Tuesday, March 22, 2011

Turkish Trains and the Lessons for Philanthropy

By Stephen Kinzer

I am writing this while speeding across the verdant Anatolian plain on Turkey's first high-speed train, which began operating two years ago. The Spanish-made cars are sleek outside and immaculate inside. Seats are comfortable, the ride is smooth, and attendants have just served tea and snacks.

This project reflects what works well in powerful emerging-market countries like Turkey—and also what works less well. It holds lessons for philanthropists as well as for entrepreneurs.

The train line was built by one of Turkey's most successful infrastructure companies, the Alarko Contracting Group, which has a global reputation for excellence in building large infrastructure projects. Among its current ones are an airport in Kiev, light rail systems in the Turkish cities of Samsun and Adana, and a water purification and distribution system in Astana, the new Kazakh capital.

Alarko was built largely by a visionary entrepreneur, Ishak Alaton. In the 1940s his family, like many Jewish families in Turkey, was effectively bankrupted by a one-time “wealth tax” that fell disproportionately on non-Muslims. The young Ishak Alaton was undaunted. He chose an equally ambitious partner and, starting from scratch, built his company. For decades he has also worked to promote civil society and human rights in his homeland.

Turkey spent much of its national life isolated from the global economy. That began to change in the 1980s, but the economy remained volatile and subject to sudden crises. Then, in 2002, Turks elected a single-party government that has made Turkey's economy one of the world's most vibrant. Last year it grew by an astonishing 11 percent, second only to China.

One of the government's priority projects was building a high-speed rail line from the capital, Ankara, to the largest city, Istanbul. Working with a Spanish partner, Alarko completed the first leg, from Ankara to the city of Eskisehir, in two and a half years.

This is not an ultra-high-speed “bullet train,” but a conventional fast one like the Acela, which serves the Boston-New York-Washington corridor. The 125-mile trip from Ankara to Eskisehir takes 87 minutes. A trip of about the same distance, from New York to New London, Connecticut, aboard the Acela, which is the fastest train in the US, takes 135 minutes.

All of this is good reason for Turks to celebrate, but also to worry. The new train line reaches only to Eskisehir, and progress toward finishing the route to Istanbul is slow. Neither Alarko or another comparably qualified company has been given the contract to complete it. No official reason has been given, but in Turkish business circles, many say that whoever wins the contract is being expected to make “special arrangements” with government agencies or officials. They may range from bribes to shady side deals benefiting favored subcontractors. Alarko is known for its resistance to such “arrangements.”

When the contract for the first leg of this train line was awarded, Turkey's one-party government was reveling in its reputation for vigor and honesty. In recent years, that reputation has begun to fade. Entrepreneurship works only in a clean political environment. So does philanthropy. Both require cooperation with government, but when that cooperation becomes tinged with corruption, nations and individuals lose.

Stephen Kinzer is an award-winning foreign correspondent who has covered more than 50 countries on five continents. Kinzer spent more than 20 years working for the New York Times, most of it as a foreign correspondent in several countries including Nicaragua Germany and Turkey. He is the author of several bestselling books including Crescent & Star:Turkey between Two Worlds and Reset: Iran, Turkey and America's Future.

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