Erdogan’s dream of a Turkic fund is now a reality. Here’s how it works

During an extraordinary summit last month, the heads of the Organization of Turkic States (OTS) – Türkiye, Azerbaijan, Kazakhstan, Uzbekistan and Kyrgyzstan – finalised a deal to establish the Turkic Investment Fund, an initiative of Turkish President Recep Tayyip Erdogan.

On May 30, Istanbul was named the headquarters of the Fund, which aims for better economic integration among the member states. Kazakh leader and former Secretary General of the Organization of Turkic States Baghdad Amreyev was appointed as the first President of the Fund.

Some have argued that the OTS would end up as an IMF-style structure, lending money to the states needing liquidity. However, the Fund is meant to promote the economic development of the OTS member countries, expanding mutual trade and support for economic activity.

What exactly is the Turkic Investment Fund, and how will it function?

A place in the global economic system

The Fund is the first joint financial organisation of the Turkic states, aiming to empower trade and economy and initiate new developmental and entrepreneurial projects.

The historical connection and the willingness to build the region's future together are essential aspects empowering the Turkic Investment Fund, says Yasar Sari, professor of Political Science and International Relations at Ibn Haldun University.

“This is cooperation and collaboration among several independent and sovereign states which have a common identity and mutual interests to work together to open themselves a place in the international system,” Sari tells TRT World.

The expert also highlights the fund’s long-term vision to present an alternative to the World Bank and IMF for the region.

“The Turkic Investment Fund will play the role of the World Bank, Asian Development Bank, European Bank for Reconstruction and Development and Asian International Investment Bank in the Turkic world to fund infrastructural or developmental projects,” he says, adding that the Fund had the status of an international financial organisation.

Other experts say that such investment funds generally provide a line of credit for various innovative projects, such as nanotechnology investments and renewable energy.

The developmental aspect seems to be the top priority of the fund. “The main target of the fund is to give credits to corporations, consortiums and SMEs for long-term projects,” Vugar Imanbeyli, Professor of Political History and International Relations of Middle East at Marmara University, tells TRT World.

Sari feels the Fund will draw its strength from the common identity of the members combined with the economic vision, which in turn will foster strategic autonomy of the Turkic states.

“When they succeed in turning their common identity for creating strategic autonomy for themselves against global powers and an emerging superpower, they can act more freely and become more respected members of the new global economic order,” Sari adds.

Economic independence

This step leading to strategic autonomy is essential in realising the economic independence of the Turkic states in the near future.

As Professor Sari emphasises, “If members of the OTS learn to work together in the financial and developmental areas, they will be more independent and least dependent on (even not dependent) international financial institutions like the IMF. But this should be long-term.”

Therefore, the Fund will provide an alternative and easier access to credit and not allow the member states to be squeezed by the constrictive policies of global financial organisations like the IMF. It will also free members from the hegemony of developed nations that control the lender organisations.

In this way, the Central Asian Turkic states will not be caught between Russia, China and the West’s policies in the region.

Professor Sari, for one, feels that in the long term, the OTS can become “one of the challengers to the old international economic hegemony, such as the BRICS nations are trying to do as well”.

Imanbeyli says that though the Fund's $500 million starting corpus “is not comparable to the other investment funds, it will transform the experience of Turkic states to work together through joint projects”.

Also, there is a non-hierarchical relationship structure and an equality principle in the initiative, in which each member state has an equal share – 20 percent – of the fund and has to make a similar investment contribution.

The president of the Fund will have a four-year term. The board of governors will be responsible for selecting a new president as well as periodically deciding on the sufficiency of the sources.

“The institutionalisation of economic cooperation in the Turkic world is an important step for the Turkic states having historical, religious, ethnic and cultural ties, which is missing for years”, says Imanbeyli.

It aims to extend its horizon to cover neighbouring countries and carries the existing bilateral cooperation areas into multilateral ones for the benefit of the region.

Imanbeyli points out that having the headquarters in Istanbul will help transfer experience and know-how from Türkiye to the other Turkic states.