in 1988 made a significant impact on the discourse encompassing the EU. This impact indeed resulted from the 26 fact that Thatcher was the first European leader to have first directly challenged the direction proceeded by the European Union. With this 2016/1 speech, an agenda shaped by the politicians, public and media began to form around the Treaty on European and the concept began to be discussed in media and political spheres (Usherwood & Startin, 2011). While historical origins of the concept are in Great Britain, the concept started to increasingly take root in other places with signing of Maastricht Treaty in the early 1990s. However, in those places, the concept of “Euroscepticism” adapted in a different way by being articulated to the national political discussions. Thus, the concept began to gain meaning with different national political conventions and different experiences of different states shaped by the discussions Euro-Scepticism In Turkey encompassing the European integration. For example, the concept of “souverainist” could be used instead of Eurosceptic. In this example, souverainism defines a policy targeting to protect national sovereignty of the state in both national and economic issues. This is a strong negative position toward the European integration when compared to those who defend less integration in certain fields of policy or who are against grant of more sovereignty to the political structures and institutions of Europe (Harmsen et al. 2004). Spread over by being evolved with Maastricht Convention, and originated from Britain, the most common definition of Euroscepticism known is by Paul Taggart. Having defined the concept in a very inclusive manner initially, Taggart defines Euroscepticism as the expression of the thought of entire or unconditional opposition to the European Union as well as a conditional and qualified one. Later, Taggart was going to revise and narrow this broad definition with a specific reference to the Central East European countries. In this narrow and specific definition, the concept of Euroscepticism now has two different appearances: ‘soft’ and ‘hard”. Hard Euroscepticism implies rejection of the political and economic integration of Europe in its entirety and opposition to membership of one’s own country or its staying as a member to the European Union, whereas soft Euroscepticism defines conditional or qualified opposition to the European Union (Taggart & Szczerbiak, 2001). In addition to the discrimination between hard and soft Euroscepticism, the two appearances of Euroscepticism may be discriminated as ideological and strategic considering the underlying driver. Ideologically driven Eurosceptic is under the influence of Euroscepticism due to its own ideological stance. His values and normative political targets stem from its ideologies in the beginning. Hence, a political party chooses and adopts a hard or soft Euroscepticism stance against the objectives, policies and targets of European Union. On the other hand, the skepticism we encounter in the strategically driven Euroscepticism is nothing else than a pragmatic attitude assumed by the parties usually to expand its group of voters, attract new voters or broaden its political influence zone, although the ideological stance of 27 the party is not so different (Ultan & Ornek, 2015). It is possible to mention about different reasons for the syndrome, 2016/1 named as a British syndrome in the beginning, and spread to whole continent nowadays. Among all major criticism for EU action is the democratic deficit, lack of transparency, lack of flexibility, complicated language, the trend of creating a highly centralized super state, fear of a symbolic threat to the national communities. The major obstacle in relations with the European institutions seems to be the impossibility to identify suitable ways of managing the relationship national vs. supranational at the level of governmental responsibilities (See Table 1) (Condruz-Bacescu, 2014). It should also be noted that aforementioned H. E. Uguz & R. Saygili

reasons also vary in historical perspective. Until the 1990s, skepticism involved macroeconomic performances of the countries; suspicion was rising as inflation and unemployment increased, whereas falling as inflation and unemployment decreased. In the subsequent years, we confront the individual economic suspicions characterized as a reaction to the common market as the reason for suspicion. According to this explanation, the increasing job insecurity of individuals brings about anger at EU and a suspicion emerging on anger. In the 1990s, despite good economic conditions, the increase in suspicion about EU brought about shift of the attention in understanding skepticism from economic reasons to social and political reasons. This is mainly because that, following Maastricht Treaty, as the European integration advanced from establishment of a common market to formation of an administrative method, skepticism began to combine with the concern of erosion of national sovereignty and national identities. Based on these explanations, it is possible to suggest that the policies conducted by EU are determined within the framework of their relationship with national interests. A skepticism emanates from the perception that EU poses a “cultural” threat to what is national and the economic interests (Koklu, 2013).

Table 1: Types of Euroscepticism Euroscepticism based Euroscepticism Euroscepticism Euroscepticism on economic criteria based on the crite- based on demo- based on political ria of sovereignty cratic criteria criteria

Quantifies pragmati- Considering that, Perceives the cur- Assesses EU action cally the major benefits at EU level, coop- rent institutional based on the doc- and costs originating eration shall not be structure of the trine of belonging from EU membership, a challenge to na- Union as insuffi- to a political family; resulted or not from a tional sovereignty. cient in terms of analysts believe that cooperative process. These eurosceptics representation and the dominant form support suprana- democratic partici- of this disproof is tional cooperation pation of citizens. social in matters that the state cannot manage alone (such as environmental issues 28 and the fight against organized crime), but wish to preserve 2016/1 national skills for socio -cultural policies. Source: Condruz-Bacescu, 2014.

3.EURO-SCEPTICISM IN AKP PERIOD: OUTGROWTH DISTANCE AND SELECTIVE ADOPTION Turkey’s relationship with the European Union (EU) has a long history that reaches back to its application for associate membership in the European Economic Community (EEC) in July 1959 and the Euro-Scepticism In Turkey resulting Ankara Agreement in 1963. EU membership has become a reality for the Turkish public and elites, and is seen as a means to further national democratisation, modernisation and economic development (Buyukbay, 2010). This faith, however, began to change towards the second half of the 2000s. Many commentators take October 2005 the official start of membership negotiations between Turkey and the EU, as the beginning of the end, the turning point where the ‘golden age’ of the EU membership project ended, after which it gradually began to Euroskepticism (Yaka, 2016). There are more than enough reasons for the growing Euroskepticism in Turkey. In this context, the Customs Union participated in without becoming member, the Cyprus problem hindering opening of the negotiation chapters, Copenhagen political criteria as one of the reasons increasing particularly the nationalist reactions, Turko-scepticism describing opposition of EU members states to EU membership of Turkey, and the partnership relation which did not end up with membership, as well as the membership course that has been continuing for a long time. In addition, the Sevres Syndrome describing the thought that EU demands would abolish the nation-state structure of Turkey, EU demands do not solve the terrorism problem, but rather they further strengthen it, and the religion difference emphasizing that the EU consisting of Christian countries would not make Turkey, with a great majority of Muslim citizens, can be stated to be as much important reasons at least as those in the first group (Tezcan & Aras, 2015). While this study aims to discuss the Euro-skepticism in Turkey with particular focus on AKP, it should be firstly noted that only AKP does not hear of a suspicion about Europe, various parties have had suspicion about EU due to the reasons listed above. However, what makes AKP different from others is the fact that it sees the course of membership to EU as a practical instrument for achieving its goal. In fact, the origin of this attitude can be found in the National Vision Movement, where AK Party has its roots. National Vision Movement is known to show an explicit opposition to the West, which constitutes the main axis of Turkish foreign policy, thus, to EU. Erbakan, the founding leader of National Vision Movement, and his parties criticized EU 29 for economic, cultural and political reasons. According to Erbakan, EU was a Christian club with imperialist desires on Turkey. As will 2016/1 be discussed in the following part,National Vision Movement (Milli Gorus Hareketi) under the leadership of Erbakan modified its rigid stance towards the EU over time.Despite the Movement’s Eurosceptic stance,particularly in late 1990s the party adopted a more positive discourse to the EU. In Turkey, political Islamists have been repressed for being a threat to secular character of the state and their parties have been closed for multiple times. In the 1990s, EU placed much more importance to the democratization and human rights, and the political Islamists in Turkey perceived EU as a tool to transform Turkey H. E. Uguz & R. Saygili

particularly in the areas of democratization, human rights, religious liberties and the influence of military on politics. Verney claims that, as of 1990s Islamists left behind their rigid Eurosceptic approach since they realized that “Europeanization, as a path to democratization, could create a framework that allows the establishment of a stable Islamist government”. While the assumption of establishment of an “Islamist government” is too assertive, it is a fact that,particularly following 28 February period1, political Islamists have, as will be seen in the next part, used Europeanization to enhance human rights and democratization in Turkey for their own interests (Cicek, 2012). When the Islamist-rooted AKP came to power in November 2002, it initiated a vigorous campaign to accelerate Turkey’s pace toward Europe. Given the then explicit and strong support of the Turkish society to EU membership, strengthening of Turkey’s European perspective has been quite instrumental for the AKP to consolidate its place within the political establishment (Kaliber, 2013). In this context it is possible to say that AKP took over as an instrument for its own period the pro- EUstance of the National Vision that was dominant in their most recent period, turned it into a strategy which it put into practice or used in the area of domestic-foreign policy (Tezcan & Aras, 2015). As expressed by Balci (2013) and Alessandri (2010), complete acceptance of the EU objective by AKP, which was in more need for international support than other political parties since 2002 to gain political legitimacy, has served the process of legitimation of the party in Turkey and international areas. In addition to being part of the said legitimization process, the encouraging expressions of EU inthe summits 2000, 2001 and 2002, also, the emphasize on establishment of civil control on the military (Yankaya, 2009) have turned harmonization with EU norms as the only peaceful means of restricting role of the military in democracy of Turkey (Dogan, 2005) into a useful instrument. In short, EU norms have been seen as an opportunity for expanding the political, economic and cultural space that had contracted for Islamic groups in the 28 February period, the democratic terms stipulated by EU prior to participation have both strengthened and legitimated the positions 30 and demands of Islamic groups (Yankaya, 2009). Additionally to all, in early 2000s there was a huge public support for the EU membership in 2016/1 Turkey and it was rational for the newly-established AKP to adopt a pro-EU stance. In 2002, rate of the supporter of Turkey’s membership to EU was around 64%. Taking a pro-EU approach AKP also aimed to get support of liberal and central media, business organizations 1 28 February 1997 is one of the most important dates in Turkish democratic history. At the regular meeting of National Security Council on 28 February 1997 the government in which Erbakan was the Prime Minister was given a list of proposals aiming to “prevent what the Council saw as Islamization of the country”. After the National Security Council summit harsh discussions on the secularist structure of the state were made in political and public level. For some circles Erbakan and his party were accused of being against secularism. As a result of these pressures the Erbakan government resigned in June 1997. This period was called 28 February Process and post-modern military coup in Turkish democracy literature (Cicek, 2012). Euro-Scepticism In Turkey like TUSIAD and civil society organizations.EU membership was so popular among the public that pro-EU approach helped to the electability of the AKP. The EU objective was particularly important in order to continue the political reforms and to unite different groups around the reforms. And the AKP comprehended this atmosphere in Turkey and embraced the EU process. As the majority of public was enthusiastic about membership, it would have been irrational for the AKP to adopt a Eurosceptic approach (Cicek, 2012). This has lasted until 2005, the AK Party in power has constantly expressed its pro-EU views on one hand, and started to quickly realize the reforms require for harmonization on the other hand. So, Onis (2008) designates the period through 2002 to 2005 as the gold age of EU process. In this period AKP combined domestic and foreign policy issues in order to use the external factors for the transformation of Turkey. In other words domestic politics in Turkey were Europeanized in this period (Cicek, 2012). Following commencement of the negotiations on 3 October 2005, very interestingly and paradoxically, the Euro-enthusiasm of the AKP cadres in the early 2000s was replaced by Euro-fatigue and postponement of the implementation of EU reform strategy by the incumbent government. The second and third terms of the AKP rule (2007 to the present time) are marked by Euro-skepticism and a drift from Europeanization (Kaliber, 2013). According to Ozcan (2010) and Yaka (2016), what ended the golden age is the fact that AK Party, which had shaped its legitimacy and its difference from the former line on the basis of establishment of close relationships with EU, is not in need of this relationship as much as it was before. The rising hegemony and public support of the AKP, which secured 47% of the votes in the 2007 elections, enabled the government to initiate a social and political transformation without needing the instrumentality of the EU membership project. While agreeing with this idea, it should also be stated here that there are other reasons which increased skepticism in Turkey in that period. For example, in December 2006, the EU suspended negotiations on several chapters of the accession negotiations, the reason for that is Turkey refused to allow (Greek) Cypriot ships and planes into Turkish facilities. Given 31 Turkish and Turkish Cypriot support for and Greek Cypriot rejection in 2004 of the UN-sponsored Annan Plan to reunify the island, 2016/1 many Turks felt that this decision was unwarranted and evidence of the EU’s ‘unbalanced’ approach to this problem. Expressions of anti- Turkish sentiment from European leaders - containing Germany’s Angela Merkel and France’s Nicholas Sarkozy- also contributed to the problem (Kubicek, 2011). European leaders have declared openly on several occasions that Turkey would not become a full EU member at the end of the process and Turkey’s accession would “deal a fatal blow to the very notion of European identity (Usul, 2014). Beside the Cyprus problem, Double Standard Treatments and French-German H. E. Uguz & R. Saygili

Attitudes, negative perceptions among the Muslim and Western world also played an important role in the rise of Euro-skepticism among Turks. Following the September 11 attacks by the Muslim terrorists, Islam phobia started to rise and European’s view of Islam changed from bad to worse by the influence of the European media. This eventually resulted in a decrease of the support of European people for Turkey’s membership to EU,which in turn reduced the enthusiasm of Justice and Development Party for EU Membership (Guler, 2011). The decree of European Court of Human Rights (ECtHR) on Leyla Sahin in 2005 was totally a breaking point. It was a monumental development that the Grand Chamber of the ECtHR agreed to hear Sahin’s case at all, since two previous applications concerning Turkish headscarf had been ruled inadmissible. Nevertheless, Sahin case ended up with temporary defeat of the hijab supporters. In the hijab case, the Grand Chamber concluded that fundamental rights could be interfered in order to protect others’ rights and freedoms and to maintain public order. While acknowledging that the prohibition was an interference in Sahin’s right to express her religion, the Chamber decided that prohibition could be applied in order to protect rights of third parties, maintain public order, assure the principles of equality and laicism in Turkey. This decision of ECtHr was not welcome at all by the AKP leaders, who saw the Europan Union a liberating power in terms of religious freedoms as well as release of the prohibition of hijab. The AKP’s disappointment immediately turned its elite and clientele Eurosceptic, revealing that the AKP had actually perceived the EU as an instrument (Kaya, 2009). As a result of all these developments the AKP is reflected in the hardening tone of the then Prime Minister, now President, Recep Tayyip Erdogan, who frequently invites the EU to ‘play it open’, to be ‘the man of his word’, etc. Those toughening remarks were not all empty gestures. The Turkish government may feel that it has other options besides the EU. The AKP has started to pursue a new foreign policy strategy, that aims to construct Turkey as an independent and respected regional and global player. Several scholars have suggested how ideas of ‘neo-Ottomanism’ and the desire for greater engagement with the 32 Muslim world have animated Turkish foreign policy under the AKP government. Part of the motivation is economic, as Turkish economic 2016/1 interaction with its non-EU neighbours grew markedly in the second half of the 2000s. With the Turkish economy growing by over 10% in 2010 while European economies remained stagnant, some began to question how much Turkey really needs Europe. Older strategic alliances are also being re-considered (Yaka, 2016; Kubicek, 2011). Given also the harsh effects of the Eurozone crisis, the self-confidence of Turkey in its relations with EU and its thought of seeking for other strategic partners can be understood better. Nevertheless, a cyclical change rather than a permanent change in this balance of power may be interpreted as a sign of the inferiority and superiority complexes Euro-Scepticism In Turkey shaping the psyche of the Turks in their relations with Europe. Keyman and Aydın-Duzgit (2013) (cited by: Yaka, 2016) refer to this new appearance of Euroscepticism, i.e. underestimating the importance of Europe and overestimating the power of Turkys as a global power as delusional Euroscepticism. Despite all these suspicions and thought of the then President Erdogan involving participation in the Shanghai Cooperation Organization instead of EU so as to expressly show Brussels that it is not the only option for Turkey, as also expressed by Tezcan and Aras (2015), EU membership desire of AK Party continues in principle. This does not mean that Euro-skepticism has come to end in AKP, but implies that AKP has realized the perceptual distinction between Europeanness and EU membership, and that it has succeeded to approach the issue of EU pragmatically.

4. CONCLUSION In signing convention with EEC, Turkey did had done this due the concern of not being excluded from the organizations in Europe, which it regarded as the tie to modernization, on one hand, and as a result of a pragmatic concern like security. Regarded as a foreign policy and security instrument in the beginning, EU could not receive much support from publicin this respect, but remained merely the preference of economic and political elites. However, several segments become passionately desirous about membership to EU for economical motives, while some desired for its values inherent in modernity. Besides the faith in modernity, it worth to note that Turkish people have always had the suspicion about Europe and its integration due to various reasons. In this context, it can be suggested that the concerns about Europe as reflected in discourses of AK Party cannot be attributed only to AKP, but that the public and almost all of the political parties in the arena of politics have the same concern. What makes AKP unique in this respect lies in that they have turned the course of membership to EU into a practical instrument for their own goals by realizing the perceptual distinction between Europeanness and EU membership. 33 REFERENCES Alessandri, E. (2010). “Democratization and Europeanization in Turkey After the 2016/1 September 12 Referenum”, Insight Turkey, 12(4), 23-30. Apodaca, A. (2015). Information Guide Euroscepticism, http://www.cardiff.ac.uk/ in srv/resources/edc/Euroscepticism.pdf Balci, A. (2013). “Türkiye’de Üç Tarz-ı AB Siyaseti: Post-Yapısalcı Bir Okuma”, Uluslararası Hukuk ve Politika, 9(35), 1-19. Buyukbay, C. (2015). “Euroscepticism in Turkey Power and Beyond”, http://www. peterlang.com/download/extract/89249/extract_266685.pdf Condruz-Bacescu, M. (2014). “Euroscepticism Across Europe: Drivers and Chal lenges”, European Journal of Interdisciplinary Studies, 6(2), 52-59. Cicek,C.(2012).“Justice and Development Party and the EU: An Inquiry on the De bates of Euroscepticism in Turkey”,(Basılmamış Yüksek Lisans Tezi), H. E. Uguz & R. Saygili

Middle East Technical University, Ankara. Dogan, E. (2005). “The Historical and Discoursive Roots of the Justice and Develop ment Party’s EU Stance”, Turkish Studies, 6(3), 421-437. Guler, E. (2011). “Eurospectism in Turkey on the Way to the EU”, https://www.aca demia. edu/1574271/Euroscepticism_in_Turkey_on_the_way_to_the_EU Gulmez, B. S. (2008). “A Comparative Analysis on Turko-scepticism in the EU vs. Euro-scepticism in Turkey”, PSA Post Graduate Conference 2008, University of Edinburgh, the UK, www.pol.ed.ac.uk/__data/.../gulmez.doc Gulmez, B. S. (2013). Understanding The Eurospecticism in Turkish Politics, https:// pure. Royalholloway.ac.uk/portal/files/22866477/Baris_Gulmez_phd_2014.pdf Gulmez, B. S. (2015). “Avrupa Şüpheciliği”, Avrupa ve Avrupa Birliği içinde, Ed. C. Dinç, Savaş Yayınevi, Ankara. Harmsen, Robert &Spiering, M. (2004). ‘Introduction: Euroscepticism and the Evolu tion of European Political Debate,’ in R. Harmsen & M. Spiering (eds.) Euro scepticism: Party politics, national identity and European integration, Amster dam: Rodopi. Hooghe, L. & Marks, G. (2007). Sources of Euroscepticism, ActaPolitica, 42, 119-127. Kaliber, A. (2013). “Contextual and Contested, Reassessing Europeanization: The Case of Turkey”, Paper presented at the 7th ECPR General Conference Sciences Po, Bordeaux. Kaya, A. (2009). Turkey-EU Relations: The Impact of Islam on Europe, in Jorgen S. Nielsen et al. (eds), Yearbook of Muslims in Europe Vol.1, Leiden, Brill, 377-402. Koklu, P. (2013). “Ekonomik Krizle Artan Avrupa Şüpheciliği”, Kubicek, P. (2011). “Political conditionality and European Union›s cultivation of democracy in Turkey”, Democratization, 18:4, 910-931 Onis, Z. (2008). “Turkey-EU Relations: Beyond the Current Stalemate”, Insight Turkey, 10(4), 35-50. Ozcan M. vd. (2010). Bundan Sonrası? Senaryo Analizleriyle Türkiye-AB İlişkileri, 2. Baskı, USAK Yayınları, Ankara. Samur, H. (2015). “Polonya: İdealist Avrupalılıktan Pragmatist Avrupa Birliği Üyeliğine”, Uluslararası Hukuk ve Politika, 11(41), 37-68. Taggart, P. & Szczerbiak, A. (2001). ‘Parties, Positions and Europe: Euroscepticism in the Candidate States of Central and Eastern Europe’, paper presented at the Annual Meeting of the Political Studies Association, 10–12 April, Manchester Tezcan, E. & Aras, İ. (2015). “Adalet ve Kalkınma Partisi’nde Euroseptisizm: Avrupa Birliği Desteğinin Eleştiriye Dönüşümü”, Uluslararası Hukuk ve Politika, 11(41), 1-35. Ultan, M. O. & Ornek, S. (2015). “Euroscepticism in The European Union”, Interna tional Journal of Social Sciences, 4(2), 49-57. 34 Usherwood, S. &Startin, N. (2011). “Euroscepticism as a Persistent Phenomenon” At the University Association of Contemporary European Studies 41st Annual Conference (Exchanging Ideas on Europe) at Robinson’s 2016/1 College, Cambridge, September avilable at http://uaces.org/documents/pa pers/1101/usherwood.pdf Usul, A. R. (2014). “Is There Any Hope on the Revival of EU–Turkey Relations in the “New Era?”, Turkish Studies, 15(2), 283-302 Yaka, O. (2016). “Why Not EU? Dynamics of the Changing Turkish Attitudes Towards EU Membership”, Journal of Contemporary European Studies, 24(1), 149-170, Yankaya, D. (2009). “The Europeanization of MÜSİAD: Political opportunism, Eco nomic Europeanization, Islamic Euroscepticism”, EU-Turkey: Sociological Approaches, (9), 1-18. A Look at Modern Social Religion as a Regressive Concept: Exploring the Power of Misinformation

Denis Kucukovic Western Sydney University

ABSTRACT The concept of religion is constantly under the scruples of redefinition. Ranging from arguments regarding the similarity and validity of state and theistic religion, to the morality of those who choose to reject the latter, religion is by far the most heated topic of discussion in any social circle today. Due to this, one would be remiss to pass up the opportunity to document the newly sprung notion of social religion; in particular, the morphing of social activism into social religion. The fact that contemporary theistic belief is increasingly held in a communal sense reveals that its purpose can be effectively categorised as social; hence the marrying of theistic and societal religion in this work. Though the distinctions are clear and numerous, the similarities cannot be ignored. Rationality needs more practice.

Keywords: Religion, Misinformation.

1. INTRODUCTION The concept of religion is constantly under the scruples of redefinition. Ranging from arguments regarding the similarity and validity of state and theistic religion, to the morality of those who choose to reject the latter, religion is by far the most heated topic of discussion in any social circle today. Due to this, one would be remiss to pass up the opportunity to document the newly sprung notion of social religion; in particular, the morphing of social activism into social religion. Third wave Feminism (not to be confused with the successful and absolutely justified first wave) and its adherents (often dubbed regressives/Social Justice Warriors or simply ‘SJW’) 35 have become fuel for the toxic mindset that is modern social religion. It is important to note the true definition of religion. Though religion does not mean faith, when one uses the word it has historically most likely been used in the theistic sense, its true meaning covers all forms of obsessive and zealous adherence to a set of established rules. This distinction is the root of religion’s inherent negativity. One must place ‘faith’ in an ideology in order to become a zealot. This faith is not subject to internal rational scrutiny (if it is to be maintained) and thus is inherently irrational, regressive, and rather imagined. D. Kucukovic

1.1 Problem Statement The idea of an imaginary ideology is not difficult to understand, or so one would hope. All one has to do is conduct a thought experiment. First, take your moral values, if they are religiously driven then you already inadvertently understand rationale based on warped reality, and then assign them to an arbitrary system of objectively false beliefs. It can be anything. It can be a belief in a God, a strict code of law set by an illiterate man who lived thousands of years ago, or even a social movement based on outdated facts. Now, your belief may only go this far, which is not physically dangerous but surely mentally so, but others may take your ludicrous notions and carry them into the civilised world as their gospel. If the question of danger is taken care of and proven to be insignificant, as it always should be, then one must turn to truth. Why must a person believe in fiction in order to justify reality? The answer is fear. The idea of ignorance through fear is an idea that has most recently, in mainstream thought, been championed by neuroscientist and moral philosopher Sam Harris (2004). To understand religion, he claims, one need only look to the emotions evoked when a vulnerable mind contemplates death. That is the key to all religious belief. Harris clearly outlines the trickle-down effect of fundamentalist religious belief. If religion is wrong about the origins, behaviour, and future of the universe, it is then more than reasonable to suggest that its idea of life after death is equally false. This is where fundamentalism begins. Fear of death. Fear of reality. To counter this fear, one must conjure up, or simply adopt, a false ideology in the hopes that it will ease this fear. To consolidate this belief, one must then spread this view with intense fervour, to neighbours, friends, and even children, so that they may feel validated in their ignorance. This is the principal of ‘imaginary ideologies.’ It is so rampant, even today, that it has poisoned the minds of those who would otherwise behave in a manner appropriate to 21st Century rational thinking. The tactic to spread one’s warped logic extends beyond traditionally lax familial ties. Unlike contemporary theistic religion (which is not to insinuate its innocence, but rather its relativity), modern feminism believes in unified, unchallenged 36 policing of thoughts. To stray from the established ‘sexist-free’ mindset is not to have a lapse in judgement, it is equivalent to true crime. The 2016/1 punishment is social and economic exile.

2. THE REGRESSIVE LEFT Perhaps the biggest perpetuator of this wilful ignorance is the ‘regressive left.’ A term popularised by author Maajid Nawaz, it refers to the fundamental apologist section of the traditional liberal left- wing. In the interest of all encompassing, misguided multiculturalism, the regressive left have deemed it an act of bigotry to criticise certain ideological belief systems; in particular, Islam. Nawaz(2013, p. 210) focuses on the word ‘regressive’ as this distortion of liberalism allies A Look at Modern Social Religion as a Regressive Concept itself with the most regressive theocratic regimes of the middle-east. By sheltering outdated ideas from criticism, regressive ideals have begun to spin a tale that paints other left-wing subscribers as having a narrow and exclusive mindset; a most ironic and misinterpreted set of beliefs. This sheltering includes more irony than sense. Those who adhere to the strict and yet confounding rules of regressivism seek to eradicate what they deem as racism. This is done in an attempt to eliminate the stigma that certain races might carry, warranted or not. What needs to be understood however is that if one chooses to lump people together based on the colour of their skin (as regressives are wont to do), then one must accept the facts and statistics that arise from such a blanketed categorisation. 2.1 Liberal or Regressive? The idea behind such a regressive ideology is a misapplication of classic liberal principles. By misinterpreting the liberal principle of acceptance, the regressive left become beacons for respect without criticism (Nawaz, 2013 p. 210). This idea is so ingrained in their community that any form of religious criticism, contemporarily this is again most common with Islam (as they ignore their own), is seen as bigotry or even racism; quite a stretch of the definition considering that religion is not a race. The true concept of liberalism subscribes to the idea of acknowledgement. It operates on the belief that all ideas must be acknowledged if constructive discussions on morality and real world application are to occur. This does not however imply that any such idea must be respected or become immune to ridicule. All ideas must be tested intensely. Without this approach, societies run the risk of allowing ignorance and bigotry to run rampant without an intelligent challenge to the principles that foster them. This is exactly what has occurred in the western world, and through association, the middle-east as well, with the rise of this ‘regressive left.’

3. THE ‘SOCIAL JUSTICE WARRIOR’ Without a filter on ridiculous beliefs, this idea is most dangerous in the realm of politics. Beginning largely as a criticism on the treatment of Islam by the west, the regressive left is effectively the result of a 37 knee-jerk reaction to neo-conservative foreign policy implementation (Nawaz, 2013). This idea is further based on the belief that organised 2016/1 military invasions of middle-eastern nations are worse than smaller, sporadic acts of Islamist terrorism. While it is obvious that these ideals carry the risk of infecting the political sphere, the real danger of this ideology lies in its sense of duty. Those that subscribe to it have been driven by a misguided sense of social justice to intensely challenge what they deem as bigoted criticisms of middle-eastern cultural and religious values. The intense fervour with which this distorted world view is being pushed is analogous to an attempt at ideological warfare. Believing victory to be more important than intellectual conversation, D. Kucukovic

the regressive left have made it their goal to attack those who do not share their views. The regressive idea is not to look at the ideas being criticised, but merely focus on the fact that they are being criticised. To the regressive left, belief systems should be immune to criticism as anything else would mean denying multiculturalism (unless it regards their own agenda, such as the systematic destruction of cis-gender pronouns). In the online world, meaning those in forums and threads dealing with social and political expectations, the subscribers have been dubbed ‘social justice warriors’ (SJW), rather ironically. With Us or Against Us Ironically, by attempting to put an end to violent clashes of ideologies, that is, the mentality of ‘us against them,’ the regressive left have only served to strengthen that very ideal. Due to their vicious and defensive nature, the regressive left have created a barrier between dialogue and change. The only change they profess is the end to a specific intolerance which they neither genuinely interpret, nor understand. To understand the idea of criticism against Islamist ideology, one need only have the capacity to evaluate ideas for what they are truly worth. Does this ideology spread hate, distrust, or bigotry? If so, it must be open to scrutiny. It is rather interesting and bewildering to note that these regressive principles never apply to ideologies which do not hold at their core the belief in a religious truth. Following this regressive mode of thinking, an ideology must be allowed to flourish if it is held by a vast number of people. This perpetuates the idea of quantity over quality. No other argument needs to be made to reveal the ridiculousness of this ideological double standard. A rejection of this idea then leaves several topics unanswered.

4. MORALITY When one rejects religion, they are left with the question of morality. The highest form of morality then becomes altruism. But why then must altruism be followed? This brings to the fore ideas of what can be called micro and macro morality. Macro morality refers to topics that deal in progress and prosperity; such as murder, rape, 38 torture etc. Micro morality refers to manners, respect, minor human interaction etc. While all sane individuals agree on the principles of 2016/1 macro morality, there is a big divide in the conduct of micro morality. Since religion preys on the idea that one cannot possess macro morality without a belief in God, and for all intents and purposes this idea is a scientific fallacy, it becomes the burden of the atheist to provide themselves with specific micro moral guidelines. This is usually taken on by communities within different nations, and these ideas differ, with just cause (Hitchens, 2007). 4.1 First Step Once morality is established as the greatest divide in human history, one must then develop a system of dialogue that can take place without A Look at Modern Social Religion as a Regressive Concept violence. Though this is difficult to do, and some rightly argue that it is impossible in an absolute manner, it must be undertaken. In order to pose the question of macro and micro morality to different nations, one must understand that vast numbers of people within those nations will refuse to question their beliefs. It is then reasonable to discard those individuals. It is of no use to any form of critical discussion to have unwilling radical deniers. It cannot be argued that morality does not stem from human understanding, specifically through the passage of time (Dawkins, 2006). Context is the defining measure of morality. If one presents the idea that morality has supernatural origins, as all theistic religions claim, then that discussion is no longer useful. When one believes in an absolute power, they believe in it absolutely (this holds true for social religion too). And it is known in human nature that absolute power corrupts absolutely. Only by taking that out of the question can dialogue begin. So when one begins to talk about global morality, one must discard religious intrusion. That is the first step. 4.2 Uphill Struggle: Reformation In order for effective change to take place, in the form of religious reformation, one must be prepared for a struggling ‘bottom up’ approach. This refers to action through dialogue and suggests its starting point as questioning the religion, not the religious; one will inevitably expose the other. This of course has many obstacles, the strongest of which is irrationality, not to mention a requirement of abnormal amounts of patience. Can this be achieved? While that remains in doubt, one must try. The most difficult aspect of the ‘bottom up’ approach to this suggested reformation is dialogue. Most often debaters, on both sides, are subject to intense monologues; unhelpful displays of ignorance or intelligence. To be clear, this is unhelpful in creating significant political change as those who are indoctrinated do not take kindly to intellectual criticism, regardless of its legitimacy. 4.3 Moderate Responsibility The tough question remains; who is responsible for bringing about change? The answer is simple in theory: everyone. In practice however, things are quite complicated. Indoctrination, fear, and irrationality all stand in the way of reason. Religion has through history caused a mass 39 suppression of educated rationality. This can only be remedied through grueling, relentless dialogue (Nawaz, 2013). This burden should mostly 2016/1 fall on religious moderates, not unbelievers. By this it is meant that because those in a position of religious influence have a certain power over other theists, it is their responsibility to make sure that their respective religion is reformed to fit the modern times that they live in. It is obvious that those who do not listen to reason, cannot be reasoned with. That is why imaginary beliefs must be tweaked to fit into modern society. It is literally a matter of trickery, not reason, when attempting to reform the ancient self-proclaimed and utterly misguided religious ideologies of both past and present. While written reform would D. Kucukovic

be most helpful, it is impossible as that in itself would cause violent reactions. As such, the only remaining option is interpretation. That is what is meant by trickery. Together, moderates and unbelievers may in fact have a chance at global religious reformation. The question is how long will it take? No one can possibly know the answer. 4.4 Effective Criticism Though without the possibility of a working time frame, one can still seek to engage in religious reformative dialogue with patience and the ability to look through a contextual lens. To do this, it is paramount to a clear understanding of religious dogma that one comprehend the complexities of free will. Riding on the coat tails of Sam Harris’ work on ‘Free Will,’ (2012) it can be understood that the views that one possesses, and the actions that these ideologies create, cannot be used to paint religious people in a black and white morality brush. While accountability is still a concept that needs refining, it is clear that indoctrination is a clear problem in realising the realities of the universe. The most difficult aspect of this case is the knowledge it brings to those who suffer from a lack of ‘free will.’ It has to be understood that it is not favourable to admit to such a reality. The pressure and ridicule that one may encounter when revealed to be a religious believer is often times a deterrent to enlightenment. Nobody wants to believe that they were tricked, or that they were wilfully dismissive of the truth. This is not to say that one should be wary not to offend the minds of the religious, it simply implies that one must take care to exclude them from enlightenment through shame (Dawkins, 2006). Those who have been fooled into believing a certain dangerous fairy tale should be given the chance to change their minds without feeling shunned by a community that had support doing the same. To be clear, dangerous religious ideals should be ridiculed and destroyed, but once those ideas are shattered, there should be no shame in admitting previous wrong doing through dogmatic influence. Though this seems to be a very shaky premise for acceptance, it is one that must work in order to completely integrate indoctrinated persons into modern scientific thinking.

40 5. ISLAMOPHOBIA Without succumbing to criticisms of utilising the ‘straw man’ 2016/1 approach, it is quite easy to point out the hypocrisy of regressive propaganda regarding false Islamophobia. The most popular approach in the contemporary social media sphere is anti-white/west arguments. Those in the regressive camp claim that because the West was responsible for the Crusades, and Christian violence in general (a rather large generalisation that people fail to realise stemmed from Europe and not the United States), they are somehow now unable to criticise modern religious extremism (Nawaz, 2013). To point out the ridiculousness of this claim, one need only look to a possible future; it would mean that the Muslim population, or Middle East in general, A Look at Modern Social Religion as a Regressive Concept would have no right to criticise any acts of fanatic violence because the culture they are a part of had at one point committed atrocities in the name of religion. Another example would be if the black population of the US began to capture and hold white slaves. Under the logic of the regressives, the white population would have no right to criticise these acts. Now, some would claim that this example is different because it is not religiously motivated, but that rebuttal in itself would suggest that religion be allowed special consideration. No organised community has the right to undermine another for no valid reason. There is no exception. 5.1 Religion ≠Science While it remains a heavy topic for debate, it should be quite clear that science and religion are incompatible. One at its very essence must rebuke the other to be true. Historically, the former has consistently and successfully done so to the latter. Most controversially, in recent times, the area in which religion has failed is evolution. Charles Darwin’s theory of evolution is undoubtedly the most important biological scientific discovery in the history of science (Dawkins, 2006). Though unimaginable to some during his time, his hypothesis has since been proven. While the scientific community is delighted to have such a great understanding of the history of life, many religious institutions do not share this enthusiasm. To them, if evolution is true, major parts of all holy books must be false; specifically, the story of Adam and Eve. This would mean that these ancient texts have a fundamental lack of understanding when it comes to the history of humanity and the animal kingdom in general. Admitting that a holy book is false in any aspect is not something that religious people take lightly. This explains the warped logic behind the extreme backlash to the proven theory of evolution. 5.2 Reason Over Faith All the attempts in this paper to advocate reason and evidence as the main proponents of human progression are not for the purpose of offense or any political agenda. While it is obvious that it is riddled with loaded statements, the hope is that this work will convince fence sitters to simply question their ideological background. It is a deluded 41 thought to hope for religious destruction, that much is clear. It will not happen. Rather, it is important to realise that nothing should be 2016/1 free from question. Hopefully it will become clearer to some through a reading of this text that there is absolutely no logical reason why religion, any religion, should be subject to special treatment and able to police the thoughts of their followers. That is all that you may be. If you are religious, you are a follower. Your faith is nothing but blind. In literal terms, there is no evidence to suggest that something which has no basis in reality, exists. Sure, it can be true that specifically for theistic religions a God might exist, but is important to note the difference between maybe and definitely. There is one thing any rational mind D. Kucukovic

must accept; one cannot possibly know if there is a God or not, but one thing that is definitely clear is that there has been no event or shred of evidence in history to suggest that believing in one is rational, logical, or factual. This same wilful irrationality is prevalent in the predominating false idea of a first world western gender pay gap. To claim that one exists is to wilfully mislead the public through a misinterpretation of the given statistics (Farrell, 2005). A belief in something that cannot be proven is lunacy. It is the wilful rejection of reason. As Lee Harris states, it is the “suicide of reason.”

6. PECKING ORDER Not only is religion the ‘suicide of reason,’ it is the birth of unreason. Allowing one’s life to be completely dictated by millennia old unimaginative and immoral fantasies is tantamount to mental illness. That is not said out of spite, but out of precedent. How many people have you known of (or had the displeasure of knowing) that claimed to be some form of deity reincarnate? How many of these people have you taken seriously? Your answer should be the same for any form of indoctrinating dogma as it is for the aforementioned situations. If not, you live in a mental reality perpetuated by fantastical bias. And not just any bias. Bias that is divisive, racist, sexist, and overall dictatorial. Each religion operates on a hierarchy of moral hubris (though the social kind stops at ‘True Believer’); Apostate

7. REFORM An area that is quite contested even amongst the most ardent atheists is reformism. This is due to the fact that it largely deals with cultural identification and morality, not strictly religion. The drift is created when one side (for arguments sake we shall assume there are two strictly opposing sides) claims that reformist religions should be given the spotlight over traditional religions. That is to say, a ‘secular liberal Muslim’ should be given just as much, if not more, media coverage over a traditional Muslim. This is where a problem can arise. It is misrepresentation of the faith, regardless of its intention. To claim that a ‘secular liberal Muslim’ falls under the category of Muslim dilutes the intellectual debate of both morality and literal truth (Ali, 2015). Under this theory, if one (rightly) claims that every Muslim believes the Quran to be the true word of God through his last prophet, some (being the reformists) would claim that this is stereotyping. These statements come from an analysis of traditional Islam, not a dilution of its morally corrupt teachings. It is a mistake that is very often wrongly criticised as being bigoted and racist; the latter being semantically untrue as religion is not a race (Ali, 2015). God’s Will Criticisms of religion can be tied to two main threads; action (physical) and truth (mental). To firmly place yourself within these parameters of critique your belief must first have a negative effect on another human being. While it is argued that even a non-believer may do this, it is certainly not by God’s will that they do so. Secondly, and most importantly, your belief must be false. It is already obvious that all religious doctrines carry false ideas in both the philosophical 43 and scientific sense. It is simple to have an unbiased view on religious teachings, regardless of belief. Simply remove ‘God’s will’ from any 2016/1 action or thought that you might have (it is not hard to imagine) and then analyse your actions accordingly. You would be mortified in even your simplest religiously supernatural belief or claim. If you cannot do that, then you are indoctrinated (Hitchens & Wilson, 2008). It is that simple. If this task is too offensive, you can do one of two things; grow up, or attempt to prove God’s theistic existence. That is to say that he exists in an influential sense, guiding you and everyone (or at least attempts to do so with his supposed omnipotence) to either bliss or misery. You will not find such evidence. Then ask yourself, are you willing to believe anything if it suits your desires? D. Kucukovic

8. QUESTION OF FAITH For those who belong to a certain religious group, how is it that you choose your beliefs? Do you believe in your holy book in its entirety? If you do, you are a literal member of that sect and any other interpretation is a diluted form of worship. This is not an opinion, it is a literal fact. If you are a diluted believer, what prompts your moral decisions? How is it that you may, with a clear conscience, analyse the validity of God’s will in a holy book that proclaims to be so without inconsistency? Perhaps a new perspective will help. A rather vehement religious zealot, being a true believer in the respective holy text, is entirely driven by what they perceive as the word of God. Every waking moment is thus controlled and accounted for by their theistic deity. There is no room for doubt. There is no room for rationality. This is the highest form of indoctrination and brings one to feelings of sympathy. A moderate however, is an interesting case. One who possesses the ability to filter out certain passages in a holy text but submit to others is not in a position to lecture on morality. This is where problems arise with religious acceptance in contemporary society. The regressive left wing is increasingly accepting and enabling religious moderates as though they were the pinnacle of moral affection (Harris & Nawaz, 2015). It cannot be reasonable to suppose that one who, with the ability to rationalise decisions individually, chooses to remain either racist, homophobic, or sexist. This ‘ability’ often leads to a superiority complex. What these moderates see as a reformed religion is in fact a clearly conscious form of immorality. An indoctrinated religious zealot is amoral in the sense that it inhibits free will. A moderate is thus immoral with an application of this same logic. 8.1 A Different Perspective Ardent religious defenders are quite akin to contemporary caricatures of ‘fandom.’ Their relentless and often overzealous defence of the observable plot holes in their beloved source material blinds them from the obvious truth; they aggressively follow and obsess over a work of fiction. How is this moral in any sense? It actually draws sympathy. Unlike the aforementioned ‘fandom,’ religious adherents 44 carry the burden (which they enthusiastically dismiss) of proving their work of fiction to be anything but. Since the documented manmade 2016/1 creation of religion thousands of years ago, this has never occurred. One must then ask why? The answer is quite evident. Extraordinary claims require extraordinary evidence. In the minds of the religious however, this logic is warped; supernatural claims require supernatural evidence. Thus, their ideas cannot be falsified. While immoral, it is not unbelievable that one would attempt to keep increasingly false claims unfalsifiable when that claim is in the business of controlling all who have religious faith. Religious authority has proven to be absolute over those who are unwilling or incapable of refusing it. As is constantly proven throughout history, absolute power corrupts absolutely. Religion is embarrassingly corrupt (Hitchens, 2007). A Look at Modern Social Religion as a Regressive Concept

8.2 Insult to Intelligence While it is well known that the religious are adamant about keeping their holy figures free from criticism (or even humour), it is the hypocritical nature of this that is most interesting. Attempting to filter ‘offensive’ critique, religion has served as a shielded weapon against reason. Planting themselves firmly in every government the world has known (Hamburger, 2002), it has become immune to constructive criticism in that it claims harassment, racism, or bigotry if this occurs. One would not be remiss in realising the glaring irony in this. While claiming to be the children of God (or champions of social justice), being the chosen few who are shown the truth, they simultaneously dismiss the validity of any opposing form of moral teaching. This is perhaps the highest form of offence to reason. Claiming exclusive divine mental intervention, all theistic religious advocates incessantly claim that God invented morality, whether one chooses to believe so (without proof) or not. What could be more offensive to one’s intelligence? It is literally saying that no person that has ever lived, or ever will live, can possibly contain the mental fortitude to make their own decisions based on internal interpretations of communal morality.

9. DIFFERENT YET SIMILAR: CONCLUSION The major difference between theistic and social religion is its use of manipulation. The former confuses fact into myth while the latter warps myth into fact; to accurately label them, one is deluded while the other is regressive. In both cases, it is a wilful suspension of reality. Not only do both examples constitute an obsession with the disproven, but also a complete lack of contextual comprehension. Religion is incessantly a product of its time. Taken out of that time, it has proven throughout history that it cannot survive the rationale of basic intellectual scrutiny. The modus operandi is the same; the ends justify the means. The delusion is not simply a matter of individual consequence. One who believes in the biologically inconsistent idea that physical gender (or sex) is a social construct operates under the misguided thought that self-identification is enough to constitute reality. These 45 matters not only affect the mentality of others who might be susceptible to such an idea, it exposes them to potential physical repercussions. 2016/1 Not only has it become a social vendetta to target anyone who might criticise such a drastic notion, it has warped into a politically charged subject in its own right. One who supports this case is undoubtedly in a more desirable position than one who does not. This is common to all religious adherents. To be clear, the contextual concerning factor here is potentially unwarranted prejudice. The power of misinformation needs only minute study to be revealed. The fact that contemporary theistic belief is increasingly held in a communal sense reveals that its purpose can be effectively categorised as social; hence the marrying D. Kucukovic

of theistic and societal religion in this work. Though the distinctions are clear and numerous, the similarities cannot be ignored. Rationality needs more practice.

REFERENCES Ali, A. (2015), Heretic: Why Islam Needs A Reformation Now, Harper. Colman, A. (2003). Oxford Dictionary of Psychology, Oxford University Press. Dawkins, R. (2006). The God Delusion, Bantam Books. Dawkins, R. (2006). The Selfish Gene (30th Anniversary Ed.), Oxford University Press. Farrell, W. (2005). Why Men Earn More- And What Women Can Do About It, AMACOM Hamburger, P. (2002). Separation of Church and State, Harvard University Press. Harris, S. & Nawaz, M. (2015), Islam and The Future of Tolerance, Harvard University Press. Harris, S. (2004). End of Faith, W. W. Norton & Company. Harris, S. (2012). Free Will, Simon & Schuster. Hitchens, C. & Wilson, W. (2008) Is Christianity Good For The World? – A Debate, Canon Press. Hitchens, C. (2007). God is Not Great: How Religion Poisons Everything, Hachette Book Group. Hobsbawm, E. (2007). Globalisation, Democracy, and Terrorism, Little Brown. Joseph, E. (2004). Language and Identity: National, Ethnic, Religious, Palgrave MacMillan. Nawaz, M. (2013). Radical: My Journey From Islamist Extremism to a Demo cratic Awakening, W. H. Allen Press.

2016/1 An Evaluation of Fashion Involvement: A Study on Generations X and Y

Dr. Hatice Aydin Mus Alparslan University

ABSTRACT This study deals with the influence of materialism on fashion involvement and of fashion involvement on mavenism, purchase decision involvement and recreational involvement. The data were collected via face-to-face survey method. The surveys were administered through convenience sampling method to generation X and Y members separ- ately. Structural equation modeling was used to test generation X and Y models. At the end of the study, it was seen that generation Y are more materialist, involved in fashion and recreational shopping, and share their views of fashion products with others more. In addition, it was found out that the centrality materialism of generation X do not have any significant influence on their fashion involvement and their fashion involvement does not have any significant influence on their recreational shopping involvement whereas the success materialism of generation Y members do not have significant influence on fashion involvement.

Keywords: Materialism, Fashion Involvement, Purchase Involvement, Recreational Shopping, Mavenism.

1. INTRODUCTION Materialism refers to one’s belief that material things lead a person to happiness and social advancement (Parker et al., 2009). Nowadays, there is an over-commercialized or materialist youth market that has emerged due to the influence of materialist society (Allison, 2009). People fall under the influence of materialism at early ages and keep going on under this influence in the upcoming years. The result is a youth market wearing well-known brands, making up reasons or excuses for consumption, and keeping up with the latest fashion. Some of the consumers in this market purchase material things to 47 take pleasure from life and be successful and place them in the center of their lives (Çopur, 2011: 2). Therefore, one of the concepts that influences purchase decisions and product preferences is fashion. Fashion is a concept referring to the change in one’s mentality in social and cultural terms as well as consumption and purchase behaviors. It also constitutes the change in the dynamic of the consumer’s life. The change in the life styles of consumers may differ from one generation to the next. With the influence of the change in life styles, there H. Aydin

may be differences in consumers’ materialism, fashion involvement, recreational shopping involvement, purchase decision involvement, and mavenism tendencies (Barletta, 2006). The differences between generations make marketers draw all their attention to generation Y while they also believe that they should keep up with the generation X as well. The demographic structure of Turkey indicates that generation Y, needs to be taken into account more. However, generation X will constitute an important consumption mass (Yüzbaşıoğlu, 2012). Therefore, this study aims at dealing with the influence of materialism on fashion involvement and fashion involvement on mavenism, purchasing and recreational involvement, and from the aspect of generations X and Y. The study is comprised of two sections. The first section includes theoretical information. The second section includes the survey study and its results.

2. THEORETICAL FRAMEWORK 2.1. Materialism Materialism is a concept about the importance of the things possessed by people for their lives (Ryan and Dziurawiec, 2001: 185). It appears in three forms, as centrality, happiness, and success materialism. Centrality materialism is a life style in which a person puts any object at the center of life (Daun, 1983). Happiness materialism is a personal trait that considers certain objects as providers of happiness. Success materialism refers to the consideration of any object as an indicator of success (Du Bois, 1955: 1235). 2.2. Fashion Involvement Involvement refers to consumer perceptions regarding brands, products, advertisements and purchasing decision. It often appears in the form of fashion involvement (O’Cass, 2000: 48; O’cass, 2004: 878). There are three type of involvement; fashion product, purchasing decision and recreational involvement. Fashion product involvement is the indicator of the relationship between an individual and objects (Martin, 1988: 8). It refers to the situation in which a product has an important role in consumer’s life (Mittal and Lee, 1989: 370). Purchasing 48 involvement is the interest paid by the consumer to fulfil the purchasing decision (Mittal and Lee, 1989: 371). This involvement is influential on 2016/1 brand preference, and it explains the consumer behaviors. Involvement within the context of recreation refers to the pleasure felt by the consumer while shopping in his free time without feeling the need to purchase. Primary purpose of shopping is to feel pleasure (Bellenger and Korgaonkar, 1980; Ohanian and Tashchian, 2011). 2.3. Mavenism Mavens constitute a special consumer group who have good command of products, stores, and market and share this knowledge with other consumers. Particularly the young consumer mass uses mobile communication devices, which makes marketers consider these An Evaluation of Fashion Involvement consumer masses that spread all kinds of business details or news on social media (Feich and Price, 1987: 85). 2.4. Generations X and Y in Consumer Culture Generation refers to a group of people born within a specific period (Williams and Page, 2011: 2-8). Current marketers take Generation “Y” into account most while they cannot give up on Generation “X”. Therefore, these two generations were included in this study. Each generation has its own specific traits, value of judgements, and attitudes (Lower, 2008: 81). Generation X is comprised of consumers born between the years 1965 and 1980. This is the first generation purchasing a product not only because of its functionality but due to the emotional connection they establish with the brand. The members of this generation behave not only with their logics but also with their emotions. Generation Y is comprised of the consumers born between the years 1981 and 2000. This group includes consumers who are addicted to shopping, can make their own decisions, and consider consumption as a kind of entertaining game (İzmirlioğlu, 2008: 53). Generation Y keeps up with the latest fashion (Saroja et al., 2015: 113) while X has interest in fashion as well (Andrew and Pentecost, 2010: 45). The generation studies are mainly conducted on the US consumption culture. It poses a curiosity to what extent the studies conducted in other cultures are true for Turkey since the influence of social, historical, economic, and political events on each country is different. There are some studies regarding the attitudes and values of generations in other cultures in last years (Andrews and Pentecost, 2010; William and Page, 2011; Bednall et al., 2012; Saroja, 2015). Though the limited number of studies dealing with the attitudes and values of generations in Turkey has recently been on the rise (Alnıaçık, 2012; Yılmaz, 2013; Sarı et al., 2014; Gürbüz, 2015). Moreover, lack of studies dealing with generation comparisons based on fashion involvement, materialism, and mavenism points to the need to conduct more studies particularly in the case of Turkey. Some recent studies that are in close association with the issue are presented. O’Cass (2004), Chan et al. (2006), and Koparal and Çalık (2015) analyzed the relationship 49 between fashion involvement, materialism, age, and motivation. They revealed that individuals with higher materialism tendencies, ages, 2016/1 and symbolic motivations are more interested in fashion products and purchasing fashion products. Ocass and Choy (2008), Sullivan and Heitmeyer (2008), Noble et al. (2009), Bakewell and Mitchel (2009), and Hourigan and Bougoure (2011) explored the influence of involvement of generation Y and revealed that fashion involvement has an influence on their attitudes, recreational shopping, purchasing involvement, and mavenism. Parment (2013) compared generation Y and baby boomers and revealed that baby boomers are more involved in automobiles while generation Y is more involved in clothes and H. Aydin

food.As it is obvious from the literature, there is no comprehensive study comparing the relationships between these variables in terms of generations. The studies are generally from diverse cultures and focus on a single generation.

3. AN EVALUATION OF FASHION INVOLVEMENT: A STUDY ON GENERATIONS X AND Y 3.1. Methodology The expectations, experiences, life styles, and demographic characteristics of generations differ from one another. However, the differences between generations vary from one culture to another (Gürbüz, 2015: 40). These differences diversify consumer behavior as well. The purpose of this study is to reveal how the fashion involvements of consumers for different generations differ from each other in terms of involvement, mavenism, and materialism.A considerable amount of Turkish population is included in generation Y though it is generation X, the middle and advanced aged people, which stand out when it comes to economic power. This is because the income level of young population has not reached the expected level yet. Therefore, marketers do not have the chance to completely give up on generation X. Moreover, generation Y is a difficult consumer mass bringing along great changes to the market structures (American Demographics, 2002-2003:1). Based on the idea that they make up a considerable amount of the consumers, this study is an attempt to compare the fashion involvement inputs and outputs of generation X and Y.So, the scope of the study covers consumers from generations X and Y residing in Istanbul. The respondents were asked to reply questions based on their general sense of fashion. The sampling method employed in this study is convenience sampling. 400 survey forms for X and 400 for Y generations were administered within a confidence interval of 95% and an error margin of 5%. The questions in the survey fall into two groups. The first group is comprised of questions regarding materialism, mavenism and fashion, involvement while the latter group is about demographic characteristics. After the elimination of survey forms, 50 385 survey forms for “Y Generation” and 389 forms for “X Generation” were taken into account. 2016/1 Materialism scale was adapted from the study conducted by Richins and Dawson 1992; recreation involvement scale was from Guiry’s (2006); mavenism scale was from Hourigan and Bougoure’s (2011); and fashion involvement and purchasing decision involvement scale was from O’Cass A. (2001). The variables were measured via a 5 point Likert-type scale (5=I strongly agree; 1=I strongly disagree). The data were analyzed using SPSS 16.0 and Lisrel 8.7 statistics programs. Descriptive statistics, confirmatory factor analysis, and structural equation modelling analysis were employed. An Evaluation of Fashion Involvement

3.2. Research Model and Hypotheses Materialist people believe that possessed things will provide insight about individuals to others reflecting their individual qualifications (Richins, 1994). Therefore, it is believed that materialism has an important role in developing fashion involvement (Browne and Kaldenberg, 1997: 32). Different levels of materialism influence involvement. With higher levels of materialism, people may consider a fashion product as the source of happiness and success putting them at the center of their lives (Richins and Dawson, 1992).

H1: Success materialism has an influence on fashion involvement.

H2: Happiness materialism has an influence on fashion involvement.

H3: Centrality materialism has an influence on fashion involvement. Consumers who keep up with fashion, are innovative, or are fashion leaders take pleasure from shopping (Hourigan and Bougoure, 2001). The shopping which they do to keep up with the fashion is for being informed about new products and developments. This type of shopping is not associated with a specific purchasing, rather it is only for the sake of collecting information. Fashion follower consumers consider this shopping as a kind of entertainment or leisure activity (Yavuz et al., 2015: 39).

H4: Fashion involvement has an influence on recreational shopping involvement. Purchasing decision involvement refers to a consumer’s degree of involvement in purchasing decision (Ocass, 2000a: 558). Product purchasing involvement requires consumers to evaluate many alternatives or product categories before making the purchasing decision. Fashion involvement facilitates purchasing decision in this process (Browne and Kaldenber, 1997).

H5: Fashion product involvement has an influence on purchase involvement. Mavens are people with high levels of interest in the market (Smith and Brister, 1994). By involving in fashion, these people accelerate adaptation to new products (Stokburger and Hoyer, 2009). Therefore, people with high levels of fashion involvement are also mavens for market, and they like sharing product, brand, and store details with 51 others. 2016/1 H6: Fashion involvement has an influence on mavenism. Research models for generations are as shown in Figure 1 and Figure 2 (In appendix). H. Aydin

3.3. Data Analysis 3.3.1. The Demographic Characteristics of the Respondents The demographic characteristics of respondents are as shown in Table 1.

Table 1: Demographic Characteristics X GEN. Y GEN. X GEN. Y GEN. Education N % N % Income N % N % Secondary/ high 114 29.3 101 26.2 Below 500 TL 39 10.0 192 49,9 school Undergraduate 200 51.4 227 59.0 501-1000 TL 40 10.3 105 27.3

Master 75 19.3 57 14.8 1001-2000 TL 51 13.1 25 6.5

Job N % N % 2001-3000 TL 195 50.1 24 6.2

Student 28 7.2 207 53.8 Above 3000 64 16.5 39 10.1 TL Civil Servant 80 20.6 60 15.6 Marital N % N % Status Retired 38 9.8 31 8.1 Married 316 81.2 62 16.1 Self-employment 93 23.9 54 14.0 Single 73 18.8 323 83.9 Housewife 72 18.5 33 8.6 Gender N % N % Other 78 20.1 207 53.8 Female 246 63.2 244 63.4 Male 143 36.8 141 36.6 Total 389 100 385 100 Total 389 100 385 100

3.3.2. Testing Materialism, Mavenism and Involvement Scales of Generation Y Based on modifications, 3 variables were removed from “success”, 2 from “happiness”, 4 from “centrality” materialism; 2 from “mavenism”; 3 from “fashion”, 3 variables from “purchasing decision”, and 2 from the “recreational” involvement. Fit values are shown in Table 2 and 3.

Table 2: The Fit Values of Materialism and Mavenism Scales Before Modification After Goodness Modi- -of- Acceptable Fit fication Fit 1. 2. 3. 4 Index Values Success Happiness Centrality Mave- 1,2,3 4 Mate- Mate- Mate- nism rialism rialism rialism 52

2016/1 X2 257.93 22.09 188.93 31.52 000 5,69

(df) 9 5 14 9 0 2

X2/df 1-5 28.65 4.41 13.49 3.50 0 2.84 GFI 0.90≤GFI≤0.95 0.82 0.81 0.88 0.97 1 0.99 AGFI 0.85≤AGFI≤0.90 0.57 0.44 0.75 0.94 1 0.96 SRMR 0.05≤SRMR≤0.10 0.12 0.18 0.11 0.039 0.00 0.016 RMSEA 0.05≤RMSEA≤0.08 0.268 0.335 0.180 0.081 0.00 0.069 CFI 0.95≤CFI≤0.97 0.68 0.66 0.79 0.98 1 1.00 NNFI 0.95≤NNFI≤0.97 0.47 0.31 0.68 0.97 1 0.99 NFI 0.90≤NFI≤0.95 0.68 0.66 0.77 0.97 1 0.99 An Evaluation of Fashion Involvement

Table 3: Involvement Types Model Fit Values Before Modification After Modification Goodness- of-Fit Fashion Purchase I Recreational 1 2 3 Invo Invo Invol Index lvement lvement vement Values 1 2 3 X2 414.16 74.32 10.08 10.65 47.86 000 35 5 14 0 (df) 20 5 X2/df 20.70 2.12 2.01 2.13 3.41 0 GFI 0.79 0.96 0.99 0.97 1 AGFI 0.62 0.94 0.97 0.97 0.93 1 SRMR 0.11 0.026 0.032 0.022 0.022 0.00 RMSEA 0.227 0.054 0.051 0.054 0.079 0.00 CFI 0.77 0.98 0.99 0.99 0.98 1 NNFI=TLI 0.76 0.98 0.98 0.98 0.97 1 NFI 0.67 0.97 0.98 0.99 0.98 1

3.3.3. Testing the Materialism and Mavenism Scales for Generation X After modifications, 3 variables were removed from “success”, 2 from “happiness”, 3 from “centrality” materialism; 3 from “mavenism”; 3 from “fashion”, 5 from “purchasing”, and 2 from “recreational” involvement. Fit values are shown in Table 4 and Table 5.

Table 4: Model Fit Values of Materialism and Mavenism Scales Before Modification After Modification Goodness 1 2 3 4 -of- Success Happiness Centrality Mavenism 1,2,4 3 Fit Index Values Materialism Materialism Materialism

X2 142.31 226.08 524.85 74.89 0.00 5.61 (df) 9 5 14 9 0 2 X2/df 15.81 45.21 37.48 8.32 0 2.80 GFI 0.89 0.81 0.77 0.94 1 0.99 AGFI 0.75 0.43 0.44 0.86 1 0.96 SRMR 0.18 0.18 0.22 0.053 0.00 0.018 RMSEA 0.195 0.338 0.307 0.137 0.00 0.068 CFI 0.61 0.66 0.54 0.92 1 0.99 NNFI=TLI 0.77 0.31 0.31 0.87 1 0.98 1 NFI 0.76 0.65 0.54 0.92 0.99

Table 5: Model Fit Values of Involvement Types Before Modification After Modification Goodness- Fashion Purchase Recre 53 of- Involvement(1) Involvement(2) ational Invol 1 2 3 Fit Index vement(3) X2 418.20 103.23 45.89 5.88 7.55 000 2016/1 (df ) 20 35 5 5 5 0 X2/df 20.91 2.94 9.17 1.17 1.51 0 GFI 0.79 0.95 0.95 0.99 0.99 1 AGFI 0.62 0.92 0.86 0.98 0.98 1 SRMR 0.11 0.026 0.066 0.014 0.013 0.00 RMSEA 0.227 0.071 0.145 0.021 0.038 0.00 CFI 0.78 0.97 0.91 1 1 1 NNFI=TLI 0.69 0.97 0.82 1 1 1 NFI 0.77 0.96 0.90 0.99 0.99 1 H. Aydin

3.3.4. The Relationships in the Fashion Involvement Model The research models were tested via path analysis. The model of generation Y suggested a modification for happiness materialism, the variable of “I would be happier if I were able to purchase more” was excluded. Results are shown in Table 6. Table 7, and Table 8 for both models Table 6: Model Fit Values Y Generation X Generation Goodness- Acceptable Fit of-Fit Index Before After Before and After Values Modification Modification Modification X2 823.88 626.65 550.70 315 290 (df) 341 X2/df 2.41 1.98 1.89 1-5 GFI 0.87 0.89 0.90 0.90≤GFI≤0.95 AGFI 0.84 0.87 0.88 0.85≤AGFI≤0.90 SRMR 0.078 0.064 0.053 0.05≤SRMR≤0.10 RMSEA 0.061 0.051 0.048 0.05≤RMSEA≤0.08 CFI 0.89 0.94 0.90 0.95≤CFI≤0.97 NNFI=TLI 0.88 0.94 0.94 0.95≤NNFI≤0.97 NFI 0.85 0.90 0.94 0.90≤NFI≤0.95

As shown in the Table 9, for generation Y, happiness and centrality materialism have a positively significant influence on fashion involvement, and fashion involvement has a positively significant influence on mavenism, purchasing decision and recreational involvement. However, the influence of success materialism on

fashion involvement is not significant. Therefore, H2, H3, H4, H5,

and H6 hypotheses were supported while H1 was not supported. For generation X, happiness and success materialism have a positively significant influence on fashion involvement, and fashion involvement has a positively significant influence on mavenism and purchasing decision involvement whereas centrality materialism does not have any significant influence on fashion involvement, and fashion involvement does not have any significant influence on reactional involvement.

Therefore, H1, H2, H5, and H6 were supported while H3 and H4 were not supported. The path diagrams are shown in Figure 2 and Figure 3 (In Appendix). 54 Table 7: The Values of the Model Variables Regarding Generation Y Variables Standard R2 Error T Structure Variance Cronbach 2016/1 Value Variance Value Validity Validity Alpha Success Materialism 0.74 0.50 0.76 I don't place much 0.81 0.65 0.51 16.00 emphasis on the amount of material objects people own as a sign of success. I like to own things that 0.63 0.40 0.86 12.28 impress people. I admire people who 0.73 0.54 0.56 14.43 own expensive homes, cars, and clothes. An Evaluation of Fashion Involvement

Variables Standard R2 Error T Structure Variance Cronbach Value Variance Value Validity Validity Alpha Centrality Materialism 0.81 0.59 0.90 I enjoy spending money 0.86 0.75 0.28 19.27 on things that aren't practical.

Buying things gives me 0.82 0.67 0.33 18.05 a lot of pleasure I like a lot of luxury in 0.72 0.52 0.56 15.32 my life.

Happiness Materialism 0.85 0.74 0.88

My life would be better 0.89 0.65 0.32 17.19 if I owned certain things I don't have. It sometimes bothers 0.83 0.40 0.46 16.13 me quite a bit that I can't afford to buy all the things I'd like. Mavenism 0.87 0.64 0.88 I lıke ıntroduction new 0.91 0.82 0.27 6.43 brands and product to my friends People ask me for 0.84 0.70 0.48 20.44 information about product, shops or sales If someone asked where 0.77 0.59 0.68 18.09 to get the best on several types of product ı could tell him or her where to shop My friends think of 0.68 0.46 0.88 15.03 me as a good source of information when ıt comes to new product or sales. Fashion Product Involvement 0.84 0.52 0.85 I pay a lot of attention to 0.75 0.56 0.47 11.41 Fashion Clothing

Fashion Clothing is 0.73 0.53 0.49 13.91 important to me 55 Fashion Clothing is 0.81 0.66 0.40 15.53 an important part of my life. 2016/1 I would say Fashion 0.70 0.49 0.70 13.39 Clothing is central to my identity as a person I am very much in- 0.60 0.36 0.80 11.36 volved in/with Fashion Clothing Fashion Product Purchase Involvement 0.93 0.66 0.94 H. Aydin

The purchase of Fashion 0.85 0.71 0.53 11.71 Clothing is important to me I like being involved in 0.84 0.70 0.61 20.73 making purchases of Fashion Clothing I attach great import- 0.90 0.82 0.35 23.62 ance to purchasing Fashion Clothing I place great value 0.83 0.68 0.65 20.24 in making the right decision when it comes to Fashion Clothing I think a lot about my 0.79 0.63 0.71 19.00 choices when it comes to Fashion Clothing Purchasing Fashion 0.78 0.60 0.63 18.33 Clothing is significant to me Making a purchase 0.73 0.53 0.66 16.71 decision for Fashion Clothing requires a lot of thought Recreational Involvement 0.84 0.65 0.91 If I was not able to go 0.82 0.67 0.65 8.89 shopping, I would feel that a part of me is missing. Shopping is important 0.80 0.64 0.78 16.11 for my self-definition

Shopping enables me to 0.80 0.65 0.58 16.14 realize my aspirations.

4. CONCLUSION Changing and increasing demands of consumers make it difficult for marketers to understand and meet their demands. In this sense, trying to discover generations makes marketers acquire a different perspective and leads to the development of more successful marketing strategies. One of such strategies is to categorize consumers according to their generations. Since generations are highly important for 56 marketers, this study deals with the relationships between fashion involvement, materialism, mavenism, recreation, and purchasing 2016/1 decision involvement within the context of generation “X” and “Y”. According to the results, the fashion involvement of generation Y is influenced by materialism more. They consider their properties as the source of happiness and put them at the center of their lives. However, they do not consider properties as the source of success. In addition, it was realized that fashion involvement transforms into purchasing and recreational involvement after a while. They also share their knowledge regarding fashion with the people around them. Consumers from generation X consider their properties as the source of success and happiness; however, they do not attach so much importance to them An Evaluation of Fashion Involvement to put them at the center of their lives. It was determined that their fashion involvement transforms into purchasing involvement. The results are consistent with the results in the literature.

Table 8: The Values of the Model Variables Regarding Generation X

Variables Standard R2 Error T Structure Variance Cronbach Value Variance Value Validity Validity Alpha Success Materialism 0.81 0.59 0.89 I admire people who 0.73 0.54 0.66 15.95 own expensive homes, cars, and clothes.

Some of the most 0.72 0.51 0.33 15.42 important achievements in life include acquiring material possessions. The things I own say a 0.86 0.74 0.68 19.87 lot about how well I'm doing in life. Centrality Materialism 0.84 0.57 0.85

I usually buy only the 0.72 0.52 0.68 15.58 things I need.

I try to keep my life 0.72 0.55 0.71 15.64 simple, as far as possessions are concerned. The things I own aren't 0.74 0.52 0.67 16.17 all that important to me.

I put less emphasis on 0.84 0.71 0.37 19.49 material things than most people I know. Mavenism 0.82 0.61 0.84 I like ıntroduction new 0.82 0.67 0.50 7.92 brands and product to my friends People ask me for 0.76 0.73 0.41 15.19 information about product, shops or sales If someone asked where 0.71 0.50 0.74 13.80 to get the best on several types of product ı could 57 tell him or her where to shop Fashion Product Involvement 0.87 0.57 0.87 2016/1 H. Aydin

I pay a lot of attention to 0.76 0.52 0.47 11.60 Fashion Clothing

Fashion Clothing is 0.75 0.57 0.47 14.60 important to me

Fashion Clothing is 0.83 0.56 0.37 16.32 an important part of my life. I would say Fashion 0.70 0.69 0.70 13.66 Clothing is central to my identity as a person I am very much in- 0.75 0.49 0.49 14.76 volved in/with Fashion Clothing Fashion Product Purchase Involvement 0.90 0.66 0.92 I like being involved in 0.76 0.52 0.47 11.60 making purchases of Fashion Clothing I think a lot about my 0.75 0.57 0.47 14.60 choices when it comes to Fashion Clothing The purchase of Fashion 0.83 0.56 0.37 16.32 Clothing is important to me Making a purchase 0.70 0.69 0.70 13.66 decision for Fashion Clothing requires a lot of thought Purchasing Fashion 0.75 0.49 0.49 14.76 Clothing is significant to me Recreational Involvement 0.74 0.50 0.73 Shopping affirms my 0,86 0.74 0.26 3.21 values.

Shopping contributes to 0.73 0.53 0.48 7.32 my self-esteem.

Shopping enables me to 0.49 0.24 0.98 12.65 realize my aspirations.

To Eğri and Ralston (2004), the success values of generation X are higher than generation Y. It is also reported that as the age increases, 58 materialist tendencies change, leading to the identification of material possessions with success and happiness (Chan et al., 2006). To Gürbüz 2016/1 (2015), the sense of not wasting time is higher in generation X. Stevens et al. (2005) claim that generation Y has higher recreational involvement since they grew up with more recreational possibilities. In addition, for generation Y having a life nested in technology, technology is a lifestyle, and due to their electronic communications, their fashion involvement is higher than the members of generation X (Miller and Washington, 2011: 174). Therefore, these consumers behave in a more mavenist way. This is because it is claimed that individuals interested in fashion product groups will have a higher tendency to make a research An Evaluation of Fashion Involvement about all kinds of information concerning fashion products and are likely more mavenist (Hourigan and Bougoure, 2012: 130).

Table 9: The Relationship Results of the Study

Y Generation X Generation

Relationships 2 2 Standard Value R Error Variance T Value Standard Value R Error Variance T Value Success Materialism - Fashion Involvement -0.06 0.31 0.69 -0.94 0.31 0.35 0.65 2.27

Happiness Materialism - Fashion Involvement 0.52 0.31 0.66 8.76 0.40 0.35 0.65 6.88

Centrality Materialism - Fashion Involvement 0.19 0.31 0.69 3.01 0.02 0.35 0.65 0.13

Fashion Involvement- Recreational Involvement 0.63 0.39 0.61 10.22 0.03 0.01 1.00 0.54

Fashion Involvement- Purchase Decision 0.67 0.44 0.56 11.46 0.65 0.42 0.58 11.52 Involvement Fashion Involvement - 0.27 0.07 0.93 4.76 0.23 0.06 0.95 3.91 Mavenism

5. RECOMMENDATION AND LIMITATION Taking the results into account, some recommendations are given to the literature, businesses, and future studies below. Dealing with generations will help better understand the differences between marketing strategies for different consumer groups. Thus, this study is expected to help marketing researchers understand that one of the factors leading to recreational involvement is fashion involvement. The understanding of the fact that consumers are involved in fashion also due to their materialist emotions will help marketing researchers to take into account materialist purchasing in fashion involvement. Fashion products are rapidly accepted and spread among the generation Y. Therefore, this study once again reminds businesses that an important consumer group for them to take into account while making fashion designs is generation “Y”. Moreover, generation Y consumers constitute an influential group for generation Z consumers since they are the 59 descendants of the current fashion-involved people. Therefore, taking into account the traits of generation Y will provide information about 2016/1 potential consumers when it comes to fashion involvement. In addition, this study revealed that fashion involvement is more common among people with high materialist tendencies. People with high materialist tendencies try to make their materialist properties their life styles and consider them as ways leading to happiness and success. In this sense, businesses positioning their products and brands against fashion should try to keep in mind that there are consumers who prefer their products just to possess a variety of things and be happy about them and should try to meet their demands. Mavenists make up an influential H. Aydin

commercial marketing group for adaptation to new products. These individuals, who have high fashion involvement, share information about fashion products, brands, and stores with others. Understanding mavenism will help fashion product businesses or retailers to access this important type of consumers. Different cultures may yield different results about fashion involvement in different products and consumer groups. It can be studied in terms of other cultures and product groups and on the basis of gender. It is acknowledged that consumers who keep up with the fashion with a sense of materialism are opinion leaders and constitute an important market group, which needs to be taken into account (O’cass, 2001:49). Previous generations may influence next generations in terms of fashion. Therefore, the fashion involvements of other generations (particularly generation Z) may be analyzed. One of the limitations of the present study is that it was carried out only on X and Y generations. Another limitation of the study is that the results were not evaluated in terms of fashion involvement of a specific brand or product groups. It was handled in terms of generations’ general fashion involvement.

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2016/1 An Evaluation of Fashion Involvement

APPENDIX: Terms in Models: MM=Happiness Materialism, TM=Centrality Materialism, BM=Success Materialism, MV=Mavenism, Mod=Fashion Involvement, ST=Purchase Involvement, EG= Recreational Involvement

Figure 1: Generation Y

Figure 2: Generation X

2016/1 64

2016/1 Moments and Significance of Balkan Diplomacy at the Start of the Twentieth Century

Cotirlet Paul-Claudiu University of Bucharest

ABSTRACT Historically, the Balkan Peninsula is marked as an area where the Ottoman Empire made its influence known. The notion of Balkan space is often thought of in a negative way, being associated with the so called „Powder Keg of Europe”. At the start of the nineteenth century, the peninsula was divided by the Ottoman and Habsburg empires. One century later, the same lands are divided up by six states. No less than 11 wars and countless armed conflicts were necessary in order to get to this result. For the Europeans that lived at the start of the last century, the Balkans represented a terra incognita, a particular area, slightly explored, constantly avoided, carrying the burden of violence. A territory filled with terror and endless strife, conjuring up unpleasant images: political instability, secret societies, and atrocities. This study shows the manner in which diplomacy tried to play a major role in this region’s stability through its fundamental concepts (summits, international conferences, parliamentary diplomacy, the international activities of transnational and subnational entities, the unofficial diplomacy of non-governmental elements, as well as the work put in by numerous international civil employees). Also, it will incline towards the last phase of the balance of power system, more specifically on its ending through the first Balkan war. Diplomacy is often mistaken for „foreign policy” or „external relations”, but the terms are not synonymous. Diplomacy is the main, yet not the only tool of foreign policy. On the other hand, foreign policy establishes goals, provides strategies and enforces measures that must be used in order for complete those goals. Diplomacy is therefore the main substitute for using violence, force or subversive tactics; it is the peaceful way in which two or more states can negotiate a common foreign policy.

Keywords: Southeast Europe, Nationalism, Borders, Conflicts, 65 Balance of Power.

1. INTRODUCTION The Balkan Peninsula, partially considered a unit of transition between the middle and southern parts of Europe, occupies an area of 468.000 square km, being the third largest peninsula in Europe (Cotet, 1967). From a geographical point of view, this region is represented as a whole, being located between the Danube (the northern border), the Black C. Paul-Claudiu

Sea, Mediterranean Sea and Adriatic Sea, making up the eastern, southern and western limits of the peninsula. The Ionian Sea, opening towards the Mediterranean, represents the south-western border, while the Aegean Sea, located in the south-east, advances along the line made up by the Dardanelles and Bosphorus straits all the way towards the Black Sea. Throughout time, there have been many different opinions regarding marking the northern border, different authors also including regions from the north of the Danube. Geographically, it could be said that the peninsula stopped at the Danube. But from an economical, political and cultural point of view, the great river had to be passed (Bulei, 2011). In the modern age, the foreign affairs domain is reserved for a small group of decisional factors, being led by a monarch, who considers that diplomatic affairs can be managed through his personal relationships with other monarchs (Young, 2006). This is the reason for which regal visits have been perceived, during this age, as a true diplomatic event, that could contribute to clarifying certain differences that came up between two states (McLean, 2001). The political map of the start of the twentieth century shows us that monarchy keeps its positions, or conquers new ones, once other state entities show up. It’s no surprise that during this period, all diplomatic acts are being done in the name of the sovereign. Although in theory it was available to everyone, in reality, diplomacy during those times was part of a elitist community, that had its own customs and rules (Cain, 2012). It was a world ruled by the aristocratic principle. Diplomacy remains an aristocratic profession, as long as the active involvement in the central system of governmental policies is an aristocratic occupation as well (Jones, 1983). “We prefer to be ruled by an aristocrat, even if we know he is incompetent, because we know very well what he’ll do, and what he won’t” (Young, 1921) The predominance of aristocracy among the diplomatic corps was obvious: 40% in the UK, 65% in Italy, 45% in France, almost 66 entirely in Russia and the Austro-Hungarian Empire (between 1860 and 1914). Constantinople and Bucharest were the two capitals 2016/1 from this region that were the most demanded and interesting for the diplomats of the Great Powers. During their stay on the shore of the Bosphorus, a lot of ambassadors saw this experience as an opportunity to propel to a higher position inside the state they represented. On the other side were Athens, Belgrade, Cetinje and Sofia, where life wasn’t as attractive and did not represent as many advantages as the aforementioned capital cities. The economic and financial leaders of the world changed the power and wealth balance at a global scale, thus we are left with inequality between diplomatic representation in the West and Moments and Significance of Balkan Diplomacy the Balkans. Only the Great Powers have representation through ambassadors. They tend to have between 7 representations, like in the case of the Ottoman and Czarist empires, and 10 embassies, like the Austro-Hungarian Empire or the French Republic. The majority of these embassies are opened in Europe, and especially the Western World, but we do have cases where diplomacy “crosses the ocean” (Germany, France, The Czarist Empire and Great Britain have embassies in Washington). The south-eastern space limits itself from a diplomatic representation perspective, only to The Old Continent. Thus, in 1909 the Serbian Kingdom sustains diplomatic relationships with 14 states, of which only two are not European (USA and Persia) (Vesnitsh,1909). In Romania’s case, we have 13 states, only one being situated outside of the continent, in Egypt. Both Bulgaria and Montenegro have diplomatic representation only in Europe, in 11 countries. European diplomacy at the start of the twentieth century is based on the “Concert of Europe” principle, or Congress System principle, as it was later called. This principle consisted of the balance of power that existed in Europe starting with the Wien Peace Congress that marked the end of the Napoleon Wars (1815). To understand this balance, we must first discuss power. Power, like love, is easier to experience than to define or measure. Power is the ability to achieve your means and objectives. More specifically, it is the capacity to influence others and to obtain the results that you want (Nye Jr., 2005). The balance of power system had divided into 5 stages of evolution: between 1815 and 1822, the states have conjugated their actions, meeting frequently in order to appease disputes and maintaining a balance. Once nationalism and democratic revolutions start to rise, the balance of power enters a new stage between 1822 and 1854. The occurrence of wars (Crimean war or the Unification war in Italy) has led this balance system process to a turning point. Once this moment had passed, the balance of power manifested under the face of the great Bismarck, who tried to push 67 France over the borders into imperialist adventures, and to stray the attention of his allied partners form his lost province (Alsace 2016/1 and Lorena) in 1870-1890. Bismarck’s predecessors didn’t show the same flexibility in the international arena and this caused the end of the balance of power starting with the Balkan Wars between 1890 and 1912. The European Congress made it so that Europe would live the longest period of peace ever known. For 40 years there hadn’t been even one war between the Great Powers, and after the Crimean War in 1854, no war took place for another 60 years (Kissinger, 2003). After the Congress of Wien, the relationship between the balance C. Paul-Claudiu

of power and a common sentiment of legitimacy was expressed into two documents: The Quadruple Alliance, made up of Great Britain, Prussia, Austria and Russia, and the Holly Alliance, which was limited to three of the so called Western Courts: Prussia, Austria and Russia. But all these alliances had weak spots. One of them was the Oriental Issue, more specifically, how can the nations that wanted to escape from Turkish dominion be stopped, and of course, to see if this was desired. A potential closing in towards the Straits by Russia, was being looked at with skepticism by London’s as well as Wien’s decision forums. The fall of the Ottoman Empire was inevitable, so the shock that followed had to have as little effect as possible, as well as the status quo not suffering changes. And so it happened that the so called Concert of Europe was finally crushed by the Oriental problem. In 1854, the Great Powers found themselves fighting each other for the first time after the age of Napoleon. Through an irony of sorts, the Crimean war, which for a long time was considered by historians as an affair that had no sense and could have easily been avoided, was started not by Russia, Great Britain or Austria (countries that had great interest in the Oriental Issue) but by France. Coming back to the studied time period, we find that this European Concert, which ensured peace for a hundred years, would cease to exist from all points of view. With a blind recklessness, the Great Powers threw themselves into a bipolar world, which consisted of two blocks of power. The starting point is the forging of the alliance between Germany and Austro-Hungary, in 1876, against their two rivals: France and England, which would introduce Germany to the Balkan problem (Cain, 2012). Next comes the signing of the Three Emperors Alliance in 1881, where Russia joins the Germanic countries in a neutrality pact that contained different clauses, also involving the region of south-eastern Europe. By trying to introduce a global policy and a globalization of German foreign affairs, Wilhelm the Second, starts by getting rid of the influential Bismarck in 1890. Once that happens, the alliance system starts to 68 fail. Russia starts getting closer to France, with whom they sign a series of political and military conventions between 1891 and 1894. 2016/1 Wilhelm the Second’s Germany turns its sight towards the Ottoman Empire, and because of its countless economical resources, manages to subjugate the Turkish state into an obvious decay. This event makes Valentin Chirol, the English publicist, write: “There has never been a great European power that could obtain a position of authority and privilege in a decaying Oriental state, with such fast and apparently little effort, with which its previous bonds and present interests seem so weak.” (Chirol, 1903) Great Britain notices that it has to switch from an “England that has nothing to do with the Balkan area” (Von Eckardstein, 1921) Moments and Significance of Balkan Diplomacy status, to a more active presence in the region, one of the reasons being that a potential isolation from the problem would have jeopardized its image of being a Great Power. At the beginning of the twentieth century, Austro-Hungary and Russia are the Greater Powers that have vital interests in the Balkans. The prestige and influence that they had in the south- eastern space are vital points of both empires foreign affairs (Grey,1926). However, the means of action of the two rivals from the Balkans are different. Russia goes through great human and material sacrifices in order to free the Slavs, but it can’t gather the fruit its labor because of their involvement in internal affairs of the new states from that area. Austro-Hungary chooses to advance in a more prudent and perseverant way in order to gain an economical supremacy, obtained through the railroad network as well as commercial treaties (Cain, 2012). In April 1897, in Saint Petersburg, the two emperors decide on keeping the status quo in the Balkans. Noel Buxton calls it a delaying policy (Buxton, 1907), both Great Powers postponing solving the Oriental Issue for a decade. The Turkish-Greek war as well as the Cretan revolt had speed up the signing of the treaty. After signing it, during this decade, the relationship between the two empires are extremely cordial (May, 1968). Thus, the Balkan states are affected by this agreement because it diminishes their chances of exerting pressure on the Ottoman Porte, in order to gain advantages that would fit their own national gains. The small states from south-eastern Europe relied on their foreign policy plan and they came across the Greater Powers’ interests. The mirage of territorial expansion is the guiding light of these states policies, and the nationality principle can easily become a source of conflict and discord. The Greater Powers can control the crises that take place in the Balkans by changing political regimes or by marking certain borders, thus crushing their irredentist plans. The next section of the study gradually looks at the way in which the countries from south-east Europe have juggled from a pro-Russian policy to one closer to the Austro-Hungarian Empire’s 69 needs. 2016/1 2. THE OTTOMAN EMPIRE Devlet-i Aliye-i Osmaniye à The Sublime Ottoman State was an imperial super power, manifesting its dominion in the Mediterranean region, and existing from 1299 to 1922. The decline of this great empire, which in its glory days stretched over a surface of approximately 20 million square km, was accelerated by a series of major economic and political failures. The defeat suffered in front of the Austrian and Polish-Lithuanian allied forces led by Ioan Sobieski at the gates of Wien in 1683 has opened the case of the so C. Paul-Claudiu called “Oriental Issue”. For three hundred years, Greeks, Serbians, Albanians, Egyptians, Syrians and others have caused numerous internal wounds. The position the greatest forces of Europe had towards the Ottoman Empire became clear at the beginning of the nineteenth century. Russia was the most interested when it came to the “Oriental Issue”. The Russian Empire wanted to have control over the Black Sea and obtain access towards the Mediterranean Sea (mainly by occupying Constantinople and the Bosphorus and Dardanelles strays). Russia had a great desire to ensure itself free navigation rights in the region for its commercial and military ships, all while denying these rights to other European forces. Austria was the power that posed the greatest opposition towards the Russian interests in the Ottoman Empire. Despite the fact that the Hapsburgs have been the greatest enemies of the ottoman people in the past, Austria considered that the threat posed by the Turks at the Danube, was less important than that of the Russians. Austria also feared that the disintegration of the Ottoman Empire would lead to the creation of many national states, which in turn would result in a rise of nationalism amongst the ethnicities from the empire. Because of all these reasons, Austria made keeping unity in the Ottoman Empire one of its main priorities. Starting with 1876, the helm of the country would belong to Abdul Hamid the Second, who had an autocratic control over a state fractured by internal problems. Despite his conservatism and his belief in absolutist monarchy, Abdul Hamid was responsible for modernizing (in a small part) the Empire during his long reign. The bureaucratic reform, the ambitious Hijaz railway project, the establishment of a registry system for the population and a press control system, are some of the accomplishments of the 34th sultan of the Empire. Regarding his foreign image, he was considered to be extremely cunning, skillful and flexible, being famous for the way in which he was sawing discord among others. (Ghyka, 2004) The sultan has continuously sent signals towards the Great Powers, in order to create a balance between Ottoman interests and the changes that took place on the international scene. A skillful diplomat, Abdul Hamid the Second tried to limit the threats addressed at the integrity of the Ottoman territory by relying on inciting one power over the other, without even striking a deal with one group or another. This policy, which was called divide et impera, was meant to pit the small Balkan states against each other and to draw capital as a result of “mutual jealousies between the Great Forces of Europe” (Cain, 2012). Being vulnerable and weak from a military point of view, the High Porte had to strengthen its relations with Germany, and a Berlin – Constantinople axe would threaten to cut Europe in half, and thus denying Russia’s expansion through the Strays into the Moments and Significance of Balkan Diplomacy

Mediterranean, and also counter the British interests in Egypt and Persia (Mowat, 1968). The German Imperial family’s visit to Constantinople in October 1989 had strengthened this friendship and had alerted the other forces in the event of a possible alliance. This unrest were ultimately pointless, Abdul Hamid the Second not wanting to limit his options by forging an alliance. The dexterity he showed in the international stage was not the same on a national level. Back home, the Armenian massacre from 1890, which systematically continued in the century that followed, had led to a failed assassination attempt on the 17th of March, 1905. The major economical problems, poverty, diseases and especially the “Macedonian issue” had inevitably led to the “Young Turk Revolution”, which ended a bloody reign, that brought him the name of “The Red Sultan”. The Young Turks was the name of an organization of Ottoman people that were educated in Western universities, who thought that constitutional monarchy would lead to a decrease in social disobedience in the empire. Not even the constitutional period had succeeded in changing the road towards damnation of a once greatly feared empire. The Young Turks could not solve the contradictions between their so called trends of multilateral democratization of a state, which was free from the guardianship of the Greater States, their effective policies on one hand, and the aspirations of the non- Turkish population and the other. The will of the Balkan states to feast on the European part of the Empire could not be hindered, and so once the “Tripolitan War” started, meaning that the Turks were focused on that area, Serbians, Greeks, Bulgarians and people from Montenegro decided to attack the High Porte.

2. MONTENEGRO Crna Gora à Monte Negro is used when making reference of a larger part of a Montenegro from the fifteenth century. The history of Montenegro is hard to distinguish from that of Serbia. Only after the Ottoman invasion, did things become clearer. In the sixteenth 71 century, Montenegro was attributed a unique form of autonomy inside the Ottoman Empire, by freeing families and clans from 2016/1 that region from certain restrictions. However, the Montenegrins have refused any form Ottoman rule through rebellions and numerous protests, which significantly increased in numbers in the seventeenth century, and culminated with a defeat of the Ottomans in the Great Turkish War at the end of that century. Montenegro became a theocracy, led by the Serbian Orthodox Church and the Metropolitan Church of Montenegro and its Coastline. It was a flourishing period, never before seen since the days of Petrovic Neagos. This theocracy’s ruler’s name was “Vladika of Montenegro”. C. Paul-Claudiu

One of the descendants of these bishops was Nikolai the First, which led the country starting with 1860. Being a minor, he received help from his father Mirko, Great Duke of Gabrovo. The external situation at the time of assuming kingship was as worse as it could get, the Ottomans being on the brink of invading the country. The extraordinary resistance shown by the Montenegrin people (they’ve barricaded themselves in the capital city of Cetinje) had determined the Great Powers to intervene and ask the Turks to be more flexible concerning peace conditions. Hard times have come upon this small Balkan state, but after the San Stefano treaty and the Congress of Berlin from 1878, Montenegro became an independent state. This event made the energetic Nikolai the First restart Danilo’s reforms (his predecessor) and organize the administrative as well as judicial state. The year 1905 had brought the country’s first constitution which guarantied full power to the monarch. This challenge had only succeeded in enhancing the people’s lack of faith for the dynasty (Gauthier, 2004). From a dynastic point of view, Nikolai the First had achieved great success in getting all his five daughters married in an honorable way: the eldest one, Zorka, was married to the future king of Serbia, Peter the First; the second daughter, Milita, to the Great Duke, Peter of Russia; the third, Anastasia, to the Great Duke, Nikolai the First of Russia; the forth daughter, Elena, to the future king of Italy, Victor Emanuel the Third; and lastly, Ana, who was given to Prince Franz Joseph von Batterberg. In 1910 Montenegro becomes a kingdom, and Nikolai had made the Parliament (which had the same name as in Serbia- Skupstina) give him the title of King. Arrogant by nature and thirsty to quench his ego of creating a stronger kingdom, he took the decision to attack the Ottoman forces on October 8th 1912, thus setting off the first Balkan War.

3. SERBIA The Obrenovic and Karadjordje families are the most resounding 72 names in Serbia’s history. These dynasties have succeeded at the helm of the country at the beginning of the nineteenth century. In 2016/1 his book about the history of the Balkan dynasties, Guy Gaunthier draws attention to the fact that both dynasties had descended from a swine herdsman. “Let us remember that the swine herdsman profession was highly seen in the Christian Balkans. An animal which was despised by Muslims, pork became the main meal of the people living here, and by consuming it, it became a sign of cultural and religious membership that were proudly claimed”. (Gauthier, 2004) Alexander I Obrenovic becomes king at the age of 12, as a follow up to his father’s abdication, Milan the First. The later had left Moments and Significance of Balkan Diplomacy this country in agony, on the brink of civil war and with its finances ruined. Thus the Serbians had put their hopes in young Alexander, only to find out he was just continuing the same ruinous policy. In 1893 he claims to come of age and takes the decision of suspending the constitution. Supporting him in this decision was his father, which returned from exile, as well as Austro-Hungarian supporters, like Kristic. On June 10th 1903, as a result of a conspiracy, the king and queen were massacred in Belgrade, in their Old Parliament apartments, with their bodies fiercely mutilated by bullets, being thrown out the windows. The French journalist, Gustave Babin, wrote: “We were once taught to honor heroic assassinations more justified than this one. We’re essentially talking about a patriotic assassination. Without speaking about the slaughters being prepared at the Palace, Serbia was in agony, it was doomed, just as the outlaws found within the regal documents, if what had just happened never took place. (Gauthier, 2004) Through its representative, Peter, the Karadjordjevic Dynasty comes back at the helm of the country after 44 years. In September 1904, Peter is crowned King of Serbia. Intelligent, cultivated, passionate about history and philosophy, spending a lot of time in exile in Geneva, where he adopted the peaceful ways of the Swiss people, Peter had a Western view for his country. With the help of his radical minister, Pasic, he succeeds in accomplishing a series of reforms in education, commerce and finance, managing to improve the quality of life for the common man. On the external arena, Peter played the France card, maybe just because he fought in the Franco-Prussian war, where he was also decorated. The economic reliance on Austro-Hungary made Peter call Paris for help, from which the Serbian kingdom applied for loans, even buying a large part of the kettle, bird and fruit production. When it came to his Balkan neighbors, Peter wasn’t in the best relationships: the Montenegro territory wanted him to help create a pan-Serbian state, as well as in the case Bosnia- Herzegovina or of Albania. When it came to the Ottomans, he 73 had many disagreements with them because of the way citizens of Serbian descent were being treated in the Empire. The Bulgarian 2016/1 border was perceived differently by both Peter and Ferdinand the First of Bulgaria. Each of them wanted to expand beyond the other’s border. Three of the Ottoman provinces were now coveted by the Serbians: Albania, Thrace and Macedonia. Bulgaria, Montenegro and Greece also had an interest for the same territories. Only one more step was needed before creating an alliance that led into the first Balkan War. C. Paul-Claudiu

4. GREECE At its birth in 1830, Greece occupied a 47.600 square km area and had a population of 752.000 souls. This country, which was considered an Ottoman Empire enclave, was in fact far from being able to bring together all the territories and people of Hellenic origins. As a consequence, the nationalistic aspirations of the new found kingdom were always being associated with expansionism, which in the Balkan context of those times, would only worry the Great Powers. Starting with October 31st 1863, the crown of the country belonged to Wilhelm de Schleswig-Holstein-Sonderburg- Glucksburg, future king of the Hellenic people, George the First, son of Christian IX of Denmark and brother-in-law of the Prince of Wales. Because of his origin, it was assumed that his dreams of a Greater Greece would be facilitated by the intervention of George’s relatives. Despite all that, any intention of changing the borders inherited after the Independence War, would meet resistance in Paris, London and Wien. Internally, the endemic political crisis was wreaking havoc, which meant that making a new constitution would have to settle any momentary dissatisfaction. Out of the two chambers that worked under the previous regime, came a new unified chamber, which proclaimed freedom of press, and yet none of these additions would change the political life in Greece. Three years after coming back into the country, the king is faced with his first international problem, which would impact the state he ruled. The Turkish occupied island of Crete would revolt, due to the way in which the sultan refused to give in to popular pressure. George I does not intervene, despite the fact that all the Greeks united for this patriotic cause. In 1897, the Cretan problem sets off for a second time. Being embarrassed by the Greater Powers, George I doesn’t act at first, but once the fire at Chania takes place, as well as the massacre of thousand of Christians, his attitude tends to change. On April 74 10th 1897, Prince Constantine crosses Thessaly’s borders together with his troops, walking into Ottoman territory. The Hellenic 2016/1 army is defeated, a fact confirmed by the signing of the Treaty at Constantinople on December 4th 1897. Years go by, in which the Greek population starts to gather complaints and looks for solutions. Governments come and go, assassinations (Prime-Minister Deliyannis is one of the victims) and crimes are everywhere, while the king spends most of his time in Paris, the people seeing him as a wandering king. As a result, the Cretan, Venizelos, son of a merchant from Mournies, who studied in Athens, appears as a savior to his compatriots. Step by step, he manages to win people’s hearts through his ultranationalist Moments and Significance of Balkan Diplomacy ideas, being seen at first as an adversary to Prince George (Grand Commissary of an autonomous Crete after the treaty of 1897). On October 17th 1910, King George I names Venizelos Council President, and sets in motion a true personal dictatorship. Externally, Greece is situated on France’s and UK’s side, indirectly fighting against Germany and Austro-Hungary, which were true supporters of the High Porte (during the confrontations from 1897 the Turks were receiving stocks of high-tech ammunition from the Krupp Factories as well as tactical advice). As for its relationship with other Balkan countries, we could say that Greece was “alone against all others”. Relationships with Romania were extremely sinuous, being often interrupted. The Zappa Affair, as well as Romania’s wish to keep the status quo in the Balkans was contradictory to what the Greek side wanted. When dealing with the Ottoman Empire, the number of fights over numbered that of diplomatic discussions, thus closeness between the two wasn’t likely in the near future. The differences with Serbia and Bulgaria concerning the position of borders would mean Greece was better keeping a certain distance on a diplomatic scale. That distance would blur once every camp wanted to stomp what was left of the Ottoman Empire.

5. BULGARIA In 1900, Bulgaria had a surface of 96.345 square km and a population of 3.74 million people, thus being the widest Balkan state (excluding Turkey). The leadership was in the hands of former German prince Ferdinand of Saxa Coburg-Gotha, who became Bulgaria’s ruler at July 7th 1887, after a favorable vote from Sobrania (Bulgarian Parliament). Wanting to become a good Bulgarian, Ferdinand let Stambulov govern as he saw fit, a deed which could only favor the good relationship they had. Between September 1887 and May 1894, Bulgaria’s Prime Minister, Stambulov, was one the new ruler’s confidant. Yet this didn’t stay in the way of his decision to get rid of him once Ferdinand understood the politics south of the Danube 75 border. A conservative government takes the place of a liberal one, and the pro-Russian, Zankov, becomes the next Prime Minister. 2016/1 Shortly after this happens, Stambulov is mortally wounded on a street in Sofia. Externally, Ferdinand perfectly understood that Bulgaria, through its placement in the heart of the Balkans, would be a most wanted ally to the two big powers that had a rivalry in the area at the end of the nineteenth century: Austro-Hungary and Russia. This advantage, as well as the perspectives that came along, offered an unlimited playing field for the prince’s personal diplomacy (Gauthier, 2004). Bulgaria always swung between Wien and Saint- C. Paul-Claudiu

Petersburg in order to rech the objective the ruler had always craved: full independence and kingship (the Bulgarian Principality being an autonomous state, but not independent). The Prince used the Austro-Russian antagonism in order to free himself from the Porte’s tutelage. This moment came at the same time the Austro- Hungarians took hold of Bosnia and Herzegovina. One day before Franz Joseph declared that the empire had one more province, Ferdinand declares himself king and breaks his bonds with the High Porte (October 5th 1908). The coordination of the two events gives birth to suspicions because of a previous agreement between Ferdinand of Bulgaria and the leaders of the Habsburg monarchy (Cain, 2012). The official recognition of the new “Czar of Bulgaria” title as well as the country’s independence launches new controversies on an international level. Wien and Sofia’s decisions impact the balance of power in the Balkan region and create a new diplomatic crisis. In Bucharest, and other places, authorities have an uneasy feeling about this new stage in the Oriental Problem. Russia commences negotiations regarding a new Balkan alliance, taking advantage of the fact that Ferdinand was a friend of their country, and Serbia felt it was directly threatened by Austro-Hungary. The first meeting between Bulgarian and Serbian authorities took place on October 11th 1911, and on March 13th 1912 the alliance and friendship treaty was signed, containing a secret annex. Once the alliance was made, Ferdinand’s dream to restore the Byzantine Empire in its benefit would take shape.

6. ROMANIA The formation of the Romanian nation was a complex one, which sucked the energy of a few consecutive generations of Romanians. The Union of Principalities (January 24th 1859) and claiming its independence after the war against the High Porte (1877-1878) were the first actual finalized actions that led to the creation of Greater Romania (1918). King Carol the First was one of the key actors that helped create 76 a modern and internationally respected Romania. As we know, Carol was named ruler of Romania on May 10th 1866. A few months 2016/1 after, the first Romanian constitution is born (June 29th 1866), which stayed the same until after the First World War (March 29th 1923). In 1878 Carol I of Hohenzollern received the title of “Royal Highness”, and the 1886 Constitution replaced the 1881 version, in order to specify among other things, that from that moment on, the head of state will be named King. At the beginning of the twentieth century, the kingdom’s political life was based on the two most important parties: The Conservative and Liberal parties. The first represented the interest of the biggest land owners, while the Liberals represented the middle class. On a governmental level, Moments and Significance of Balkan Diplomacy these parties were succeeded under the close eye of the king. The later would hold a key role in deciding the result of elections, by virtue of his constitutional prerogatives to name the future Prime Minister. During the 1899-1907 period, Conservative and Liberal parties, five by number, have rotated without facing any difficulties. In the first years of the new century, governments were “tortured” by a severe economical and financial crisis. The Sturdza government, which was active starting from the beginning of January 1905, managed to revitalize the state and overcome its financial difficulties and even improve the quality of life (especially for the country folk). Sturdza’s successor, Gr. Cantacuzino, was put in the ingrate position of hindering the Great Peasant Uprising of 1907, which proved to be the most severe internal crisis since gaining Independence. Amongst these events, the Government is dismissed, and old Sturdza (who reached the venerable age of 74) comes back at the helm of the executive branch for a very short period of time). He was followed by Ionel Bratianu, as leader of Government as well as leader of the National Liberal Party. According to the rotation of parties practice, the end of the four mandatory years of legislative mandate, the King turned his attention towards the Conservatives, resulting in P.P. Carp being named Prime Minister for a second time (he first governed between July 1900 and March 1901). During the Balkan Wars, Titu Maiorescu is the one that leads Government for two consecutive mandates. A few days before being dismissed (December 31 1913), he presents the Parliament with the famous “Green Card”, where the reasons for why Romania had a latent neutrality in the first Balkan War were written, as well as in the case of its full involvement in the second confrontation. Externally, Romania had signed a treaty with the Triple Alliance countries (Italy, Germany, Austro-Hungary) since 1883, but this detail does not mean that the Romanians didn’t try a shift between the two blocks. The importance Romania posed on an international level was also shown by the choice of representatives from great forces 77 to be sent here. Among the ones that can be remembered we can find: Bulow, Goluchowski, Kiderlen, Aerenthal, Czernin, White, 2016/1 Giers Jr. Etc. Bucharest was considered by German diplomacy as the “central observation and estimation point of the entire complex around the Oriental Problem”. (Kinderlen, 1925) As I pointed out at the begining of this paper, foreign affairs relied exclusevelly on the monarch’s prefferences. A conclusive example is that of Romania, where Carol I chose to forge an alliance with Germany, not only because it was one of the main European Powers of the time, but especially form personal resons, being a descendant of the Hohenzollern-Sigmaringen familly, which was at the helm of C. Paul-Claudiu

Germany. Inclining towards the Central Powers had adepts among Conservative and Liberal supporters. Yet, the efficiency of the 1883 treaty is diminished by its secret caracter. Bismark insisted on this form, in order to avoid certain reactions from Russia, and Romanian diplomats had to agree to it, because of the public opinion’s attitute towards Austro-Hungary. In 1888 the treaty was extented for three more years, then it was renewed in 1892, containing a clause which stated that the treaty would continue to exist until one of the participants would opt out. Nothing would change, concerning this alliance, until the moment Romania decides to enter its first global conflict. Because of this alliance, the diplomatic ties Romania had with its Balkan neighbors, also coicided with the way those states would get along with Germany and Austro-Hungary. Thus Bulgaria, a faithfull ally of the Czarist Empire, was ploting a future control over the Dobrogea region in Romania. Along these secret wishes, the actions commited by Bulgarians in Macedonia have caused an irritation in Bucharest, where the Macedo-Romanian minority’s case was also pleaded by some of its representatives, had a big echo. (Agrigoroaie, 1980) Greece, due to the way it treated Macedo- Romanians, was given a cold shoulder on the diplomatic front, leading up to the interuption of diplomatic relations. The Serbian Government tried to get closer to Bulgaria and Russia, as a result of the way Austro-Hungary, an ally of Romania, was treating citizens of Serbian ethnicity. This fact had repercussions on bilateral ties between Romania and the Serbian Kingdom. France tried to exploit the sympathies of a lot of Romanian politicians, but it couldn’t neglect the fact that Romania found itself protected by the Central Powers. Théophile Delcassé, the French foreign affairs minister, would warn Caillaux, the finance minister that: “The strong political ties that Romania has with Germany and Austro-Hungary, are designed in such a way in which it is of no interest to us to make efforts in order to facilitate financial aid 78 demanded by Bucharest” (thus referring to the Romanian Government’s plea for a loan). 2016/1 This conviction has continued to influence the conduit of French diplomacy regarding Romania, with Russia having the same attitude. This will change, once the new Foreign Affairs Minister of Russia takes office, Sazonov (1910), who, according to Blondel (French representative in Bucharest): “Russia sets everything in motion, in order to prepare a favorable future in Romania. (Agrigoroaiei, 1980) During the Balkan conflicts, the Austro-Hungarian and German diplomatic corps have made visible efforts in order to keep the political orientation of Romania unchanged (official visits, Moments and Significance of Balkan Diplomacy loans, etc.). The surface for the Allied Powers’ diplomatic actions was largely set in place, through the intervention of new differences that occurred between the allies, which appeared at the same time as the 1908 events aimed at the status quo established at the Berlin Congress. Romania had constantly manifested in favor of maintaining the status quo in the south-eastern region. The situation was relatively favorable for a rise in Franco-Russian influence, but it was countered by an internal event. On January 1991, the Romanian Government was taken over by the Conservatives, with P.P. Carp as Prime Minister and Titu Maiorescu at Foreign Affairs. Both of them were in favor of an alliance with the Central powers. It can be said that Romania remains a relatively faithful ally to the Central Powers, a faithfulness that actually belonged to a few political circles which were advantaged by the position they held at the top, yet declining in numbers. The conflicts which took place between 1912 and 1913 would also bring along changes within them.

REFERENCES Agrigoroaiei Ion, Romania in relatiile internationale 1699-1939, Editura Junimea, Iasi, 1980. Bulei Ion, Romanii in secolele XIX-XX, Europenizarea, Editura Litera, Bucuresti, 2011. Buxton Noel, Europe and the Turks, London, 1907. Cain Daniel, Diplomati si diplomatie in sud-estul european: Relatiile ro mano-bulgare la 1900, Editura Academiei Romane, Bucuresti, 2012. Chirol Valentine, The Middle Eastern Question or Some Political Problems of Indi- an Defence, London, 1903. Cotet Paul, Europa, Asia , Editura Didactica si Pedagogica, Bucuresti, 1967. Gauthier Guy, Acvile si lei- O istorie a monarhiilor balcanice, Editura Humanitas, Bucuresti, 2004. Ghyka Dimitrie, Memorii, Traducere de Vasile Savin, Institutul European, Iasi, 2004. Grey Edward- The Viscount Grey of Fallodon, Twenty-Five Years. 1892-1916, vo lume I , London, 1926. Jones Raymond, The British Diplomatic Service. 1815-1914, Waterloo, Ontario, Wilfried Laurier University Press, 1983. Kiderlen-Wacher, Der Staatsmann und der Mensch, Volum I , Stuttgart, 1925. 79 Kissinger Henry, Diplomatia, Editura Bic All, Bucuresti, 2003. May Arthur, The Habsburg Monarchy. 1867-1914, New York, W.W. Norton, 1968. 2016/1 McLean Roderick, Royalty and Diplomacy in Europe, 1890-1914, Cambridge, Cambridge University Press, 2001. Mowat , The New Cambridge Modern History, Volume XII. The Shifting Balance of World Forces, 1898-1945, Cambridge University Press, 1968. Nye Jr. Joseph, Descifrarea conflictelor internationale- teorie si istorie, Editura An tet XX Press, Filipesti de Padure, 2005. Vesnitsh Milenko , Diplomacy and Foreingn Policy in Alfred Stead (Ed.), Serbia by the servians, London, 1909. Von Eckardstein Hermann, Ten Years at the Court of St.James. 1895-1905, Lon- don, 1921 C. Paul-Claudiu

Young George, Diplomacy Old and New, London & New York, 1921. Young William, German Diplomatic Relations. 1871-1945, The Wilhelmstrasse and the Formulation of Foreing Policy, New York, iUniverse, 2006.

2016/1 International Cooperation on Law against Terrorism: The Harmonization of Antiterror Laws of Turkey and Macedonia

Dr. Fehmi Agca International Balkan University Dr. Nicola Dacev International Balkan University

ABSTRACT The number of terrorist attacks has been steadily increasing in the past decade. Also, the number of countries exposed to the threat of terrorism is increasing. Terrorism is getting more momentum and wider proportions. Most countries have adopted new legal provisions against the terrorism. The new technologies enable terrorist groups to attract new members, to develop new techniques, to transfer money for financing terrorism, to reach easier worldwide communication and movement between countries. Taking into account the extent of terrorism, the new anti-terrorism legislation is necessary for the prevention of terrorist attacks in future. But, at the final stage, the success of the new legal framework will depend on the international cooperation and good faith and honesty of the global powers. The aim of this article is to review the anti-terror legislations in Turkey and Macedonia, UN Security Council resolutions and EU conventions related to terrorism. In this context, a comparative method of legal research is used to determine the applicability of the existing legislation that regulates this issue.

Keywords: Anti-terror laws, Terrorism, Technology, Financing Terrorism, International Cooperation.

1. INTRODUCTION The world has experienced a dramatic event at the 81 beginning of the 21st century. The 9/11 attack in New York has fundamentally shaken the international relations, alliances and strategic notions. In this context, threat and security concepts have changed to a great extent.Parallel to the rapid changes in the post-Cold War era, the new risks and threats represented a wide spectrum regarding their characteristics. These asymmetric threats, particularly international terrorism, use technology increasingly and restructuring themselves at the international level. In today’s chaotic environment, the societies demand much better service from security forces. Therefore, the ability F. Agca & N. Dacev

of thinking and acting proactively have gained greater importance for the sustainable success of the security forces. Combating against the international terrorism is one of the major challenges for the international community. Although the enforcement of the law is the responsibility of the sovereign nations, a coordinated international response and a close regional cooperation are vital for the success of the anti-terror policies. At the national level, it is essential to take necessary protective measures to ensure the security of the people. Terrorism is the enemy of the democracy. In this context, to maintain the balance between democratic values and public demand for strict measures against terrorism is crucial. At the international level, nations should agree on a clear definition of terrorism. Without a consensus on the definition and understanding of terrorism, it will not be possible to win this struggle. The UN General Assembly couldn`t have reached the consensus on a definition of terrorism that is acceptable by all states. Different approaches to the definition make it difficult to pass a comprehensive convention on terrorism that criminalizes all forms of terrorism. Discussion among the legal experts at the UN has not concluded with a clear understanding of the meaning of terrorism. The lack of definition is creating difficulty to reach agreements on common actions by the international community.An international military coalition force cannot successfully fight without agreeing on who the enemy is. (Lindberg, 2010) International cooperation is prerequisite in fighting against terrorism.Today’s global counter-terrorism framework includes UN conventions and protocols, Security Council resolutions, the UN Global Counter-terrorism Strategy, and some regional instruments. The 16 conventions and protocols of the UN constitute the normative and legal basis of the global counter-terror efforts. At the global level of fighting against terrorism, the Office of the UN Counter-Terrorism Implementation Task Force, co-sponsored by Switzerland, Germany, Norway, Austria, Turkey as well as the US, organized regional conferences between 2010 and 2012. The aim 82 was to determine the needs of the regions in implementing the Global Counter-Terrorism Strategy. 2016/1 2. TURKEY`S ANTI-TERROR LAWS For the last thirty years, Turkey has been targeted by the separatist terrorist organization PKK. Since 1984, more than thirty thousand people were killed or injured because of the terrorist attacks. Turkey has managed to execute effective and successful fighting against the terrorists inside and outside the country. In fighting terrorism, Turkey has fully respected to the democratic values and and fundamental human rights. In the light of UN conventions and EU regulations, Turkish parliament modified the International Cooperation on Law against Terrorism anti-terror laws taking into account the changing requirements of the its counter-terrorism strategy. The Law on Fight against Terrorism of Turkey’ adopted in 1991 establishes three main criteria for defining a terrorist act: First, it concerns the use of coercion, violence, terror, intimidation or threats. Second, the terrorist action needs to be designed to impair the basic characteristics of the Republic specified in the Constitution, or the country’s political, legal, secular and economic systems, violate territorial or national integrity, and jeopardize the existence of Turkey, weaken government authority, destroy fundamental rights and freedoms, impair the domestic and international security, public order or public health.Third, the person or persons who committed an act must belong to an organization. (The Law on Fight against Terrorism of Turkey, 1991) Turkey is committed to combating terrorism without discrimination and takes influential measures against associating terrorism with any religion, nationality, civilization or ethnic group. Based on its national experience, and in line with the UN Counter- Terrorism Strategy, Turkey adopted human rights based, multi- dimensional counter-terrorism practices, with full respect for the rule of law. In this context, Turkey tries to keep the balance between security measures and fundamental rights in a democratic system. An effective coordination among different responsible bodies is crucial for a successful counter-terrorism strategy. In this regard, the Under-Secretariat for Public Order and Security established in 2010, has developed measures to combat terrorism, by evaluating strategic intelligence. It also acknowledged the people to gain the public support and trust in counter-terrorism efforts. Relying only on security measures does not produce a sustainable solution to the threat of terrorism. Thus, Turkey had a paradigm shift in its counter -terrorism strategy. The most important one is the democratic opening process. In this process, Turkey adopted a holistic concept comprising political, cultural, social and economic dimensions, as well as international cooperation. But, this process ended because of the Syrian Crises and the manipulation of the 83 separatist terrorists by some global powers. `The Law on the Prevention of Financing of Terrorism` came 2016/1 into effect on 16 February 2013. This law provides the principles and procedures in the implementation of the UN Security Council Resolutions, through the decision of the Council of Ministers. In the case of a request made by a another state to Turkey to freeze the assets of a person or organization, the Council of Ministers will make a decision after getting the assessment of the Commission. The Commission may also propose to the Council of Ministers to request freezing of the assets of persons, institutions or F. Agca & N. Dacev

organizations in foreign countries, because of financingterrorist acts (The Law on the Prevention of Financing of Terrorism of Turkey, 2013). It is obvious that the effectivedetection of terrorist activities could be accomplished when the governmet authorities assess the intelligence about terrorists and financial information together. The success of the investigation will depend on the sincere sharing of the information by the states and international organizations. (Best, 2001) `The Law on Witness Protection` envisages principles and procedures regarding the protection of witnesses at risk in criminal proceedings. The witnesses in criminal proceedings for the offenses requiring a sentence from 10 years to life can benefit from protective measures (The Law on Witness Protection of Turkey, 2007). In practice, the secret witnessing under the protection of this legal provision caused unfair decisions by some judges. A fair hearing cannot be set without cross-questioning. This law actually was used to blame the persons who were not guilty by manipulating the realities. In this regard, many innocent individuals have suffered because of the impartial decisions of the courts. Turkey has actively supportedthe international efforts for cooperation inrestricting terrorists from reaching safe heavens, to improve border and customs controls, and to bring the perpetrators to justice for extraditing or prosecuting. In addition, Turkey exchanges information concerning the prevention and combating terrorism, without delay. It is important to remember that Turkey warned the Belgium and Netherland government authorities before the terrorist attacks in Brussel on 22 March 2016. Unfortunately, they ignored the Turkey`s warning. Belgium has also rejected Turkey`s requests many times to send back the criminal individuals to Turkey. Because of the negative approach by some EU member states, European cities have now become a safe haven for the terrorists.Turkey considers UN conventions and protocols,Security Council Resolutions and the Council of Europe decisions on terrorism as a legal basis and a road map to combat terrorism. In 84 this context, Turkey has fully co-operated with the UN Counter- Terrorism Committee and regularly submitted its country reports. 2016/1 Turkey still contributes to capacity building efforts of the UN agencies and regional organizations as well as conducting extensive bilateral capacity building programs. Further, Turkey signed bilateral agreements with many countries on cooperation in combating terrorism, organized crime, and drug trafficking. Turkey is party to the European Convention on Mutual Assistance in Criminal Matters and European Convention on Extradition. One of the major difficulties encountered is the refusal to extradite the terrorists claiming that the offense in question is of a political nature. It is important to give careful consideration to the difference International Cooperation on Law against Terrorism between a political offense and a terrorist crime. The UN Security Council Resolution 1373 states: “Claims of political motivation are not recognized as grounds for refusing requests for the extradition of alleged terrorists” (UN Security Council Resolution 1373, 2001). The main obligation of the States relating to terrorism is to bring perpetrators to justice either through extradition or prosecution before national courts. Abuse of the refugee status is a major problem in this struggle. Some European states refuse to cooperate in the prosecution or extradition of some terrorists. For example, Belgium rejected to send back a murderer to Turkey and provided safety and freedom of movement to this terrorist without a reasonable explanation. Many European states continue to support the separatist PKK terrorist organization members in their countries although they have declared that the PKK is a terrorist organization.

3. ANTI-TERROR LAWS OF MACEDONIA The Republic of Macedonia, like other countries, is not immune to terrorism. A terrorist action happened in the days of 9 and 10 May 2015, in the city of Kumanovo neighborhood “Divo naselje”. During the fighting against the armed terrorist group, eight members of the special unit of the Macedonian police were killed, and 37 police officers were injured. 14 terrorists were killed, and about 30 members of the terrorist group surrendered to the police. Macedonia faces a serious challenge to maintain the security and stability of the country. The term terrorism in Macedonian laws was first mentioned and regulated with a large number of legal provisions in the Criminal Code dated 1996. It prescribes penalties for terrorists endangering of the constitutional system and security, criminal association, the terrorist organization, financing terrorism and international terrorism (Criminal Code of Macedonia, 1996). It is realistic to expect that Macedonia cannot answer alone to all kinds of contemporary security threats, such as modern terrorism, organized crime, trafficking in drugs, human, weapons, which 85 are transnational in nature. Therefore, several laws were enacted to regulate the international cooperation of Macedonia with other 2016/1 countries regarding criminal matters, covering the fight against terrorism. According to the `Law on International Cooperation in Criminal Matters`dated 2010, Macedonia provides international cooperation in all proceedings related to criminal acts. Furthermore, international cooperation is given in proceedings before the European Court of Human Rights, the European Court of Justice, the International Criminal Court, and other international F. Agca & N. Dacev

organizations when an international agreement requires the cooperation. International cooperation in criminal matters includes international legal assistance, criminal prosecution, extradition and enforcement of criminal judgments and the transfer of sentenced persons (Law on International Cooperation in Criminal Matters of the Macedonia, 2010). `Law on Witness Protection` of Macedonia dated 2005 applies if the proving of the crime cannot be conducted without the statement of a person who disagrees as a witness to testify for offenses against the state, humanity and international law under the threat of revenge or danger to life, health, freedom, physical integrity or property and for the offenses that the Criminal Code stipulates a prison sentence of at least four years (Law on Witness Protection of Macedonia, 2005). To set out the measures for detecting and preventing money laundering, as a process of concealing the origin of financial assets and transfer into legal financial system; and financing of terrorism, as a process of gathering and distributing of these assets; Macedonia adopted the `Law on Prevention of Money Laundering and Financing of Terrorism`in 2014. The article 89 of the law states that the Financial Intelligence Office may conclude agreements for cooperation with other countries and international organizations in the fight against money laundering and financing of terrorism ( Law on Prevention of Money Laundering and Financing of Terrorism of Macedonia, 2014). Macedonia harmonized the Law on Prevention of Money Laundering and Financing of Terrorism with the international conventions, directives and recommendations, such as UN Convention against Transnational Organized Crime, International Convention for the Suppression of the Financing of Terrorism, and EU Council Directive on the Prevention of the Use of the Financial System for the Purpose of Money Laundering and Terrorist Financing (EC Decision, 2005/60). Macedonia also signed some bilateral agreements, with Albania in 2005, with Bosnia and 86 Herzegovina in 2009,with Romania in 2004 and Poland in 2008 on Cooperation in Combating Terrorism, Organized Crime, Illicit 2016/1 Trafficking in Narcotic Drugs. In 2014, to identify the causes and prevent violent radicalism and extremism, Macedonia started the project “Prevention of violent extremism and radicalization that lead to terrorism through community policing.” Within this project, 150 trainers assisted police officers to detect possible signs of extremism that can lead to terrorism. In Macedonia, it is necessary to work on improving the legislation that may prevent the terrorism. But, if the financial support for the terrorist organizations continues, prevention of terrorist attacks will be carried out with difficulty, despite the existence of legal capacity. International Cooperation on Law against Terrorism

The central position of the Macedonia in the Balkans geography makes the country a transition corridor for the organized crime and terrorist activities. The harmonization of the Macedonian anti- terror laws in line with the UN conventions and EU regulations is expected to contribute to the fighting against terrorism in the Balkans. At this stage, with the help of EU, Macedonia needs to increase its institutional and operational capacity of the security forces.

4. THE LACK OF INTERNATIONAL COOPERATION ON THE FIGHT AGAINST TERRORISM After the September 11 terrorist attacks in New York, the normative framework against global terrorism has been significantly strengthened. Today there is a wide range of legal legislation in the world related to anti-terrorism, suchas international conventions, UN Security Council resolutions, regional agreements, and EUanti- terrorist legislation.The UN Security Council has strengthened the international legal foundation for counter-terrorism efforts by issuing numerous binding resolutions. The UN alsoadopted the Global Counter-Terrorism Strategy that contains practical recommendations for tackling, preventing and combating terrorism and ensuring respect for human rights. Because of different threat perceptions,only a few number of countries ratified 16 conventions and protocols until today. Some states perceive terrorism as a lesser priority in the light of other challenges. The struggle against terrorism requires that the states do not sponsor or aid transnational terrorism and take responsibility for the welfare of the citizens and reduce the possibility of terrorist acts. The powerful states have the responsibility to assist weak states. Otherwise, fostering the capabilities of the states to fight against terrorism cannot be possible. Furthermore, the number of the failed states will increase and the chaos will spread throughout the world. An effective legal structure for counter-terrorism requires a potent law enforcement, intelligence gathering, and strict security measures to be conducted by the states. Bilateral efforts may have 87 a critical affect for building effective institutions and capable personnel. The combination of national efforts and international 2016/1 cooperation in fighting terrorism have shown that it is possible to defeat and deter such movements and threats if the international actors honestly and actively cooperate with the unity of action (Cordesman and Burke,2010). Today’s legal framework against global terrorismrequires a central global body dedicated to terrorist prevention and response. Counter-terrorism effortsare multilayered ranging from legally binding instruments and strategic guidelines to multilateral F. Agca & N. Dacev

institutions and regional frameworks. The existing conventions against terrorism provide a universal legal regime against terrorism. For today, the UN General Assembly has not reached the consensus on the definition of terrorism that would be accepted by all countries. The differences over the definition of terror have been a major factor in the failure to accept a comprehensive convention on terrorism that criminalizes all forms of international terrorism. Although there is considerable progress toward building a normative framework for terrorism since 9/11, the national differences continue to obstruct efforts to build a comprehensive treaty that would unite all aspects of counter-terrorism under one legal framework (Council on Foreign Relations, 2013).

5. CONCLUSION The cooperation among the nations can only be possible by recognizing and evaluating every kind of terrorist organization as a common threat without making any discrimination among them. The international community should have the same understanding of terrorism. Double standards in the fighting against terrorism might have extremely adverse results, even for the defenders of this approach. Supporting terrorism must not be a policy of national interest. Terrorism is a common challenge that we need to resolve in solidarity. Whatever their motivations and objectives, terrorism can not be justified. It should be condemned by all the states. Any state shouldn’t rely on its border security, self-defence power or its economic power. No nation can defeat terrorism alone. National defense and response capabilities are important to fight against terrorism, but not sufficient. In this sense, the international community should cooperate for the effective use of their military forces.In this context, human rights violations continue to be a significant challenge.International cooperation should focus to find the best ways to defeat terrorists with minimum violation of human rights. The life of ordinary citizens in any country must be under the 88 guarantee of the rule of law. Terrorism may occur in any country, whether it is developed 2016/1 or underdeveloped, democratic or authoritarian. Thus, there is no single cause of terrorism or a common set of causes. It is highly difficult to exterminate the sources of terrorism completely. The international community should find concrete remedies to solve the deepening structural problems between wealthy and poor countries. Terrorism has no religion, nationality or culture and not confined to a particular region. Terrorist attacks in many parts of the world remind us this reality. Terrorism is a major violation of the most fundamental human rights: the right to live. By creating a climate of fear, terrorism violates every individual’s right to live free from fear. International Cooperation on Law against Terrorism

The fight against terrorism requires a unified, determined and coordinated response from the national authorities as well as the international community. In this framework, it is necessary to establish new structures ensuring informational and intelligence sharing and a high-level contact among those structures. Without the active involvement of the five permanent members of the UN Security Council, an effective strategy against terrorism seems impossible. Full compliance with the provisions of the international conventions and UN Security Council resolutions is vital in the struggle against terrorism.

REFERENCES Best, Richard A.(2001). Intelligence and Law Enforcement: Countering Transnati onal Threats to the US, Congressional Research Service, 3 Dec. 2001. Cordesman, Anthony H. And Burke, Arleigh A.(2010). International Cooperati- on in Counterterrorism: Redefining the Threat and the Requirement, Center for Strategic and International Studies. Council on Foreign Relations. (2013). `The Global Regime for Terrorism`,Wash ingtonDC,website:http://www.cfr.org/terrorism/global-regimeterrorism Criminal Code of Macedonia (1996). Official Gazette of the Republic of Macedo- nia, No.37/1996 Lindberg Miryam (2010). Impediments to International Cooperation Against Ter rorism, Análisis nº 7954. The Law on International Cooperation in Criminal Matters (2010). Official Gazette of the Republic of Macedonia, No.124/2010 The Law on Prevention of Money Laundering and Financing of Terrorism (2014). Official Gazette of the Republic of Macedonia, No.130/2014 The Law on Witness Protection,Official Gazette of the Republic of Macedonia, No.38/2005 The Law on Fight against Terrorism of Turkey (1991). Official Gazette of the Re public of Turkey. https://www.imolin.org/doc/amlid/Turkey/Turkey_Anti-Terror_ Law_1991.pdf (12 May 2016) The Law on Prevention of Financing of Terrorism of Turkey (2013). Official Gazette of the Republic of Turkey. http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/ Laws/TFLaw_Turkey.pdf (13 May 2016) The Law on Witness Protection of Turkey (2007). Official Gazette of the Republic of Turkey. 89 http://www.resmigazete.gov.tr/main.aspx?home=http://www.resmigazete.gov.tr/ eskiler/2008/01/200801051.htm/20080105.htm&main=http://www.resmigazete. gov.tr/eskiler/2008/01/20080105-1.htm (13 May 2016) 2016/1 UN Security Council Resolution 1373 (2001). http://www.un.org/en/sc/ctc/specialmeetings/2012/docs/UnitedNationsSecurity CouncilResolution1373(2001).pdf (11 May 2016) 90

2016/1 A Quintessential Lesson from European Union Integration to African Union

Dr. Hasan Korkut International University of Sarajevo Endris Mekonnen Faris International University of Sarajevo

ABSTRACT The African Union -a multipurpose cooperation platform which most believe inspired by the European Union- came to exist to transform the continents fate into a prosperous one. European Union unpreceden- tedly becomes the crucial factor to speed up the Europe’s integration. European Union is an economic community and was not meant, first, a political one. Hence European Union can be a quintessential lesson for the African Union if the later understands the formers achievement came because of the exclusive emphasis given to the economic approach. The paper empirically argues that economic integration leads to an outright continental political unity. Accordingly the continent’s integration can only be achieved when economic approach is given prior emphasis. The political approach is a default which by nature follows the achievements gained from economic approach.

Keywords: European Union, African Union, Economic approach integration, Political approach.

1. INTRODUCTION The globe, in general, is living in extraordinary period of cooperation and is promptly changing into a likelihood of small vicinity than any other time before. The brand of cooperation varies across the world so do the level of achievements those cooperation have so far championed. The yearly book of international organizations is a comprehensive resource of over 68,000 international organizations. Working under official name called Union of International Associations it developed a tool where in the accessibility of numbers of cooperation 91 platforms has been made possible. The tool includes detailed information on over 38,000 active and 30,000 dormant international organizations from 300 countries and territories - including intergovernmental (IGOs) and international non- governmental organizations (INOGs) noticing further that approximately 1,200 new organizations are added each year.1 The economic cooperation has by far helped for the some prosperous segments of the world to emerge better than of any

1 Union of International Associations. (n.d.). Retrieved June 16, 2016, from http://www.uia.org/yearbook H. Korkut & E. M. Faris

other kinds of cooperation either by single-purpose or/and multipurpose organizations. Solely political oriented organizations, in all parts of the world have been achieving their respective purposes but remain source of tension, unanimity and disintegrations. Ordinary citizens living in economy-led cooperation have substantially been observed to change their life condition contrary to ordinary citizens living in politics-led cooperation, such as Africa. Both the European Union (EU) and African Union (AU), the focus of this paper, as members of the cooperation generation are meant to serve such cooperation purpose. The former exclusively represents a single purpose mission, i.e. the economy. The economic identity of the Union is not the only and the lasting purpose of its existence. Starting off as an economic community, then growing into a new kind of federalist supra-state, 28 countries today have come together to participate in the blurring of national borders, achieving more success in market integration than foreign and security policy.2 This paper on the basis of empirical comparison tries to show the exemplary of the European Union to African Union in such a way that the later could speed up and succeed its integrity agenda by giving priority to an economic approach that the former proved it feasible.

2. TRANSFORMATION TO AU 2.1. Main justifications The meeting from July 2-11, 2001 in Lusaka, Zambia was concluded with an official approval to transform the Organization of African Unity (OAU) into a new one-the African Union (AU). But the decision was not a result of an overnight discussion, in fact leaders concerned more have been pondering for the demand to change the fate of the then virtually 40 years old organization. Apart from the justifications coming from the authorities, scholars attempted to forward their own analytical reasoning as to why the move has been launched. This paper argues the following two points 92 profoundly important justifications. They could potentially be related to the fate of the ordinary Africans as far as their longing to 2016/1 get relieved from desperate life condition prevailing in the continent. Globalization, a new phenomenon, offered the world the stoutest centripetal force whose sole element of attraction is economy. It showed the world, by hook or by crook, the substantial possibility of its merging into a local and small market. Unlike other global phenomenon globalization was so fast and deemed to have no excuse if one is not comply with it without delay. Many countries, particularly in the third world, woke up to find globalization

2 Stadnik, S. (2016, May 12). A Comparative Historical Study of the Development of a European Army. E-International Relations. Retrieved May 16, 2016 A Quintessential Lesson from European Union Integration to African Union in their dominion without having appropriate policies to deal with it. Africans confronted globalization and its impacts with no meaningful tool to neither get benefited from nor to cope up with. The scattered endeavors here and there at national level as a reaction failed to outdo the impact caused by the globalization at the continental level. The tool that was supposed to challenge the phenomenon at the continental level with a harmonized approach and relevant policies lacked the organizational formula. Because of this Africa is worse off economically today than it was at the time of the founding of the OAU.3 The Organization for African Unity functionally existed as a leading effort to protect the unity and sovereignty of its member states. That however was a tool to shield from the intrusion of political authority by outsiders. This built up the demand to sour to the level that there should be a transformation of the old fashion organization to the one that fits the dynamic world. The second, but imperative rational is the desire to bring about prosperity achieved by other horizontally equivalent organizations particularly the European Union. The record achievements of the EU have put the supranational cooperation platform at the top of contemporary organizations. For ordinary people in the continent, where the EU membership enclaves, the cooperation added value in their life. The changes observed have resulted in significant improvements in economy, politics and social and culture in virtually all EU membership countries. The role played by the EU in its specialized economic field became center of interest that countries within the continent are longing to get benefited from by joining it. Such role has long been missed in the African continent basically because the old organization- OAU- was not essentially shaped as such.

3. KEY FEATURES ATTRIBUTED TO OAU AND AU The two organizations representing the African continent in the global political, economic and social realm could characteristically be attributed with distinguishing features. The 93 now dissolved OAU, for instance was particularly established on the basis of pan-Africanism sentiment. The then pan-African 2016/1 giant and charismatic visionaries were in the front to lead the continent wide strong emotion, pride and hope to change into a strong organization of unity. In that sense the pan-Africanist OAU was typical not to follow any other horizontally equivalent organization. AU replacing OAU on the other hand hugely lack the emotional sentiment and consequently pan-Africanism exists in its very low level. African Union, in fact, was established on the basis

3 Bujra, A. (2002). Africa: Transition From the OAU to the AU [pdf document]. Retrieved from Lecture Notes, May 13, 2016 http://www.dpmf.org/meetings/ FromOAUAU.html H. Korkut & E. M. Faris of business like sentiment whose launch was moderate and muted, with little stimulating rhetoric or enthusiasm. Objective wise the two iconic organizations differ distinguishably. Organization for African Unity objectively was featured as front bringing hands together to liberate lands and powers from mainly European colonizers. Most of the then leaders of the countries in the continent were freedom fighters with unanimous vision, which is independence. African Union had clearly envisioned further economic integration. The following table depicts in brief how easily these two organizations are distinguishable objective wise and most of the clauses in AU’s objective included the word “economic”.

Table 1: OAU’s and AU’s Featuring Objectives OAU AU The Organization shall The objectives of the Union shall have the following pur- be to:2 poses: 1 (a) Accelerate the political and (a) To promote the socio-economic integration of unity and solidar- the continent; ity of the African States; (b) Establish the necessary conditions which enable the con- (b) To defend their sov- tinent to play its rightful role features ereignty, their terri- in the global economy and in

Distinguishing torial integrity and international negotiations; independence; (c) Promote sustainable develop- (c) To eradicate all ment at the economic, social forms of colonial- and cultural levels as well ism from Africa; as the integration of African economies; Source: OAU’s Charter and AU’s Constitutive Act: Authors’ Compilation

4. SIMILARITIES BETWEEN AU AND EU The African Union, which came into existence in 2002, seems in some ways to be a copy of the European Union4 and aims the political and economic integration of the African states.5 First of all, there is the obvious use of “Union” in the name. It seems a trivial issue paving a reductionist approach. The case, however, is so much so important. The preference to use the suffix “Union” was a deliberate and an answer to the desire coming from EU to setup, 4 Siaroff, A. (2007). Following in Europe’s Footsteps? The African Union and Integra- tion in Africa. Paper presented at the Biannual Congress of the European Union Studies Association, Montreal, Quebec. Retrieved May 13, 2016, from http://aei. pitt.edu/8034/1/siaroff-a-06c.pdf 5 Bostan, Z. (2013). ‘Another false dawn for Africa?’ An assessment of NEPAD. E-International Relations. Retrieved May 13, 2016, from http://www.e-ir.info/2011/07/19/‘another-false-dawn-for-africa-’-discuss-this-assessment-of-nepad/ A Quintessential Lesson from European Union Integration to African Union from the outset, the coming organization as parallel to deal with issues in continental level. Secondly, the institutions of the African Union parallel those of the European Union. Very specifically, the African Union has a Pan-African Parliament, an executive African Commission, an African Court of Justice, an Executive Council (to match the European Union’s Council of Ministers), and — at the apex — the Assembly of the African Union, grouping its political leaders and meeting at summits (as per the European Council). Third and finally, the future plans of the African Union include other parallels, in particular an African Central Bank.6 To sum up the EU and the AU have strikingly similar features. This is no surprise, considering that much of the AU structure was built upon the EU model. The following table shows that, with a few exceptions, the AU is almost the mirror image of the EU.7

5. WHAT BRANDS EU AS AN EFFECTIVE COOPERATION PLATFORM? The European Union paves economic approach ahead of political approach to realize the continents integration. The union has been at the heart of the European integration, converging countries once in conflict back in history. EU serves as a key trading and investment partner across Europe and as a powerful catalyst for fundamental economic and governance reforms by many entrants and aspirants. An economically prosperous union has managed to take over some sovereign powers of member states. The later substantially convinced that transferring their power to the supranational institution contributes to the better and common benefits of all. Had there been an attempt to integrate the continent paving the political approach the fate of the continent would have been different by far.

2016/1

6 Siaroff, A. (2007). Following in Europe’s Footsteps? The African Union and Integration in Africa. Paper presented at the Biannual Congress of the European Union Studies Association, Montreal, Quebec. Retrieved May 13, 2016, from http://aei.pitt.edu/8034/1/siaroff-a-06c.pdf 7 Z. Sore, Z. S. (2010). Establishing Regional Integration: The African Union and the European Union. Macalester International, 25(13). Retrieved May 16, 2016, from http://digitalcommons.macalester.edu/macintl/vol25/iss1/13 H. Korkut & E. M. Faris

Table 2: Structural Resemblance of the EU8 and AU9 European Union African Union European Council (Heads of Assembly of the Union (Heads of States) States) Council of the European Union Pan-African Parliament (Ministers) European Parliament Pan-African Parliament Committee of Permanent Repre- Permanent Representatives Com- sentatives mittee The Financial Institutions The Financial Institutions

• European Central Bank • African Central Bank

• European Investment • African Investment Bank Bank Source: Treaty establishing a Constitution for Europe and African Union Constitutive Act: Authors’ Compilation

Passing through different phases after its foundation, the union has firmly assured the world as an economic branded cooperation platform. Securing the economic benefit of its members by getting involved in a common and single market, irrespective of the status and a country’s level of advancement, is the core objective of the union. There have been varieties of approaches that scholars have developed and used to measure the empirical changes countries in the EU scored. The measures essentially focus on whether countries indeed get economically benefited or not in their membership of the European Union. The Synthetic Counterfactuals Method (SCM), pioneered by Abadie and Gardeazabel (2003) has been employed to substantiate empirically the economic benefit member states in the EU have been generating. Accordingly, countries labeled rich and poor are taken into account to measure their GDP after they joined the union and if they were, supposedly, not members at all. Nauro F. Campos, 96 Fabrizio Coricelli and Luigi Moretti10 used the SCM and have come up with findings that clearly show the consequences of joining EU 2016/1 as far as the respective country’s GDP is concerned. Preferably UK, Denmark, Irland, Portugal and Spain are selected for their change in GDP graphically is analyzed. The simple graph contains two lines 8 Treaty establishing a Constitution for Europe. Retrieved May 16, 2016 from http://eur lex.europa.eu/legal%20content/en/txt/?uri=uriserv:oj .c_.2004.310.01.0001.01.eng&toc=oj:c:2004:310:toc 9 Constitutive Act of the African Union: http://www.au.int/en/sites/default/files/ Constitutive Act_EN.pdf 10 Campos, F., N., Coricelli, F. and Moretti, L. (2016). The eye, the needle and the camel: Rich countries can benefit from EU membership.VOX, CEPR’s Policy Portal. Retrieved May 16, 2016 from http://voxeu.org/print/10502 A Quintessential Lesson from European Union Integration to African Union one broken the other solid. The broken line represents estimated GDP if the country had not been a member of the Union.

Figure 1: GDP evaluation of Denmark and UK

Source: Nauro F. Campos, Fabrizio Coricelli and Luigi Moretti, 201611

Figure 1 depicts that country, such as UK and Denmark that were economically much better than the rest of member states in the union have been getting benefited by joining the EU. The result as shown in the graph would be quite to the contrary if the states stayed away from EU membership. Figure 2 depicts both countries’ better payoff in their membership to the EU. The graph exponential elevated from its lower level before the countries joined the union and continue to grow so long the countries maintain their membership.

6. LESSON FOR AFRICA FROM THE EU INTEGRATION 6.1. Economic Approach for an Effective Integration Transferring sovereign political power willingly to an organization to bring about integration is not such simple imagination. It is unbounded by borders and it feels similar whether in Europe or Africa. However EU has managed to break this chain by implementing economic approach rather than political approach. By successfully realizing the vision to bring the Europe 97 in to a single market where in states can freely get involved and benefited from EU has achieved to the great extent to take over 2016/1 some of the important sovereign powers of member states.

11 Campos, F., N., Coricelli, F. and Moretti, L. (2014). Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Counterfactuals Method. Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor: Bonn. Retrieved May 16, 2016 from http://anon-ftp.iza.org/dp8162.pdf H. Korkut & E. M. Faris

Figure 2: GDP evaluation of Portugal and Spain

Source: Nauro F. Campos, Fabrizio Coricelli and Luigi Moretti, 2016

Economic approach is viable approach that states in Africa could accept to speed up the continent’s integration. Political approach would never be a viable formula in Africa. In a very widely understandable feeling across the continent no single state/ country believes its political system is far behind the other state/ country. In other word no other state/country feels better to lead others considering its political system is exemplary by large. No political system as a role model exists in the continent to be shared implies there is no any political approach to successfully be adopted to integrate the continent. The economic approach, on the other hand works. EU is a quintessential in this regard. Three levels of empirical analysis can be employed in order to assert the aforementioned claim, namely continental level: here the paper refers countries; country level: here the paper refers the state; and individual level: here the paper refers politicians. 6.1.1. Continental level EU’s integration started from the western part of the continent as an economic bloc. It expanded, then, to the other part of the continent in 1970s to include other European countries convinced of the achievements gained by the founding members. Now that 98 small economic community is no more confined to a corner rather became a continental concern. The achievement has led to create 2016/1 greater sense of convergence manifested as a demand to voluntarily integrate into a one but larger single market. The continent wide prosperity has become persuasive tool to win heart and soul of former political rivals. This has enabled the unity to draft continent wide and politically meaningful laws, regulations and policies. Now a day the countries embraced by the unions are significantly represented globally as a singly political unity governed, for instance, by common foreign and defense policies. What started as a small economic community culminated, finally, an economically harmonized, big and prosperous political union. A Quintessential Lesson from European Union Integration to African Union

The same formula can be applied in Africa as it needs continent wide initiation. Taking the leading role, AU should put economic approach as a prior agenda by casting the very conflictual and separating political approach aside. Policies that can promote and speed up the realization of free trade with in a single market that could embrace the whole continent should be developed. 6.1.2. Country level Economic prosperous integration is a common platform for a bitterly enemy countries to come together and solve their century old political disputes, conflicts even war. EU is serving as such means to bring formerly bitter enemies together and make business. An economic integration is the less hesitant approach for the state to confer some of its sovereignty to the supranational institutions. Having practically observed the prosperity the supranational entity has gained member state will find the situation favorite enough to compromise some of the exclusive a national level power. This encourages other non-member states to pave the same. Practically this would give substantial result in Africa, if the integration effort put the economical approach ahead. Conferring sovereignty would be a big deal while it’s the most untouchable issue otherwise. 6.1.3. Individual level Politicians and politics in advanced countries, particularly in EU member countries are interrelated in a proper manner. A politician holding public office, for instance, if fails to carry out duty, can easily resign or transform the power to whoever to come peacefully. Quitting political authority does not imply anything further and life continues ordinarily. The opposite is true in Africa. Why is the question? Africa is often mentioned with the leaders reigning for longest possible period of time. The late Muammar Ghadafi was in power for nearly 42 years before ousted and killed, Mugabe of Zimbabwe since 1987, Mussieveni of Uganda has been in power since 1986, Oumar Al-Bashir of Sudan has been in power since 1989, Mumabark of Egypt ruled Egypt form 30 yearsare only few worth mentioning. One of the reasons why politicians in Africa resist giving up 99 or transferring power is they would not have a secured life after quitting power in office. Unlike politicians particularly in Europe, 2016/1 politicians in Africa have no any way to go after power. To live until their death in power is the option less option. A politician holding public office in Europe will not be hesitant to resign or to quit for any case that prevents him/her to stay in office anymore. The question of the coming fate regarding how to afford life may not cross his/her mind. The opposite is true in many of the countries in Africa. Life after office/ power is a nightmare. For many state-men, politicians in Africa following their powers no to exist anymore they ended H. Korkut & E. M. Faris

in jail, exile or death. Rare occasion are known in the continent politicians to rejoin the ordinary society and live together in peace and tranquility after they abandoned power in any way. That is why peaceful power transition is a sort of miracle in the continent. An economically integrated and prosperous Africa, taking lesson from EU, will not have a space to accommodate such resistant and dictator politicians. Quitting or power transferring will not be such an issue any more.

7. CONCLUSION 21st Century is more convenient for pro unity, togetherness and integration. In all these both small and larger actors, for instance, in a particular region can secure their relative gains. Consequently the region becomes prosperous; peaceful that definitely affects the globe. A united (an integrated) region in its strength, and success to be prosperous will not only be a confined issue to the region per se but also inevitably would have an extended effect to affect political, economic and social affairs of other states, other regions and the globe at large. Quite a few efforts have been developed and expired; some still exist, without positively impacted to change the livelihood of ordinary Africans. Millions of Africans still live in sever poverty while paradoxically the global production is consuming the infinite and varieties of raw materials from the continent. When a horizontally equivalent organization-EU- becomes source of prosperous there is no reason that AU to fail to do so. A formula applied to bring people in one continent into a strong unity should also function the same way to produce a better result given some sort of customizations are taken onto considerations. As discussed in this paper a more united and prosperous Africa can only emerge when economic approach, rather than political approach is given prior attention. African Union, as the sole and iconic cooperation platform should coordinate efforts from all the corners of the continent. The work seems simplified as each of sub- 100 regional blocs are mainly organized on the basis of free trade that lead to regional integration. Economic Community of West African 2016/1 States (ECOWAS) in the West, Common Market for Eastern and Southern Africa (COMESA) in the southeast, Economic Community of Central African States (ECCAS) in the center and East African Community (EAC) in the east are by far crucial segments. Each of the sub-regional blocs should harmonize their economic platforms and formulas envisioning future integration so that the future continent-wide integration would very much be simple. A Quintessential Lesson from European Union Integration to African Union

REFERENCES Ayittey. B. N. George (2010). The United States of Africa: A Revisit. American Academy of Political and Social Science, 632, 86-102. Retrieved May 13, 2016, from http://www.jstor.org/stable/27895950 Babarinde, O. (2007). The EU as a Model for the African Union: the Limits of Imitation. Jean Monnet/Robert Schuman Paper Series, 7(2). Retrieved May 16, 2016 from http://www6.miami.edu/eucenter/BabarindeEUas Modellong07edi.pdf Balassa, B. (1961). The Theory of Economic Integration. Richard Irwin: Homewood. Bedjaoui, M. (n.d.). From the Pan-Africanist Movement to the African Union Brief Historical Overview of Steps to African Unity. The African Union: Legal and Institutional Framework, 7-23. doi:10.1163/9789004227729_003 Bostan, Z. (2013). ‘Another false dawn for Africa?’ An assessment of NEPAD. E-International Relations. Retrieved May 13, 2016, from http://www.e-ir.info/2011/07/19/%E2%80%98another-false-dawn-for- africa-%E2%80%99-discuss-this-assessment-of-nepad/ Braveboy-Wagner, J. A. (2009). Institutions of the global south. Milton Park, Abing don, Oxon: Routledge. Bujra, A. (2002). Africa: Transition from the OAU to the AU [PDF document]. Re trieved from Lecture Notes, May 13, 2016 http://www.dpmf.org/meetings/FromOAUAU.html Campos, F., N., Coricelli, F. and Moretti, L. (2014). Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Counterfactuals Method. Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor: Bonn. Retrieved May 16, 2016 from http://anon-ftp.iza.org/dp8162.pdf Campos, F., N., Coricelli, F. and Moretti, L. (2016). The eye, the needle and the camel: Rich countries can benefit from EU membership. VOX, CEPR’s Policy Portal. Retrieved May 16, 2016 from http://voxeu.org/ print/10502 Carpenter, M. and Dunung, P., S. (2015). International Business: Opportunities and Challenges in a Flattening World, v. 2.0. Retrieved May 12, 2016 from http://2012books.lardbucket.org/pdfs/challenges-and-opportun ities-in-international-business.pdf European Center for Development Policy Management. (2010). Building the African Union An assessment of past progress and future prospects for the African Union’s institutional architecture (Policy and Man agement Report 18). Maastricht: ECDPM. Retrieved May 15, 2016 from www.ecdpm.org/pmr18 Furtak, F. T. (2015). Integration in Regional Organizations ? A Comparison of 101 EU, AU, OAS,and ASEAN. Journal of Civil & Legal Sciences Civil Legal Sci, 04(02). doi:10.4172/2169-0170.1000146 Karangizi, S. (n.d.). The Regional Economic Communities. The African 2016/1 Union: Legal and Institutional Framework, 231-249. doi:10.1163/9789004227729_013 McCormick, J. (1999). Understanding the European Union: A Concise Introduc tion. London: Macmillan Press ltd. Moghadam, R. (2014). Europe’s Road to Integration. International Monetary Fund Finance & Development. 51(1). Retrieved May 16, 2016, from http://www.imf.org/external/pubs/ft/fandd/2014/03/moghadam.htm Peters, W. (2010). The quest for an African economic community: Regional in tegration and its role in achieving African unity - the case of H. Korkut & E. M. Faris

SADC (Doctoral dissertation) [Abstract]. Siaroff, A. (2007). Following in Europe’s footsteps? The African union and integ ration in Africa. Paper presented at the Biannual Congress of the European Union Studies Association, Montreal, Quebec. Retri- eved May 13, 2016, from http://aei.pitt.edu/8034/1/siaroff-a-06c.pdf Sicurelli, D. (2010). The European Union’s Africa Policies: Norms, Interests and Impact. Ashgate Publishing Limited: Farnham. Stadnik, S. (2016, May 12). A Comparative Historical Study of the Develop- ment of a European Army. E-International Relations. Retrieved May 16, 2016, from http://www.e-ir.info/2016/05/12/a-comparative-his torical-study-of-the-development-of-a-european-army/#_ftn1 Union of International Associations. (n.d.). Retrieved June 16, 2016, from http:// www.uia.org/yearbook Z. Sore, Z. S. (2010). Establishing Regional Integration: The African Union and the European Union. Macalester International, 25(13). Retrieved May 16, 2016, from http://digitalcommons.macalester.edu/macintl/vol25/ iss1/13 Zweifel, T. D. (2006). International organizations and democracy: Accountabil ity, politics, and power. Boulder, CO: L. Rienner.

(Footnotes) 1 Article II of the OAU Charter: http://www.au.int/en/sites/default/files/treaties/7759-sl-oau_charter_1963_0.pdf

2 Article 3 of Constitutive Act of the African Union: http://www.au.int/en/sites/ default/ files/ ConstitutiveAct_EN.pdf

102

2016/1 A Projection for the Turkish Economy in 2023 with a Bayesian Approach

Dr. Mesut Murat Arslan Yildirim Beyazit University Dr. Fatma Ozgu Serttas Yildirim Beyazit University Dr. Recai Aydin Turkish Police Academy & International University of Sarajevo

ABSTRACT Turkish economy has almost experienced a continuous growth process since the first quarter of the year 2002, except for the year 2009 in which the impact of global financial crisis was felt. As a result of this growth period, Turkey has become the 17th largest economy in the world and has set big targets as to join one of the largest 10 economies in the world. In this study, we investigate whether Turkey would be able to meet its 2023 targets or not if the trends and dynamics that have been experienced during the last decade continue. Specifically, we will examine if Turkey’s exports will reach 500 billion US dollars, Turkey’s GDP will reach 2 trillion US dollars, and Turkey’s GDP per capita will reach 25 thousand US dollars. Furthermore, the path that Turkey’s macroeconomic indicators should follow in coming years and the different applicable scenarios in order to reach these 2023 economic targets will be studied. The results of this study show that those 2023 targets will not be met. So if Turkey is serious and insistent on these targets, this study may be a warning to policymakers to take the necessary measures when there is still enough time and oppurtunity.

Keywords: Turkish Economy, DSGE-VAR, SOE, Bayesian Methods. Jel Classification: C11,C13,C68

1. INTRODUCTION The Turkish economy has almost experienced a continuous growth process since the first quarter of the year 2002, except 103 for the year 2009 in which the impact of global financial crisis was felt. As a result of this growth period, Turkey has become the 17th or 18th largest economy in the world.1Following this remarkable economic performance, Turkey has set some big targets for 2023 as: i. being one of the largest 10 economies in the world; ii. reaching GDP of 2 trillion US dollars; iii. having per capita GDP of 25 thousand US dollars; iv. Having export of 500 billion US dollars. 1 According to the IMF, World Bank and UN ranking based on nominal GDPs in 2014 and 2015, Turkey is the 18th country in the list. However, according to GDP calculated by purchasing power parity (PPP), Turkey is 17th country in the world GDP ranking lists. M. M. Arslan et al.

Thus, in this study, we investigate whether Turkey would be able to meet its 2023 targets or not if the trends and dynamics that have been experienced during the last decade continue. Of course, the first target of being among the 10 largest economies and Turkey’s ranking in the world economy in 2023 are closely related to the performance of other similar. So in order to see whether this target will be met, the projections which will be made for the Turkish economy will also be applied to some of those economies which are below and above the Turkey’s ranking. Because in this study, we also propose a new methodology and approach for projections, we will just focus on projections on Turkey, and postpone the projections of other countries and comparisons to some other study. Therefore, in this study, we will just specifically look at the feasibility of GDP, per capita GDP, and exports targets of Turkey in 2023. In this study, the Turkish economy will be modeled and investigated through a Small Open Economy (SOE) theoretical model based on Gali and Monacelli (2005). This model is a version of Dynamic Stochastic General Equilibrium (DSGE) model. The projections in this study will be made through Bayesian estimations of a DSGE-VAR (or DSGE-VAR(λ)) model that is obtained from the combination of a structural DSGE model with a Vector Autoregression (VAR) model. Therefore, theDSGE-VAR (λ) model establishes a balance between the statistical representation (VAR) and the economic requirement (DSGE). So here, the DSGE-VAR or DSGE-VAR (λ) model that will be estimated by using Bayesian methods represents a combination ofour SOE model with a VAR model.2 DSGE models are generally used in the analyses of short term macroeconomic policy within the New Keynesian framework. The long term projections are made generally by the VAR models. In this study, these two approaches will be combined and projections will be made by using a VAR model starting from a structural DSGE model. Because in literature, there are no long term projections and estimations made within such a framework at least to our knowledge, this study will contribute the literature. 104 In addition to the theoretical and methodological contributions, this study could provide information and guidance to policymakers 2016/1 in their way of reaching the targets. So, if they are serious on those targets, and such studies arrive at a conclusion that these targets are not attainable, then the attention of policymakers and the public can be captured when there is still enough time to take the necessary measures. Another contribution could be introducing of using Bayesian methods and techniques in Turkey in the context of long term projections, where there are not enough studies using this state-of-art estimation method. 2 The hyperparameter λ is interpreted as the weight placed on both the VAR and the DSGE parts of the DSGE-VAR (λ). λ → ∞: DSGE-VAR (λ) → DSGE; λ → 0: DSGE-VAR (λ) →VAR. A Projection for the Turkish Economy in 2023 with a Bayesian Approach

2. THE LITERATURE 2.1. DSGE Models We will use a small open economy (SOE) model which is a variant of the dynamic stochastic general equilibrium (DSGE) model in this study. This is an open economy version of the standard model used in New Keynesian framework (see Woodford, 2003) developed first by Gali and Monacelli’s (2005). Its simplification by Lubik and Schorfheide (2007) has become standard and vastly used in the literature. DSGE models are microfounded optimization- based models that have become very popular in macroeconomics over the past 25-30 years. DSGE models are the models with a high degree of theoretical coherence and derived from the first principle by explicitly modeling the household and firm behavior as well as the monetary authority’s reaction function. In these models, decision rules of economic agents are derived from assumptions about agents’ preferences and production technologies and some fundamental principles such as intertemporal optimization, rational expectations, and competitive equilibrium. Thus, they are robust against the well-known Lucas (1976) critique, and a good model for policy analysis. However in such models, the functional forms and parameters of equations that describe the behavior of economic agents are tightly restricted by optimality and equilibrium conditions. But, likelihood functions for such empirical models with a strong degree of theoretical coherence tend to be more restrictive than likelihood functions associated with atheoretical models. However, a challenge arises if the data favor the atheoretical model. Since the atheoretical model generates more accurate forecasts, but a theoretically coherent model is required for the analysis of a particular economic policy. In literature DSGE models could be estimated by different methods. Clarida and Gali and Gertler (2000) used GMM. Orphanides (2001) and Ball and Tchaidze (2002) used OLS methods but to avoid endogeneity bias they made implausible identification assumptions. Fuhrer and Moore (1995), Leeper and Sims (1994), Kim (2000) used full-information maximum 105 likelihood estimation (MLE) method. However, one problem in the estimation of DSGE models by MLE is absurd parameter 2016/1 estimates, that is, estimates of structural parameters by MLE are often at odds with additional information or observations. Because of such problems DSGE models have been estimated by Bayesian methods recently. Likelihood-based Bayesian estimations of DSGE models have started with the studies of Landon-Lane (1998), DeJong et all. (2000), Schorfheide (2000) and Otrok (2001). An analysis and estimation of a DSGE model by Bayesian methods in a closed economy framework was performed by An and Schorfheide M. M. Arslan et al.

(2007). In open-economy literature, Lubik and Schorfheide (2007) used Bayesian estimation methods in a SOE framework to see the effects of exchange rates movement on the monetary policies of some central banks (to investigate the hypothesis whether central banks do respond to exchange rates). Lubik and Schorfheide (2006), Rabanal and Tuesta (2006), Walque and Wouters (2004) used Bayesian methods in the estimations of multi-country DSGE models. 2.2. VAR Models While DSGE models provide a complete multivariate stochastic process representation for the data, simple models impose very strong restrictions on actual time series and are in many cases rejected against less restrictive specifications such as Vector Autoregressions (VAR). A natural alternative to DSGE models in dynamic macroeconomics is a VAR model, because linearized DSGE models, at least approximately, can be interpreted as restrictions on a VAR representation. Thus, instead of estimating a structural model of the economy, we can directly estimate a model by using observable variables and data without having any restrictions, as in a VAR model. VARs are linear time-series models, designed to capture the joint dynamics of multiple time series. Therefore, VAR models are usually used in long-term estimations and making future projections. Sims (1980) proposed VARs to replace large-scale macroeconometric models (inherited from the 1960s), which impose incredible restrictions. Since then, VARs have been used for macroeconomic forecasting and policy analysis to investigate the sources of business-cycle fluctuations and to provide a benchmark against which modern dynamic macroeconomic theories can be evaluated. The equilibrium law of motion of many dynamic stochastic equilibrium models can be well approximated by a VAR. There are some problems in the estimations and forecasting with VAR models. Since the VAR parameter space is generally much larger than the DSGE model parameter space, the specification of a prior distribution for the VAR parameter becomes 106 very important and requires careful attention. A VAR with a prior that is very diffuse is likely to be rejected even against a misspecified 2016/1 DSGE model (An and Schorfheide (2007)).3

3 In a more general context this phenomenon is often called Lindley’s paradox. A Projection for the Turkish Economy in 2023 with a Bayesian Approach

3. THE MODEL AND ESTIMATION METHOD 3.1. DSGE-VAR and Bayesian Approach In empirical studies the guidance of theory is crucial. However, since theoretical models have been getting more complicated, complex and very specific in macroeconomics, this guidance in a formal statistical framework has become more difficult. Bayesian estimation methods provide a statistical framework to overcome such difficulties and take formally uncertainties in model parameters into account. In Bayesian inference, prior distributions for parameters are updated by sample information contained in the likelihood functions to form posterior distributions. In a Bayesian framework, prior distributions are important. The prior can enable to use information that is not contained in the estimation sample. Thus, to the extent that the prior is based on nonsample information, it provides the ideal framework for combining different sources of information and thereby sharpening inference, and obtaining more correct and consistent estimations in macroeconometric analysis. Then, posterior distributions can beobtained to measure parameters’ uncertainty, and used in making political analysis, estimations, and future forecasting. Thus, with a DSGE-VAR model in Bayesian framework, since the likelihood function is reweighted by a prior density that can bring the information to the model that is not contained in the estimation sample, more reasonable and consistent estimations can be obtained. In a DSGE-VAR model, probability distributions for parameters are determined by a DSGE model that models the economy theoretically. These distributions are used as prior distribution in VAR to obtain estimations and projections that are consistent with the assumed economic model. Then, the posterior distribution of DSGE-VAR model is derived from combining a VAR likelihood function with the DSGE priors.The DSGE priors here are used instead of the Minnesota-styled priors that are usually used in the Bayesian VAR (BVAR). DSGE-VAR model obtained by combining DSGE models with Bayesian VARs first proposed by Ingram and Whiteman (1994), 107 and further developed by Del Negro and Schorfheide (2004) to improve forecasting and monetary policy analysis with VARs. 2016/1 Then the framework has been extended to a model evaluation tool in Del Negro et al. (2007). The main point in these studies is to determine the moments of the prior distribution of the VAR parameters by using a DSGE model. DSGE-VAR approach was designed to improve forecasting and monetary policy analysis with VARs, and some studies find that this model can compete in forecasting with BVARs based on the Minnesota prior (Del Negro and Schorfheide (2006, 2009)). Since unlike the BVAR, where the M. M. Arslan et al.

so-called Minnesota priors are used to tilt the estimates toward random walks in the parameter space, the DSGE-VAR model uses the artificial data generated from the DSGE to tilt the estimates toward the region of the parameter space. This would produce better and more consistent estimation results when theoretically strong DSGE models are used. 3.2. The Small Open Economy (SOE) Model A SOE-DSGE model includes an open economy IS curve that represents the production side of the economy, a new Keynesian Phillips curve that represents inflation dynamics, a real exchange rate equation, and a monetary policy rule. Thus, the SOE model that will be used in this study can be described by the following equations. The consumption Euler equation showing the supply side of the economy can be rewritten as an open economy IS-curve:

where 0 < α <1 is the import share, τ is the intertemporal substitution elasticity, y is aggregate output, and π is the CPI inflation rate. The terms of trade, q is defined as the relative price of exports in terms of imports. y* is exogenous world output, and z is the growth rate of an underlying non-stationary world technology process A.4

Optimal price setting of domestic firms leads to the open economy Phillips curve:

where y is potential output in the absence of nominal rigidities. The slope coefficient κ is a function of underlying structural parameters, such as labor supply and demand elasticities and 108 parameters capturing the degree of price stickiness. The nominal exchange rate e is included into the model through 2016/1 the definition of the CPI by assuming that relative PPP holds:

where π* is an unobserved world inflation shock, and may also be interpreted as the misspecification, or deviations from PPP. Monetary policy is described by a Taylor-type interest rate rule, where the central bank adjusts its instrument in response to movements in CPI inflation, output, and nominal exchange rate:

4 In order to guarantee stationary of the model, all real variables are therefore expressed in terms of percentage deviations from A. A Projection for the Turkish Economy in 2023 with a Bayesian Approach

Where ψs represent monetary policy coefficients, and is a smoothing term that accounts the persistence in nominal interest rates. The terms of trade can be determined endogenously as the relative price that clears international goods markets. However, estimation of the fully structural model turned out to be problematic as explained in Lubik and Schorfheide (2007). For most specifications, numerical optimization routine had difficulties finding the maximum of the posterior density. Whenever optimization did converge, implausible parameter estimates and low likelihood values are obtained. The apparent reason is that endogenous equation would imply a tight link between the terms of trade and output growth that the estimation procedure attempts to match. This creates a conflict with output and inflation dynamics as governed by the IS-equation and the Phillips-curve, which can at best only be resolved at the cost of implausible estimates. To overcome such difficulties, a law of motion for the growth rate of the terms of trade can be added to the system of equations given above:

These five equations given above form a linear rational expectations model. Here it will be assumed that the variables representing the world and evolve according to univariate AR(1) processes with autoregressive coefficients and , respectively. The innovations of the AR(1) processes are denoted by and . This rational expectations model can be solved by different methods. Linear approximation methods are very popular.Since a log- linearized DSGE model with rational expectations can be put in a state-space form, where the observed variables are linked to the model variables through the measurement equation. At the same time, the state equation provides the reduced form of the DSGE model, mapping current variables to their lags and the i.i.d. shocks. The reduced form is obtained by solving for the expectation terms in the structural form of the model using a suitable numerical 109 technique. The most common methods are Anderson and Moore’s (1985) AiM algorithm, Klein (2000), and Sims (2002).5 If a unique 2016/1 convergent solution is available, the Kalman filter can be applied to compute the value of the log-likelihood function. 3.3. Estimation in Bayesian Framework After solving the DSGE model, a parameter vector that needs to be estimated is formed. This vector is composed of unknown model parameters, policy rule parameters, and parameters for the shocks.

5 See also Blanchard and Kahn (1980), Anderson (2008, 2010), Christiano (2002), King and Watson (1998). M. M. Arslan et al.

Under the assumption that all the structural shocks are normally distributed and uncorrelated with each other at all leads and lags we can obtain a joint probability distributionfor the endogenous model variables. The solution of the rational expectations system takes the form

The variables in the rational expectations system are represented

by the vector st. From an econometric perspective, st can be viewed as a (partially latent) state vector in a non-linear state space model and the above equation is the state transition equation. Here, is the vector of innovations and the structural parameters are collected in the vector θ that are the parameters to estimate in the model. The model is completed by defining a set of measurement equations that relate the elements of st to a vector of observations, Y. The unknown parameters will be estimated by Bayesian techniques. A Bayesian approach is in principle easy. Parameters are given values through their posterior distribution, which is linked to prior information and the observed data through Bayes theorem. From Bayes theorem we know that the posterior distribution of θ, denoted by p(θ|Y), is given as

where p(θ) is the prior density, p(Y|θ) is the density function for a random data matrix Y conditional on θ, and p(Y) is the marginal data density that is defined as

As can be seen from the above equation, the density function p(Y|θ) can be represented by the likelihood function associated with 6 110 the DSGE model and Yis the vector of observables. In a Bayesian framework, the likelihood function is reweighted by a prior density. 2016/1 If the likelihood function peaks at a value that is at odds with the information that has been used to construct the prior distribution, then the marginal data density of the DSGE model, will be low compared to, say, a VAR.

6 In this marginal density of the datawith Θ being the support of θ. Since p(Y) is a constant when Y has been realized we know from the Bayes theorem that the posterior density of θ is proportional to the product p(Y|θ)p(θ). Hence, if we can characterize the distribution of this product we would know the posterior distribution of θ. For complex models like those belonging to the DSGE family this characterization is usually not possible. Methods based on Markov Chain Monte Carlo (MCMC) theory can instead be applied to generate draws from the posterior. A Projection for the Turkish Economy in 2023 with a Bayesian Approach

If the pure Bayesian approach is used, a prior distribution for each parameter is assigned, and the data are used to update these priors through the likelihood function of the DSGE model.Then, by using Bayes theorem the posterior distributions can be obtained. In a Bayesian framework, this likelihood function can be used to transform a prior distribution for the structural parameters of the DSGE model into a posterior distribution. This posterior is the basis for inference and decision making. However, in the DSGE-VAR estimation method, the DSGE model is used to determine the moments of the prior distribution of the VAR parameters using a normal/inverted Wishart distribution. Thus, possible distributions of parameters are determined by using a DSGE model that theoretically represents the economy. These distributions are used as priors in VAR estimation, so estimation and forecasting results that are consistent with the assumed economy could be obtained. That is, dummy observations priors are obtained by the DSGE model, and then these DSGE priors are used to weigh the VAR likelihood function in order to derive the posterior distribution. These posterior distributions are used for posterior sampling or posterior mode estimation to obtain estimation or forecasting results. The DSGE priors here are used instead of the Minnesota-styled priors that are usually used in the BVAR. It is found that this model can compete in forecasting exercises with BVARs based on the Minnesota prior. The DSGE-VAR(λ) shows an equilibrium between economic requirement represented by a theoretical model (DSGE) and statistical representation in an empirical framework (VAR) depending on the optimum value of λ. Since the empirical performance of the DSGE-VAR(λ) procedure crucially depends on the weight placed on each part, a data-driven procedure to determine optimum λ will be used (An and Schorfheide (2007)). A natural criterion for the choice of λ in a Bayesian framework is the marginal data density 111

For computational reasons we restrict the hyperparameter to a 2016/1 finite grid of λs. If one assigns equal prior probability to each grid point then the normalized pλ(Y)’s can be interpreted as posterior probabilities for λ. Then the optimum value for λ can be obtained from: M. M. Arslan et al.

4. THE ESTIMATION RESULTS In this study, seasonally adjusted quarterly data set for Turkey will be used. The data set includes nominal GDP, inflation rates, short-term interest rates, nominal exchange rates, and terms of trades. In estimations and forecasting, growth rates of output will be used; inflation will be taken as the change in CPI; exchange rates will be either trade-weighted nominal exchange rate or simply dollar exchange rates. Since the changes in exchange rates and terms of trades will be used in estimations, log differences of those variables will be taken. Two data sets for Turkey are used in forecasting, one covers the period 1998:2-2015:4, and the other period 2002:1-2015:4. Although the first set has more observations, it also includes the effects of big crisis in Turkey in 2001. However, the second set covers observations after the crisis, so it represents a period in which Turkey is more stable. Thus, it might be thought that a projection using the second set may reflect the current dynamics of Turkey more and also carry these into the future in a better way. The model is estimated through Bayesian estimation methods described above and quarterly projection results are obtained. Table 1 shows the annual results of projection calculated from quarterly results when 1998-2015 data set is used. Also, it tabulates three confidence bands of 50%, 70% and 90% calculated for this projection. Such as the values for 90% confidence band indicates that projection results would be in this interval with 90% probability. Figure 1 shows quarterly projection results graphically that are used to obtain annual results given in Table 1. According to these results, nominal GDP of Turkey in 2023 is projected to be 3.8 trillion TL. Also it can be expected that GDP in 2023 would be between 3.59 trillion and 3.99 trillion liras with 90% probability. The projection results obtained when 2002-2015 results are used are given in Table 2 and Figure 2. They indicates that the higher projection results are obtained with the data set that excludes the 2001 crisis, and 2023 GDP is projected to be 4.72 trillion TL. Similar projections are also 112 implemented in US dollars and the results are given in Table 3, Table4, and Figure 3 and Figure 4. According to these projections 2016/1 Turkey’s GDPs in 2023 is found to be 942.4 billion dollars and 947.2 billion dollars for the two data sets. These findings show that Turkey’s GDP target of reaching 2 trillion dollars in 2023 seems to be far from achieving. Per capita GDP projections are given in Table 5 and Table 6. According to these results GDP per capita in 2023 is projected to be around 11.200 dollars, and 90% confidence band results shows that this figure could be realized as highest as 12.000 dollars with probability of 90%. Therefore, these findings show that it is extremely difficult for Turkey to reach the per capita target level of 25.000 dollars in 2023. A Projection for the Turkish Economy in 2023 with a Bayesian Approach Table 1: Nominal GDP Projections with 1998-2015 Data – TL Nom.GDP Year Confidence Interval (1000 TL)

2015 1952724009 50 % 70 % 90 %

2016 2193749416 2150714971 2232520925 2134096574 2253937948 2104694703 2287879265

2017 2406717216 2362485652 2456648353 2331234081 2477383867 2294364246 2515110036

2018 2625544162 2575736488 2680796985 2544951019 2709645749 2491961424 2766325150

2019 2847140174 2783904122 2909063081 2759677984 2941297862 2705912849 2986203550

2020 3074239791 3009787960 3143449030 2970692811 3174796445 2909766651 3238328122

2021 3307628174 3242805705 3363672744 3207626674 3401163898 3151116033 3454044063

2022 3547673244 3473454840 3614624077 3435794156 3666190783 3364553222 3723388383

2023 3795193990 3712127398 3870907018 3673746596 3910672754 3589206313 3995732916

Figure 1: Nominal GDP Projections with 1998-2015 Data

Table 2: Nominal GDP Projections with 2002-2015 Data – TL Nom.GDP Year Confidence Interval (1000 TL) 113 2015 1952724009 50 % 70 % 90 % 2016/1 2016 2262066340 2221037944 2304509157 2199508443 2325397912 2163984989 2371761603

2017 2598143283 2550010624 2648562648 2517288533 2678684905 2466901117 2723968058

2018 2944276252 2890178910 2997265375 2851333622 3034014474 2806117803 3075747459

2019 3288115690 3213169550 3360336406 3172140651 3397247470 3110472783 3471206420

2020 3631337085 3545853333 3716175017 3508599029 3753194814 3440753719 3826279266

2021 3980038870 3894526203 4067389578 3855056734 4110047341 3783519263 4178206433

2022 4339937130 4244517251 4439772203 4183699624 4489845853 4118373300 4560201075

2023 4716567615 4624202565 4809816086 4582123040 4869340126 4475340483 4928979127 M. M. Arslan et al.

Figure 2: Nominal GDP Projections with 2002-2015 Data

Table 3: GDP Projection with 1998-2015 Data – USD Nom.GDP Year Confidence Interval (1000 USD)

2015 721051070 50 % 70 % 90 %

2016 708891564 678250146 735392054 666045267 752679076 640813019 779743837

2017 728773540 691806891 769305255 669084167 788727180 645364937 823308215

2018 757975618 725538167 793373864 701471104 812952544 669841378 842973334

2019 793173789 758482702 828043276 736589167 850595994 699585683 888667746

2020 829083127 788854812 866866464 770221475 887260258 740038309 930644355

2021 865876586 827982218 902141266 803533619 925187654 767524204 967598530 2022 903681691 859442943 950854956 833339864 974778373 800430358 1016097404

2023 942447762 901729705 981916419 879088358 1011907123 840976999 1061962832

Figure 3: Nominal GDP Projection with 1998-2015 Data

114

2016/1 A Projection for the Turkish Economy in 2023 with a Bayesian Approach

Table 4: GDP Projection with 2002-2015 Data – USD Year Nom. GDP Confidence Interval (Thousand USD)

2015 721051070 50 % 70 % 90 % 2016 728438318 701942363 752182942 689750070 768195146 667502612 793611342 2017 756947587 727078666 784560522 713023262 802622435 689926856 829846759 2018 785647730 757668315 816295276 738085477 832364933 717309822 850074051 2019 818291180 788375418 845712519 774947268 866035139 749262163 895613375 2020 850482239 820002538 879577859 803711740 896273246 776195324 927968454 2021 882777091 849155780 915936565 831598994 936885991 801566996 963900320 2022 914945081 882394941 948876084 862670724 966564519 829068777 998334015 2023 947180046 913729768 982827589 897139306 1001711473 866082637 1026237387

Fig.4: Nominal GDP Projection with 2002-2015 Data

Table 5: Nominal GDP per Capita Projections with 1998-2015 Data – USD Nominal Year GDP per Confidence Interval capita 115 2015 9157,24 50 % 70 % 90 % 2016 8977,21 8589,18 9312,81 8434,62 9531,73 8115,09 9874,47 2016/1 2017 9136,39 8672,95 9644,52 8388,09 9888,01 8090,73 10321,54

2018 9409,85 9007,16 9849,30 8708,38 10092,36 8315,72 10465,05

2019 9753,55 9326,96 10182,33 9057,73 10459,66 8602,71 10927,82

2020 10101,31 9611,18 10561,65 9384,16 10810,12 9016,41 11338,70

2021 10455,39 9997,82 10893,29 9702,61 11171,57 9267,80 11683,68

2022 10817,34 10287,79 11382,02 9975,33 11668,39 9581,39 12162,99

2023 11186,71 10703,39 11655,20 10434,64 12011,18 9982,27 12605,34 M. M. Arslan et al.

Table 6: Nominal GDP per Capita Projection with 2002-2015 Data – USD Nominal Year GDP per Confidence Interval capita

2015 9157,24 50 % 70 % 90 %

2016 9224,75 8889,21 9525,45 8734,81 9728,22 8453,08 10050,08

2017 9489,60 9115,14 9835,77 8938,94 10062,21 8649,38 10403,51

2018 9753,39 9406,04 10133,86 9162,93 10333,36 8905,01 10553,21

2019 10062,41 9694,54 10399,61 9529,42 10649,51 9213,57 11013,23

2020 10362,03 9990,68 10716,52 9792,19 10919,94 9456,94 11306,10

2021 10659,47 10253,49 11059,87 10041,50 11312,83 9678,86 11639,02

2022 10952,17 10562,53 11358,33 10326,43 11570,07 9924,20 11950,36

2023 11242,88 10845,83 11666,01 10648,91 11890,16 10280,27 12181,28

5. CONCLUSION The projection results show that the 2023 targets of Turkey of having GDP of 2 trillion dollars and per capita GDP of 25.000 dollars are far from reaching and seem to be unattainable with the current dynamics and trends. The reasons to be far from these targets today could be explained by large depreciation of Turkish currency of lira against US dollar in 2014 and 2015. Because, by excluding 2014 and 2015 data and making projections with the data set until 2013, we have obtained the GDP of 1.5 trillion dollars and per capita GDP of 17-18 thousand dollars projections for 2023. Although they are still below the target levels, they are not very far from those targets as the figures given above.

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2016/1 An Assessment of Consumer Ethnocentrism Tendencies Scale among University Students: The case of Turkish and Bosnian Students

Merjema Becic International University of Sarajevo

ABSTRACT The process of globalization and liberalization of markets brought new challenges and opportunities for both, local and global businesses. A number of studies explored consumer ethnocentric tendencies by making use of CETSCALE, universally accepted measure of the phenomenon developed by Shimp and Sharma in 1987. The present study aims to explore levels of consumer ethnocentrism among university students studying at the International University of Sarajevo using the quantitative research method utilizing the survey originally developed by Shimp and Sharma consisting of 17 questions for inferential statistics, plus four questions added by the author for descriptive statistics to explain differences arising due to demographic characteristics of respondents, including nationality, gender, age and income level. Research was carried out in cross-sectional time- frame study manner utilizing convenience sampling methodology. The questionnaire responses were collected from 150 respondents; freshmen and postgraduate Turkish and Bosnian students in paper form. The CETSCALE value of 79.60 for Bosnian students compared to 74.22 for Turkish indicates that Bosnian students tend to be slightly more ethnocentric consumers than Turkish. Additionally, value of CETSCALE of 84.37 for postgraduates compared to 74.24 for freshmen indicates positive relationship between level of consumer ethnocentrism and level of education. Comparing results with those obtained by other researchers in developed countries, both Bosnian and Turkish students showed higher levels of consumer ethnocentrism. High preference for domestic products expressed by Bosnian students might be a signal for domestic companies to focus 119 more on this population in terms of adjusting their products and marketing activities.

Keywords: Consumer ethnocentrism, CETSCALE, Consumer behavior, Globalization.

1. INTRODUCTION As markets become borderless and fully integrated, it is important to understand whether consumers are concerned about a product’s country of origin or to what extent nations and cultures prefer domestic products as opposed to foreign M. Becic

goods. Ethnocentrism is defined by the Webster’s dictionary as ‘an attitude that one’s own group (race or people) is superior’. It represents a “tendency to see an individual’s own group as the center of the universe, to interpret other social units from a group perspective and to reject those people who are culturally different, blindly accepting those who are culturally similar” (Sainy&Jangalani, 2012). Consumer ethnocentrism has increasingly been of interest for researchers in the area of consumer behavior and international marketing, as its implications for marketers have shown to be of great importance, since it directly influences consumers’ attitudes and buying preferences.Buying foreign products is perceived wrong as it is believed to be harmful to the domestic economy, unpatriotic and as having an adverse impact on the domestic employment (Akdogan et al., 2012). Consumer ethnocentrism in certain cases transcends mere economic and functional considerations, but has a more noble foundation rooted in morality. Some consumers believe it is unpatriotic and wrong to purchase foreign-made products because it will hurt the domestic economy and cause loss of jobs. Highly ethnocentric consumers often make biased judgments and over-evaluate domestic products unreasonably in comparison with foreign products. Shimp and Sharma (1987) have noted that “consumer ethnocentrism gives the individual a sense of identity, feelings of belonging, and, most importantly, an understanding of what purchase behavior is acceptable or unacceptable to the in-group”. On the other side, consumers who are non-ethnocentric judge foreign products on their merits without consideration of where these products are made. Several antecedents of consumer ethnocentrism have been identified by various studies. Consumers who tend to be less ethnocentric are those who are young, those who are male, those who are better educated, and those with higherincome levels. Sharma et al. (1995) argue that people from the developed and first world countries tend to be less ethnocentric than their counter part 120 in developing and emerging nations. Being defined as the „belief held by consumer about the 2016/1 appropriateness, indeed morality of purchasing foreign-made products”(Shimp& Sharma, 1987), consumer ethnocentrism has been assessed in many countries with different levels of development and included groups with different demographic characteristics, with the accent on the markets where there is a fierce competition between domestic and foreign-made products, i.e. in the emerging markets.The concept of consumer ethnocentrism has significant managerial implications within the international business context. A large proportion of the research has used the same tool for assessing the levels of consumer ethnocentrism around the An Assessment of Consumer Ethnocentrism Tendencies Scale among University Students world which is the so-called CETSCALE developed by Shimp and Sharma in 1987. Although results have shown that consumer ethnocentrism impacts consumer behavior regarding foreignmade products, it is observed that the results are not consistent across nations and cultures. Therefore, there is a need for replicative studies in the area. Additionally, variations exist between different social classes within one nation, as well as the other demographic characteristics. Shimp and Sharma (1987) had found those in the lower socio-economic group to be more ethnocentric than those higher up. They attributed this to the fear of losing jobs to foreign competitors.Regarding other demographic characteristics, the dominant view is that older people tend to be more ethnocentric consumers than younger. Additionally, people with higher levels of education are, in general, less ethnocentric compared to those with less education. When it comes to the level of income, the findings are split. Regarding the gender, it is concluded that women will be more ethnocentric consumers than men. The present researchexplores the level of consumer ethnocentrism as measured by the CETSCALE among Bosnian and Turkish university students. To the author’s knowledge, so far there has not been similar comparative research that would include these specific groups from the two nations, and which would yield findings significant to marketers in two countries, as it shows whether this particular group has tendency to buy domestic or imported goods, as well as the difference in ethnocentric attitudes due to the gender, nationality, income, and education level. The purpose of this study is to examine the level of consumer ethnocentrism among Bosnian and Turkish students studying at the International University of Sarajevo and its relationship with respondents’ demographic characteristics including nationality, gender, income level and year of studying. Consumer ethnocentrism level will be measured by the CETSCALE, which is 17 – item Likert- type 7-point scale developed and tested by Shimp and Sharma in 1987, and it is used in many countries, so far, to assess consumers’ ethnocentric tendencies. 121 The study has both comparative and explanatory objectives. Comparative data allows a researcher to explore the validity of 2016/1 the concept and measure across two nations and cultures, and to compare attitudes and behaviors of comparable groups in two countries. On the other side, investigating relationship between consumer ethnocentrism and demographic variables might help and provide guidance for companies operating in the Bosnian and Turkish market. M. Becic

2. LITERATURE REVIEW Prior to 1966, no significant research on the topic of ethnocentrism was conducted.In 1966, applied statisticians Pearson and Zaltman were the first to propose the idea of conceptualization of ethnocentrism. Later, in 1987, Shimp and Sharma focused on customers’ ethnocentric tendency and in that way were the first to incorporate the study of ethnocentrism in the field of marketing. In their work, Shimp and Sharma developed consumer ethnocentric tendency scale (CETSCALE) as a universal measure of consumer ethnocentrism, which has extensively been used and confirmed by researchers to assess customers’ ethnocentric tendencies. The validity and reliability of the measure has so far been assessed by many authors and for different markets. Martinez, Zapata and Garcia (2000) validated CETSCALE as a measure of Spanish consumers’ ethnocentric tendencies by means of confirmatory factor analysis adopting a competing models strategy. Their conclusion was that the scale measures a unidimensional construct and that the measurement error is quite acceptable. Terblanche, Pentz and Boshoff (2013) surveyed two subsamples, namely a sample of white and a sample of black South African respondents to account for the ethnic diversity in South Africa. Results indicate that the CETSCALE should be regarded as a multi-dimensional measuring instrument for South Africa. The unidimensionality postulate of the CETSCALE was confirmed by Sepehr and Kafashpoor (2012) who assessed validity and reliability of the CETSCALE in the context of Iran on the sample of 278 university students to examine the unidimensionality, internal consistency, discriminant validity, and nomological validity of the CETSCALE. They found reliability and discriminant validity of the CETSCALE strongly supported by the data, while the support for nomological validity was not very strong.Chowdhury and IbnRahman (2014) tested the applicability of CETSCALE in a developing country Bangladesh. Based on 788 samples collected from 27 districts of Bangladesh, they proved applicability of the 122 scale on three chosen socio-demographic groups namely, students, job holders, and businessmen. 2016/1 So far, the research has been conducted for countries with various development levels and included different demographic groups including USA, Japan, Germany, Russia, Sweden, Turkey, Czech Republic, Bosnia and Herzegovina, Montenegro, Croatia, New Zealand, etc. The repeated conclusion of the research conducted by various researchers was that consumers from the developed countries in general tend to be more ethnocentric, (Good & Huddleston, 1995; Durvasula, Andrews & Netemeyer, 1997), while consumers from developing countries have repeatedly shown marked preference for imported goods (Papadopoulos, An Assessment of Consumer Ethnocentrism Tendencies Scale among University Students

Heslop & Beraes, 1990; Agbonifoh&Eliminian, 1994; Mohammad et al., 2000). A good summary of antecedents of consumer ethnocentrism found in previous studies on the topic is presented by Jain and Jain (2013) along with the assessment of CETSCALE inIndian market. They define several socio-psychological and demographic factors that determine level of individual ethnocentric tendencies. Patriotism, conservatism, collectivism, salience, animosity and ethnic pride are socio-psychological factors that are positively correlated with consumer ethnocentrism, while openness to foreign culture is found to influence consumer ethnocentrism negatively. Among demographic factors, age is found to be positively correlated with preference for domestic products, and women are in general more ethnocentric consumers than men. On the other side, highly educated and richer people generally express lower levels ofconsumer ethnocentrism than poor and low educated people. Analysis of Croatian university students’ ethnocentric tendencies presented by Rešetar (2014) shows that those who are more ethnocentric consumers are women, students living in villages and students with lowest incomes, confirming the above listed antecedents of consumer ethnocentrism. HabiburRahman et al. (2011) conclude that, in case of Bangladesh, housewives tend to be more ethnocentric than other professions. Bangladeshi male tend to be more ethnocentric than female, and also, there is a positive correlation between level of education as well as age with level of consumer ethnocentrism. Saffu and Walker (2005) concluded that consumers (students) in country in transition (Russia) were more ethnocentric compared to their peers in Canada which is developed country, adding to the earlier studies that came up with similar findings. Furthermore, consumer ethnocentrism is found to be positively related to consumer animosity. Akdogan et al. (2012) analyzed the effects of consumer ethnocentrism and consumer animosity on repurchase intent for American goods among Turkish consumers. They found significant and positive relation between consumer 123 ethnocentrism and consumer animosity, but also concluded that both these elements were negatively related to customer loyalty, 2016/1 as well as the repurchase intent toward US products. However, customer loyalty was foundto be positively related to repurchase intent, but also to have significant moderating role in the interaction between consumer ethnocentrism and repurchase intent. Reardon et al. (2005) investigated how ethnocentrism and economic development within transitional economies affects the formation of brand attitudes and attitude toward the ad with Kazakhstan and Slovenia representing transitional economies. They found the effect of ethnocentrism on attitude toward the ad M. Becic

to be stronger in the newly transitioning economy, while it affected attitude toward brand formation only indirectly through attitude toward the ad, not directly as predicted by previous research. Ethnocentric tendencies of Bosnian consumers were assessed in the work of Marija Cutura (2011) and included population older than 15 years of age, in randomly selected households. The general conclusion was that the value of CETSCALE was relatively low, as compared to other, more developed countries. However, ethnicity and level of household income are found to have significant negative effect on the value of CETSCALE. It seems that Croats and Serbs are less ethnocentric consumers than Bosniaks. Also, she concluded that the consumer ethnocentrism is the most important predictor of evaluation, readiness to buy and the final purchase of domestic products. Significant effect of nationalism and national identity on the level of consumer ethnocentrism in Bosnia and Herzegovina was confirmed by Vida et al. (2008). In the sample of 580 urban consumers, they found that ethnic affiliation has a direct effect on both consumer ethnocentrism and on domestic purchase bias. Bosniaks seem to be the most ethnocentric consumers in Bosnia and Herzegovina, followed by Serbs and then Croats. Similar findings were presented by Brkic et al. (2011) Asil (2013) found that Turkish consumers have middle level consumer ethnocentrism tendency as measured by CETSCALE. A relationship was found between the Turkish consumers’ socio-demographic characteristics and the levels of consumer ethnocentrism, as well as the correlation between consumers’ political opinions and ethnocentric tendencies. Candan et al. (2008) assessed consumer ethnocentric tendencies of Turkish students at the Faculty of Economics and Administrative Sciences, at Kocaeli University. It analyzed factors affecting purchasing decision of students regarding domestic and foreign products, as well as the effects of political stances of respondents on their ethnocentric attitudes. Results indicated that 124 respondents were not highly ethnocentric consumers, in general, with slight variations in the levels of CETSCALE for respondents 2016/1 with different political stances.

3. METHODOLOGY AND RESULTS The instrument used to assess consumer ethnocentric tendencies among university students at the International University of Sarajevo was so called CETSCALE developed by Shimp and Sharma in 1987. Studies using the CETSCALE reported high reliabilities, including Shimp, Shin and Sharma (1995), Netemeyer et al. (1991), Saffu and Walker (2005). 17 items were measured on the scale 1-7, with 1 being “strongly disagree” and 7 being “Strongly agree”. Four An Assessment of Consumer Ethnocentrism Tendencies Scale among University Students additional questions assessing the demographic characteristics of respondents were included in the questionnaire regarding gender, household income level, education level and nationality. Income level was measured by an ordinal scale as follows: 1= less than 500 euros, 2= 501-1000 euros, 3= 1001-1500 euros, 4= 1501-2000 euros, and 5= more than 2000 euros. Based on the previous findings obtained by conducting similar research in other countries, the present research will test several hypotheses. H1: The mean value for the CETSCALE will be higher for respondents from Turkey than for respondents from Bosnia. H2: Postgraduate students will show lower ethnocentric tendencies than freshmen, as measured by the CETSCALE. H3: Consumer ethnocentric tendencies, as measured by the CETSCALE, will be positively correlated with females. H4: Both Turkish and Bosnian students will express lower preferencefor domestic products compared to their peers from more developed countries, namely Canada. The research included students of Bosnian and Turkish nationality studying at the International University of Sarajevo. The rationale for using students as a research population was to improve the homogeneity of the sample and to have comparable populations from two countries which should mirror the larger national attitudes as citizens of their respective countries. As the official language at the International University of Sarajevo is English, the survey was carried out in its original version without translating it to either Turkish or Bosnian language. The total sample was 150 students including freshmen and postgraduate students and comprised of 48 Turkish students, 90 Bosnians and 12 students of other nationalities. The stratified sampling methodology was utilized with 100 respondents from the first study cycle (freshmen) and 50 postgraduate students. The reason for using these two groups of students is to have more pronounced effects of education level on consumer ethnocentric tendencies. 125

Table 1: CETSCALE items and reliability 2016/1 ITEM SCORES*

1. Bosnian/Turkish should always buy Bosnian/Turkish - made 0.8936 products instead of imports. 2. Only those products that are unavailable in my country 0.8937 should be imported. 3. Buy Bosnian/Turkish products. Keep Bosnia/Turkey work- 0.8940 ing. 4. Bosnian/Turkish-made products, first, last and foremost. 0.8933 5. Purchasing foreign products is non-Bosnian/Turkish. 0.8980 M. Becic

6. It is not right to purchase foreign products, because it puts 0.8922 Bosnian/Turkish people out of jobs. 7. A real Bosnian/Turkish should always buy Bosnian/Turkish 0.8870 products. 8. We should purchase products manufactured in our country 0.8913 instead of letting other countries get rich off us. 9. It is always best to purchase Bosnian/Turkish -made prod- 0.8915 ucts. 10. There should be very little trading or purchasing of goods 0.894 from other countries unless out of necessary. 11. Bosnian/Turkish people should not buy foreign products, 0.8918 because this hurts my country’s business and causes unemployment. 12. Restrictions should be put on all imports. 0.9003 13. It may cost me in the long run, but I prefer to support Bos- 0.8908 nian/Turkish-made products. 14. Foreigners should not be allowed to put their products on 0.901 our markets. 15. Foreign products should be taxed heavily to reduce their en- 0.8999 try into my country. 16. We should buy from foreign countries only those products 0.8931 that we cannot obtain within our own country. 17. Bosnian/Turkish consumers who purchase products in other 0.8972 countries are responsible for putting Bosnian/Turkish people out of work. Test scale 0.8999 *alpha scores on the deletion of an item

The data was collected in December 2015, and the questionnaire was administered by the author.Approximately 49% of the respondents among Bosnians were female, and about 41% of Turkish respondents were female. With respect to education level, 73% of Turkish students surveyed were freshmen, and 62% of Bosnian respondents were freshmen students. For analyzing the data, the statistical software STATA 11 was used. CETSCALE’s internal consistency was measured using Cronbach’s alpha for the 17-item scale for the complete sample on the deletion of an item. The results are presented in Table 1. As it can be seen, all the scales are reliable as all the scores exceed the .70 126 rule, and internal consistency can be classified as “good” following the rule of thumb defined by George, D. &Mallery, P. (2003). 2016/1 Several statistical tests were performed to explore the impact of demographic factors on the value of CETSCALE. Fisher’s exact test was performed to examine differences in the demographic variables between students of two nations. Based on the results, there are no differences for gender (p=0.47) and education level (p=0.195), but the differences were noted for the income level (p=0.047).

Table 2: Spearman’s rank correlation coefficients An Assessment of Consumer Ethnocentrism Tendencies Scale among University Students

Number of obs = 139 Spearman’s rho = -0.1877 Test of Ho: cetscale and nationality are independent Prob> |t| = 0.0269

Spearman’s rho = -0.2798 Test of Ho: cetscale and education_level are independent Prob> |t| = 0.0009

Spearman’s rho = -0.1249 Test of Ho: cetscale and gender are independent Prob> |t| = 0.1428

Spearman’s rho = 0.0267 Test of Ho: cetscale and income are independent Prob> |t| = 0.7554

Spearman rank correlation test was performed for four demographic variables as shown in Table 2. The correlations (and p-values) are 0.187 (p=0.0269); 0.279 (p=0.0009); 0.124 (p=0.1428); and 0.026 (p=0.755) for nationality; education level; gender; and income level respectively. So, based on these findings, slightly positive correlation between CETSCALE and nationality indicates that, on average, Bosnian students tend to be more ethnocentric consumers than Turkish. There is also a positive correlation between education level and CETSCALE, meaning that more educated (postgraduate) students, on average, express greater consumer ethnocentric tendencies as compared to freshmen. Additionally, based on the Spearman rank correlation coefficient, it can be concluded that gender and income level are not significantly correlated with the value of CETSCALE. 127

Table 3: Simple within mean CETSCALE values for specific groups 2016/1 Avg_cetscale_Bosnians 79.60 Avg_cetscale_Turkish 74.22 Avg_cetscale_male 75.13 Avg_cetscale_female 80.70 Avg_cetscale_freshmen 74.24 Avg_cetscale_postgraduate 84.37

Calculation of simple mean values of CETSCALE for different M. Becic groups shown in Table 3 confirms the above results, as it shows that the average value of CETSCALE for Turkish students (74.22) is slightly lower than for Bosnians (79.60). Also, the mean CETSCALE value for postgraduate students (84.37) was quite higher than for freshmen students (74.24). However, it also suggests that, on average, female students (80.70) are more ethnocentric consumers than male (75.13). On the other side, results of inferential statistics where the simple regression was conducted with CETSCALE score being the dependent variable, and demographic characteristics of respondents independent, suggest positive relationship between CETSCALE values and education level of respondents at 5% significance level, while the results for other independent variables indicate statistical insignificance.

4. CONCLUSION The topic of consumer ethnocentrism has become frequent field of interest for many researchers in both developed and developing countries. Several conclusions were made based on a number of studies from countries with different development levels, which were conducted for populations with different demographic characteristics. In general, it is agreed that people from developed countries tend to be more ethnocentric consumers than those from developing countries. The dominant view, when it comes to the age of the respondents, is that older people tend to be more ethnocentric consumers than younger. Additionally, people with higher levels of education are, in general, less ethnocentric compared to those with less education. Regarding the gender, it is concluded that women will be more ethnocentric consumers than men. The majority of these studies made use of CETSCALE for assessing the level of consumer ethnocentric tendencies, an instrument for which high reliability, validity, and stability was reported in studies conducted in USA, Russia, Canada and other countries. The present study is consistent with previous studies regarding reliability of CETSCALE, with the alpha scoreof 0.8999 for the whole sample. Higher average CETSCALE values for Bosnians than for Turkish students was quite unexpected since the general perception (which was based on observation and understanding by the author) was that Turkish people are more ethnocentric consumers than Bosnians. Therefore, H1 was not supported by the evidence. Additionally, the effect of education seems to be reverse as compared to previous studies, as the positive correlation was reported between education and consumer ethnocentric tendencies, which resulted in rejection of H2, while the results for gender confirm greater ethnocentric tendencies for female students An Assessment of Consumer Ethnocentrism Tendencies Scale among University Students than for male, irrespective of nationality and level of education, so we accept H3.Since both countries researched in this paper are classified as developing with upper middle-income level, it is hard to make any conclusions regarding the influence of the level of development on consumer ethnocentric tendencies. But, when compared to findings of similar research conducted in Russia and Canada (which is classified as developed country), it can be concluded that students from both Turkey and Bosnia tend to be more ethnocentric consumers than their peers from Russia and Canada. Therefore, we reject H4. This study was concerned with the consumer ethnocentric tendencies of university students from two countries, Bosnia, and Turkey. Comparatively high values of CETSCALE among researched population might be a signal for local companies to focus more on this market segment in designing and marketing their products and services. However, to get the full insight into the ethnocentric behavior of nations, further research should involve larger population which would include people with more diverse demographic characteristics. Such a research might yield useful marketing implications on a larger scale for both Turkish and Bosnian marketers in their own countries, but also in trade between the two countries. Additionally, it would be useful to conduct similar research in several years targeting the same population (university students) to follow the trend along with analyzing various campaigns which call citizens to buy domestic products instead of imports to ensure how successful they were. Such campaigns were very frequent in Bosnia in the recent period, especially 2015, but unfortunately, there was no previous research which would allow the author to make conclusions about their effects on consumers’ ethnocentric tendencies.

REFERENCES Agbonifoh, B. A., &Elimimian, J. U. (1994). “Attitudes of developing countries to wards country-of-origin: Products in an era of multiple brands”, Journal of International Consumer Marketing, no: II (4), 9l-l 129 Akdogan, M.S., Ozgener, S., Kaplan, M., &Coskun, A., (2012) “The Effects of Con sumer Ethnocentrism and Consumer Animosity on the re-purchase in 2016/1 tent: The moderating role of consumer loyalty“, Emerging markets journal, Vol. 2, 2012 Asil, H., (2013) “An Empirical Study on Determining Ethnocentric Tendencies of Turkish Consumers”, Istanbul University Journal of the School of Business, Vol. 42, No. 1 Brkic, N., Corbo, M., &Berberovic, D.(2011) “Animosity in Consumer Behavior in Bosnia and Herzegovina and Implications for Companies” Economic Review - Journal of Economics and Business, 9 (1), 45-61. Candan, B., Aydın, K. & Yamamoto, G. T. (2008). “A research on measuring consumer ethnocentrism of young Turkish customers purchasing behavi ors”, Serbian Journal of Management 3 (1) (2008), pp. 39 – 60 M. Becic

Chowdhury T.A., &IbnRahman, M., (2014) “Conceptualizing Consumer Ethnocentrism in a Developing Country: Validity and Applicability of CETSCALE in Bangladesh “, Journal of Asia-Pacific Business Volume 15, Issue 1, pages 27-53 Cutura, M. (2011). „The characteristics of consumers’ ethnocentrism and possibil- ies to encourage the purchase of domestic products in Bosnia and Herzegovina“, Sarajevo Business and Economics Review, no. 31/2011, pp.89-104 Durvasula, S., Andrews, C., Netemeyer, R. (1997) “Cross-cultural comparison of consumer ethnocentrism in the United States and Russia”, Journal of In ternational Consumer Marketing no: 9(4), pp. 73–84 George, D., &Mallery, P. (2003).“SPSS for Windows step by step: A simple guide and reference. 11.0 update (4th ed.)”. Boston: Allyn& Bacon Good, L. K., Huddleston, P. (1995) “Ethnocentrism of Polish and Russian consumers: Are feelings and intentions related?”,International Marketing Review no: 12(5), pp. 35–48. HabiburRahman, M., Morshed, M., &TakdirHossan, M., (2011) „Identifying and Measuring Consumer Ethnocentric Tendencies in Bangladesh“, World Review of Business Research, Vol. 1. No. 1. March 2011. Pp. 71-89 Jain, S. K., & Jain, R., (2013) „Consumer Ethnocentrism and Its Antecedents: An Exploratory Study of Consumers in India“, Asian Journal of Business Research ISSN1178-8933 Volume 3 Number 1 2013 Luque‐Martínez, T., Ibáñez‐Zapata, J., &del Barrio‐García, S. (2000) “Consumer ethnocentrism measurement :An assessment of the reliability and validity of the CETSCALE in Spain”,European Journal of Marketing, Vol. 34 Iss: 11/12, pp.1353 – 1374. Mohammad, O., Ahmed, Z. U., Honeycutt Jr., E. D., &Tyebkhan, T. H. (2000).“Does made-in matter to consumers? A Malaysian study of country of origin effect”, Multinational Business Review, no: 8, (2), pp. 69-73 Papadopoulos, N. G., Heslop, L. A., &Beraes, J. (1990). “National stereotypes and product evaluations in a socialist country”, International Marketing Re view, no: 7(1), 32-47 Pentz, C.,TerblancheN., & Boshoff C., (2013)“Measuring Consumer Ethnocentrism in a Developing Context: An Assessment of the Reliability, Validity and Dimensionality of the CETSCALE, Journal of Transnational Management Volume 18, Issue 3, pages 204-218. Saffu, K., & Walker, J.H., (2005) „An Assessment of the Consumer Ethnocentric Scale (CETSCALE) in an Advanced and Transitional Country: The Case of Canada and Russia“, International Jonrnal of Management Vol. 22 No. 4 December 2005 Sainy M., &Jangalani S., (2012) „A study on ethnocentrism and buying behavior among B - School students”, ELK Asia Pacific journals, Volume 3 Issue 4 Sepehr S., &Kaffashpoor, A., (2012) “Measuring the Ethnocentric Tendencies of 130 Iranian Consumers: An Assessment of Validity and Reliability of the CETSCALE”, Journal of International Consumer Marketing Volume 24, Issue 4, pages 263-274 2016/1 Terence, A. Shimp& Sharma, S. (1987) “Consumer Ethnocentrism: Construction and Validation of the CETSCALE”, Journal of Marketing Research, Vol. 24, No. 3 (Aug., 1987), pp. 280-289 Vida, I., Miller, C., Reardon, J., & Kim, I., (2005) “The effects of ethnocentrism and economic development on the formation of brand and ad attitudes in transitional economies”, European Journal of Marketing, Vol. 39 Iss: 7/8, pp.737 – 754 Vida, I., Dmitrovic, T., &Obadia, C., (2008) “The Role of Ethnic Affiliation in Con sumer Ethnocentrism”, European Journal of Marketing, 24 (3/4), 327- 343. Effects of the EU Originated Debt Crisis on Turkey’s Export

Serife Merve Kosaroglu Cumhuriyet University Haci Ahmet Karadas Cumhuriyet University Dr. Esengul Salihoglu Cumhuriyet University

ABSTRACT The 2008 global financial crisis, which is originated from US, resumes its effects especially in members of EU. During global or domestic financial crisis waves, worsening on consumer and producer expectations, reduction in foreign capital inflows, and decrease in export are expected. Turkey makes a crucial part of its foreign trade with EU states. Therefore, developments on economies of EU states are reflected to Turkish economy directly or indirectly. This study examines the effects of the demand changes in EU on a global crisis wave to Turkey via Turkish export sector.

Keywords: Trade Balance, Export, Turkish Economy, Time Series, Trade Policy.

1. INTRODUCTION Acceleration of the globalization trend in the 20th century, the rapid development of transportation and technology have led countrıes to international goods and capital flows. The liberalization trend started in foreign trade has increased the volume of international trade. The direct and indirect capital flows have accelerated depending on the increase of trade. Since the economic dependency of the countries increased, the power of the political, social and economic impacts occurred in a country to influence the other countries has increased. Especially the negative atmosphere due to the political and economic problems also shows negative effects 131 on other countries. It is known that the economic crisis have contagion effects on other countries due to the contraction of the foreign trade volume, reduction of the direct and indirect capital flows. The self-fulfilling structure and spreading to other countries have taken its place in the literature as second and third generation crisis models. After the 2008 crisis EU debt crisis first emerged seems to have a negative impact on developing countries later. The expectations for near future are the 2008 crises will cause economic crises in emerging countries. Since Turkey has extensive trade relations with EU, S. M. Kosaroglu et al.

the contraction effects connected to debt crisis are seen in Turkish economy. Expansionist effects of the 2008 economic crisis has reveal a negative impact on Turkish economy. In addition to the contraction in the real sector, a time period was observed increased in macroeconomic problems such as contraction in foreign investment, rise in unemployment rate and increase in current account deficit. In our study, we mainly investigate the negative impacts of the European debt crisis on Turkish economy. For this purpose, an econometric analyze is done in order to identify the effects of the relation between EU states’ GDPs and public debts on Turkish export since the crisis spreads their negative effects by trade.

2. ECONOMIC CRISIS AND FOREIGN TRADE The economic crisis are defined as severe fluctuations happens beyond an acceptable range in any one of commodity, service, production factor, and currency exchange market. Economic crises can be examined under two headings as real and financial crisis. The real sector crises emerge as a contraction of production and/or employment in commodity, service and labor markets. Financial crises are financial market collapses that can lead to devastating effects on real section of the economy and disrupts the efficient functioning of markets (Işık et. al., 2006:239).Financial and reel economic crises emerge for different reasons. Due to the international economic connections, crisis started in one country is reflected to other countries. Economists examine the role of the financial crisis on foreign trade for two reasons. First, the trade deficit of the financial crisis have been shown to be one of the most important factors to mobilize. The current account deficit leads to the decrease of foreign sources. Krugman (1979) noted that foreign sources of money, such as the emergence of the crisis in the economy are more likely not enough. Second, the financial crisis can infect others from one country to trade links. The effects of economists to explain the impact of this 132 type of contamination are trying to identify the channels through which it spread. Many studies due to the known economic ties 2016/1 between the countries foreign trade is done in this connection. The importance of foreign trade take action on the importance of open crisis is largely accepted in the foreign trade of the spread of the crisis is no consensus (Ma and Cheng, 2005:254). However, the contagion effects of the crisis between the countries is seen in various ways because of the influence of foreign trade. The adverse impact of a financial crisis on capital accumulation is likely the combined outcome of several factors. Decreased demand for products and heightened uncertainty of potential return dampens the incentive to invest (Elwell, 2013:18). If a country Effects of the EU Originated Debt Crisis on Turkey’s Export enters the stage of recession, it also affects the countries that have trade relations with it. In the countries that experiences cyclical recession, demand decreases and imports fails. This situation results in reduction of exports and deficits on balance of payments of the countries have trade relations with it (Öztürk, 2012:159). Thus, developing countries with fragile economies becoming more vulnerable to external shocks, especially the rapid movements of the financial capital in and out of these economies cause the economic crisis (Değirmen et. al., 2006:466). The problems in trade financing potentials play part in the reduction of world trade as well as the lack of demand. There are important signals regarding the financial institutions have tightened the conditions of loans to finance the foreign trade. While this situation significantly increases the costs of foreign trade operations, it hinders the foreign trade in some cases. Another factor causing the costs to increase is the rise in insurance premiums originated from the crisis and in demand for insurance instruments due to the mutual mistrust (Acar, 2009: 2-4-9). The current financial crisis started in developed countries, but reduced foreign investment and reduced demand for imports of commodities and labor-intensive products are having profound effects on developing countries. Continuing lack of demand in developed countries implies that developing countries need to enhance trade and finance linkages among themselves in order to foster economic growth. The inability of some companies to obtain insurance for orders they have placed with suppliers has caused them to curtail or shut down their production and sales activities. This problem has been aggravated by developments on the demand side, with households compelled to increase their savings to compensate for the fall in the value of their financial and real estate assets. Rising fears of unemployment have also led households to curtail consumption (Abreu, 2009:2-3).

3. CRISIS OF 2008 AND THE EUROPEAN DEBT CRISIS Since the interest rates in the US stayed quite low from the beginning of 2000’s, loans became attractive for the people in low 133 level income groups. In particular, along with reelection of George W. Bush in 2004, there were some facilities such as tax benefits in 2016/1 order subprime groups to be able to buy house. The rate loan for subprime groups is mostly applied as the first two years are fixed and the rest is indexed in LIBOR. The movement of US interest rates from 1.5% to 5% in the period of 2004-2006 did not affect the subprime group who uses the loans. The raise of the interest rates by the US Central Bank (FED) from 2006 has put the housing sector into a major recession. After the house prices becomes cheaper than when they were bought, low level income group became unable to pay the loans regularly (Korkmaz and Tay, 2011:117). S. M. Kosaroglu et al.

The global crisis that emerged in the USA started in the finance sector and then spread to overall economy. The outstanding loans led to bankruptcy of financial organizations and shook the confidence of consumers, and along with the decrease in the demand, implications of financial crisis occurred in the real sector as well. As a result of liquidity and confidence problem caused by the financial crisis, short term transactions such as foreign direct investment flow and portfolio investments also declined (Yavuzet. al., 2013:133). When growth in the financial markets reached to significant levels, the crisis affected the all Europe since toxic papers, possessed by many European banks, are based on the US mortgage market. Many banks have shown weak balance against the risk due to the assets they posses and have suffered huge losses. Moreover, the uncertainty of the value of assets in their possession made it difficult to borrow money. With the global financial crisis, many European banks with balance sheets do not contain toxic papers has also come to the point of sinking as a result of excessive tightening of repayment of loans they provide to the housing sector (Eser and Ela, 2015: 211). Packages to rescue banks have activated so a crisis originating from banks have prevented. However, the negative impact of the rescue package and demand-side policies have led to public debt ratios above the rate set out in the Maastricht criteria. This situation has led to the debt crisis in the countries members of the European Union.

4. EFFECTS ON THE TURKISH ECONOMY CRISIS The global financial crisis effects on developing and emerging countries in terms of several factors. The combination of declining commodity and manufactured export earnings, collapse of remittances, reversal of private capital flows, rising risk spreads, an extreme degree of credit squeeze affecting even trade finance and losses of asset values is giving rise to a sharp economic slowdown and even contraction in many parts of the developing world (Terzi, 134 2010:248,249; Shelburne, 2010:22). Although Turkey’s strongest bond with Europe is the foreign trade, the share of EU in total 2016/1 exports of Turkey fell from 56% to 39% in the period of 2001-2012 (Aysan and Ermişoğlu, 2013: 20). Turkey’s economy is in a high degree of harmony with the world economy through trade and financial channels. Therefore, the crisis affected Turkey’s economy is related to this harmony (Macovei, 2009: 1). The global crisis has affected the Turkish economy through three channels, namely expectation channel, trade channel and financial channel (Cömert and Çolak, 2014:7). The problems in global credit markets caused loss of consumer confidence, local uncertainty and deterioration in risk perception thus caused a decline in foreign Effects of the EU Originated Debt Crisis on Turkey’s Export trade (Macovei, 2009: 1). Turkey is affected by the large loss in export revenues due to the demand shock in EU as well as lack of money entry (Öniş, 2009: 57). After the economic crisis experienced in the early 2000s in Turkish economy, the economic indicators have developed in a positive direction. In this context, there have been significant growth in Turkey’s exports and imports after the crisis occurred in 2001 and this trend continued until the last quarter of 2008. Despite the unfavorable demand and supply conditions that emerged in the last quarter due to the global crisis, the ongoing increase in nine months of 2008 began to recession as the impact of the crisis became clear by the last quarter (TOBB, 2009: 90-91). Due to the weight of the EU in Turkey’s exports, Turkey’s export performance depends on the demand conditions of the EU member states. Economic slowdown and recession in EU members affect the Turkish exporters and manufacturers as contraction (Yalçınkaya, 2012: 179, Born, 2013: 2). Trade relations between Turkey and Europe which is in crisis have decreased, current account deficit of Turkey has increased, macroeconomic data has deteriorated, and Turkey has taken its cue from global crisis with negative growth rate, increased unemployment and poverty. The current account deficit problem, which is the leading most important problem of Turkey, has increased with this crisis. Since the current account deficit and unemployment problems are connected to each other, an increase occurred in unemployment with current account deficit. Since unemployment comes with poverty, increase in social aid has been observed with state intervention as a part of the fight against poverty (http://sahipkiran.org /2015/01/12/kuresel-ekonomik- kriz/, Date of Access: 23.03.2016). In the long run, the euro crisis will continue to affect negatively the competitiveness of Turkish exports. But the decline in external demand and export bottlenecks can be financed with foreign currency arbitrage made by foreign direct investment (FDI). If the high rate of ROI offered by Turkey (investment transformation) is taken into account (6.5%), there is more potential for attracting 135 FDI from EU countries. Being outside the euro area and providing high ROI, can make Turkey the winner of the Euro crisis in the long 2016/1 term (Elitok and Straubhaar, 2010:8).

5. LITERATURE There are several studies to investigate the effects of the economic crises on foreign trade and the national economy. Various methods and applications used for different countries. Some of these studies are: • Lu Bai found out the financial crisis is the main factor that reduces the China’s exports by using Gravity method for 2001-2010 period. S. M. Kosaroglu et al.

• BalazsMuraközyanalyzed the decline in Hungary’s export during 2008-2009 crisis. He found the decline in exports of foreign-funded companies is higher than the local firms. • Görgand Spaliara investigated the response of UK’s manufacturing companies to the recent financial crises in 2000-2009 period by using panel data set. According to the results of the study, the companies that started to export recently shows better performance in and out of the crisis than none-exporters. • Neto and Romeu investigated the role of export diversification in determining the foreign trade output during the financial crisis. They tested Latin American countries with the data set that includes over 500 thousand observations by using Gravity model. Results of the study shows that industry and product density of Latin American countries effected the resistance of their foreign trade excessively during the financial crisis. • Emirhan analyzed the effects of the global economic crisis of 2008-2009 on exports of Turkey and in particular on the different quality levels of exports. He used panel data of exports of Turkey to the EU countries at the industry level in the period of 2008q1 and 2009q4. He found that the medium quality industries have highest share in Turkey’s exports to the EU countries on average. The findings of the study reveal that income elasticities vary across industries at different quality levels, and medium quality industries’ exports are more sensitive to income changes than lower and higher quality industries. • Tunçsiper and Bicen empirically investigated the export potential of Turkey to EU countries. Results of the study shows that in the long run economic growth or recession in the EU countries will affect Turkey’s export in the same direction.

136 6. DATA AND APPLICATION In our study, analysis is performed using annual data for the 2016/1 period of 1995-2012. In the analysis, the effects of external debt stock and GDP of EU on growth rate of Turkey’s exports are investigated. The data set is taken from World Bank database. There are several co-integration tests to estimate the relation between the series in econometric analysis. For I(0)variables, conventional OLS is used. For I(1)variables Engle-Granger (1987) or Johansen (1991) methods are used. If the variables are integrated I(0) and I(1), ARDL: Autoregressive Distributed Lag (Pesaran and Shin, 1999 and Pesaran et. al., 2001) must be used to estimate the relation between the variables. Effects of the EU Originated Debt Crisis on Turkey’s Export

While trying to estimate the relation between the variables, we firstly define an unrestricted error correction model:

(1)

Where Y is dependent variable, Xi independent variables,βi

(i=1,2,···,n), θj (j=1,2, ···,p), δk (k=1,2,···,q) and γl (l=1,2,···,r) are coefficients, tu is error term.

An unrestricted error correction model (defined in (1)) is estimated and the significance of βi coefficients is evaluated by the help of Wald test and table values appeared in Pesaran et. al. (2001). The null hypothesis of this test is “there is no long run relation between the variables”. That is,

If the value of F-statistic calculated by Wald test is greater than the upper bound, then we can reject the null hypothesis. Therefore, it can be said that there is long run relation between the variables. However, if the value of F-statistic is less than the lower bound, the the null hypothesis cannot be rejected.

Graph: Data TR_EXP(%)

40%

30%

20%

10%

-10%

-20%

-30% 1996 1998 2000 2002 2004 2006 2008 2010 2012 137 EMU cgd 90 2016/1

40 96 98 00 02 04 06 08 10 12 S. M. Kosaroglu et al. EMU GNI (constant 2005 US$) 1.15E+13$

1.10E+13$

1.05E+13$

1.00E+13$

9.50E+12$

9.00E+12$

8.50E+12$

8.00E+12$ 96 98 00 02 04 06 08 10 12

6.1. Unit Root Tests In econometric analysis, regression models for non-stationary variables will give spurious results. There are several unit root tests to investigate stationary of the variables. Since the ADF (Augmented Dickey Fuller) test is the most common of all, ADF test is used in this study. The unit root test results are given in table 1.

Table 1: Unit Root Test Results Augmented Dickey-Fuller test statistic Unit root Tests t-Statistic Prob.* TR_EXP -3.162637 0.0407 EU_CGD -0.374968 0.8931 DLNEUCGD -4.475492 0.0035 EU_GNI_C -1.881576 0.3321 DLNEUGNI -3.863507 0.0422

According to unit root test results, exports of Turkey (TR_ EXP) is stationary at level, external debt stock and GNI of EU are non-stationary at level (but stationary at first difference). The non- stationary variables are LN-transformed into stationary. 6.2. Bounds Test The equation of bound test for our model is like

138 (2)

2016/1 Where, TR_EXP: Exports of Turkey LNEUCGD: External debt stocks of EU LNEUGNI: GNI of EU The Wald test result of equation (2) is given in table 2. As seen in table, since the value of F-statistic is greater than upper bound of 1% significance level, hypothesis can be rejected. Therefore, it can be said that there is a long run relation between the variables. Effects of the EU Originated Debt Crisis on Turkey’s Export

Table 2: ARDL Bounds Test Null hypothesis : : No long-run relationships exist F-statistic k 20.28130 2 Critical Value Bounds (1%) I(0) I(1) 6.34 7.52

6.3. ARDL Lag lengths for ARDL model is identified by Akaike information criterion in Eviews 9. In this study maximum lag length is set as 4 and ARDL (2,2,2) is identified by Akaike information criterion. The result of the model is given in Table 3.

Table 3: ARDL (2,2,2) Co-integrating and Long Run Form DependentVariable: TR_IHR Variable Coefficient Std. Error t-Statistic Prob. D(TR_IHR(-1)) 1.135998 0.225193 5.044560 0.0040 D(DLNEUGNI) 1201.513585 134.812697 8.912466 0.0003 D(DLNEUGNI(-1)) -573.516587 199.132463 -2.880076 0.0346 D(DLNEUCGD) -63.528991 21.880750 -2.903419 0.0337 D(DLNEUCGD(-1)) 59.993097 16.117745 3.722177 0.0137 D(@TREND()) 3.090586 0.544463 5.676398 0.0024 CointEq(-1) -0.530359 0.186117 -2.849599 0.0358

Cointeq = TR_IHR - ((1400.6126)DLNEUGNI-(265.7858)DLNEUCGD -60.8505+(5.8273)@TREND) Long Run Coefficients Variable Coefficient Std. Error t-Statistic Prob. DLNEUGNI 1400.612571 463.085970 3.024520 0.0293 DLNEUCGD -265.785779 167.560316 -1.586210 0.1736 C -60.850508 23.303497 -2.611218 0.0476 @TREND 5.827346 2.095282 2.781175 0.0388 R2=0.748010R2=0.294429F=1.649120 139 According to ARDL co-integration and long run form results, the coefficient of error correction term (cointreg) is found negative 2016/1 and statistically significant. Since the coefficient is (-0.530359), it means that adeviation from equilibrium in the short run will return to lung run equilibrium in about 2 sessions.

7. EVALUATION AND CONCLUSION International trade has increased the economic interdependence between countries. Positive developments such as the economic growth increases the foreign trade of the country and also contribute to the economies of other countries. However, S. M. Kosaroglu et al.

the economic reasons such as demand reduction, current account deficits, and shortness of foreign currency reduce the foreign exchange and cause negative effects on other countries. Especially, the progress of these negative economic developments results in economic crisis and causes different long-termed and wide-scaled economic crisis. The contractionary effect on demand and increasing effect on public debt and economic recession of 2008 crisis has led to the European debt crisis. Turkish economy is affected from 2008 crisis at most in 2009. However, in the recent period it is subject to the effects of the debt crisis. The lack of demand occurred in Europe has reduced Turkey’s most important export potential. According to our ARDL approach, a decrease in GNI of EU effects the growth of Turkish exports negatively. In order to minimize the negative effects of the 2008 and the debt crises, Turkey should take measures to support export sector. In addition to this, new markets must be found. Thus, the national economy will be affected from the effects of global crises at minimum.

REFERENCES Abreu Marcelo de Paiva, Manmohan Agarwal, Sergey Kadochnikov, Mia Mikic, John Whalley and Yu Yongding, The Effect of the World Financial Crisis on Developing Countries: An Initial Assessment, The Centre for International Governance Innovation, 2009. Acar Ozan, Türkiye’de Dış Ticaret ve Dış Ticaretin Finansmanı Durum Değerlendirmesi, 2009. Aysan Ahmet Faruk and Ergun Ermişoğlu, Eurozone Debt Crisis and its Effects on Turkish Economy, MPRA Paper, No.50501, 2013. Bai Lu, Effects of Global Financial Crisis on Chinese Export: A Gravity Model Study, Jönköping International Business Scholl, Master Thesis, 2012. Born Chad P., Trade Policy Flexibilities and Turkey Tariffs, Antidumping, Safeguards, and WTO Dispute Settlement, Policy Research Working Paper 6322, 2013. Cömert Hasan ve Selman Çolak, The Impacts of the Global Crisis on the Turkish 140 Economy and Policy Responses, ERC Working Papers in Economics, 2014. Değirmen Süleyman, Ahmet Şengönül ve İsmail Tuncer, Kriz Erken Uyarı 2016/1 Sinyalleri Olarak Reel Ekonomi Göstergeleri, Ekonomik Kriz Öncesi Erken Uyarı Sistemleri, ArıkanYayınevi, İstanbul, 2006. Elitok Seçil Paçacı and Thomas Straubhaar, The Turkish Economy: A Winner of the Euro Crisis?, HWWI Policy Paper, 2010. Elwell Craing K., Economic Recovery: Sustaining U.S. Economic Growth in a Post-Crisis Economy, Congressional Research Service, 2013. Emirhan Pınar Narin, The Effects of the 2008-2009 Crisis on Turkish Exports: Does Quality Matter?, Izmir Review of Social Sciences Vol:2, No:2, 2015. Eser Levent Yahya ve Mehmet Ela, Avrupa Borç Krizi: Nasıl, Neden ve Nereye?, Eskişehir Osmangazi Üniversitesi İİBF Dergisi, 2015. Görg Holger and Marina-Eliza Spaliara, Exporters in the Financial Crisis, Kiel Working Paper, No.1919, 2014. Effects of the EU Originated Debt Crisis on Turkey’s Export

Korkmaz Esfender ve Arzu Tay, Küresel Kriz, Türkiye Etkileri ve Çözüm Önerileri, Kafkas Üniversitesi İİBF Dergisi, C:1, S:2, 2011. Işık Nihat, Mehmet Alagöz ve Metin Yıldırım, 1990 Sonrası Türkiye’de Yaşanan Krizler:1994, 2000 ve 2001 Krizleri, Ekonomik Kriz Öncesi Erken Uyarı Sistemleri, Arıkan Yayınevi, İstanbul, 2006. Ma Zihui and Leonard Cheng, The Effects of Financial Crises on International Trade, NBER-East Asia Seminar on Economics, Volume 14, 2005. Macovei Mihai, Growth and Economic Crises in Turkey: Leaving Behind a Turbulent Past?, European Economy Economic Papers 386, 2009. Muraközy Balazs, Margins of Hungarian Exports During Crisis, EFIGE Working Paper, No:53, 2012. Neto Nelson Camanho da Costa, Rafael Romeu, Did Export Diversification Soften the Global Financial Crisis?, IMF Working Paper, 2011. Öniş Ziya, Crises and Transformations in Turkish Political Economy, Turkish Policy, V:9, N:3, 2009. Öztürk Nazım, Dış Ticaret Kuram, Politika, Uygulama, Ekin Basım Yayın Dağıtım, Bursa, 2012. Pesaran M. Hashem, Richard J. Smith and Yongcheol Shin, Bounds Testing Approaches to the Analysis of Long Run Relationships, Journal of Applied Econometrics, 16/3, 2001. Pesaran M. Hashem and Yongcheol Shin, An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis, 1999. Shelburne Robert C., The Global Financial Crisis and Impact on Trade: The World and The European Emerging Economies, Discussion Paper Series, No:2010.2, 2010. Terzi Nuray, Global Financial Crisis And The Effects Of Its On Turkish Economy, 6th International Scientific Conference, 2010. TOBB 2009 Ekonomik Rapor, 2009. Tunçsiper Bedriye ve Ömer Faruk Biçen, Avrupa Borç Krizinin Türkiye’nin İhracatı Üzerindeki Etkileri, International Conference On Eurasian Economies, 2013. Türkay Hakan ve Muzaffer Demirbaş, Türkiye Ekonomisinde Yatırımların Faiz ve Gelir İlişkisinin ARDL Yaklaşımı İle Analizi, Akademik Yaklaşımlar Dergisi, V:3, I:2, 2012. Yalçınkaya Onur, Analysis of Turkish Financial Market With Focus on EU Membership, Master Thesis, 2012. Yavuz Ali, Ceyda Şataf ve Serap Gül Kır, Avrupa’da Borç Krizi ve Çözüm Arayışları, Afyon Kocatepe Üniversitesi İİBF Degisi, 2013. http://sahipkiran.org/2015/01/12/kuresel-ekonomik-kriz/, Date of Access: 23.03.2016 141

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2016/1 Factors Shaping Attitudes towards Niche Luxury Cars Resulting from Brand Extensions

Dr. Vladimir Sashov Zhechev University of Economics-Varna Dr. Evgeni Stanimirov University of Economics-Varna

ABSTRACT Global business has witnessed multiple automotive companies being positioned as niche market players. Such organizations are more frequently prone to apply inhomogeneous marketing approaches to meet some contemporary customers’ desires for change and innovation. Such actions can modify customers’ overall evaluation of the brand. In this regard, behavioral, cognitive, and affective aspects of attitude shall be monitored and continuously calibrated. In particular, self-image, conformity, and desire for uniqueness are purported to be among the key influencers of attitude alterations in luxury market segments. This brings questions about empirical testing of different attitudinal variables for the purposes of market offering to forefront of managerial discussion of automotive companies.This article delves into the factors that shape consumer attitudes towards niche car brands of class “F” on the Bulgarian new cars market. It makes reference to some critical aspects that can steer change in the way these brands market themselves and attempts to identify the shifting nature of consumer attitudes related to niche luxury car purchase and ownership. The main objective of the paper is to present part of the findings of a broader study on the image effects from downward brand extensions by putting a special emphasis on the variables, shaping the attitudes towards niche car brands. It also presents some conceptual and methodological aspects that can be used for studies in other industries (e.g. consumer electronics, luxury apparel, etc.). The article holds practical value for market players as it tries to classify multipliers of success for companies practicing nichemanship.

Keywords: Brand Attitude, Luxury Cars, Niche Marketing. 143

1. INTRODUCTION Building and enhancing brand equity through brand extension strategy is typical for the niche companies which aim at market and technological development. This is primarily valid for established brands where recognition and intangible benefits are expected to be translated to the extension. Brand extensions could reduce the high initial capital, required for the establishment of a new brand; could lower the distribution costs as well as the costs for media coverage. Thus the long- term marketing success is arguably secured by taking into V. S. Zhechev & E.Stanimirov

account that brand awareness increases the sales prospects and the greater acceptance of the extensions (Singh, Scriven, Clemente, Lomax, & Wright, 2012). Despite their advantages brand extensions should be implemented by taking into account the effects that they may produce. Some extensions could have a negative impact on the attitudes towards the main brand. For the buyers of expensive products which bear luxury brands a significant importance is carried not only by the benefits that they receive, but also the idea of exclusivity that they get. Some customers of niche products believe that through the preservation of the exclusiveness of the brand image they could sustain their self- image as well. Therefore they normally display negative reactions to extensions which raise the possibility of change in their attitudes and which may lead to brand image dilution (Magnoni & Roux, 2012). This type of downward brand extension can potentially depreciate the brand meaning and change the attitudes toward it (Nesterkin, 2013). Strong brands are characterized by higher demand which stimulates some niche companies to use that advantage to extend over the boundaries of their niche. Although this could generate some positive financial outcomes it could also cause negative effects on customers’ attitudes and brand image. This, in turn, may reduce the exclusivity of the respective niche brand. However, companies rely on the increasing number of customers (also called “followers”) who prefer to buy luxury brands irrespective of the product class. This poses some challenges for the companies involved in maintaining exclusivity for: (1) those seeking a high level of luxury or (2) switching to inclusiveness for the “followers” as this could have some financial and image projections. The case of Class “F” car brands on the Bulgarian new cars market provides an interesting scientific and practical reason to investigate the above-mentioned challenges considering the transformation of the niche strategy and the changes regarding the attitudes that affect the business of niche companies. The existing scientific sources in 144 the field of extensions reflect their impact on customers’ supplier switching but do not pay attention to the long-term impacts on the 2016/1 attitudes towards the main brands. Companies of Class “F” have undergone significant transformation since their establishment. Although they are traditionally associated with the production of niche luxury cars of the highest (premium) class, throughout the last two decades they have converted from producers of a limited number of exclusive cars into market-oriented companies aiming at wider customer base. The discussed technological and image evolution is on the one hand a practical issue and on the other – it represents an interesting transition for the marketing theory and practice taking into account the changes resulting from the brand Factors Shaping Attitudes towards Niche Luxury Cars Resulting from Brand Extensions extension process. The process of downward brand extension on the consumer market of new niche luxury cars in Bulgaria reveals the impact that this strategy has on the attitudes towards the respective brands. In the country they are considered as carriers of higher social status, exclusivity and positive own image which determines the authors’ interest to study the possible factors that shape the attitudes towards Class “F” car brands in the country. In this sense, objects of the research are the buyers of the niche brands of Class “F” on the Bulgarian new cars market. Subject of the research are the attitudes (cognitive, behavioral, affective) that are shaped by different personal, market and social factors. The purpose of this article is based on scientifically-reasoned analysis, theoretical ideas and investigation of the change in the strategic orientation of companies from Class “F” in Bulgaria and respectively the reactions of their clients, to develop and test methods for analysis and assessment of the attitudes towards niche luxury cars. In the specialized literature the information regarding the changes in attitudes towards niche luxury cars is scarce. Furthermore there is a lack of such studies in Eastern Europe. This study is conducted under the following limiting conditions: 1) The respondents are customers of Class “F” brands within limited geographic territory (the Republic of Bulgaria). 2) The study is also limited in terms of product class.

2. CONDITIONS AND STRATEGIC CONSIDERATIONS IN THE PROCESS OF DEVELOPING AND IMPLEMENTING A NICHE MARKETING STRATEGY Currently, the positive and negative outcomes, arising from the implementation of the niche marketing strategy remain unclear. The increasing diversity in consumer tastes and habits together with the changing needs on consumer markets favor the activities of companies that are able to more precisely adapt their products to the requirements of the increasingly fragmenting markets. In this regard, the preconditions for the implementation of a niche 145 marketing strategy could be based on: market deregulation; ineffective functioning of certain markets; inter-company 2016/1 capabilities; changes in consumer demands, etc. On the other hand, the necessity for implementation of such a strategy could be determined by: the saturation of certain markets; the lack of competitive advantages in some segments; low prices/deflation; increased competition; demand fluctuation, among others. The implementation of a niche marketing strategy must be consistent with the strategic company priorities and should not endanger the fundamental values and already built competitive advantages. V. S. Zhechev & E.Stanimirov

Using niche marketing strategy companies develop strategic advantages by targeting specific market segments based on: 1) The unique desires of the consumers; 2) Customized products, designed to meet these desires; 3) Specific geographic location; 4) Better communication and coordination; 5) Flexibility; 6) Competitive advantage based on skills, experience and service quality; 7) Neutralizing direct rivalry with big companies on national and international markets (Parrish, Cassill, & Oxenham, 2006). Despite the positioning advantages related to the scope of the niche and their role for the market effectiveness of companies, firms with broad brand portfolios have different market behavior in comparison with those with more narrow specialization (Zhechev, 2012). To benefit from the advantages of the niche marketing strategy, companies must carefully select small-size markets and concentrate on the development of specialized practices (Wilson, 2012). Alternatively, Caragher (2008) notes that most copmanies start out as a small entities operating on single markets with limited geographic scope and in order to develop they repeatedly expand beyond the niche through detailed segmentation as they test their profitability on new markets. Zhelev (2010) explores a different aspect of that statement exploring the “double jeopardy” effect of the brands with narrower scope. The researcher notes that there are three types of “double jeopardy” that could be distinguished: behavioral, affective and cognitive and it can put smaller brands in an unfavorable competitive position to the bigger ones due to the lower volume of sold units and the potentially lower levels of customer loyalty. And although most companies, ideally aim to stop the expansion after reaching the optimum level of commitment and areas of service, this is often practically difficult to achieve (Rhee, Kim, & Han, 2006). More and more often the experience and the business principles inevitably lead companies to risky and potentially harmful expansions (Sorenson, McEvily, Rongrong Ren, & Raja, 2006)we propose that broad contemporary scope also provides insight into the routines that govern firm behavior. To attain 146 broad scope, firms must repeatedly explore outside the boundaries of their current niche. Firms with broad niches therefore operate 2016/1 under a set of routines that repeatedly propel them into new market segments, expanding their niche. These niche expansions, however, involve risky organizational changes, behavior that disadvantages generalists relative to specialists, despite the positional value of broad scope. Empirical analyses of machine tool manufacturers and computer workstation manufacturers support this conjecture: (i. Thus companies with wide niches are characterized with a market shortcoming in comparison with their better concentrated competitors (Dobrev, Kim, & Hannan, 2001). Factors Shaping Attitudes towards Niche Luxury Cars Resulting from Brand Extensions

The results from the presented literature review reveal that the niche marketing strategy is primarily used in advanced industries and sectors rather than in emerging ones. An argument in favor of that statement is the fact that niches are often seen as a response to the increasing market competition, competitive pressure, demand fluctuations, etc. This provokes an interesting scientific and practical contradiction: if a mass manufacturer launches a niche product intended for a narrow range of consumers with specialized needs, would this product be correctly perceived by a firm practicing nichemanship that is closely specialized in the same field? In this respect, authors adopt the view that the niche marketing strategy could be applied to mature markets as well as to developing markets as competitive pressure and demand could change dynamically in both types of settings. On the other hand, authors suppose that the niche marketing strategy is a complex one and consists of a multifaceted combination of product and market decisions. Thus the attitudes towards niche products expand their dimensions and could be regarded as specific to certain markets in accordance with geo-demographic and psychographic characteristics. In conclusion, authors believe that by researching niche marketing strategies three main aspects should be take into account: 1) The market niche has a limited scope (Stanimirova, 2009); 2) The niche market could be protected by creating entry barriers (specific product qualities, forms of intellectual property, maintaining relationship with customers etc.); 3) The implementation of niche marketing requires specialized skills that contribute to the establishment of product differentiation and positive consumer attitudes.

3. RELATIONSHIP BETWEEN ASSOCIATIONS AND ATTITUDES TOWARDS THE BRAND Brand associations are all elements rooted in consumers’ mind that are connected with the brand and that reflect the reality accurately or inaccurately (Stanimirov & Zhechev, 2013, p.74). 147 Associations must be positive in order to generate positive customer attitude towards the brand. 2016/1 Brand associations play a significant role in choosing a brand name as it should focus on an important feature or benefit that can justify the positioning process. Brand associations are formed as a result of: 1) Customers’ contacts with companies and their employees; 2) Advertisements; 3) Publicity built on the spread of information by word of mouth; 4) The price at which products / services with certain brand are sold; 5) Associations with celebrities; 6) Product/ Service quality; 7) Product class/category to which the product belongs and 8) History and traditions of the manufacturing company (www.management studyguide.com, 2013). V. S. Zhechev & E.Stanimirov

Positive brand associations could be realized in case the respective products are characterized as desirable, well marketed, popular etc. To achieve positive associations, the brand attributes must reflect on and respond directly to the customer needs. Positive brand associations increase company’s competitiveness and entry barriers to potential rivals. Keller (1993)brand awareness and brand image (i. e., a set of brand associations classifies brand associations into three major categories: attributes, benefits, attitudes (Figure 1):

Figure 1: Different types of brand associations

Related with the product Attributes Non-product related

Functional

Different types of Benefits brand associations Emotional

Symbolic

Attitudes

Attributes are descriptive functions that characterize the products/services or what consumers think these products/services represent and what their consumption is connected with. Attributes could be classified in two main categories: 1) product-related and 2) non-product related. The first group describes the physical composition of the product or the conditions of service delivery. The second group includes the external aspects of the product or service that are related to the purchase or the consumption, for example: information for the price (relation between quality and 148 price range); packaging; image of the consumer of those products/ services (advertisements, public appearances); situations when the 2016/1 product is used (personally, with other people, in general public), etc. Benefits reflect the personal customer value that purchasers refer to the attributes of the product/service (how exactly products/ services will be useful for them). In specialized sources of literature in the field (Park, Jaworski, & Maclnnis, 1986) it is evidenced that there are three categories of benefits: (1) functional, (2) emotional, and (3) symbolic. Functional benefits refer to the key motivation factors (first and second level of Maslow’s hierarchy of needs pyramid) and are directly connected with the product attributes. Factors Shaping Attitudes towards Niche Luxury Cars Resulting from Brand Extensions

Emotional benefits are related to the product attributes as well and describe the feelings/emotions arising from the usage of the product/service. Symbolic benefits are related to the non-product related attributes and characterize the social approval and the self- expression/external confidence. Thus customers could appreciate the prestige, the exclusivity and the brand fashion trends that meet their personal views. Attitudes represent the overall consumer assessment of the brand. They are of significant importance as they often determine consumer behavior (for example brand choice). Also, if consumers are unable to evaluate the product they can use external features to draw conclusions about the quality on the basis of their knowledge about the brand (appearance, packaging, color). According to Hawkins, Best, & Coney (2004) specialized literature has shaped the concept of attitudes as a three-component system: 1) affect (feelings towards the object of attitude); 2) behavior (willingness to act towards the object of attitude) and 3) cognition (knowledge and beliefs towards the object of attitude). Each component is important for the proper identification of attitudes as its importance can vary depending on consumers’ motivation. It is therefore necessary to put these components in a hierarchical order so that the formation of attitudes could be better understood. This study covers the extension strategy of niche luxury products by which consumers form attitudes based on complex factors such as: self-image relationship, need for uniqueness, fashion trends, conformity, etc. Taking into account the three components of attitudes, the authors evaluate how these factors influence the formation of attitudes. Based on these features it could be summarized that this study differentiates itself from and enriches previous scientific researches in the same field in that: 1) it aims to develop and test a methodology for analysis and evaluation of the factors shaping attitudes towards luxury brands, which could be applicable to industries such as: automobile trade, consumer electronics, IT products, luxury apparel, etc. 2) the study incorporates selected customers of niche luxury car brands; and 149 subject of the study are the attitudes towards Class “F” cars. 2016/1 4. METHODOLOGICAL AND CONCEPTUAL PREREQUISITES FOR STUDYING FACTORS FORMING THE ATTITUDES TOWARDS NICHE LUXURY CARS AS A RESULT OF EXTENSION The review of extant literature shows that there is a lack of researches in the field of downward brand extension of niche luxury cars and the factors shaping attitudes towards the main brands. While some studies analyze the potential differences between the consumer evaluations of extensions, defined as “functional” and V. S. Zhechev & E.Stanimirov

“luxury”, recent studies emphasize that this distinction may prove to be inadequate, as the latter vary widely based on the perceived prestige and price (Truong, McColl, & Kitchen, 2009). In this respect it’s important to clarify the influencing factors predisposing the downward extension of luxury cars and the resulting attitudes towards the main brands. The slowly growing demand, the nature of the competition (in regard to: cost price, time to launch to market, penetration in segments with high demand, offering multiple versions of a single model) and the consolidation of the business of different manufacturers are among the factors that determine the future of the car industry. The major trends that stand out in the field of brand extensions could be conditionally distinguished as consumer and organizational. Consumer ones could be summarized in: 1) The desire for individual movement (many variations of the same model are offered); 2) Cars are becoming an important means for self-expression and a place for communication, which is evident by the many additional options in equipment that are offered; 3) Systems linked to active safety, automated driving and advanced features for systems control in cars will continue to stimulate demand, providing distinction from substitutes. On the other hand, organizational trends in the field of downward extensions are related to: 1) Risk diversification due to do fluctuating sales in the upscale classes (“E and F”); 2) The expertise in the development and the supply of equipment as above, on the one hand, and the attractiveness of certain classes (“B and C” – with the highest shares in sales), on the other hand, are among the main reasons predisposing niche luxury brands to undertake a downward extension strategy; 3) The striving to capture a greater market share through detailed segmentation (brand market value). The existing academic sources in the field also outline that brands must satisfy functional (quality, reliability) and representative (emotional, symbolic) customer needs (de Chernatony & McWilliam, 1990). In conclusion it could be assumed that in Bulgaria the representative needs prevail for luxury car brands, whereas for midscale cars most important appear 150 to be the needs for practicality and functionality. The population in this study is limited to customers (owners) 2016/1 of Class “F” vehicles on the Bulgarian new cars market. The approximate size of the population in the studied period (2008- 2013) is 721 units. Of all distributed questionnaires (226) there were 111 completely filled out and returned. The degree of reliability of the scales for the variables set out in the conceptual model is tested using the Cronbach’s Alpha criterion. The study of the relationships between the variables is calculated by χ2-analysis (aiming to exhibit a more detailed distinction between the factor and the resultant variables). The authors have applied 5-point Likert scales for all studied variables. The target respondents have been reached in two Factors Shaping Attitudes towards Niche Luxury Cars Resulting from Brand Extensions ways: (1) pre-selected using personal contacts in different regions of the country and (2) through authorized representatives (dealers) of new automobiles in Bulgaria. The main array of respondents is secured at the discretion of the dealerships as they are interested in the results of the study and actively promote the distribution of questionnaires.

5. CONCEPTUAL MODEL OF THE STUDY OF FACTORS SHAPING ATTITUDES TOWARDS NICHE LUXURY CARS The study and evaluation of the factors shaping attitudes towards luxury automobiles represents a specific research process due to the multiple cultural, economic (among other) facets exerting influence on the owners of such vehicles in the country. In the development of the model (Figure 2) the authors have used ideas, concepts, components, and associative features explored by other researchers and practitioners related to investigation of the various aspects of attitudes and the influence of brand extensions over them. The objective of the conceptual model is to gauge the potential influence of different factors that shape customer attitudes towards luxury automobiles in Bulgaria. A necessary condition for this study and influence measurement is the exploration of the standpoint of Class “F” vehicle owners in the country. The conceptual model sets out six generalizing variables that potentially affect customer attitudes (affective, behavioral and cognitive). (1) By the „self-image relationship” authors explore attitudes towards niche automobiles as the extant literature and practice in the field exhibits high attachment of customers’ purchase and ownership of Class “F” vehicles with their own image and/or the image of the people they want to be (Aaker, 1999).

Figure 2: Conceptual model of the study of the factors shaping attitudes towards niche luxury car brands

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(2) „Social needs” – aims to determine whether the ownership of niche luxury car brands can reflect objectively customers’ strive for higher achievement and respect by the reference groups they associate with (Kim, Ko, Xu, & Han, 2012) (3) „Need for uniqueness” – intends to verify whether there is an inclination among customers to purchase and own automobiles that are unique in themselves and are perceived as such by others, and how this potentially impacts attitudes (Hem, De Chernatony, & Iversen, 2003). (4) „Fashion trends” – this variable attempts to identify whether fashion in general and fashion trends in the automotive industry exerts influence over attitudes towards niche luxury car brands (H. Park & Rabolt, 2009). (5) „Conformity” – aims to find out whether the change of behavior through which customers try to meet the influence of reference groups (accepting imposed norms and values) impacts the attitudes towards niche luxury cars (Keng, Jung, Jiuan, & Wirtz, 2000). (6) “Customer experience with automobiles” – seeks to clarify to what extent the customer awareness about innovations in the automotive industry and respective country of origin of niche luxury automobile brands can potentially influence their attitudes. Overall, this study combines the well-acknowledged methods for evaluation the customer experience with automobiles by accentuating on: (1) innovations in the automobile industry and (2) the countries of origin of the studied niche luxury automobile brands of Class “F” on the Bulgarian new cars market.

6. ANALYSIS OF THE SURVEY RESULTS Over 71% of all respondents indicate that the owned automobile correspond to their own image. The results related to the desire to own a car that reflects the perception of the person they would like to be further confirm the previous statement with high degree of agreement. A significant dispersion in discovered in the analysis of the “sense of importance”, contributed by the ownership of niche luxury car. A possible reason for this is the perceived level of public significance of the participating respondents considering their 152 social status that limits the importance generated only by the owned vehicle. 2016/1 The majority of respondents reconcile around the statement that the owned automobile corresponds to their social needs. Essentially, 62% of all respondents confirmed that the owned car corresponds to their social surroundings, while 52.2% indicate that there is a relationship between the vehicle they own and the respect they receive from their environment. Last, but not least, 32.6% of the respondents point out that their car serves a catalyst for higher achievements. These results match certain cultural features related to the emotional values of luxury cars and their place in the establishment of social image of their owners. Factors Shaping Attitudes towards Niche Luxury Cars Resulting from Brand Extensions

The extant literature in the field has discovered that customers’ “need for uniqueness” is a key determinant when purchasing image products. Survey participants do not regard their automobiles as unique neither do they share the desire to have their vehicle perceived as such. The authors of this paper come across discrepancies between respondents’ estimates and the findings of the literature review in the field. This may be engendered by several factors, among which: - There are likely to be other factors (different and / or more precisely defining uniqueness) predetermining respondents’ disagreement; - Since automobiles serve as catalyst for higher achievements, respondents may not be fully contented with the perceived uniqueness of the cars they currently own; - The Bulgarian new cars market already prides itself on the presence of representatives of the so called “super cars” and niche upscale sports brands as Bugatti, Ferrari, Porsche, Rolls Royce and others. Since the latter are deemed exotic representatives of utmost quality and image, this might be considered a limiting factor for the perceived exclusivity of some Class “F” vehicles. A wide range of the respondents consider the influence of fashion trends as neutral when choosing a car, but at the same time 59.4% of all participants agree that new models of luxury brands stimulate their purchase intention and interest. These results correspond to the findings of reviewed literature sources whereby fashion trends have been found to impact purchase decisions of image and luxury products. The conceptual model incorporates a set of statements regarding the “conformity” variable. They aim to reflect the presence/absence of behavioral change as related to customers reacting to the influence of reference groups. The predominant part of the responses associated with social surroundings’ influence when choosing a car are negative (29.7%) and neutral (26.1%). Interesting appears the fact that there is a dispersion in the statement, connected with the compliance with the image that social environment would 153 built as a result of the choice of luxury car brand. The prevailing percentage (27.9%) of respondents disagree with this statement, 2016/1 while a significant proportion (20.7%) do agree that there is a link between their choice of vehicle and the alleged attitude of the social surroundings. On the premises of these results the authors arrive at the conclusion that respondents face little influence of conformity in choosing a niche luxury car brand, which may be caused by: - Unwillingness to objectively acknowledge and recognize the influence of social surroundings on the choice of a car; - The willingness of respondents to be different and distinctive (through possession of a more “classy” vehicle) in their social environment. V. S. Zhechev & E.Stanimirov

The next set of statements encompasses customer experience with automobiles. The authors track down asymmetry in view of the high perceived experience with automobiles (50.4%) The same holds valid for the awareness of respondents with innovations in the automotive industry (42.3%). It is important to note that customers are largely interested in the country of origin of the respective niche luxury brands they own. There results further confirm that the surveyed customers are characterized both by high level of awareness and high familiarity of the innovations in the automotive industry. The last set of statements in the conceptual model considers the three components of attitudes – (1) affective; (2) cognitive and (3) behavioral. The first component reveals high propensity of respondents to share positive emotions towards the niche luxury car brands they own. In view of the cognitive component, respondents to a large extent (36%) express neutral judgment about the perceived limited range of clients for which their automobiles are designed (only 12.6% of all respondents agree fully that their car can be recognized as such). Different are the views of participants with regards to the behavioral component of attitudes. In particular, 68% are likely to choose the same brand on next purchase. The review of the results within this set of statements leads the authors to the following conclusions: - Satisfied customers (those who share positive attitude) demonstrate inclinations to spread positive information about the owned car brands; - The neutral opinion of respondents related to the perceived limited range of clients who can own the same niche luxury model can be explained by: (1) the general scarcity of publicly available information on sales of new luxury vehicles; (2) the differences of judgments of individual Class “F” brands incorporated in this study; (3) the lack of awareness of the ownership of such automobiles in other regions of the country; - There is a tendency of increased attachment to the brand as 154 evidenced by the high propensity for choosing the same brand upon next car purchase. 2016/1 7. ANALYSIS AND DISCUSSION OF THE DIRECTION AND STRENGTH OF THE RELATIONSHIPS IN THE MODEL In order to move from binominal distribution to normal distribution the authors have employed the inverse trigonometric function arctangent (ATAN) for the transformation of the values from the SPSS code table. As previously explained, the conceptual model incorporates the following generalizing variables: “social needs”, “need for uniqueness”, Factors Shaping Attitudes towards Niche Luxury Cars Resulting from Brand Extensions

“fashion trends”, “conformity” and “customer experience with automobiles”. Table 1 presents the results of the regression analyses between the generalizing and the operationalizing variables. The conducted regression analyses confirm the existence of relationships between the studied variables. For the “self-image relationship”, 25% of the changes in the generalizing variable are attributed to changes in the “sense of significance” variable. These results could be due to lack of operationalizing variables that explain more precisely the relationship between the owned niche luxury car brand and the self-image. Referring to the “social needs”, only 19.5% of the changes in the generalizing variable can be explained by the congruence between the owned automobile and: (1) social surrounding, (2) respect and (3) strive for higher achievements. The strongest determinant of changes in social needs of the studied respondents is the third operationalizing variable – strive for higher achievements (39% influence). 26% of the change in the “need for uniqueness” is influenced by the operationalizing variable associated with the participants’ personal perception of uniqueness of their automobile. The fourth generalizing variable encompasses “fashion trends”. It is noteworthy that due to the statistical significance of only one operationalizing variable the choice of automobile is largely influenced by whether the latter suits its owner. The willingness of owners to have their vehicle desired by their social surroundings and the consideration of reference groups’ judgments as related to the choice of automobile are carriers of respectively 33% and 67% (of the total 26%) influence in the context of the “conformity” variable. Knowledge of innovations in the automotive industry is an essential influencing factor (41%) under the “customer experience with automobiles” variable. In the context of this analysis country of origin has proved statistically insignificant variable (unlike the responses within the descriptive statistics). The study of the relationships between generalizing variables 155 and the different components of attitudes is also an interesting research viewpoint (Table 2). 2016/1 V. S. Zhechev & E.Stanimirov

Table 1: Results of the regression analyses of the attitudes towards niche luxury cars

2 Generalizing/ χ operationalizing R R2 Sig. β-coefficient Weight (%) Cramer’s variables Sig. V 1. Self-image 0,505 0,255 0,000 relationship - perception of the person I would like 0,237 0,119 - 0,380 0,000 to be 0,000 - sense of signif- 0,429 100% 0,523 0,000 icance 2. Social needs 0,442 0,195 0,000 - congruence between the automo- 0,013 0,265 27% 0,416 0,000 bile and the social surrounding - congruence between the au- 0,003 tomobile and the 0.336 34% 0,325 0,000 respect received by others 0,000 - congruence between the automobile and the 0,380 39% 0,307 0,002 strive for higher achievements 3. Need for 0,511 0,261 0,000 uniqueness - uniqueness of the 0,000 0,511 100% 0,458 0,000 automobile 4. Fashion trends 0,414 0,172 0,000 - the choice of car depends on the suitability with the 0,002 0,351 100% 0,400 0,000 individual owner’s perception 0,398 - interest upon presentation of a 0,093 - 0,276 0,006 new luxury model 5. Conformity 0,511 0,261 0,000 - willingness to 0,000 0,060* 0,189 33% 0,354 0,000 have a car that is 156 highly desired - considering the 0,380 67% 0,360 0,000 judgments of the 2016/1 social surrounding 6. Customer 0,640 0,410 0,000 experience with automobiles - innovations in 0,868 0,000 0,629 100% 0,515 0,000 the automotive industry - country of origin 0,17 - 0,430 0,000 Factors Shaping Attitudes towards Niche Luxury Cars Resulting from Brand Extensions

Table 1 Relationship between the attitudinal components and the generalizing variables

(1) Self-image, (2) Social needs, (3) Need for uniqueness, Component of attitude (4) Fashion trends, (5) Conformity, (6) Customer experience with automobiles

R R2 Sig. Affective 0,588 0,345 0,000 Cognitive 0,627 0,393 0,000 Behavioral 0,576 0,332 0,000

The following conclusions can be drawn from these results: (1) “self-image relationship” holds the highest sway within the affective component of attitudes (37%), followed by “fashion trends” (33%) and “customer experience with automobiles” (30%); (2) The dominant influence of the cognitive component is contributed by “fashion trends” (51.2%), “conformity” (25.4%) and “self-image relationship (23.4%); (3) Under the behavioral component the highest weight (86%) is carried by the “fashion trends” and 14% are attributable to the “need for uniqueness”. The existing sources of literature in the field point out the role of the affective relationship between customers and brands. The affective component of attitudes is also connected with emotional attachment and personal identification with brands. After running the tests the authors highlight that the aforementioned results conform to the findings of other studies whereby the affective attachment diminishes customer propensity to switch to alternative brand (supplier) even in the presence of more attractive offer.

8. RECOMMENDATIONS FOR FUTURE RESEARCH The study is conducted within a single country and includes respondents who own a niche luxury vehicle belonging to Class “F” (according to the international automobile classification schemes). In addition to the results that this research reveals regarding 157 customer attitudes towards niche luxury cars, future research may consider a similar study looking at other brands (in other 2016/1 industries such as: consumer electronics, IT, fashion products and accessories) using a wider range of operationalizing variables as this can increase the practical application of the conclusions reached across multiple businesses. Since Bulgaria embodies a complex synthesis of characteristics of supply and demand (V. S. Zhechev & Stanimirov, 2013), an analogous study of other brands in different product classes can provide a conceptual basis for investigation of brand extensions’ impact over resultant customer attitudes. The results of such analysis may serve similar research purposes in other geographic contexts. V. S. Zhechev & E.Stanimirov

Future research may also examine some financial effects of downward brand extensions such as for instance whether the volume of the net long term profit from maintaining exclusive attitudes in a niche isn’t lesser compared to the net long term profit achieved through “inclusivity”. A study of this sort would require data on the number of buyers of luxury products of the highest respective class and their price ranges, as well as the number of buyers (who are potentially interested in lower class products of luxury brands) and the price ranges of downward extensions. Such study can provide valuable information on the key trends for the development of Class “F” vehicles and outline strategic priorities for suppliers in terms of maximizing their long term profit. Other practical issues that may be subject to future research are related to whether: (1) Bulgaria has exclusive elite buyers, i.e. customers who would only buy a niche luxury car brand if it bears special features and is offered at such price that makes it inaccessible for users with comparably lower purchasing power? What is the number of such buyers, what is the price they are inclined to pay, how much can be gained from them in the short and long run? Is this gain higher compared to the potential profit that can be achieved by launching downward extensions (inclusivity)?; (2) Does the country have venturesome buyers (innovators) who would still like to buy the most expensive niche luxury models acknowledging the fact that the supplier sells models of lower class and lower comparative prices, which are designed for customers “outside the elite segment”? What is the number of such buyers, what is the price they are inclined to pay, how much can be gained from them in the short and long run?; (3) Does the new cars market in Bulgaria include buyers (described as “followers”) who would purchase downscale models of niche luxury car brands trying to “imitate” the elite customers and acknowledging the fact that the respective company sells its upscale models at prices that make them accessible for the latter buyers only? What is the number of such buyers, what is the price they are inclined to pay, how much can be gained from them in the 158 short and long run? Another important aspect which future studies can address is 2016/1 whether attitudinal change can occur with products manufactured by joint ventures / strategic alliances / group-wide manufacturing subsidiaries. Accordingly, future studies can examine the positive and negative factors that influence the attitudes and perception of joint brands of two separate business entities. In the context of the global automotive industry cases like Nissan-Renault, VW-Skoda, VW-Porsche and others can turn out to be especially interesting research projects. Given these settings researchers may analyze the cooperation between main and subsidiary brands as sources of brand attitude building. Factors Shaping Attitudes towards Niche Luxury Cars Resulting from Brand Extensions

9. CONCLUSION In the context of the contemporary business development companies compete on the basis of the depth of consumer needs and desires knowledge. In this respect, positive attitudes can create functional, emotional and symbolic benefits to consumers, thereby deriving many challenges for suppliers of niche luxury vehicles in Bulgaria related to the desire of capturing a higher share of the market. The proposed conceptual model uses a creative approach to the assessment and measurement of consumer attitudes, taking into account practical research findings of brand extensions and nichemanship in the field. The model can be applied to analysis of other industries/markets (consumer electronics, IT, designer products and accessories, etc.) which exhibit high degree of attitudinal decision making within the context of Marketing 3.0 and 4.0. The authors arrive at the conclusion that there is a high likelihood of automotive producers to induce “desired change in attitudes” as this can result in larger aggregated profit. Under the contemporary market circumstances in this industry it can be argued that the optimal changes of attitudes are potentially those whereby the total net profit is the sum of the net profit from “elite buyers” and the net profit realized from “inclusive followers”. Logically, the equation must take into account the probable losses by the possible supplier switch of some elite buyers. Nevertheless, the question whether changes in attitudes could affect the performance of suppliers and their respective brands remains an important area that comes to the forefront of managerial discussions among executives of authorized dealerships in the country.

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Dr. Ufuk Ayhan Turkish Police Academy

ABSTRACT Conceptually, security concept is always tend to expand its own limitations. Current global events, emerging new situations and resulting needs in this area often make the changes obligatory and inevitable. Today, the fight against crime and criminality follows a path which aims to identify and clarify the crime begining from the emergence of the criminal activity until the capture and detention of its actors, and finally dealing with them through judicial process and prison. However, often its social costs and damage as well as its impact on the sense of trust in the community have been ignored. This study analyzes and assesses modern techniques which are available to use against criminal activities and organizations.

Keywords: Crime Prevention, Public safety, Security.

1. INTRODUCTION About security, the first thing that comes to mind is the protection of the state and its basic elements. Second is the approach including the preventive and juridical process achiving by the arm guard and the general law enforcers. However, in today’s society, the concept of security including the individual areas of economic and social dimension has been dominating the field. Rather than only being against a thief that entered the house or in the street against a beggar to be bothering them, the individual safety has a wide range of the general living space such as the environmental health, zoning and housing policies, noise, natural disasters, terrorism that is creating fear and anxiety, planet security, chemical and biological threats. Basically, the rules emerging for the social order, harmony, and the development are also the guarantee 161 of a safe life. Of course, in general, in addition to the external and internal safety, the term safety can be detailed as social, economic, cultural and environmental safety. As it is known Maslow’s hierarchy of needs are listed as physiological, safety, belonging, esteem and self-actualization. In each circumstance, our subject safety need, “Conservation and protection of the resulting desire tended to urge the institutionalization of the concept of sefety is forced to achieve a horizontal social relation point. On the basis of this, the U. Ayhan

effective need to take the vertical preventions in the public safety approach lies.” ( Demir, 2002:15 ). For state, the term safety can be summarized in three main subjects. These are; the national security that aims to ensure the continuation of the national interests and the constitutional law security; the public safety that aims to protect the public safety and the individual’s safety and the living space safety safety or in other words the public peace safety that ensure the safety of the Daily lives of individuals within the area and the time period. The living space safety or in other words the public peace services defines the general terms of the relations of the individuals with the other individuals and with the public services except the concepts such as the state safety or public peace that has more outstanding features in each stage of the Daily life, in the transportation vehicles, in the working places or in their houses. Urbanization, advances in technology, advances in communication tools, Globalization; and the emergence of the business section along with industrialization has increased the dependence of people with each other. In the industrial society, man’s relationship with man has left its place to the relationship of the society with the community ( Erdem, 2001).

2. CRIME AND CRIME PREVENTION TECHNIQUES Directly and indirectly, the concept of crime affects and interests the society as a whole. According to the year – end 2013 datas, % 77.2 of our country’s population live in urban areas and % 22.7 of the population live in rural areas. Through population growth and internal migration, population density especially in big cities clustered together had increased crime rates and gave a negative differentiation in the perception of security. “In nineties, the concepts such as the perception of crime clarification management, capture, criminal convictions, fines and detention centers and justice mainly shifted towards the development of crime problem solution oriented preventive policies rather than direct criminal arrestment. Now the real work of security became a 162 problem that is searched to be solved alongside with the official law enforcement local governments, non-governmental organizations, 2016/1 universities and the most important inter-sectoral collaboration involving the citizens. In this direction ( Geleri, 2010: 26 ): • Detection of the factors that led to the processing of crime and the elimination of these factors, • The processing of the zoning plan and carry out works related to the physical arrangement in order to deter criminals and to complicate the processing of crime, • Works done to eliminate the fear of crime, • To raise awareness and to inform citizens about the crime prevention, Crime Prevention Techniques and Crime Prevention in Turkey

• The provision of assistance and support services to the victims of crime, • Conducting studies on ex-convicts have a vital importance.”

Individual and public safety is important for the visibility of the offered services. Having the foot and motorized patrols in the preventive actions have a vital importance for the presence of both state authorities as well as individuals themselves feel safe. Without connecting the patrol services to a certain routine, a system that continuously goes on can give effective results within a certain time and place. It is also known that, taking these measures in a wide range of different sectors of society also has a special importance to create deterrence on the potential crimes and crime prevention alongside special attention in apprehending criminals (Geleri, 2003: 69 ).

3. CRIME PREVENTION WITH A COMPARATİVE PERSPECTIVE If we compare it with the United States of America, in the USA, the police organizational structure has earned a special feature by its partition and diversity. The police is the symbol of the local government that rely on the grassroots ( Gleizal, Domenach and Journes 2000: 235 ). In the federal states, the state has seperate police organizations in the state levels. In the USA, while this police force is about 450 thousand ( Gleizal, Domenach and Journes, 2000: 235 – 236 ) this number is about 48.950 in the New York city only ( Binnninger and Dreher, 2004: 251 ). In the year 2005, the number of police officers in the New York Police Department is 39.110 ( NYPD, 2006 ). In the USA, the basic functions of the police department is team (patrol), criminal investigation, traffic control, to avoid harmful habits and indecent acts and to control juvenile delinquency and for these duties, line departmens are formed. On the other hand, in the state level police organizations, there are seperate departments for these functions. In order to ensure efficiency in 163 the execution of these tasks, the responsibilities were decentralized by the district stations. Patrol is an indespensible way to fullfil the 2016/1 security services. As known, the patrol services has a very effective role in the services with its ready for service, preventive functions (Bahadır, 1985: 19 – 21). While having 440 officers in the year 1924, today, FBI has approximately 21 thousand officers. From the Second World War to the present day, FBI has been working on the inter state nature crimes against the federal laws such as kidnapping, drug trafficking, the fight against internal corruption and counter-espionage. Withthe laboratories, identification units, computer data centers U. Ayhan

in its excisting structure, it makes significant contribution to the local forces. And since 1989, the FBI officers can arrest the criminals without having the consent of the federal state (Glezia, Domenach and Journes, 2000: 236). The New York Police Department was formed in the 19. Century by modelling the London Metropolitan Police Department and now is the biggest and the largest metropolitan police department of the United States of America. The New York Police Department is giving legal protection and investigation services in the five central boroughs of the New York City. According to the own definition of the Department, its dut is “to apply the law, keep the peace, reduce fear, to create a safe environment, to prevent and to investigate the crime”. Being in the New York Metropolitan Police Department but working as a seperate department, the New York Transit Police is responsible for protecting the transportation network of the New York City investigating the events occured in this network and the Housing Police is only responsible for the prior police services such as protecting the public peace in the certain areas built buildings and districts made by Federal Government or the State Government decisions, crime prevention, offenders identify and arrest, community violence prevention, protect the rights of people, ensure the safety of life and property, the protection of public health, the prevention of violence and breaches of law rules, arrest those who violate the rule of law and fingerprints of people arrested and taken their photographs (NYPD, 2006). When we consider the New York City in terms of security, individuals feeling themselves safe and the fight against crimes, we see that, especially until 1990s, there is an increase in crime rates and also an increase in the fear of incurring crimes but by the 1990s, as the beginning of the new understanding to provide security and fight against crime, serious gains were observed on crime and delinquency. The underlying principles of this success are; “to be close to the scene as possible, the active information gathering and inquiry 164 work, convenient and constantly supervised in accordance with guilt tactics, rapid police reaction and progressive police measures, 2016/1 zero tolerance against ‘the petty criminals and those who disturb order’ for example; in the streets, stopping the use and transport of weapons, school and driveways youth violence suppression, fighting against drug crimes, special teams fighting against drug abuse, control of public buildings and spaces, taking the small sellers’ money and vehicle confiscation and prohibition of their entry into the field. In all these works, the coordination with the court house and the the speedy trial has a very important role in these works (Binnninger and Dreher, 2004: 253 – 4). In New York, according to the “zero tolerance” policy; Crime Prevention Techniques and Crime Prevention in Turkey intimidation and deterrence of the criminals strategy has worked. In the past, beg in public transport, passenger disturbance, trafficking of women, making small toilet in public areas were the everyday events that people have to live with, as Giuliani became the mayor, until 1990s, by incarceration of people disturbing public order and peace for a few days of, disposal of the drug dealers from the streets under pressure from police, preventing of carrying the weapons that could have grave consequences and leaving these weapons at home, to ban the vehicles from the traffic that is creating excessive noise, cooperate closely with other agencies about construction, traffic, youth and health issues and immediate prevention of gang graffiti used in the communication of the gangs has created important results (Binnninger and Dreher, 2004:254). The five boroughs of the New York City has been increased to 8 and for each borough, there is a commander (can be compared with the Polic Director). In addition to this, there are 76 Precints (the units – zone that gives security services). In the United States of America, the “Public Guards” system which is a patrol sevice of the citizens and built in the 19. Century (Binnninger and Dreher, 2004: 257) is still in force today and Shaquille O’Neal is a reserve police in a this type of program (Shaq sworn, 2006). Beside this, pedestrial patrol system also yielded significant results in the prevention of crime and delinquency. In the New York scale, ensuring the social order, easily investigating the criminals by direct connection with the local community and by knowing the addresses of the citizens, its being increasing the trust has gained important advantages. But the staff not willing to work in these services becomesa major handicap (Binnninger and Dreher, 2004: 267). In england, by “ the foot patrols, the community watch schemes, the consulative commitiees and the community policing” studies, as the police acts consensually rather than use of force, creates important effects in the participation of the citizens (Aydın, 2002: 105). The London Metropolitan Police Authority consists of 23 165 members. 12 of them are authorized by the Mayor on behalf of the London Assembly, 4 of them are the Conservators of Peace 2016/1 authorized by the Home Office, 7 of them are independent members an one of these 7 members is authorized by the Minister of the Internaşl Affairs. For the other members, an open announcement is made. The Chairman of the Metropolitan Police Authority is elected by the members and all the members can be candidate for the elections. Each member is in relation at least with one municipality. So, wherever you live, one of the members has closely related with the police services in your region (London Metropolitn Police Authority, 21.12.2005). U. Ayhan

In England, USA and Holland, by the Blue – point Programme, there is an effective reduction in offenses. In the core of this program the pre-school and after-school socialization studies, visiting the risky families and educating the heads of these families, providing resources to the families which has disadvantages in education and having educational works are aimed (Reno and other, 2000: 6). About the home and car theft; “Cocoon Neighbour Surveillance Program” was developed. With the Zero Tolerance approach, by not allowing the petty crimes, a success has been gained in preventing the major crimes (Binnninger and Dreher, 2004: 255 – 6). In the USA, in the doctrine of criminology, the “root causes” of crimes are found as poverty, unemployment, social inequality, discrimination and social deficiencies of families and groups resulted by the lack of the families being organized. In addition to this, in the USA, by the “Tipping Point” theory, crime has been likened to an epidemic and as the crime wave could easily turn to flood, it has to be stopped immediately. In this theory, the aim is based on the suppression of the crime before it reaches to a serious level (Binnninger and Dreher, 2004: 252). Again, in the USA, by the beginning of the 1994, by using the statistical datas in the fight against crime (COMPSTAT), crime-fighting activities have been accelerated. If we make an economical assesment of the crime prevention programmes in the USA; according to the records of the year 1999, it shows that when their is an increase in the employment, there is a direct increase in the tax revenues, if there is an increase in the orderly life rates, there is an increase in the house rents and there is a dicrease in the costs of capture, arrest, incarceration and trial. So, the gain of each dollar spent changes between 1.06 dollar to 7.16 dollar. Also by reducing the crime areas, each dollar can have a return between 1.83 dollar to 7.14 dollar. In the developed Western Europe Countries and in the USA, in recent years, spending on education and health spending goes over the justice and delinquency is the result of this approach (Reno and others, 2000: 7 – 8). 166 Based on these comparative applications, in our country, by preparing a detailed action plan with determining the aims clearly, 2016/1 of cource together with the public support and the continuity of the partnership, the various sectors should take responsibilities according to their contribution rates. As in the USA, in the process of fight against crimes, rather than solutions depending on the law regulations and trials, giving focusing on the studies on crime prevention in the work areas such, in the schools, in the social services and in the health services, the preventive security services can give more benefit and can be more economical and because of this reason, in the fight against crimes, legal or non – govermental Crime Prevention Techniques and Crime Prevention in Turkey organizations, all the social units should take responsibilities and they are required to take their parts in these process. Especially in the USA and in some European countries, citizens spend so much money on alarm systems, insurances and house protection services to feel safe. Except this, especially in the countries such as USA, England, Holland, France and New Zealand, it is found much more important to make investments on the children in the pre school and after school development programs instead of spending on the security investments. Yet, there is report in this issue that is prepared by the USA National Crime Prevention Committee in 1999. According to this type of social content programs, in the Western Europe countries, in Australia, Canada and in the United States, compared to 70sand 1960s, in 1990s, a gradual decline has been achieved in the crime rates.

4. PREVENTIVE POLICING IN CRIME FIGHTING About the fight against crime, if we look at the New York City model; as there is a huge increase in the crime and delinquency rates aspecially in the 1970s and 1980s; today, the policing services has focused on the detailed on social intelligence, statistics, technological and community policing and by the beginning of the 1990s, very importants success has been gained in this area. In the policing services and security policies, the new and different struggle techniques such as “Broken Windows” (not ignoring even the smallest details, to be dealt with each types of guilt), “Zero Tolerance”, “Intelligance – Led Policing”, “Community Policing”, “Problem Oriented Policing” (Billante, 2003: 2), Police and Neighbour Safety, Community Policing (Binnninger and Dreher, 2004: 260 – 1) has been applied. In the period started with the word “Law & Order”, betwen the years 1994 and 1995, the total crime rates in the USA has declined by % 2 and has declined in the New York City by % 14.5. In the New York City, the decline in the crimes has came to the % 70 level in 1996 and in the end of the 1990s, this level came to the % 68 (Binnninger and Dreher, 2004; 252 – 1). 167 In the developed Western Countries and in the USA, Canada and Australia, as the studies done and their results have 2016/1 a parallelism with the internal Dynamics and the social structures of these countries, in modelling, if we ignore the differences in the social structure and take these models directly or create the similar models with these programs, these approach will turn us into the lighhouse keepers looking for darkness in the day light. In here, the proper thing to do is to perceive what is going on in the world and concentrate on our own model after taking the lessons from the results of the other models. U. Ayhan

5. CRIME PREVENTION TECHNIQUES 5.1. Theoretical Approaches in Crime Prevention The crime prevention techniques are seperated into three main categories a traditional, liberal and radical approach. As in the crime prevention levels and as in the other approaches, each of these approaches has their own understanding and applications. 1. Traditional Approach: The traditional approach emphasizes the law, government and public authority. It argues that if the penalty of a criminal taking after the crime wil be much more than the profit (benefit) of the crimal will tend to gain, the criminal will desist from committing crimes. So here law prevails can be applied more effectively by the deterrent penalties. On the other hand, this method also argues that, because it is not possible to prevent the crimes only by the individual efforts of the police, the citizens also should give support to the police. (Bese and Geleri, 2013: 37). 2. Liberal Approach: In this model, crime is seen as a social problem. According to this approach, the disadvantages in the environmental of the individual are important factors in the formation of guilt. Rather than the crime, the liberal model focuses on the potential crime groups that are prone to commiting crimes. Within this context, it is said that, by increasing the legal and statutory opportunities of the individuals and the groups, the crimes can be prevented ( Bese and Geleri, 2013; 37 ). 3. Radical Approach: The radical approach defends that the inequalities in the society is the main objective in creating crimes. In a social structure if there is social justice andif economic income distribution is carried out in a fair manner, people will not have any reason to commit crimes ( Bese and Geleri, 2013: 37 ).

5.2. Crime Prevention Models 168 Right to life is at the beginning of the most basic human rights. But, right to life can be achieved only in safe places. This aspect 2016/1 of safety and security issues always has been one of the priority issues since the existence of mankind. And the crime prevention has taken its placein the literature by the beginning of the crime problem. Today, the new thing is the content of the crime prevention approaches and efforts, their sizes and seriousness (Bese and Geleri, 2013: 38). a) Proactive Model: It defines the prevention of crimes by the active works before they are committed. It includes the elimination of the favorable opportunities to commit crimes and the strategies that weaken the offenders recidivism thoughts and commitments. Crime Prevention Techniques and Crime Prevention in Turkey

In this manner, this approach consists of the works applied for the elimination of the factorsaffecting the commitment of crimes or reducing these factors to the minimum levels (Bese and Geleri, 2013: 37). Crime struggle in cooperation is developed by the American industrial experiences. Basically this strategy depends on collecting datas, evaluation, analysis, determination of the problem arising zones, preparation of the political choices and plans and finally applying these plans and monitoring their results (Bese and Geleri, 2013: 38). The proactive model addresses the pre crime period. In general meaning, as it is a preventive approach, by taking all the necessary steps, it tends to take all the required preventions and prevent the crime or the event and if the crimes can not be prevented it tends to reduce the losts to the minimum level (Bese and Geleri, 2013: 38). In the proactive model, the main aim is to eliminate the reasons that drive people to crimes and builds a social structure in which evey one obey the rules and being god citizens. Meaning that, having so strong and healthy social, economic and cultural structure that no one even have an idea of committing crime. Ideally, there is a philosophy that tend to prevent even the idea of committing crime. This approach defending the struggle against the reasons that drive the people committing crimes can only be applied by the active participation of the society and their acceptance and supports (Bese and Geleri, 2013: 39). b) Crime Prevention Model: The policing services that aims to prevent the crimes and cathing the criminals and the center of the interest of this struggle has two sides; police and the criminals. Crime is an event that effects the people deeply and has the negative effects on people for a long period and maybe until the end of their lives. As its target group has a very wide range, this issue across the board should be addressed in a comprehensive way. To occur the crime, the following three issues should be ready together andshould be met (Bese and Geleri, 2013: 40): Target / victim (individual, building, institution, object), Criminal (The one thet commits the crime), Situation / Opportunity (The situations in which the 169 criminal and the target meets; environment and the place). When we talk about the role of the police in the struggke against crimes, 2016/1 in general, the first thing that comes to minds is ‘catching the criminals’. Whereas, the main task of the police is to prevent the commitment of crimes. In the A paragraph of the 1. Clause of the Article 2 of the 2559 numbered Law on Police Duties and Powers, the task of the police is defined as “preventing the actions under the provisions of this Act before processing of transactions that are not applicaple with the laws, regulations, government orders and public orders”. As it can be seen in here, ensuring public order and security, providing preventive services before the crime has been U. Ayhan

recognized as one of the primary duties of the police and this issue was also seated in a legal framework (Bese and Geleri, 2013: 40 ). After the crime, public damages or individual damages are in question. As crimes are committed, harm is given to the individuals and ore important there is a social harm. In this situation, as the offenders are catched and registered with the guilt of the people convicted by the court are sent to prison to serve their sentence. In a this kind of situation, the cost of the person to the society hugely increases. In this context,: as the individuals participation to the production process will come to an end, his / her production capacity will become unusable. As because the individual will be only a consumer in the prison, the money of the poeple giving taxes will be spent for the fod, water, heat, bed, bath, health, security etc. expenses and in addition to this, the prison will have to hire many professionals from various occupations such as guards, prison director, teachers, priests, workers, psychologists, social workers and prosecutors and this will led to an additional cost item for the society. (Bese and Geleri, 2013: 41). So, the preventive approaches has a very importance and function in general for the social life, public order and country economy and in special for the crime struggle and prevention of crimes. There is a thin line between the proactive model and the preventio model differs. In the Proactıve Model, the main aim is to create and develop the socio-economical, political, cultural and educational oriented projects and models that will eliminate the people having even the idea of committing crimes. But, in the Preventıon Model, despite these studies and programs, if the people have the idea of committing crimes, this approach tends to prevent them to put their ideas into practice (Bese and Geleri, 2013: 41). c) Juridical / Reactive Model: In the context of the crime investigation and research policing actions,collecting the informations, catching, detention, interrogation and trial work take place in this model as a whole. According to the Brantingham and Faust, this approach is determined as fire department (fire 170 extinction) policing. To realise these actions, the occuring of the juridical case or a crime is the pre requisite. In this model, policing 2016/1 takes place after the commitment of the crime, police intervene to the event immediately, takes the necessary preventions, by using his / her occupational experiences, tries to clarify the case. The inquest is an action that needs so much personnel in policing actions (Bese and Geleri, 2013: 41). d) Repair (punitive / corrective) Model: Repair / punitive model is a stage emerges by making the necessary inquiries after the crime, arresting the criminals convicted by the courts. In this approach, it is considered important to prevent the people commiting crimes again by punishing the criminals and by taking the corective Crime Prevention Techniques and Crime Prevention in Turkey actions. After prison, the prisoners should be monitored with a close interest by the social services. In this manner, the prisns being in the first place, the punitive justice system as a whole is the most important part of this approach. This situation brings the two important opinions (Bese and Geleri, 2013: 43). First one is the strict approach that defends criminals to be punished in the harshest way. It is thought that, the criminals should be punished in the harshest way and so that they will take the necesery lessons by this way and will not tend to commit crime again. It says that, the harshest way of punishment will also deter the other people that have the idea of commiting crimes (Bese and Geleri, 2013: 43). e) Application Stages of Crime Prevention Programs: Crime prevention by deterrence method is the central point of the prevention approaches. In this context, the followed process needs the evaluation of the seriousness and the sizes of the problem and determination of the methods and the tools that should be used in this struggle. This perios that should be followed in the struggle against crime mainly consists of the natural, scientific methods and approaches. To struggle effectively against all types of crimes and to prevent their occurance again, all the methods and the approaches that should be followed are determined in this period. In this context, the prevention period is made of the practical application of the Lewin’s five stage social research period that he found in the 1940s. These stages are as follows : (Geleri, 2010: 26) 1. Collecting the datas and determining the problem: Collecting all the datas about a specific problem’s condition and the size of this problem and drawing a clear Picture of the actual problem. 2. Analysis of the datas: Determination of the physical and the conditional terms that ease the crimes and their analysis. 3. Revision of preventive measures and planning: About the preventive measures and the tools that will eliminate the physical conditions which pave the way for the crimes, including the costs, a systematic work should be done. 171 4. Choosing the best plan and its application: Choosing the best promising, applicable and economical preventive 2016/1 actions among the occured alternative projects and their application. 5. Monitoring the results and their assesment: Monitoring the results of the applied preventive actions and their consequences and disseminate the experiences to the related person and the institutions benefits ( Bese and Geleri, 2013: 44 ). U. Ayhan

f) Crime Prevention Techniques in Turkey: First of all, the issues that led to crime should be determined and the required studies to eliminate these should be done. If we see the society as a living organism, there can be various structures in the various regions of the country and even in the same province, monotony can not be achieved; so the appropriate models for the social structure should be developed. While duing these, all the education and welfare organizations, NGO’s, local governments, meaining that all the stakeholders should work in coordination (Geleri, 2010 : 225). 1. By the physical arrangements, difficult and deter from commiting crimes: Preventive patrol services ( foot – motorized- bicycle etc ), Civil patrols ( such as security teams ), Security cameras ( city surveillance cameras – Mobese ), Reactive Neighbouring Programs, Private Security Guards and Systems, arrengements in the physical environment ( Ambient lighting, parking, alarm system, solid doors and locks, controlled flow of traffic), regular zoning plans, deterrence can be achieved ( Geleri, 2010: 25). 2. Citizen awareness : District Meetings, works towards Schools (students, teachers, parents, administrators), Elderly Mom and Dad studies, works for the Public Employees can be achieved by Radio-TV-Newspaper- public spot ads, brochures, and flyers in order to raise public awareness. 3. Help – support to the victims and theirs relatives: Prevention of the crime, in this manner by eliminating the victimization or reducing it to its minimum, eliminating the g-fears and worries about crimes and eliminating the fear of being a victim or reducing it to its minimum, increasing the public awareness and the biophilia, eliminating the negative effects of the crimes on the victims or reducing it to its minimum, giving the social, psychological, economic and legal supports to the victims and by decarceration of 172 crime victims to the social life, the restoration of social peace is possible ( Geleri, 2010: 31 – 33 ). 2016/1 4. Decarceration of the ex convicts to the social life: The rehabilitation of these people and for the decarceration of them, creating some social projects with all the parts of the society and re taking these ex convicts to the production ( Geleri, 2010: 33 ).

Utilization of Different Models and Practices in the Field of Preventive Policing: We can list them as Patrols (motorized, foot, horse), School Policing, Specific Zones, Technical and Physical Inspection of the Streets and the Crime Scenes, Security Teams, Crime Prevention Techniques and Crime Prevention in Turkey

Peace Meetings, “Broken Windows” (not ignoring even the smallest details, to be dealt with each types of guilt), “Zero Tolerance”, “Intelligance – Led Policing”, “Community Policing”, “Problem Oriented Policing”, Police and Neighbour Safety, Rehabilitation of the Criminals and Decarceration of the ex convicts, “Tipping Point”, the Monetary Size of the Crime and its Analysis.

6. CONCLUSION Prevention of crime is not an easy subject to be left to the judicial and legal officials. If all the citizens and the parts do not participate in this process, any success or progress can not be achieved in the Prevention of Crime. Before improving a model a social analysis must be made. There is no rule that the models which are applied in the various countries of the world will also be successful every time in every place.

In todays society, before the emergence of crime, prevention and protection of the crime and protection of the social costs and a feeling of confidence and preventive security services gained so much importance. In addition to this, the social awareness about the struggle against crime and delinquency and not only by the security forces but also by the supports of all the parts of the society, this turns into a more systematic fight. In this study, an overall struggle has been studied about the crime and the delinquency by the participation of all parts of the society especially by the NGO’s.

REFERENCES Aydın, Ahmet Hamdi (2002). “Meşruiyet ve Polis”, Türkiye’de Devlet Toplum ve Polis, (Ed.) Turgut Göksu ve Hasan Huseyin Çevik (Ankara: Seçkin Yayınları. Bahadır, Gürbüz, (1985). “Büyükşehir Düzeyinde Kolluk Hizmetlerinin Örgütlenme ve Yürütülmesi”, Ankara: Gazi Üniversitesi (Yayınlanmamış Master Tezi) Billante, Nicolle (2003). ”The Beat Goes On: Policing for Crime Prevention”, The Center For Independent Studies, Issue Analysis, No: 38. Australia. 173 Binniger, Clemens ve G. Dreher, (2004). “New York Şehri Polis Departmanın Suçla Mücadelesindeki Başarısı-New York’tan Öğrenmek”, Çev. Recep 2016/1 TAYFUN, Polis Dergisi, Sayı 42: 249-268. Demir, M. Faruk, (2002). “21. yy’da Türkiye İçin Yeni Bir Milli Güvenlik Siyaseti- Stratejik Öneriler Belgesi”, Yüksek Strateji Merkezî Yayınları, İstanbul. Erdem Elçin ve başk. (2001). “Küreselleşme (Globalleşme) Nedir?”, http:// hazirlik2.emu.edu.tr/yonca/kuresel.htm 20.05.2001 Geleri Aytekin, (2010). “Şehirlerde Suç Önleme Politikalarının Geliştirilmesi” Polis Bilimleri Dergisi, Cilt:12 (3), ss.23-39 Geleri, Aytekin, (2003). Önleyici Polislik, Ankara: Seçkin Yayınevi. Gleizal, Jean J., J. Gatti-Domenach ve C. Journes, (2000). “Batı Demokrasilerinde U. Ayhan

Polis”, Çev. Mustafa Kandemir, Ankara: Temiz Yayınları. London Metropolitan Polica Authority, www.mpa.gov.uk/ downloads/ about/ translation/ turkish.pdf 21.12.2005 NYPD’deki Polis Sayısı, http://www.nyc.gov/html/nypd/ html/misc/ pdfaq2.html# 41, 20.01.2006 Reno, Janet – D. Marcus – M. L. Leary – N. E. Gist, (2000). ”Investing Wisely In Crime Prevention International Experiences””, I. Waller, D. Sansfaçon (Ed.) Crime Prevention Series 1, Montreal, Quebeck, Canada: International Centre for the Prevention of Crime. http//www. ncjrs.org/ pdffiles1/bja/182412.pdf

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2016/1 How does Incentive Affect Kidney Donation Rates: Turkey Case

Yavuz Demirdogen Yildirim Beyazit University

ABSTRACT Renal disease is an ongoing and growing problem around the world and in Turkey. Almost %5 of health expenditures are about kidney patients in Turkey. The amount of patients is increasing every day although the donation rates are not increasing in the same speed. The governments are applying different regimes for closing the gap between supply and demand on kidney. These systems are not accurate to close this gap. Main classification of these techniques is opt - in and opt - out regimes. The cost of dialysis for every patient is higher than the cost of transplantation. The transplanted patient lives 22 years whether dialysis patient lives 14 years. Transplantation is cost –effective than dialysis. It is an obligation to decrease the number of patients in the waiting list. In 2014 there are almost 60.000 kidney disease patients in Turkey and 29.000 of them are ESRD patients. Almost 4200 of them are transplanted in 2014. One of the solutions of closing this difference is to pay monetary incentive to possible living donors. Among the ethical debates on monetarizing the human body, this article is focused on the quantity of monetary incentive that would pay to the possible donors. This amount is the collection of the costs of statistical value of life, death-risk component, quality of life component and value of time. It is the quantity of losses, not the value of a kidney. The quantity differs according to the value of statistical life. Average price for these losses are 8.638 TL.

Keywords: ESRD, Monetary incentive, Kidney disease, Kidney transplantation. JEL Codes: I110, I150, I180

1. INTRODUCTION Renal impairment is a disease which is rapidly approaching to be a problem in Turkey and in the world. From the first 175 kidneytransplantation surgery till today, supply of kidney is still standing as an unsolved problem. Although this problem is tried to be overcome by peritoneal dialysis and hemodialysis techniques, the diseaseis not healing; but only being delayed. Since producing a kidney in laboratory conditions or re- functioning an ineffective kidney is impossible, the last solution, which renal impairment patients refer to at the last phase of their disease, is kidney transplantation. There is no cure for End Stage Renal Disease (ESRD) patients other than transplantation. Y. Demirdogen

Curing the disease with the transplantation of a kidney is more effective than holding on the life with dialysis. While the average life year of transplanted patient is 21,6 years, the average life year of dialysis patient is 13,8 years (Harihan et al.:2000). When considered from the costs point of view, the cost of transplantation, even with a rough calculation, is less than the costs of dialysis.1 If all unrelated costs like transportation, lodging, labor-loss are added to this calculation, one can see the advantage of transplantation. At this stage, kidney supply problem for transplantation is arising. Different methods are used and tried to overcome this supply problem. The method used in many countries is “Altruistic Donation”. Whether this system differs in content and practice, international data shows that it is unsuccessful (Irodat 2013). Waiting list is growing day by day, buton the other hand donation quantities are stand nearlyat the same level. At this point, academicians express that different and effective methods must be implemented. Main axis of method change proposal constitutesmonetary incentive. Matas, who wrote several essays on the subject, published the results of the study group constituted in 2012 for the research about the incentives and legal regulations. (Matas: 2012). Applying monetary incentive fororgan donation (it can be named as selling kidney) is a subject that has different aspects. One of these aspects is about the fact that organ donation should definitely be on voluntary basis. In America and England, government applied payment on blood donation for a period and a decline at donation rate was observed. Based on this example, some academicians defend the opinion that if monetary incentive is allowed, donation rates will decline. Conducted surveys have showed that people rather prefer donating their organs instead of selling them (Mohamer & Guella: 2013; Mayrhofer-Reinhartshuber: 2006; Evans: 2003; Leider & Roth: 2010; Bilgel: 2011). But results of these surveys are closely related with the questions and demographic structure of the participants. These surveys have generally been applied in or around the university. It is expected that people who are willing to 176 sell his kidney would be poorer and having financial difficulties. It is possible to have different results if these surveys are applied at 2016/1 places in which low-income group of people live. Selling kidney has several dimensions. First of all, from whom will the kidney be taken, from a living person or from a cadaver? While if it is a cadaver, not only kidneys but also eye, tissue, heart, lung, liver and other organs could be taken; if it is a living person, only kidney and part of the liver could be transplanted. For this reason,

1 Government pays 158 TL for each dialysis session. Almost %96 of the patients is having dialysis 3 times a week. Cost of dialysis for a patient in a year is: 158x3x52 = 24648 TL. Payment for transplantation is 35000 TL on average. All the costs are paid by government health expenditures. How does Incentive Affect Kidney Donation Rates: Turkey Case at the center of most researches there is kidney transplantation. Monetary incentive also has several dimensions. Indirect incentive is one of these methods. The reason why it is“indirect” is that it is not paid directly in cash. The proposals about indirect incentives are concentrated into three groups: tax impulsion; insurance and health expenditure incentives; and reimbursement of expenses. Incentive mechanisms proposing covering health expenses besides tax support are also among proposals (Peters: 1991). Even these kind of incentives have been proposed, they haven’t been applied in America (Pennsylvania and Wisconsin) (Ubel et al.:2000). Again in Pennsylvania, although net payment for funeral and hospital expanses is proposed, they have not been applied (Ubel et al.:2000). Another system proposes direct incentive. Direct incentive is based on making payment in cash to donor or donor’s family. In this type of system, different alternatives are proposed about the quantity and the way of the payment. Quantity of the payment has become a different subject for discussions. One of the simple ways to identify the quantity is to take the price of kidney in the black market. But the price at the black market differs with respect to middle-men, donor, and recipient and also from country to country. For this reason, considering the price of the black market will not be the correct choice. Another proposal for the quantity of the payment is the difference between dialysis and transplantation costs. Difference between the cost of dialysis for one year (or afew years) and transplantation costs will directly be paid to the donor (Matas: 2012). The most solid calculation is the one mentioned in Becker and Elias’s article handling monetary incentive in 2007 (Becker & Elias: 2007). At this paper, the author makes the calculation based on the donor’s labor-loss, hospital expenditures, lounge, food and beverage costs, monetary equivalence of the impaired quality of life, monetary equivalence of the risk of death during or after the 177 surgery and the statistical value of life basis. In this study, Becker and Elias’s calculations will be adapted to our day and to Turkey. 2016/1 Another system is paying a net payment that the government determined. This system is already active in the only country that allows the trade of kidney; Iran. In this model that is called the Iranian model, the government or an entity that is authorized by government make a sum of payment; if the donor demands an additional payment, it will be paid by the recipient. If the recipient cannot afford this payment, the remaining amount would be paid by a charitable foundation (Ghods & Savaj: 2006). Some studies have been conducted about the amount of money Y. Demirdogen

that people would be willing to sell their kidney. These studies are generally concentrated on determination of this amount by surveys. Hoeyer et al categorized the papers of financial support models on social behaviors and summarized their results (Hoeyer et al.:2013). According to this analysis, American people are more consentient to sell organs with respect to European people. The study that is among the rest surveys is the study conducted by Adams, Barnett and Kasermann in 1999. According to this survey, a 117% increase is foreseen on donation rates with $1000 incentive. If incentive quantities are more than $1000, it would result a little bit more increase but this increase is not radical (Adams et al.:1997). The subjects handled at some of the surveys focused on the question: “if there is financial incentive, will you donate?” rather than the quantity (Mohamed & Guella: 2013; Mayrhofer – Reinhartshuber: 2006). Another debate is from whom the organ will be taken. Some of the authors defend that the donor must only be cadavers (Robertson: 1999). But researches showed that; even if organs are taken from the entire eligible cadavers, the demand would not be met (Sheey et al.:2003). Other than these, some other methods to increase the organ donation come to the fore. The other proposal than can be considered in the incentive scope is the small scaled ‘‘encouraging’’ incentives. The primary one of these is making discounts at driving license fees in exchange for tagging as donor in driving licenses. This application does not directly target to increase donation, but aims to increase the donor numbers. This system is actually in practice at Georgia with $7 discount-incentive per person. According to researchers’ results, this type of incentive results in a comparable growth at donor numbers (Jasper et al.:1999; DeJong et al.:1995).

2. KIDNEY TRANSPLANTATION AND DIALYSIS IN TURKEY From the first kidney transplantation in 1975 (Karaali& 178 Haberal:2005) till today, kidney transplantation in Turkey showed a serious increase in quality and quantity. With the help of the legal 2016/1 regulations, that renewed and updated in time, the quality, speed and security of the transplantation has increased. But, since the opt-in regime is still applied in Turkey, the kidney demand is irretrievable. Every day the number of dialysis patients is increasing everyday but kidney supply is not increasing adequately. Although Turkey takes place on the top on living donor numbers (46,6 pmp), it is pretty far behind being the leading country at cadaver donations (5 pmp) and take part at the middle parts of world ranking in the mean (IRODAT 2014). The health expenditures on dialysis and transplantation, How does Incentive Affect Kidney Donation Rates: Turkey Case exceeds 2% of the health ministry2 (www.saglik.gov.tr). When it is considered that transplantation is more profitable than dialysis for the government, being donor should be encouraged. Ministry of Health data from 2014 appearing at the web site (www.organ.saglik.gov.tr) will be used in the following parts of the study. According to these data, number of transplantation in 2014 is 4263 and patients in the waiting list are 25337. There is only one donor death occurred after transplantation. All of the dialysis and transplantation expenses either for donor or for recipient are paid by Social Insurance System. 59% of dialysis patients are registered to the Social Insurance System. The data are beginning from the year 2011 at the official website. There are no radical changes in dialysis patients, number of donor and number of transplantationsin the given years. In this content, using 2014 datafor the proceeding calculations is considered suitable.

3. ECONOMIC ANALYSIS OF MONETARY INCENTIVE Among the proposals for increasing the transplantation quantity, monetary incentiveis being written widely in academic literature in recent years. Becker and Elias are the pioneers about the rational determination of the amount that would be paid (Becker & Elias: 2007). In their calculation for the monetary incentive, they took three main matters as principals: the first one is monetary incentive for death risk, the second one is monetary incentive for the healing period and third one is monetary incentive with respect to decreasing life quality. First of all, the price of the death risk is calculated. Life-loss during the transplant surgery is about 1% in USA. This ratio is about 0,0235% in Turkey (see Appendix). For the calculation of the optimal value, Statistical Value of Life (SVL) is needed. There is no such calculated SVL for Turkey currently. According to World Health Organization (WHO), there exist a calculated SVL for Eurozone which is 2.487.283 Euro3 and this quantity will be converted to Turkish Lira (TL) and used in this article. The SVL, 179 which is necessary for these kind of calculations, must be calculated by Ministry of Health or Turkish Statistical Institute (TSI). However, 2016/1 it is not calculated because of different reasons except for developed countries. In the sensitivity analysis, the most suitable value for the statistical value of life in various amounts will be calculated. The monetary equivalent found depending on the statistical 2 Dialysis expenditure per patient multiplied by number of dialysis patients and average expenditure of transplantations are added according to health ministry data. 2014 health ministry budget is used. 3 http://www.heatwalkingcycling.org/index.php?pg=requirements&act=vsl&PH PSESSID=q3jkco40bnm8aj7poon2v765o5 Y. Demirdogen

value of human life of the probability of dying during the surgery is approximately 906,41 TL. The calculation can be seen at Appendix (1). As the second component is the value of monetary-loss during the treatment process. The determination is done by calculating the healing period as approximately 4 weeks. Although this period is not fully healing period, it is enough duration to return working in full capacity again. The rest of the period is foreseen as medical treatment. For calculating the money-loss during recovery, the lowest civil servant salary is used and semi-annually salary raise is ignored. Within these constraints, the value of recovery period is approximately 1.951,4 TL (see Appendix). As the third component, the calculation of the value of change in life quality should be calculated. While doing this calculation, SVL must be multiplied with Quality Adjusted Life Years (QALY). Since there is no calculated QALY value for Turkey, the quantity of Becker and Elias’ article is used. In the light of this information, the quantity is approximately calculated as 5779.8 TL (see Appendix). The calculated values are primarily in direct relationship with SVL (Viscusi & Aldy: 2003). Generally, it is calculated for health sector so the amount that is calculated by WHO is used. According to these results, optimum monetary incentive for grafting a donor’s kidney is approximately 8.638 TL. The cost of transplantation is also needed for proper evaluation. For that reason, 55.000 TL that is the standard payment of the government for transplantation is taken. So, demand percentage change is found as 21,85 %. When the demand function has unit elasticity, it will make 21,85 % effect on transplantation demand. To calculate the effect of this percentage change on the transplantation amount, total kidney demand in 2014 will be used. While the total demand for kidney was 29600 in 2014, the number of transplantation was 4263. Number of patients in the waiting list was 25337 (www. Donor.saglik.gov.tr). In this case, the effect of change on demand will be 6466. So, the amount requested 180 after the change will decrease to 27397. The necessary amount will decrease as 16668 since the demand will lessen in the case of 2016/1 monetary payment is done for the kidney. With a 21,85% decrease in the demand, whole requested amount of kidney will be met. In this case, the transplantation number will increase to 27397. So the percentage increase in demand of kidney after payment to donors will be 485,3 %. Theoretically, these increases will be enough to cover all kidney demand. 3.1 Sensitivity Analysis As indicated at previous sections, the effect of monetary incentive on organ transplantation depends on two factors: the first is the effect of payment for organ to transplantation costs;and How does Incentive Affect Kidney Donation Rates: Turkey Case the second is the demand elasticity of organ transplantation (Becker & Elias: 2007). In this section, the change of demand and transplantation amount with respect to price changes will be analyzed. Since the statistical value of life appearing in the first column differs according to calculation techniques and sectors, SVL will be used as a variable in the sensitivity analysis. In the second column, risk of death component is held constant. Since it does not differ with respect to person or system, this ratio is taken as 0,0235%. Change in SVL will affect this result. In the third column, since QALY component is also the same, 0,0014985 is taken as a multiplier. Since this column will also differ according to SVL; changes in this column are the result of the changes in SVL. The monetary equivalence of labor-loss can be seen in the fourth column. The minimum civil servant salary is taken basis for calculation so no change is expected in this column. For this reason the number is held stable. After all the components are added,it is seen that the price of the kidney ranges between 5300 TL to 12000 TL. Price elasticity of demand is taken as -1 for kidney transplantation which is corresponding to 527% to 443% change on transplantation amounts. Even the SVL is calculated higher, the change in total transplantation amount stands out as high. At this stage, the importance of the components rises to the surface. First of all, since the life of human is in question, statistical value of the life must be known for the calculations. The other one, death risk component, shows the monetary incentive given to donor in return for having risk of death during or after the surgery. For calculating this component, the SVL must be known, too. Donor will have a “life-quality” loss because of an organ deficiency. Although this loss will not be so high to affect the rest of his life substantially, a loss is in question to a certain extent. While this life- quality loss ratio is not explicitly given in Becker and Elias’s article, it is taken from the calculations. Since this ratio is independent from country or values, it is constant. Lastly, since the donor loses 181 “time” for healing, the monetary value of the lost time period must be calculated. 2016/1 Table 1: Sensitivity Analysis

% change in Total Statistical Death-risk Quality of life Value of % change total trans- kidney Value of Life component component time in price plantation value amount

1928541 453,2 2890 1951,4 5295 9,63 527,51

3101440 728,8 4648 1951,4 7328 13,32 501,84

3857080 906,4 5780 1951,4 8638 15,70 485,30 Y. Demirdogen

4652161 1093,3 6971 1951,4 10016 18,21 467,90 5785621 1359,6 8670 1951,4 11981 21,78 443,10

When it is considered that the costs of dialysis – even if the highest SVL is taken for calculation – are more expensive than total kidney value, it can be said that giving monetary incentive payment will result in decreasing/ending kidney waiting-list patients and also gainin economy will be higher. The graphic below shows the relationship between percentage change in price and percentage change in transplantation with respect to the percentage change in price. As it can be understood from the graphic, while percentage changes are not redundant and rapid, fast decreases in percentage changes of transplantation are observed. As the reason of that, the gap between transplantation needs and transplantation amounts can be suggested. Since there are great differences between actual kidney transplant numbers and kidney requirements, a small percentage change will cause dramatic changes on transplantation amounts. Even in the case that the price increases; kidney amount and transplant amount that would be demanded (under the assumption that all the demand is met) are still very high. The numbers in this article shows the minimum monetary incentive to be paid in the case the market is set free. Since the prices billed to the receiver in the black market are highly higher than this amount, even the price increases, there will still be (a lot of) buyers.

Graph 1: Percentage Change in Total Transplantation

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2016/1 How does Incentive Affect Kidney Donation Rates: Turkey Case

4. THE BENEFITS OF DECREASING THE WAITING LIST According to Ministry of Health data, waiting time in the kidney waiting-list is approximately 7 years. It is not certain to find a kidney in this period. Since the majority of the kidney patients are above 60 years, survival of these patients in this waiting period is doubtful. Nonetheless, diabetics and cardiac failure arises together with the kidney failure (Stel et al.: 2012). When the necessity of providing physiological support to the patients is considered, the cost of renal failure disease is further increasing. Besides, these expenditures are not enough to heal the disease. Decrease in waiting time means that the patients would get healthy again sooner than anticipated. A dialysis patient cannot be fully productive during his/her life and besides always require support and medical care. When considered from this perspective, every dialysis patient is restraining another person to participate in production/labor force. In general, kidney patients are trying to cover the dialysis and treatment expenses by him at the beginning. This results in a wealth loss to some extent. Extension of waiting time is also a factor affecting the patient’s recovery during and after the transplantation. If the recipient suffers from ESRD for a long time, he/she becomes unavailable for transplantation. Death is a matter of time for these kinds ofpatients. The extension of waiting time causes a major decrease of the patients’ life quality and causes a significant deterioration.As long as the time passes, the patients as well as his/her beloveds become nervous. So, social welfare loss for this type of patients and their next-of-kin is inevitable. The difference between supply and demand of kidney is growing day by day. This difference results in extension of waiting time. This extension leads patients to try illegal ways to find kidney. Since this problem cannot be eliminated in a short time, patients have to find different, illegal and unethical ways. The government does not have solid and quick solutions for ESRD patients. This gap will be fulfilled by kidney black market. It is obvious that, donation 183 system cannot meet the demand. Donation encouraging systems, mechanisms and advertisement policies are not satisfying the 2016/1 needs. On the other hand, ESRD patients are dying day by day and these patients do not have time to wait for a “legal” kidney. Since there is not any governmental control on the market, middlemen have exorbitant gains. Not applying an effective enforcement to the caught buyers, sellers and middlemen can be seen as one of the reasons of not being able to prevent black-marketing. Illegal organizations prefer the countries that have legal loopholes. Turkey was one of the haunted until the re-regulations on the legislation in 2012. Transplantation centers and the competence of Y. Demirdogen

transplantation teams are advanced in Turkey. Turkey is competing with U.S., in which the first transplantation occurred and who is applying transplantation in an advanced way. Illegal transactions are continuing on one side, on the other side people are dying because of the length of the waiting list. The main problem here is because of legal regulations. When the regulations are directed to eliminate the difficulties like Iran, illegal market will vanish, patients will gain their health as well as the money-loss will turn to economy. Within the donation system, patient would have his health (gain), surgical team and hospital would have its fee (gain) but donor and his family would not get any winnings (loss). The unique gain for donor is the moral satisfaction from saving another’s life. This motivation is not enough most of the time. Although Turkey is ranked as the first on living donation rates around the world, it is on average about deceased kidney donation rates per million capita. By current donation mechanisms, it seems impossible to close this gap. At this stage, it is a must that the authorities change their perspective. There are some problems about being adonor from the individuals’ perspective. People think that if they will be signed as a donor, their organs will betaken before death or their medical records could be sold to middlemen and they could be “hunted” by them. It must be explained properly and explicitly to the people that these records are private and unattainable by othersand their organs cannot be taken before death. On the other hand, for eliminating the religious reasons, there must be a proper and effective integration between Religious Affairs and government. The studies conducted to increase donation rates finds responses immediately. Encouraging applications done by Ministry of Health in recent years raised the donation rates to some extent. Thanks to campaigns, donation rates had increased by 259% between 2007 and 2014. After the legal regulations for increasing donation that was supported by effective and comprehensive advertisement campaigns 184 between 2010 and 2014, donation growth rate was almost % 140 (by the end of 2013, 51,6 ppm). Even though these results may seem 2016/1 promising, the vast majority of donations are from living donors and generally close relatives (by the end of 2013, 46,6 ppm). Turkey is ranked as the first on living donation rates.On the other hand, deceased kidney donation ratios are relatively small with respect to European countries (5 ppm)4. Turkey is well ahead around the world in living donor ratios. The explanation of this result is: the recipients who cannot find a donor from his close vicinity have to wait for a deceased donor but in general, cannot able to get any

4 Forfurther information please check www.irodat.org registry reports. How does Incentive Affect Kidney Donation Rates: Turkey Case kidney. Death donation rate is far below than the average of the world. In this context, studies to increase deceased donation rates should be conducted. Tracking system that is organized by the Ministry of Health within the entire country is tracking and allocating is done effectively. Even this tracking system, which is attached to a regulation, has some faults; it is serving actively and helpfully5. But this system is tracking already registered patients and donors. Possible donors cannot be known. At this point, the main duty is on medical personnel who work at intensive care units and/or emergency units. Employees in charge at these critical units, especially doctors, could be trained to persuade the families to donate the organs of the deceased. Doctors and personnel are usually refraining from asking this type of question. Regular trainings are given to the staff of dialysis and transplantation units by the Ministry of Health periodically. With attempts about this subject, donation rates could be increased. While this kind of demand does not have any illegal aspect; every study will turn as a benefit from many aspects since this kind of attempt would be an encouragement to save lives.

5. ENCOURAGING BEING A LIVING DONOR The effect of monetary incentive on kidney donation rates is analyzed. The quantity of the monetary incentive and the effect of it are investigated. In addition to this, some mechanisms that encourage being a living donor must be settled. There are some reasons to avoid from being a living donor. First of all, being a living donor is scary for most of the people. Living with organ deficiency may cause many problems. However, a missing kidney will not affect the quality of life significantly. Apart from heavy- duty employees and sportsmen, living with single kidney does not constitute a problem. “Kidney failure” defines malfunctioning of both kidneys. For this reason, studies for increasing the donation must explicitly explain that there will be no difference about quality of life after the donation. One of the drawbacks is about religious concerns. Vast majority 185 of the Turkish people have this concern. “Deceased body must have integrity” is the common consensus. Religious Affairs had given 2016/1 fatwa about organ donation, so there is not any inconvenience. This issue should be expressed at every possible platform by the Ministry of Health. Another concern is about people’s lack of trust towards the system. Individuals think that their medical records can be taken by third parties and can be used to find a matching donor and tracked. It should be clarified that these records are confidential and can only be seen by authorized staff. 5 Daily donor tracking system can be seen at the website: https://organ.saglik. gov.tr/web/ Y. Demirdogen

Possible donor candidates are afraid of dying during the surgery. In 2014 there is not any recorded death during surgery and only one donor died because of post-surgery complications out of 4263 transplantation. Death risk during this kind of surgery is less than dying because of a car accident. Average death ratio around the world is much more than Turkey’s average which is less than % 0,1. For this reason, it should be clearly explained that death risk during the surgery is almost zero. Broad and comprehensive explanations have to be done while the donor is registered. By clarification of every risks and gains explicitly and completely, there will not be any questions on the head. General knowledge is not clear so there is not any clearance among individuals. Clear information must be given to the registered donors and hesitatations must be eliminated. This informative explanation will create a domino effect and lead the registered donors to persuade non-donors (Thiessenet a.: 2013, Parekh et al.: 2008).

6. CONCLUSION The calculations done in this article are not related with commodification of human body. It is aimed to determine the amount of monetary incentive in order to meet the kidney need that is rising day by day. An approach is done about the quantity of the optimum payment amount. The purpose is not buying a kidney but compensating the loss (this loss should be separated as time, health and quality of life) of consenting donors. The analysis shows that monetary incentive will get excessive gain for both the individuals and also health and insurance system perspective. The amount of the payment that is calculated in the study is less than yearly dialysis costs. For this reason, applying monetary incentive for kidney donation will be advantageous. Legal regulations, ways of payment, quantity and procedure are subject of separate studies. At the studies conducted about kidney donation, it has been found that people are more eager to donate their kidney 186 instead of selling. On the other hand, different segment of the people consent to donate in return for monetary incentive. By this 2016/1 way, secondary possible donor candidates will be activated and also black market will be blocked.

7. DISCUSSION “Monetary incentive” could be seen as “selling kidney” by large number of people. The distinction must be clearly understood. Furthermore paying incentives for kidney donation is accompanied by moral debates. The focus of discussion is about “commodification of human body”. It is emphasized that if selling kidney will be legalized the How does Incentive Affect Kidney Donation Rates: Turkey Case sellers will usually be poor people and social distinction will deepen. When the individuals become desperate, they try deriving gains and getting out of the problem without considering if it is legal or illegal. Because of that, black market prefers always poor and uncontrolled countries. Yet, it is not compulsory that the donor is poor. When families are reluctant to donate their deceased family member’s organ, monetary incentive would be persuasive. Even a monetary incentive system is applied, it is not sure that all of the kidney demand will be satisfied. Many contestants cannot be “donor” because of their medical incompetence. The main reasons of that are alcohol consumption and genetic disorders.

8. APPENDIX Statistical value of life: Statistical value of life is taken from WHO Eurozone data in 2011: 2.487.283 Euro. Since the data and calculations are for the year 2014, it is obligatory to convert it with power purchasing parity. So in 2014; 1 £ = 1, 2938 $ (According to OECD 2009-2014 data) Over 2014 PPT 1$ = 1,198578 TL. Then; 2.487.283 x 1, 2938 x 1,198578 = 3.857.080 TL. Minimum value: 1.243.642 x 1,2938 x 1,198578 = 1.928.541 TL Maximum value: 3.730.925 x 1,2938 x 1,198578 = 5.785.621 TL Death risk of donor during or after the operation related with complication: 1/4263 = 0,0235 % Monetary equivalence of death risk: 3.857.080 x 0,0235 % = 906,4138 (1) Monetary equivalence of workforce loss: Minimum civil servant salary (2014) = 2114 TL. Healing period is about 4 months, so monetary equivalence of workforce loss: …………(2) Monetary equivalence QALY (Quality Adjusted Life Years): The ratio that was calculated by Becker-Elias: 0,0014985 187 3.857.080 x 0,0014985 = 5779,8 TL……………..(3) The total value of monetary incentive: (1) + (2) + (3) = 8638 TL 2016/1

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