Turkish PM Davutoglu on Turkey's Economy

Event Description

Prime Minister Ahmet Davutoğlu of the Republic of Turkey joins CFR President Richard N. Haass to discuss Turkey's economy, national security, and the geopolitics of the Middle East. The prime minister discusses the strengths of the Turkish economy, rejecting claims that Turkey faces imminent economic difficulties. Davutoğlu goes on to address Turkey's controversial domestic security law, Turkey's role in the Syrian civil war, and the challenges posed by ISIS.

This meeting is part of the 2015 Corporate Conference.

Event Highlights

“Our GDP was around $240 billion when [the Justice and Development Party] came to power. Now it is around $830 billion. Per capita income from $2,500 now around $10,500. And in all statistics, especially in infrastructure there has been a tremendous change.” - Ahmet Davutoğlu

“Independence of judicial system is very important. But also not independence only from executive power, but independence from the monopoly or domination of one group.” - Ahmet Davutoğlu

“[To counter ISIS] we have to have a grand, integrated strategy for Syria and for Iraq, but especially for Syria.” - Ahmet Davutoğlu

HAASS: Well, good evening. Welcome to the Council on Foreign Relations. I want to echo Ruth's remarks. And thank you all for being here. And we're thrilled to have such a strong lineup for the corporate conference this year.

With that, let me though turn to the prime minister of the Republic of Turkey and welcome him to the Council on Foreign Relations, not for the first time, I should add. He's been here several times, though previously as foreign minister, if I have my facts correct...

DAVUTOGLU: That's right.

HAASS: ... both in New York and Washington. But thank you again for being with us.

This—the prime minister, though, has not come alone. This is—the delegation is extraordinary by any measure. It includes, among others, my old colleague and friend, Ali Babacan, who's the deputy prime minister with particular oversight for things economic in Turkey.

The minister of finance is with us. I believe the undersecretary for foreign affairs, if I remember correctly. Turkey's two ambassadors, if you will, in this country to the United States as well as the permanent representative to the United Nations. And the mayor of Istanbul, I believe is with us as well.

Fantastic. And they are with many of their colleagues. Again, we're honored and thrilled to have so many of you here.

I think I'll say one or two things about Turkey. The Republic of Turkey is and has been unique. It's at the crossroads of Europe, Asia and the Middle East. Today now it's a country of more than 80 million people. Its GDP is somewhere above $800 billion, with a b. Roughly 18th or so, 17th to 18th in the world.

And the prime minister is here for many reasons. But I don't think it's a misstatement of his visit to say that a principal reason of his being here is to promote U.S. investment in Turkey and U.S. trade with Turkey.

As for things political, the prime minister's party, the AKP or the Justice and Development Party has been ruling Turkey now for over a decade. It currently holds just over three hundred  seats in Turkey's Grand National Assembly. It obviously holds the presidency. And it is, let me say, the favorite in the run-up to the June elections.

The relationship between Turkey and the United States has been important for a long time. But to be candid, it's also been uneven for a long time. I know this from personal experience as I worked on and with Turkey many times while I was in the U.S. government at the State Department and at the White House.

And we've had difficulties over past tech age (ph) regarding Cypress and Greece. The involvement of the Turkish military in the political sphere and its role in the 2003 Iraq War.

Though as well, have been moments and years of close cooperation between our two countries. Obviously Turkey's entry and membership in NATO, its fighting alongside U.S. troops in the Korean War, its playing a central role in the Gulf War, the 25th anniversary of which we mark this summer.

I would say today that U.S.-Turkish relations remain important but also often difficult. There is real concern here—to just get it out there and then the prime minister and I will discuss it and then we’ll open it up to you—there is concern in this country about Turkish democracy, the state of Turkish democracy, and the trajectory of Turkish society. And in the realm of foreign policy there are differences and worries both about things that Turkish is doing and not doing.

So there's no shortage of things to discuss. And again, we are very pleased to have the prime minister of Turkey with us this morning. He and I will start. I'll ask the easy questions and then we'll open it up to you all to ask the tough ones.

Let's start with the economic. It seems to me that's fair, given the purpose of your trip.

DAVUTOGLU: Sure.

HAASS: If my statistics are right, I'm sure at least two of the gentlemen in the front row will correct me if they're not, Turkey is growing these days at plus or minus 3 percent. The lira has weakened significantly against the dollar. And inflation is now somewhat above the inflation target. I think that's all right.

So the first question is really what can and will be done to revive growth yet avoid runaway inflation?

DAVUTOGLU: First of all, thank you very much. It is nice to be here back in CFR.

Yes, Turkish economy is in fact a success story in the last two-and-a-half years. In 1990s the world economy was growing and expanding, but unfortunately the performance of the Turkish economy was very poor.

Per capita income and GDP did not change in ten years almost. It was same—around $2,500 to $2,700 from 1991 until 2001.

After economic crisis in 2001, there was a huge earthquake in Turkish economy. And that had to be several structural reforms.

When we came to power the most negative impact was the absence of self-confidence of the people that Turkey could overcome all these difficulties and create a new approach. Our government for last twelve years tried to revive this self-confidence and made structural reforms—not only in economics.

Economy—free economy cannot function if you don't have proper democracy. There has been several democratization packages. Part of that is economic growth. And in—despite economic crisis in 2008 and the narrowing of the world economy, Turkish performance in economics was like a miracle.

Our GDP was around $240 billion when we came to power. Now it is around $830 billion. Per capita income from $2,500 now around $10,500. And in all statistics, especially in infrastructure there has been a tremendous change. Like we had only 6,700-something highway network.

Now we have 23,000 highway network. Turkish Airlines was a weak airlines in the world—just some indications. Now Turkish Airlines is the biggest airlines in the world in the sense of destination, number of destination, biggest airlines in Africa.

Now we are building the biggest airport in the world in Istanbul for 150 million passengers per year. This indication is important because if there is no moment of commodity, businessmen economic activity cannot have a big airport.

If you—for me the best indication of the development—economic development when land to a city, if there is light and if airport is very busy, it means there is economic dynamism.

So and recently last week I announced another mega project of three floor tunnel under the Bosphorous, two for cars and one for metro, which will be the first ever in the world, city for such a tunnel connecting two continents.

So in health sector, in agriculture, in tourism, for example now agriculture was Turkey's sixth biggest agriculture producer in the world, the first in Europe. In tourism same, sixth biggest tourist destination with Turkey five million. It was only 12 million when we came to power. And again one of the first in Europe and surrounding regions.

Just to compare these twelve years, we made a real change in transformation of our structural reforms in Turkey in economic structure, and the statistics are excellent. For example, just fiscal deficit, I mean budget deficit, it was 10 percent in 2002 when we came power. It is now 0.7 percent. And it will be budget surplus in 2017.

Monetary structure is—and banking system is very strong.

HAASS: You're not at all worried that your best days, how will we put it, are behind you? That now you've done phenomenally well but the concern now is with inflation rising and growth slowing, you're not worried that you’ve got a structural problem?

DAVUTOGLU: No. In fact the opposite. Now fiscal discipline is getting better and better every day. Banking sector is very strong despite economic crisis. No Turkish bank face difficulty.

And inflation is declining, not increasing. From it was 9.2 percent in November, 8.2 percent in December, 7.2 percent in January and now 7.4 percent or 7.5 percent, the slight increase because of the winter conditions pressure on agriculture.

What do we want to achieve now? In early years of our government we declared targets of 2023, 100 anniversary of our republic.

Now in—after forming the government I declared the second paradigmatic shift in Turkish economy. Until now in last twelve years we tried to—we tried to have a quantitative change in our economy. And through using idle capacity in industry and infrastructure investment.

Now we want to make a qualitative transformation in economy, meaning that there will be more value added production, manufacturing. And there will be more R&D, more high technology.

And therefore in November we declared twenty-five areas of transformation wherefore increasing productivity, commercialization of R&D, from transport to logistics, preventing any type of corruption and other means of overshadowing the economy's procedures. And several, twenty-five areas of transformation.

But the most important substance of this transformation is, as I said, change the quality of production. High technology, R&D, developing education. When we came to power average schooling was seven years, now it is getting fourteen years. When we came it was—there were seventy-six universities.

We have now 176 universities. But in the university education we want to make a change, more R&D and more scientific research, together working together with the business sectors.

So this—in this new phase until 2023 we want to reach $2 trillion GDP. And until 2018 our target is twenty-five transformation areas and 1,300 micro measures we want to achieve to $1.3 trillion. These are our tasks.

Of course when you look at the crisis and declaring in world economy, this seems to be quite ambitious. But many of our targets in 2002 were ambitious and today we have realized this.

Turkish growth is, yes, you are right, is less than what we expect, 3 percent. But it is 3 times more than the average of...

HAASS: Europe.

DAVUTOGLU: ... Europe. It is 1.2 percent in Latin America, 2.5 percent in Europe, but emerging Europe let me say. And even more than Asian economies, except China and India.

So our performance is much better than the world average and much better than OECD average. We are the fastest—second fastest growing country in Europe and twelveth fastest in OECD.

But we are not satisfied with this 3 percent. Definitely we want to make it 4 percent at least this year, and 5 and 6 percent in subsequent years to achieve these goals.

HAASS: Fair enough. It is a remarkable change in the $10,000 plus GDP per capita is impressive.

One of the concerns, though, that some people have going forward—I just want to ask one last economic question—is, again, it deals with inflation and the trade off with growth, and the question of your central bank. And one of the issues that has come up is the independence of the central bank and its ability to keep interest rates at a level that will get the balance between growth and inflation right.

And there's been recently public statements by the president that have questioned central bank policy. What is it you could say that reassure people here that the central bank will be able to manage rates in a way that the currency will stay strong?

DAVUTOGLU: In fact in Turkey central bank has established its role and its relation with the government and executive power. And until now there was—there has not been any interference. Even despite of criticisms in public opinion, central bank has taken its own decision regarding interest rate.

Of course it is a big challenge for all central banks. In Europe you know how much central bank of Europe was criticized by several authorities as well in Greece, for example and other places in euro zone.

In this type of crisis momentum that has been—there will be always some very lively dynamic discussion how to respond to this crisis. In democratic societies it is an issue.

But how central banks function at the end of the day that is important. And here what we need to understand is that yes, central bank is independent and it's taking its own decision.

Former vice president of central bank is here, is one of the member of the committees here with us. But they have had this experience working very efficiently.

But at the end of the day, the performance of central bank and the performance of monetary policy is part of general economic performance. Central banks do not function in an isolated vacuum. They are functioning and they are using certain instruments, which are important for the government policies as well.

For example, last year central bank forecast for inflation was 6 percent. In May that was the forecast of central bank. But at the end of the year it was 9.2 percent.

Let me ask why this—there is this price instability. The argument was that—and it was right argument, that there was growth in Turkey and surrounding regions and therefore the agriculture prices was higher because of less supply.

Yes, it means agricultural policies of government may affect the performance of central bank. And vice versa, central bank decisions may affect the efficiency of government policies.

So in all democratic societies, these realizations (ph) will be fixed by a legal framework and in that framework central bank is function. There is no need for—to worry about Turkish institutional set up of economy.

Every institution will do its own job within the human parameters. And as in the past, we will be coordinating this. And there are certain mechanisms to quote (ph) in central bank.

Of course if there is the difference between Turkey and U.S. and Europe is that in Europe there is recession. Therefore the interest rate is according to the recession.

And in Turkey there's—growth is higher than inflationary trend. But we want to have more growth. And for more growth we want to have less inflation, less interest rate. That is the challenge we need to achieve.

HAASS: I want to get one or two domestic political questions out there before I turn to foreign policy.

If I'm not mistaken, you marched in Paris, right, after the Charlie Hebdo. You were part of that. But there's also been questions and debates in Turkey about what the French publication did. I think one of your own newspapers ran afoul of the law of the authorities when it published one of the cartoons.

I guess the question for a lot of Americans that we think about is what is—to get your thinking about on one hand, how does one respect religion, on the other hand how does one protect freedom of expression? And what do you see as the balance of that in Turkey?

DAVUTOGLU: Of course as an academician for me one of the most important values is freedom of speech. In academic life you—if you don't have freedom of speech you cannot produce anything. There should not be any limit on freedom of speech, and on thinking and free thought.

But what I say, speech and thought, not insult. There should be—the best way to make this difference is self-control. If somebody respect his own religion or his own identity, that somebody should respect to the identity and religion of the other one. This empathy is important.

But freedom of speech, that does not mean freedom of insult. Here we are in a very civilized atmosphere. I am talking and anybody can criticize me. Anybody can say anything to me.

HAASS: We'll get to that part later.

DAVUTOGLU: Yes. I know. I know. That's what I am inviting them to criticize.

But if somebody insults, it is against the cultural civilized life. Or I can defend myself or my position. But if I, looking at someone, assume that he's from a particular religion, and looking at him or her, insulting that religion is not only insulting the religion but insulting that personality.

HAASS: Who decides that in a democratic society?

DAVUTOGLU: The social values will decide. That's more important. It might be in some social atmosphere, some words might not be as insulting as others. But the belief and certain values are part of the identity of every individual. And respect to the dignity of individual is a civilized value as well like freedom of speech.

If somebody insults Prophet Muhammad or Jesus in my—in our presence, it is not only insulting that. Why? Why do we use insult? Language—language of hatred should not be used. In a civilized democratic society there should be any criticism, but not insult.

This is the main difference. For us, Turkey, for our society, for centuries we lived in a multi-cultural, multi-religious society. Jews, Muslims, Christians lived in the same street next to each other in Istanbul.

I know you came several times and I am very happy to hear that you also visited 10 days. When you go to certain streets, mosque, synagogue and church are wall-to-wall. And meaning that those who are going to mosque, they greet Christians and Jews, and those who are going to synagogues they greet others.

There, in such an atmosphere, there will be no culture of violence and culture of insult. If there is violence to the certain societies, it is because of the absence of a tradition of multiculturalism. And if there is an insult culture, again, that is the absence.

I was in Paris defending freedom of speech. But next day I went to a mosque in Berlin which was burned by racists in Europe. These are not contradictory.

We have to respect dignities, dignity of our counterparts. But at the same time we have to give full right of freedom of criticism, not freedom of insult.

HAASS: Also on the domestic side, the so-called domestic security package. Why is something like that necessary? Why is there so much concern about placing a ceiling or limiting the right of assembly and the right of protest? What are—what's the consideration?

DAVUTOGLU: I wish to give the English translation to you and all the audience here about this law. What is the substance of it? It is not just security. It is security and protecting liberties law.

Why? Because in last year, 6 and 7 October, after we established the government, there were several violent terrorist attacks in cities, especially in Southeastern Anatolia by certain terrorist groups.

They used Molotov cocktails to burn houses, and some young people being killed, and doing demonstrations. They used certain methods as if they are demonstrating. They are not peaceful demonstrations.

And based on all these very alarming experiences, provocated by some circles like creating an atmosphere like in Syria or Iraq. We decided to take certain measures. But these measures, the basic criteria that was 7th of October. 15th of October I got everything from Ministry of Domestic Affairs.

And the basic criteria is EU standards. In this package there is nothing contradictory to EU standards. Therefore, for example Molotov cocktails, you know it is prohibited everywhere in Europe, everywhere in United States.

And in certain states here in U.S. there is a very high penalty for this, $2 million penalty and four years penalty. In Britain three PKK supporters, because of using the Molotov cocktail was judged—charged for fourteen years.

In Turkish case, in our case, there was no direct reference to Molotov cocktail. And therefore, these people, not doing demonstration, doing violent action, were using Molotov cocktails. And several young ladies were burned in the past.

What we are doing in this is we are prohibiting Molotov cocktails to be used in demonstrations. And in order to secure free demonstrations we said that nobody could cover the face. They're covering the face and attacking the other side. There were several clashes in demonstrations, so-called demonstrations.

And this is according to E.U. standards. The most discussed item was the police and the legal—how many hours you can keep someone. According to our existing law, police doesn't have any right to take into custody anyone for the sake of protecting even demonstrators.

While in—for example, in France, twenty-four hours police can take, forty-eight hours prosecutor can keep him just for investigation. In Britain it is thirty-six hours for police. In Turkey police doesn't have such a right.

Now with this new law we are giving the same standard of French rule—law. And we give the right in extraordinary situation. In certain cases when there is a violent—violence in any action, police can take for twenty-four hours to custody and prosecutor for forty-eight hours.

This is the minimum in EU standards. In all other EU countries, that is much higher. In some countries like Spain I think forty-eight hours and thirty-six to seventy-two hours in some countries. So there is not any single article or item which is contradictory with European standards.

HAASS: I expect there may be some more questions on things domestic. But it is the Council on Foreign Relations. I'm going to try to get a couple of foreign policy questions...

DAVUTOGLU: Yes.

HAASS: ... out there.

You were famously known for saying that Turkey's foreign policy was based on the idea with no problems with any of your neighbors. But now you're at war with the government of Syria. And you're estranged, I would say, from both Egypt and Israel. What's gone wrong?

DAVUTOGLU: Yes. We declared zero problems with our neighbors. The important thing is whether you have a counterpart in your neighbor or not.

When—for example, regarding Syria, when there was a counterpart, when Bashar Assad was not killing his people, we are not intervening in their domestic affairs. But when Bashar Assad started to kill his people and refugees came to Turkey, and when he...

HAASS: How many refugees are now in Turkey?

DAVUTOGLU: Two million refugees from Syria and Iraq. You can imagine. Almost 10 percent of Syrians now are living in Turkey. And in some Turkish towns like Kilis the number of Syrians are more than the number of Turks.

And in this condition problem is in Syria. And you don't have someone in Damascus you are able to talk. Because despite of all of our efforts, to convince him not to use his army against the people, he used chemical weapons. He used Scud missiles against civilians.

You have problem if you don't have problems with such a person. You have problem with your values if you don't have problem with such a person.

So it is—it was not our fault because of this bad relation with Syria. But values, there is always priority of the values. The most important value in politics and social life is human dignity. Having zero problems with neighbors is secondary compared to this basic principle.

It's right, yes, we had good relations. And I was mediator between Israel and Syria when Bashar Assad was not killing his people. When Israeli armies were not attacking to Gaza, children of Gaza, we had good relations.

And in 2008 December we were very close to final settlement between Israel and Syria. December 8, I still remember the date, Israeli Prime Minister Ehud Olmert stayed in residence of prime minister then Erdogan in a room. In the other room we were talking with Bashar Assad by phone to finalize the deal. Telephone mediation let me say.

And in one week we were supposed to have a summit, Turkey, Israel, Syria to finalize the deal. And all the paper were ready except one word. And I was given the task to complete this in three days.

When we completed this Friday evening, Saturday morning Israeli army attack Gaza and hundreds of Gazan people were killed. So it was not our choice. We did everything to have good relations with Israel, with Syria. But it was not our choice.

Except that today we have excellent relations with Greece. (Inaudible) legislature cooperation (inaudible) mechanism with Bulgaria. We're with Iran balanced and we don't have any direct problem with them.

With Iraq now we have excellent relations. We had problem with Maliki because of his sectarian policy. But one of the visit if Prime Minister Abadi was to Turkey. I went to Baghdad.

And we have good relations with Russia. We have high level cooperation with Ukraine. Interestingly with Russia and Ukraine, we are keeping the same level of good relations.

With Azerbaijan, with Georgia we don't have even ID. We don't need passport to go to Georgia and come.

So our policy's still there. But whether we have proper counterpart to implement this policy, it is not our choice. It is the—it is given to us unfortunately.

HAASS: In the list you gave, then fact that you don't have a problem in your relations with Russia is a problem.

DAVUTOGLU: No.

(LAUGHTER)

HAASS: But Turkey is—the view here is that Turkey is so dependent on Russia for Turkey's imports of natural gas, 60 or whatever percent, that Turkey has been unwilling to isolate Russia for what it has done in Ukraine.

DAVUTOGLU: Not only Ukraine. Let me ask why didn't we isolate Russia because of supporting Assad regime?

Why U.S. and others didn't isolate Russia when Russia supported Assad who killed 300,000 people? Is it because of—that those people who were killed were Muslims and Syrians, and those who were killed in Ukraine were Christians and Ukrainian? Is that the difference?

If Russia did wrong, we have to be consistent. They did wrong in Syria. What was the response? What was the response?

And I am not blaming on one person or two. But there were very high level contacts between European and American allies with Russia when Russians were supporting Bashar Assad to kill hundreds of thousands of people, and to force millions of them to Turkey.

We have been telling that we have to be firm in U.N. to protect civilians in Syria. But in Ukraine as well. Our position is very clear. And Putin—President Putin, when he came to Ankara, we have spoken with him in a very clear manner.

HAASS: But you have not supported sanctions against Russia...

DAVUTOGLU: No. I will tell you. I will come to that point.

Our mind was very clear. We told him that Turkish position is clear. We will never, never compromise from territorial integrity of Ukraine. And we expect respect to Crimean Tatars in Crimea. And we don't want any tension in Black Sea.

So this is our national position. But we are not acting in a vacuum, as I said. And we have certain critical cooperation with Russia, on energy for example, and others. Our Ukrainian friends understand very well.

And today a Turkish diplomat is in charge of OSCE efforts and special envoy in Ukraine, and brought Ukrainian and Russian side, respect Turkish policy and prefer a Turkish diplomat to run this type of mediation effort. We will keep our principal position.

Turkish foreign policy is a foreign policy of principle. We don't say we support democracy in New York. We support democracy in Cairo. We support democracy in Damascus.

It is easy to preach democracy in Western capitals. It is difficult to say the truth when there was a military coup in Egypt. And this even taking risk to lose Turkish interest. It was difficult. But our position was very clear there as well.

We respect Egyptian culture. We respect Egyptian history. We respect Egyptian civilization. And today I said in a meeting that Egypt is the backbone, strategic backbone of peace and stability in the region.

But for so many years when democracy was advised to other societies, it was a test for all of us. Similarly, now in Ukraine, there should be a democratic process.

Ukraine is our strategic partner and Russia is our—Turkey's the only country neighbor who brought Ukraine and Russia and having access to Crimea. We cannot risk everything based on certain processes which we didn't initiate, which we were not consulted.

In EU, I raised as minister of foreign affairs about Ukrainian issue. We support Ukraine. We will defend the right to territory integrity of Ukraine.

But nobody consulted us. Although we were neighbor to Ukraine, nobody consulted us about what will be happening in Ukraine.

When—this is of course another criticism I am raising. After a while if you do not prevent a crisis at early stage, you have to be ready for a much bigger problem in the future.

Unfortunately, we were not—when I say we I mean our allies in NATO, Trans-Atlantic Alliance. We were not very efficient to prevent a crisis at early stage.

In 2008 Georgian crisis. It was easy to say something from outside. But Georgia is our neighbor. When the crisis in Georgia emerged, Prime Minister Erdogan and all of us, we went immediately to Georgia to visit, and to Moscow in order to ease the tension.

As a growing economy and as a stable democracy, Turkey doesn't want to see any instability around itself. We want to see stability and easing the tension. That is mainly why we are approaching to Ukraine in this framework.

HAASS: I will show uncharacteristic self-restraint and just raise two other questions. One deals with—one with the Middle East, one with Europe. I'll do the European one.

Do you think in your career you will ever see Turkey in the EU?

DAVUTOGLU: Yes. It depends. It depends of course the will of two sides. We—if you ask me do you want to see Turkey in EU, yes. But if you ask do you think that will happen, I cannot judge on behalf of Europeans who have so many excuses not to accept Turkey.

It was interesting in 2002 I was chief adviser to Prime Minister Erdogan when we participated first EU summit. And then as chief I had—I negotiated with leading European teams about our procedure.

At that time they were saying very frankly sometime behind it. Saying that Turkey's too poor, too weak to be member. Because if Turkey becomes member, European Union has to subsidize Turkish economy. And Turks will be asking more job.

Now what they are saying is Turkey's too big and too powerful to be a member. Because of this strength it will be difficult to absorb Turkey.

If you have an intention, a good intention, you can find a solution. But if you want to find excuses, you can find hundreds of excuses.

HAASS: Why do you think the Europeans are looking for excuses?

DAVUTOGLU: Not all Europeans. I was in Portugal before coming here. They are supporting us. In Italy they are supporting us. Poland they are supporting. Many Europeans are supporting.

But for those who are reluctant, the first is cultural prejudice. Unfortunately I have to say this. Not economic indicators.

Before we were thinking that if we perform well in economics it will be easy for Turkey skeptics in Europe to accept Turkey. But now we realize whatever we do, something—it is difficult to change something which is cultural prejudice.

As if Europe is a Christian continent, Holy Roman Christian continent. This is not true for all Europeans. This is one cultural prejudice we have to fight.

And today Turkey's much more—and Turkish people are much more tolerant for other cultures, and much more ready to be inclusive and to be in Europe than (inaudible) moment in Germany. Or some xenophobic and Islamophobic type of tendencies in Europe.

Second is a fear of a rising Turkey because Turkish economy, Turkish population is dynamic. History doesn't forgive wrong decisions in wrong time. And history doesn't forget stagnation or being static.

If an empire—it happened to Ottoman Empire, it happened to Roman Empire, it happened to all imperial tradition in the bag (ph), and all big traditions—if they start to think statically, in a static way, not to receive others, then you—that state or civilization start to decline.

The most historic turning point of Roman Empire was the era of Marcus Aurelius, who tried to transform Roman society. But when it was not possible to be more inclusive based on straight philosophy. But when it was not successful, Roman Empire started to decline.

Similarly now, European Union, unfortunately they had a choice. They're at the threshold of a choice. Either they will be static in economic sense, less influential in geopolitical sense, and less dynamic in demographic sense. They will be more inclusive in cultural sense, more dynamic in economic sense, more relevant in world affairs in geopolitical sense.

Taking Turkey into Europe is a choice between these two Europe. If they want to have the first choice they will not accept Turkey. If they want to have the second choice, geopolitical relevance, dynamic and competitive economy, inclusive culture, they will accept Turkey.

It is not a test for us anymore. We have—we passed our test with economic performance, with all the criteria, democratic criteria. Now it is a test for Europeans to decide which type of Europe they want. And we are expecting their decision. Whenever they decide, we are ready.

HAASS: That seems as good a point as any to open it up for questions from our members. It's on the record. Just wait for a microphone. Please keep your—identify yourself and keep your question relatively succinct.

I see a hand up over there, but I don't have my glasses on.

QUESTION: Thank you very much, Mr. Prime Minister. David Rivkin from Debevoise & Plimpton, also president of the International Bar Association.

One of our members, the Union of Turkish Bars, comes to very different conclusions about the internal security bill and whether it complies with international standards. For example, not just—there's not just a 48-hour limit on police holding individuals, but governors and other administrative officials may hold people.

The ban on covering one's face would apply even in the event that the police sprayed the protestors with pepper spray. And they have other criticisms of it so that it does not meet EUstandards.

But in addition they have pointed out that the government is taking steps to bring control of lawyers, regulation of lawyers under the judiciary, which the government controls, rather than maintaining them as an independent profession, which is very important in preserving democracy. Why is the government taking steps to control the regulation of lawyers?

DAVUTOGLU: First of all, I know all the text of the law. And we discussed in the cabinet hours and hours. You know what they mean by these—giving the right of decision to governors. Not governors, not higher authority.

Instead of giving this authority to police, because police is a man with gun. And he might be nervous. He might be in a situation which he can't decide on its own.

The—those—the decision will be taken by prosecutor. But if it is urgent like what happened in 6 and 7 October, four young men were killed in front of police, pushed—were thrown from the building. And police were—legally were not able to control the situation.

What we are saying is that not police, but a higher civilian authority will decide temporarily until prosecutor comes or takes the decision. They can take the decision just for twenty-four hours. If you give this to police it will be much more difficult to control.

And you and I, we all of us we know how the rules are in the United States. Assume that you are driving a car. You are driving a car. If a police here in New York stops you, you stop. And he can check. And it is—you have to keep your hand. You cannot move your hand. Is that right?

In Turkey a police, even if there is an intelligence report that a car is carrying a gun or bonsai (ph) type of materials, a police cannot stop and check.

He has to take decision from the court. And court says bring me the evidence, then I will give you permission. We have realized that because of this it was impossible to prevent—to act proactively to prevent crime.

In Europe and United States and everywhere, police has the right to check if there is a clear—if there is information that there is something in the car. In existing Turkish law, we don't have this.

And our party brought this law in 2004 and 2005 with good intention. But now after so many experiences we realized that it is better to adapt American and European standards.

And Turkey's not much more safe and secure than these countries when you have so many ISIS militants, maybe agents of Syrian regime, and terrorists from different groups. We have taken this caution.

I can give you—send you, please—our embassy can send you all this information one-by-one about justification.

About lawyers, I mean the high board of prosecutors and judges. You know before us, before 2010 referendum, constitution referendum, this court was elected within a group, very limited group. What we did, our government did this in 2010. We said that since judges and prosecutors are the most respected people, they have to choose their own high board, not government. Not just a small circle.

And based on that, today in this high court there is a high board of prosecutors and judges. They are voting. All judges and prosecutors are voting. And the body has been formed by this.

We as the government, we suggested that one man, one vote—so that nobody could come together to monopolize this high board. But unfortunately constitution court decided that it should be a list.

Once it is a list, one will dominate it, high board, and this group had links and certain connections, networks in police and judicial system. And many journalists, many intellectuals, many politicians were arrested and were under risk because of this monopoly and domination in judicial system, this parallel structure what you call.

Now there is—we didn't change the rule. There has been another election and a group of different ideologies, Sudanese, Alawites, different sects, groups, leftist, rightist, they formed another list. And now they are in the board.

They are not pro-government. They are not in one group or the other group. And that body is deciding what will happen.

Independence of judicial system is very important. But also not independence only from executive power, but independence from the monopoly or domination of one group.

If a seemingly religious group is dominating the judicial system or a secular group not important, that is the end of the justice. The average judge should decide on his own or on her own, not based on a decision taken outside the court system.

That is what is happening. But if you have any suggestion or any other question, we are ready to answer because I know, I know that there are so many speculations and rumors circulated in United States and Europe just to blame on Turkish government.

We are ready. I am challenging. We are ready to answer any question. But don't believe what some circles are just circulating without seeing the text itself or without seeing the action itself.

HAASS: We just had an invitation for more questions. So anything about domestic, foreign policy or economic policy. I saw a hand there.

Yes, sir?

QUESTION: Phil Waldeck from Prudential Financial. I'd be interested in the Prime Minister's thoughts on Turkey's policies to combat the threat of ISIS. And under what circumstances Turkey would consider using ground troops to combat ISIS.

HAASS: Also in you answer to that also add a little bit about what more you could do to stop the flow of recruits from around the world transiting Turkey to beef up ISIS.

DAVUTOGLU: First of all, let us clarify this group ISIS. How did they emerge?

ISIS did come to the picture of Syrian scene in 2013, March. Means after two years of Syrian crisis. And in that two years around 200,000 people were killed, so—and millions were already refugees.

So there is now—we are very short memory we have. There is an impression now as if Syrian crisis is ISIL crisis. If you eliminate ISIL, there will be no Syrian crisis. It's not true.

ISIL did emerge after two years of Syrian crisis. Even if you eliminate ISIL today—which we have to do—we have to fight and we have to eliminate. Another radical group may emerge, not ISIL, but PISIL or IKIL (ph), whatever it is. Based on the same—in the same context.

Where did they come from? Not from Turkey. Some people are propagating this as if there's a transit to ISIL from Turkey. No.

ISIL before was Iraqi Islamic State, IIL, which was formed in 2003 by another Baghdadi linked to Al-Qaeda. And this Baghdadi, the terrorist, leader of this terrorist group, was in Abu Ghraib prison under the control of—when U.S. forces are there. And stayed there after—until after the withdrawal of American troops.

And they came from Iraqi territories to Syria. They entered Syria from Iraq. And when they entered, Syrian regime didn't do anything against them. In fact, some of them were released from Syrian prisons.

Because we have intelligence experience. I was mediating between Iraq and Syria in 2009 when Maliki accused Bashar Assad to organize terrorist attacks in Baghdad. Syrian regime had contacts with this group.

From 2013 March until 2014 June, until they attacked Mosul there was no single clash between the Syrian regime and ISIL. ISIL controlled Deir ez-Zor, which was under the control of Free Syrian Army. Then took over Raqqah, which was under the control of Free Syrian Army, moderated position. Then Manbij, then Jarabulus.

How did they control? Because Syrian air strikes, air forces bombarded these places. And not only Syrian forces, Free Syrian Army head to evacuate and ISIL came in. So there was a tactical coalition between regime and ISIL.

When did this change when they attack back to Mosul? Until that time, ISIL was not in the agenda of Iraqi or Syrian regime. Syrian regime especially. Now there is such a threat.

What should be done? We have to do everything to prevent them. There is no other country more threatened than Turkey because of this ISIL. Because we have 1,295 kilometer long Iraq and Syria border. And 60 percent of this border is under ISIL control. We cannot tolerate this.

But what is the method? How will we do it? The method is we have to have a grand, integrated strategy for Syria and for Iraq, but especially for Syria.

In Syria the job is more difficult for us because there is no counterpart in Damascus. In Baghdad at least we have a counterpart. We can work together.

Our minister of defense is—was in Baghdad yesterday, and today in Erbil. And we send two full of equipment to airplane to Baghdad. And we are training Peshmerga, Turkish forces are training Peshmerga and also Mosul people in order to liberate Mosul.

But in Syria with who will we work? This is the question. We have been asking this question, and for last four years we have been telling too American friends, European friends that moderate forces should be supported. There was no support to moderate forces.

Because of this power vacuum they took over the control. When did they become a real threat as an army, as if they're army, this ISIL? When they took over sophisticated American weapons in Mosul which were left by Iraqi army, bag (ph), tanks, armed vehicles, heavy weapons of Iraqi army were taken by ISIL.

Until that time ISIL was the balance of power between Free Syrian Army and ISIL was almost equal because of light weapons. But ISIL took these weapons.

Many of them are American weapons. Of course I don't blame United States because they gave this to Iraqi army and Iraqi army left them. In a few hours, they evacuated Mosul and they took all these arms.

Where is Turkey in this picture? We are victim of all this struggle, two million people. Because of Kobanî issue, 300—200,000 Kurds came to Turkish side in three days. We received 200,000 Kurds escaping from Kobanî. If we didn't receive them, they would have been massacred.

We allowed Peshmergas to go to Kobanî. We allowed Free Syrian Army to go to Kobanî. Still international media give an impression as if people are being killed in Syria because Turkey is not willing to make ground operation.

Why we should do ground operation? Why Turkey should take risk if there is no grand strategy accepted by all? If American, European or other ground troops are not there, why Turkey should send?

Yes, one day we can send, as last week we sent 600 military personnel, 40 tanks, 100 vehicles to take—make an operation 40 kilometer deep inside in Syrian territory, to take our military and our territory to relocate a holy place, a holy tomb of the ancestor of Ottoman—founder of Ottoman State. And it was a very successful operation.

I was in the headquarter of our army from 9:00 in the evening until 6:00. Beyond the operation it was very successful operation because it was a threat to Turkish nation security. If there is a threat, of course we will take action.

Today there is a threat, big threat. But threat to all of us. And we need to do—we need to have a concerted action together.

What Turkey wants, first equip and train moderate forces. Why? Because today Syrian people, innocent Syrian people are being sandwiched by two brutal sides...

HAASS: But that will take years to get these people equipped and trained.

DAVUTOGLU: No. It would have been much easier if it started four years ago.

HAASS: We are. We are.

DAVUTOGLU: Unfortunately our European and our American colleagues, they were reluctant. They just observe.

We in every meeting as minister of foreign affairs. I warned our colleagues that it is—if you do not train and equip moderate forces there will be radicalization and there will be brutality of the regime.

This still it is possible because on the ground there are around 60,000 to 70,000 moderate forces, I can say, which can change the balance of power.

This is something important. Because putting two options to Syrian people is not fair. Either a radical, brutal terrorist group or a brutal regime. This is a very bad choice. We should not be legitimizing ISIL because of the threat of ISIL.

Assad is responsible for all what happened in Syria. Syrian people, we know them very well. They were not radical or they were not Wahabbi or this type of extremist ideology. They are much like Turkish, more moderate. This happened because of these brutal attacks.

First, equip and train. Second, safe haven. Safe haven for refugees. Enough is enough. Turkey paid $5 billion only for the Syrians living in our camps. You can imagine the rest are in the cities, which are much, much more costly. Third, air exclusion zone or no-fly zone because if you do not do it today, if Free Syrian Army attacks ISIL, Syrian regime will control Aleppo.

Why Free Syrian Army is not fighting against ISIL? Because if they move from Aleppo to Raqqah to fight against ISIL, Syrian regime will bombard Aleppo and will take Aleppo. And for moderate forces Aleppo is the most important place to defend. Therefore they have to come to Aleppo to withdrawing from ISIL. These are some elements for—of our strategy.

We are ready to contribute. We are contributing. We are helping equip and train agreement within Turkey and U.S. is a historic step. We will do even more, much more. But we want to see the end of the tunnel, the light at the end of the tunnel.

Now, in the darkness of tunnel, it is difficult to make—to see the final phase of this struggle. But I can say this coalition, our coalition, now there are more practical discussions, consultations. And we hope that we will work very closely against this terrorist threat.

About the transit with Turkey, this is a, say, myth.

HAASS: It's a myth.

DAVUTOGLU: It's a myth. I will give you—not myth. I don't mean that it is not—there is not transit from Turkey. I don't mean that. But not from Turkey only. From Iraq, from other neighboring countries.

And from Turkey how can we prevent it? I will give you a striking example. Two years—one-and-a-half years ago —one European colleague of mine told me, Ahmed, can you prevent these people to go there? We are taking all the measures I told him.

But Turkey receives—Turkey five million tourists every year. We cannot decide who is terrorist who is not looking at their face. So let us—please give, please prevent these people to leave your country.

I don't want to know if they leave the country. Prevent them to leave the country. He said, but we are a democratic country. We cannot prevent anyone to go outside the country if they didn't commit any crime yet.

I said, OK. I understand. Please give us the name of those suspects so that we will not allow them to come in Turkey. He said how can we give the name of individuals who didn't commit any crime yet? We are a democratic country.

And I told him, we are a democratic country as well. How can we arrest someone coming to Turkey without knowing him or her and without having any intelligence report from you?

Then they start to give the names. And in less than one year, 10,000 people were not allowed to come in Turkey from the airport. When we received the list we said OK, we don't accept you to Turkey. And around 2,000 of them were deported after they came into Turkey—911-kilometer long border.

You, American friends and administration, they know very, very well how it is difficult to protect American-Mexican border, despite of the fact that there is a Mexican government on the other side, a well-functioning state. It is difficult to prevent—stop all illegal migration.

Two million means total population of Atlanta, Chicago and several American cities. We can—we could do it.

Another reason why it is difficult to both sides: tomorrow we can close all the border and put soldiers everywhere, but then nobody will ask us to receive refugees anymore. Refugees are coming. We cannot check whether they're this group or that group.

And this we'll implement open-door policy based on humanitarian ground. And if we implement open-door policy, it is difficult to close all the borders. Because in one fight hundreds of them are coming towards Turkey. Next day another hundreds want to go back to Syria when they feel that it is secure.

So it is not so easy jump. But we are doing everything possible. And we are against foreign fighters. But let me say one another just to compare.

Yes, all of us we are against foreign fighter. But do we do enough against the presence of Hezbollah? Or are foreign fighters coming from Lebanon supporting regime? Do we do enough who come from Iraq (inaudible) supporting regime? Do we do enough that some countries are sending officials to fight in Syria?

But when it comes to one side, as if there are only—those are the only foreign fighter—this is also misleading. We have to be principally oriented. Turkey has suffered from terrorism in last three decades. We never tolerate any terrorism.

Radicalization in Islam, we are against it because our way of Islam is not their way of Islam. Turkish way of Islam is multicultural, is tolerance, harmonious.

And why didn't we have Al-Qaeda in Turkey very strong? We have some small groups maybe. Because Turkish culture is a urban Islam culture.

And in that cultural atmosphere it is difficult to find such a ground. And it is a threat, ideological threat to us because their presence is against our presence as Islam. It is a security threat to us. But it depends how we will be dealing with them.

What we say is see Syria and Iraq as a macro picture, and develop a strategy one-by-one. And we should know what will be happening next day after we fight or we do any operation against Daesh, against ISIL. Then it will be much easier to consult and to make proper planning.

HAASS: Mr. Prime Minister, I'd like to continue, but we've already gone over our allotted time, so we won't.

I want to thank you. You succeeded in making a complicated problem even more complicated.

(LAUGHTER)

I didn't think it was possible.

DAVUTOGLU: Life is complicated itself.

HAASS: It is...

DAVUTOGLU: Human beings are complicated, so...

HAASS: Again, I want to thank you for coming to us, to the Council on Foreign Relations tonight. I want to again say how honored we are to—for such a distinguished delegation to come here. And we wish you the best in your visit to the United States.

DAVUTOGLU: Thank you.

(APPLAUSE)