As indicated in the previous sections of the paper, Turkey conducts is maritime activities in the Black Sea, the Mediterranean Sea, the Aegean Sea, and the Marmara Sea. The Mediterranean Sea and the Aegean Sea are of great significance to Turkey. The Mediterranean Sea, as this study will expound, will shape the Turkey’s maritime policy through its relation to the EU, its bid for accession, the broader EU integrated maritime policy, the Schengen Agreement, and Turkey’s bilateral conflicts with EU members. However, the Aegean Sea disagreement between Turkey and Greece remains the most pronounced. The Aegean dispute, that threatens to tear up the two countries, results from Greece’s fear of its citizens who inhabit islands near Turkey. On the other hand, Turkey fears that Greece could increase its territorial sea zones unilaterally (hence creation of new jurisdiction zones). As a result, it would block important sea ways for Turkey. Despite both countries claiming the right to 6 nautical miles in the Mediterranean Sea, the dispute gained prominence when Greece invaded the controversial state of Cyprus and attempted to annex it to itself (International Crisis Group, 2011).
Both Greece and Turkey claim rights to 6 nautical miles of the Aegean Sea’s territorial waters, which leaves close to 50% of the sea under high seas categorization. In this case, Greece, which is a signatory of the United Nations Conventions on the Law of the Sea (UNLOSC), can expand its territorial waters by 12 nautical miles as it is allowed in accordance to the convention. On the other hand, Turkey would do the same since the Turkish Parliament enacted into law, a stipulation of military action if Greece extends its waters beyond the current 6 nautical miles. However, it is notable that Greece controls over 80% of the Aegean Sea islands (Rozakis, 1975).
There is, therefore, latency of crisis that would extend beyond the two nations with severe consequences. Turkey has exercised its muscles and threat to start the war with Greece since the 1970s. In 1974, Turkey sent an oceanic vessel to the Aegean Sea where its continental shelf was said to overlap with Greece’s. In 1976, it sent Sismik I vessel, accompanied by warships, to Greece’s Lesbos Island. The following act almost led the two into a war that was mediated by the UK. In addition, Turkey has also sent ships to probe and update its maps of Greek waters, as well as flying war jets over Greece’s islands. The impact of an actual crisis is hazardous for Turkey, especially towards its EU bid. It is a problem, which affects Turkey’s maritime sector, appears to concentrate on the Aegean issue guided by memories of lost territories (under the Ottoman Empire) instead of objectivity on how best its maritime sector would survive (International Crisis Group, 2011).
The major maritime issue, with regards to this dispute, which will significantly impact Turkey’s maritime policy, is the solution by the International Court of Justice (ICJ), which is handling the dispute. The other issues relates to the outcomes of extension of sea territories by both countries. In the event that either extends, the distribution of the Aegean basin controlled by both will drastically change. Currently, Turkey controls 7.47% of the Aegean basin waters while Greece controls 43.68%. An extension to 12 nautical miles by Greece would change its control to 71.53% and Turkey’s to 8.76%; the area regarded as high seas would fall to 19.71% from 48.85%. The effects would be devastating for the Turkey’s maritime sector since it would become Greece’s mare clausum and close out Turkey (Rozakis, 1975).
The other effects would be the reality that such an extension by Greece would isolate Turkey’s Aegean ports. Thus, its ships would have to cruise through Greece’s territorial waters to enter the Turkish straits. Given the importance of these straits to Turkey and the extent to which they serve its military and economic purposes, Turkey would be devastated. In addition to the reduction of passage routes for its vessels, Turkey is hugely investing in marine tourism through expensive resorts; yet this move would restrict its marine tourist activities (currently at a 50-50 basis with Greece) to smaller spaces. Its access to sub-surface resources, such as future prospects of marine mining, would be denied. In addition, it would leave slim continental shelves to Turkey, thus crippling its Maritime sector. All the gains that the country is making will be reversed (International Crisis Group, 2011).
Rozakis (1975) also opines that the major problems with Turkey’s maritime sector, as regards to the Aegean dispute, pertain to its approach to the matter. It has continually approached the issue as only solvable through a bilateral or military approach, which continues to hurt its international scoring. Despite the apparent military threat of such a move by Greece, it has continued to state its case based on other considerations other than regional and national concerns. It continues to deny the existence of a right by Greece to extend its waters; this limits its ability to argue that such an extension would violate some of its rights. It has also wasted time avoiding the ICJ to handle the dispute. In general, Turkey’s approach to the Aegean dispute has not always been in the best interests of its maritime sector. There is a need for the country to change the manner in which it asserts its legitimate claims in order not to hurt its bilateral and multilateral relations.
Turkey’s Quest for Accession into the EU
It has been constantly stated and accepted as true that the sea is Europe’s source of life. It is clear that it serves as a transport route, source of food, regulator of climate, source of recreation, source of energy, among many other pivotal. It is also evident that the zone is on a constant quest to integrate the policies European Union members in a bid to protect this important resource. Critical to the quest of safeguarding Europe’s source of life is its focus on Maritime Policy; the EU launched a wide-covering and integrated Maritime Policy in 2007. This policy seeks to ensure environmental protection of the maritime environment and expansion of the zones internal market through maritime commerce. The policy also aims at ensuring that an efficient surveillance system is put into place to prevent drug trafficking, piracy, terrorism, and illegal immigration (European Commission, 2008).
Turkey suffers from significant setbacks, due to high rates of pollution on its strips. This new policy is particularly interested in the Mediterranean Sea, which is one of its four seas that constitute its maritime activities. However, the major issues shaping Turkey’s maritime industry result from its bid to join the EU and the consequence of such joining on its Maritime activities and policy. Rozakis (1975) notes that the conditions laid down for Turkey, which it has to adhere to so as to qualify for membership, influence its policies and activities even before actual accession. Turkey’s process to join the EU has been a long process, which is far from over, partly due to Turkey’s lack of compliance to the critical EU’s requirements.
Despite the inability to predict the extent to which the new maritime policy will affect Turkey’s maritime sector, it is safe to note that Turkey will have no choice but to comply with major EU requirements. This policy is particularly a setback on Turkey regarding environmental protection given the alarming rate of pollution that occurs under Turkey’s watch. It is also worth noting that since Turkey really desires joining the union, any move by the EU regarding international affairs that affect its member state will influence Turkey’s actions (European Commission, 2008).
Turkey’s maritime sector is set to take huge influences from the new policy on two levels. The first reason pertains to the fact that it really needs to join the EU and, therefore, will act in a manner consistent with EU policies, such as the new maritime policy. The second one pertains to the resourcefulness of the EU that Turkey can learn from (before accession) and can have access to (upon accession). Reviewing the new maritime policy is, therefore, imperative in understanding the direction that Turkey’s maritime industry might take.
In addition, the quest for accession, the conflict between Turkey and Greece and the Cyprus issue, will also shape Turkey’s maritime policy. It is specifically related to its new policy since Cyprus and Greece are members while Turkey is an aspirant. The EU Schengen Agreement that leads to the creation of ‘European Waters’ through maritime borders will cover 90% of high waters, most of which are in the Mediterranean Sea. This will hugely affect Turkey, and the decisions the EU makes regarding the Aegean dispute and the Cyprus problem will shape Turkey’s maritime sector significantly. This is because before accession of Cyprus and Malta, the boundaries were much less; however, now, they leave little choice for Turkey, especially if it goes against EU’s maritime policies. Consequently, the manner in which the EU will solve the bilateral disputes and hasten or delay accession will impact Turkey greatly.
European Union’s Integrative Maritime Policy
This novel policy takes a form of a broad approach towards regulating and optimizing the returns from the sea-related activities. It is a comprehensive undertaking by EU member states, EU itself, and other related institution. This undertaking commits to ensure integrated and jointly managed maritime activities. The policy will have EU at the center while member states play critical roles in the realization of specific results through deliberate policies, new decisions, and focus on targets. The policy prioritizes on shipping activities since they are the backbone of its major activities, such as cruising, fishery, off-shore energy transport among others. It emphasizes the need for a sustainable use of the sea that will enable economic growth while ensuring non-deterioration of the environment. Its focus on shipping as a priority area of policy target also arises for the understanding that the haunting issues of pollution arises largely from shipping activities. Thus, the policy aims at combining different approach to ensure huge returns, expansion of gains, and environmental sustainability (European Commission, 2008).
The integrated maritime policy also aims at developing a sea surveillance system that will allow monitoring of pollution, illegal immigration, and piracy among others. Turkey’s maritime policy is likely to benefit and change from its current low surveillance capacity if it accedes as a member. Turkey requires surveillance radars to monitor pollution it its straits, but the cost is too high for it. It might, therefore, benefit immensely through EU’s integrated surveillance FRONTEX and EUROSUR. Additionally, the surveillance system will create ease of controlling sea activity since the state-based surveillance system will receive a boost from integrating them into a “European Network”. In addition to Turkey’s maritime sector being influenced positively upon joining, its strategic position and indispensable contribution to the stability in the region (maritime related or otherwise) will lead to its consideration in the system integration. This will influence its internal policies, as well as policies relating to other maritime partners, such as Greece, the UK, and Cyprus, who are EU members (European Commission, 2008).
To achieve the ambitious goals, the maritime policy aims at revising the 2000-2018 maritime transport strategy to eliminate barriers in the transport space. This will be done through the creation of competent short sea shipping systems. Such a move will ensure port services are boasted, and investment and professional opportunities for member states are created. The policy will also achieve its objectives through increasing funding into Marco Polo and TEN-T projects.
Pollution of Turkish Straits
A major problem and concern for Turkey’s maritime sector is the excess pollution of its straits that it continues to witness. Since it has always pushed for reduction of the polluting activities, the realization of its goals and the policy approach adopted will influence the future nature of this sector significantly. Research indicates that a major cause of pollution in the Turkish straits is the historical knowledge that the straits are the cheapest for transporting the Caspian Sea oil. This fact predisposes Turkish straits to pollution than any other strait in the region. It is worth stressing that pollution results from shipping activities, such as leakages, nuclear powered ships, collisions, dumping of wastes into sea, disposal of dangerous cargo among others (Tutuncu, 2005).
The above mentioned sources have been substantial contributors of pollution in Turkey’s straits and a major challenge to its maritime sector. According to reports by the Istanbul Municipality Environmental Protection Control Department, discharges of oil, its derivatives, sewerage, garbage, paint, oil leakage, scrap metals, and other materials have been leading sources of fines imposed on ships passing through the straits. It also states that the Turkish strait of Bosphorus has witnessed 480 accidents between 1953 and 2003. A major challenge to Turkey’s maritime sector pertaining to pollution is that it is yet to harmonize some of its policies on pollution with international standards. This will boast its internal abilities to manage the rising concerns. Despite the important role that its territorial waters contribute to its economy through fishing, marine tourism, among others, pollution in the straits continues unimpeded (as cited in Tutuncu, 2005).
Perhaps, the most notable factor with regards to pollution that will shape its maritime sector is how Turkey will respond to pollution within the confines of international law. It is imperative to stress that the Convention on the Territorial Sea and the Contiguous Zone of 1958, notes that states responsible for some territorial waters upon which foreign ships pass should not impede their navigation. It also extends to state that the states controlling such waters have a right to institute a regime that will ensure compliance to non-polluting activities. The UNLOSC 1982 indicates that states bordering straits predisposed to pollution should cooperate to ensure that pollution is prevented, reduced, and controlled. This indicates that Turkey can only put in force anti-pollution policies that are within the frame of international laws. Thus, Turkey’s maritime sector is likely to continue in transformation as Turkey endeavors to safeguard its straits, balance policies to international law, and refine its internal approaches (Tutuncu, 2005).
Another major problem of Turkey’s maritime sector, leading to huge pollution in these straits regards Turkey’s refusal to evaluate the pollution from the angle of innocent passages. The country is yet to consider the potential threats of increased pollution, due to the increasing tonnage of cargo that passes through its straits. It is also not focusing on the changing nature of vessels, which means different levels of potential pollution. Thus, a major challenge to its sector is laxity in its approach and fear of using the mandate given to coastal states. This study notes that Turkey continues to regulate pollution as informed by the Montreux Convention, which is devoid of any specific provisions on pollution. This means that its policy guidelines are not updated (DeLuca, 1981).
Turkey’s Ship Building Industry-Coherence of Policy
A critical agenda in Turkey’s maritime sector is boasting its position in the shipbuilding industry, which is currently dominated by Japan, China, South Korea, and other EU members. This would serve the interests of Turkey in a major way since it is surrounded by a huge market. In a quest to achieve this vision, Turkey has come up with the Istanbul Metropolitan Plan 2023, which will target the shipbuilding industry. This will hugely impact the maritime sector and is also in line with Turkey’s accession bid; the EU considers shipbuilding central to its economic transformation plan. In Europe, there are over 300 shipbuilding zones, 40 of which contribute significantly to the region’s economic growth, and the EU has set a target for shipbuilding that aims at rationalizing shipbuilding through a quantitative adjustment mechanism (capacity cut-back) (Erbas& Erbil, 2010).
Turkey’s implementation of 2007-2013 Development Plan IX will transform the shipbuilding sector. The plan, which is already in effect, will shape the sector in a number of ways. The plan operates through high level decisions implemented as medium term plans. Then reporting through Special Expert Commissions Reports is submitted to guide priorities, principles and investments to be made. With regards to the shipping sector, Turkey has conducted an analysis of Istanbul Metropolitan and Yalova city shipbuilding activities. However, Turkey has major challenges in the implementation of the project and improvement of the shipbuilding industry (Erbas & Erbil, 2010).
As noted in the previous section, Turkey is doing relatively well in shipbuilding and has not suffered shocks of the 2007 financial crises like many peers in shipbuilding. Despite this, the sector lags behind, due to importation of most of the materials required in shipbuilding; this increases production costs. This study notes that SPI Development Plan IX that handles the sector plans and the Special Expert Commission Report on the sector offered no recommendation to solve the situation. The report opined that future decisions would not deviate from past decisions. This indicates that Turkey will continue to experience low gains until it focuses on creating an internal source of shipbuilding materials (Erbas & Erbil, 2010).
In addition to the material problem, the plan to reform the sector and increase gains continues to meet with a problem of policy incoherence. Turkey seems to make proposals that are not carefully balanced. For instance, this study notes that shipbuilding in Turkey takes place mainly in Tuzla District (Marmara region). Investors in the region realized that there was an increasing demand for ships and had to expand to meet the future demands. Yet there was little in the plan that indicates a response, guide, financial support, and directions over such expansions. It is also notable that Turkey’s maritime sector will continue to lag behind until it implements a plan and regulates Tuzla shipbuilding operations. This majorly private area produces pollution, lacks an expansion capacity, and continues to experience lack of the adequate infrastructure (Erbas & Erbil, 2010).
Erbas and Erbil (2010) note that Turkey started concentrating on Yalova as a shipbuilding location after realizing that the shipbuilding activities in Istanbul Metropolitan were congested, and thus, they were not under good spatial conditions. However, it did little to address the issue, and private investors had no choice but to consider alternative locations that interact with Istanbul; this was Yalova. However, Yalova has underscored a problem of policy incoherence in the planning policy. Yalova’s 4.5 km of the sea front was designated as a shipbuilding area, yet this area was once designated a residential area. It is worth stressing controversies between investors, local administrations, and NGOs on implementation of policies continue. The master plans on shipbuilding fall within a larger Metropolitan Plan 2023, which bases an economic transition in trade on science and technology, yet there exists no industrial infrastructure assessment of capacity among other incoherencies. The solution and streamlining of this policy will impact the maritime sector hugely, but their continued existence will continue to impede any meaningful gains (Erbas & Erbil, 2010).
Precautions and Solutions for Turkey’s Maritime Sector
Aligning with New EU’s Integrative Policy
Despite the debate regarding its accession into the EU or issues that EU has refused to solve in its favor, Turkey stands to benefit if it aligns its maritime policies to the new EU policy. This is because, as a prospective member, it stands to gain more as opposed to losing from the adoption of this policy. The adoption of this policy will also indicate that Turkey can be pro-active in territorial as well as environmental conservation, and international issues. Turkey will benefit from the policy, either acceding or not, since many EU members will extend their support to its maritime management in return for its friendship; its location is desirable and critical to other EU members, and thus, they know it (European Commission, 2008).
To improve its maritime sector, Turkey requires the goodwill of its neighbors whom it trades with. The previous sections of this study indicate that Turkey exports significant amounts of its produce to the EU member states. Given this reality and the continued disputes and discontent among member states regarding Turkey’s accession, (which are triggered by its response to policies and issues incidental on EU members, such as Greece and Cyprus), Turkey must take precautions to restore the broken trusts. This study appreciates the legitimacy of Turkey’s issues regarding the Turkish Republic of Northern Cyprus (TRNC) and the Aegean Dispute among others. Though, it also indicates that Turkey must ensure a balance in these conflicting issues. The EU craves for the creation of ‘European waters’, which would cover almost the entire Mediterranean Sea through the Schengen Agreement, Turkey must recall that Greece and Cyprus (with whom it is in serious disagreements) are members of the EU, and thus, it might lose the benefits, as well as the chance of acceding. This study opines that Turkey must push for its EU bid informed by matters beyond historical claims but, maritime and economic sense, as well. For instance, Turkey must approach its obligation cautiously, through its trade pact with the EU to open its ports to Cyprus (an EU member), despite their differences (European Commission, 2008).
Approaches and Solution to the Aegean Dispute
Turkey is noted to lose a lot in its maritime sector if Greece unilaterally extends its territorial waters. However, it must be ready to change some of its approaches to the issue if it is going to benefit its maritime sector. For instance, Turkey might benefit its sector by solving the dispute through admitting that Greece has the right to extend its waters; this is pursuant to both customary and the UNCLOS. Only after acknowledging this, would it qualify (according to Article 300 of UNCLOS) to argue in favor of the limitations that the UNCLOS imposes on such a move? The UNCLOS does not give a unilateral right to exercise such an extension. It limits moves that would create hostilities and, thus, holds in place Turkey’s right to defend its waters among others. It is, thus, clear that it would serve Turkey to acknowledge Greece’s right and then contend that such a move would be unjust and contrary to many just courses (United Nations Convention on the Law of the Sea, 2009).
Rozakis (1975) opines that since Turkey is on the losing end of the debate, it might serve it well to comply with the accession requirements. This would edge it close to the EU from where it would be cushioned from some repercussions as a member. In addition, it could push for the solemnization of the Schengen Agreement by joining other parties, like NATO and the US, that share similar concerns over Greece’s extension. Since Greece is an EU member, the Schengen would stop the establishment of Greek waters but, European waters. This would serve Turkey well as an EU member or as an aspirant. It should, thus, seek support from the US and NATO (who conduct operations and rely on the high seas unimpeded waters for their operations) in pushing for the Schengen creation. In addition, Turkey should consider applying for UNCLOS membership; this is because its non-membership limits its ability to asset a violation that it is not a party to. The two moves would ensure that the Mediterranean Sea, which is critical to its maritime sector, remains as high seas or under Schengen without any impediment of passage (United Nations Convention on the Law of the Sea, 2009).
Turkey must also acknowledge that it stands to benefit if the dispute is solved amicably and, thus, should win the support of neighbors and the international community by championing for peaceful approaches. It should cease its military flights to the Greek Islands in the Aegean Sea. Additionally, it should champion for the demilitarization of the islands by relocating its armed forces (Forth Army) away from the islands. The indication of goodwill will ensure that as the solution to the dispute has been sought for, its maritime sector will proceed unimpeded by current hostilities. In addition to these moves that will foster trust and thus, increase its chances of accession (since the EU requires Turkey to resolve all disputes with its members), Turkey should agree to the establishment of sea corridors that are flexible. Some Greece experts have expressed favor over 8 nautical miles for some Islands. This would lead to reduction of Greek corridors where unnecessary, unimpeded access of Turkish vessels to its major ports among other flexible compromises (Rozakis, 1975).
Solutions to Pollution in Turkish Straits
The regulation of these straits happens to fall among those regulated by international treaties that have existed for a long time. There is a need for rapid and determined efforts to be introduced in order to cope with pollution, especially with the density of passage traffic increasing through crude oil and kerosene tankers. The need for urgency cannot be over-emphasized by recent accidents such as Indipendanta (1979), Jambur (1990), Leontans and Rabunion 18 (1991), and Rapan (1993) among other gross accidents. These accidents caused major and widespread pollution through collisions and running aground (Tutuncu, 2005).
To solve this problem, Turkey must strongly utilize the freedoms in the United Nations Law of the Sea Convention (1982). This law will allow Turkey (a coastal state) to put in place measures to eliminate pollution in its straits, to avoid accidents, and to improve the manner of handling collisions, dangerous situations, or potential pollution threat, to maintain safety in its straits; to prevent incidental wastes, and to stipulate the standards that will guide the design, construction and manning of ships. The later will allow Turkey to update its policy and institute policies that regulate pollution depending on the class of the vessel. It means that nuclear ships, crude oil tankers among other vessels that are at high risk of causing pollution should meet higher standards of manpower in the vessels and better designs (United Nations Convention on the Law of the Sea, 2009).
As a solution to the limitations of the Montreux Convention, Turkey should further apply UNLOSC 1982 that allows it, as a coastal state, to designate schemes for traffic separation and sea lines where necessary. This provision allows the use of this authority both in Turkey’s territorial waters and in international navigation straits. Despite the limitation on international navigation straits, Turkey can prove the necessity of such measures given the apparent importance of non-polluted straits to its economy. Since the limitations of the Montreux Convention relate to navigation and passage, but not civil, criminal jurisdiction or rights of police, Turkey will be in a position to regulate, prevent, control and reduce pollution in its straits while observing passage and navigational requirements of the treaty. Since it supports the International Convention on Safety and Pollution, its move will not be a violation of international requirements (Tutuncu, 2005).
To avoid accidents, such as the ones mentioned above, Turkey should explore the options of pilotage and towage of its straits. This will help in preventing such accidents and irretrievable losses that threaten its aquatic habitat and its marine tourism. To institute this move, Turkey needs to invest in surveillance, safety systems, and monitors. Seminars conducted since the 1990s on accidents in the straits indicate a pressing need for Turkey to establish schemes of traffic separation. This will serve and improve its sector since it falls in line with the IMO requirements (Turkey is a member). Such network radar will offer enough sufficient information to reduce pollution through correspondence. As the project requires huge financial ability and goodwill, Turkey needs start cooperating with international maritime organizations and states using its straits to realize results (Tutuncu, 2005).
Shipbuilding and Policy Solutions
Since the Yalova region has the enormous labor potential and skillful personnel, Turkey should increase its support and encouragement to investors. It should focus on improving the standards of ships made from this location and transfer some of the operations form Tuzla to Yalova. This would be in accordance to the Special Expert Commission Report that Tuzla is extremely inadequate in offering safe and efficient conditions for shipbuilders. In addition, to boast the gains from this sector, Turkey should align its shipbuilding master plan to the national macroeconomic objectives. It will place the sector in a national position, as well as encourage investment and assistance since it has the required potential. To solve the problems of relocating to Yalova raised by the residents, Turkey must be consistent in its planning policies. It should designate sea shores and land for shipbuilding to curb the opposition of relocation and stop the construction of residential areas. Conclusively, Turkey must strive to develop an innovative approach in planning to ensure sustainability of the metropolitan strategy and, thus, the growth of the shipbuilding industry. In addition, to reap the full benefits of shipbuilding in Yalova, Thurkey must ensure that there exists a planning process that negotiates with and involves the community. This functioning process will ensure optimal decisions and maximum returns (Erbas and Erbil, 2010).
In addition, Turkey must harmonize the source of its policy direction through the creation of the Ministry of Shipping. This is because there exists various institutions that control maritime affairs, yet they fall under different ministries. For instance, the Turkish Maritime Organization (that operates the Turkish Maritime Lines and Turkish Cargo Lines) falls under the Shipping Under secretariat of the Prime Ministry. The Ministry of Transport runs the Turkish State Railways. This creates incoherence of policy, bureaucracy, and inefficiency (Yercan, 1998).
In relation to Yalova, Tuzla, or any other place concerns with shipbuilding and the plan to increase the output of this sector, Turkey must remember that it faces similar challenges like other mid-sized economies. It must be careful in its production to regulate the excess capacity. The following capacity was particularly clear during the financial crisis, and this is continuing through the establishment of more green yards in Japan and China. Since some of these projects might be funded by the public, and there is a likelihood that the current fleet of world ships is relatively young, Turkey must compute the probability of replacing these ships given their economic lives. This will allow a good estimate that will avoid overcapacity in production (Yercan, 1998).
Thus, to realize increment, the maritime sector in shipbuilding must expand its product range to compensate for the likely short demands. Despite the fact that it may still depend on its core market niche, to increase its world market presence, Turkish yards should consider strengthening their traditional areas of strength while seeking newer expansions. It should also go strongly in areas where it can gain a competitive advantage through its unique expertise. This could be in special purpose vessels, such as vessels to support offshore activities or where their presence is growing. It should also search for joint ventures, increase foreign participation; this will go in hand with increased research and development to strengthen its technological base. This study notes that shipbuilding market leaders, such as South Korea, Japan and China, have grown tremendously, due to high research and development (Erbas & Erbil, 2010).
Privatization of Some Maritime Institutions
Studies on the benefits of privatization abound, and there is increasing evidence that privatization of state-owned institutions may lead to the efficiency, lower costs, competitiveness, and higher profitability. Turkey’s maritime sector has been scheduled for privatization since the 1990s, but this is yet to be realized. It is argued that privatization will help the sector transform and compete at a global level with peers in the sector. This study notes that the Turkish government owns and controls the entire sector. It controls the Turkish Maritime Organization; this organization is not profitable, records a 20 billion USD loss every year, has huge over-employment, and operates at an excess capacity. Privatization of this organization and fast tracking the privatization of some sub-sectors within it that have been on schedule since 1990 would reverse the gains. It would lead to the efficiency, utilization of full capacity and profits through reduced costs among others (Yercan, 1998).
The state owns the four shipyards under the Turkish Shipbuilding Industry. The yards have a potential of 1 million dwt per year, yet they only use 10% of this capacity. Privatization of these yards will encourage more investment and reverse the current inefficiency and slow pace in development. This study also opines that privatizing supporting sectors in the transport industry will improve the performance of the sector. The major targets in these support sectors should be Turkish Maritime Lines and Turkish State Railways. This is because Turkish Maritime Lines is responsible for the local/national passenger ferries in the Black Sea and International ferry services in the Mediterranean Sea. The need for their efficiency that will improve the performance of the maritime sector is critical. On the other hand, there is a need to privatize Turkish State Railways since they are critical in operations of seven major ports and cargo terminals of Mersin, Istanbul, and Izmir. The privatization process will enhance general efficiency through competition since monopoly powers create inefficiency and increase costs (Yercan, 1998).
Financial Policy that Supports the Maritime Sector
For the endeavors mentioned and planned in the sector to be realized, Turkey must increase its investment in the sector through a deliberate and efficient financial policy. It is noted that the amounts of government subsidies to the sector amount to 10% while the rest is undertaken by investors at their own risk. It is important for Turkey to fast track the proposal of establishing a specialized bank that will serve the maritime sector. This may be substituted by an international consortium bank and investors in the sector. The move will increase credit available to meet increasing demands. It will be in line with other endeavors, such as increasing the output from the Yalova area. These establishments will also aid in reducing bureaucracy in opening shipping companies, leasing vessels, or operating vessels under flags of Turkey (Yercan, 1998).
This study found out in its prevoius parts that some of the most successful states in shipbuilding and the maritime sector invest a lot in training. They have efficiency and professionalism in operations, due to high quality training of the maritime employees. If Turkey takes full advantage of its strategic location, improves its shipbuilding quality, increases its fleet among other endeavors; it should invest in maritime training and education. Since maritime education increases safety, improves functioning of maritime activities, fosters healthy competition, improves cooperation with maritime partners, and reduces sea transport costs; Turkey stands to gain hugely, and thus, investment in this area is inevitable if it is to improve the sector. Turkey has 13 maritime schools and various maritime trainings at university levels; however, these schools (especially the newly established) continue to receive low attention through inadequate subsidies. This situation requires a reversal to ensure high quality, as well as sustainable and guaranteed maritime employees who are well equipped (Yercan, 1998).