Friday, October 24, 2008

Never plain sailing in Byzantium

It is difficult to imagine Istanbul being any more chaotic than what hapens on the streets but the life in the news appears just as full as mayhem. There is a trial in swing of 46 people accused of plotting to overthrow the Turkish government and yesterday the judges announced they were refusing to grant them bail. The defendants, known as the Ergenekon network, all have high profiles and they include former army officers, journalists, and a retired university dean. All 46 have denied the charges and claim the trial was politically instigated by Prime Minister Tayyip Erdogan's government in order to censor its critics.

The Ergenekon trial is the topic of most conversations around the city and has sharply divided opinion into three camps. Firstly there are those who support the defendants and say the case is an excuse for the Islamist government to suppress its opponents. A second group of government supporters say the suppression of the secretive Ergenekon clique is a major step in the road to enhance Turkey's democracy. The third and most cautious camp consists of the intelligentsia who believe the trial will not result in any concrete gains for democracy as the indictment for the case is weak. But everyone has an opinion. The fact the indictees include generals, journalists, business leaders and an actress means that the case has enormous cachet on the streets.

And what incredibly noisy streets they are. Trams, cars, dolmus and buses compete for space with ever industrious trolley-boys, sackmen and slack-jawed tourists straining to capture the spirit of the place with yet another photograph. The central district of Sultanahmet is almost entirely surrounded by water. The Sea of Marmara lies to the south where an enormous queue of cargo boats awaits a spot to load and unload. East is the Bosporus and Asia across the water. A steady stream of ferries take the thousands home and abroad though the toll-spanned Bosporus Bridge is eating in to their traffic. North is the Haliç – the Golden Horn which splits the two European arms of Istanbul. Here the bridges are awash with fishermen and foodstalls and a clutter of noise and energy.

Napoleon reputedly once said that if the world had a capital then Istanbul would be it. And although it is not even the capital of its own country, the Corsican genius had a good point. Not only is the city's geography illustrious, so is its history. That history is most redolent in the three buildings that dominate Sultanahmet's Bosporus shoreline, the Blue Mosque, Aghia Sophia and the Topkapi Palace.

The Blue Mosque is the colloquial name for the Sultan Ahmed (Sultanahmet) mosque and is the country's national house of prayer. It was built in the 16th century by Ahmed as the first mosque of his massive Ottoman Empire which stretched from Morocco to Persia and from Ethiopia to the gates of Venice. The mosque earned its common name thanks to the blue tiles adorning the walls of its interior.

The Ottomans had inherited the great city of Constantinople two centuries earlier when it finally ended the thousand-year reign of the Eastern Roman Empire. Back in 532, its great emperor Justinian had also ordered the construction of a great building in Istanbul to honour his deities. That building was the Aghia Sophia, which would be the largest basilica in the world for a thousand years. When the city fell to the Ottomans in 1453, it was re-consecrated as a mosque still replete with Byzantine murals. Then in 1923 Turkey's great modern secular leader Mustafa Kemal Ataturk turned it into a museum as part of his move to abolish the caliphate.

Also now a museum is the next door Topkapi Palace. Topkapi was the home of the Ottoman emperors for 400 years. It was built after the capture of the city and is a complex structure divided into four courtyards each one leading into more restricted parts of the palace. By the mid 19th century, its Asiatic style was becoming tiresome to the more sophisticated tastes of the Europeanised sultanate. They abandoned it in 1853 and Kemal Ataturk transformed it into a national museum in the 1920s.

The ghost of Ataturk still haunts the city. His image appears on many Turkish flags branding by streetsellers and hangs from the windows and from portraits on the walls of shops. Erdogan's government may have the veneer of Islamism that provoked the ire of the plotters but a strong taint of capitalist secularism lines the streets. The merchants compete on equal terms with the muezzins. Money is the real religion here.

Tuesday, October 21, 2008

Chaos, Chios and Cesme

I was never supposed to be in Chios or Cesme. The idea was to get the nine hour ferry from Pireaus to Lesbos and then sail into Turkey via Ayvalik. But somehow I was convinced the ferry made good time from the mainland or that I had researched it wrong and it was only a seven hour voyage. In any case I blissfully disembarked the ferry from Pireaus and sought out the nearest hotel as the last light faded behind the hills of the port.

It was not until I entered the lobby of the hotel that I noticed something was amiss. The wording on the scenic picture that greeted me was Chios not Lesbos. I did not want to ask the lady at the desk where I was (which seemed too silly for words). Then I remembered some people on board the ship who did not seem in a hurry to disembark. Putting that together with the 2 hours gained, I realised there and then that my ferry made two stops and I had accidentally got off at the first port of call. At that moment the ferryboat hooted loudly and I could see it leaving port by the window. For better or worse I was staying in Chios.

Immediately I smiled at my mistake for I knew this was actually a good outcome. Researching ways into Turkey via the Greek islands, several Internet sites said Lesvos was the most expensive port of departure and Chios and others were a lot cheaper. Plus it meant I would land in Cesme which was loaded in history. All that remained was to find out more about Chios itself.

It was a large island by Aegean standards. Lesbos was Greece's third largest island and Chios wasn't far behind in fifth. The large island was itself another reason why it never twigged I was headed for the wrong place.

The fame of this island is based upon its mastic gum. Mastic is a small tree almost unique to Chios. In a small area on the south of the island, mastic trees produce a distinctively flavoured resin, also known as mastic. Mastic has been used as a spice for over 2,000 years as a gum, medicine or to spice up cakes, pastries and liqueurs. When Chios was incorporated into the Ottoman Empire, the spice and the area it grew in became crucial to defend.

I took a leisurely local bus to the town of Mesta barely 35km from the town of Chios but one hour away on narrow winding roads. Here in the southwest of the island is the heart of mastic production. This village, like many around it, was built in defensive formation with the houses tightly packed around the church making it difficult for enemies to penetrate. These mastic villages have controlled the gum production since Roman times.

The pretty town of Chios itself faces off the Turkish port of Cesme visible less than 10km away. The waters between the towns were the scene of a crucial 18th century naval battle that was instrumental in the growing reputation of the Ottomans as the sick man of Europe. Here in 1770 was fought the battle of Chesma in the Russo-Turkish war. Aided by British naval officer Rear Admiral John Elphinstone, Russian forces under the command of Grigory Potemkin defeated the Turkish navy which sought refuge in Cesme. Potemkin was a particular favourite of the German born Tsarina Catherine the Great who called him endearingly "my dear pigeon".

Dear pigeon's victory established Russian control of the Aegean and Catherine erected Cesme Palace in his honour. The palace is still extant but it is the Cesme castle that is the major drawcard. The castle was built by the Genoese rulers of the 14th century and passed into Ottoman hands around 1400. Bristling with towers that slide down the hill to the port, the castle presents a fearsome barrier to control of the mainland. Outside lies a statue that attempts to turn this dark page of Ottoman history into a victory.

This is the monument of Gazi Hasan Pasha next to his lion. Kaptan Pasha was a former slave who rose through the Ottoman naval ranks. He avoided worse disaster in the battle of Chesme by withdrawing part of the Turkish fleet to port. Despite personally bringing the bad news of defeat to the Sublime Porte in Constantinople, he was eventually promoted Grand Vizier. Cesme still proudly honours the Pasha, an attitude probably for the best when dealing with someone with such a potentially nasty pet.

Thursday, October 16, 2008

Athenian Agora phobia

Welcome to thriving and prosperous Athens. The world financial meltdown seems to have passed Greece by. Either that or Prime Minister Karamanlis has ordered a food led recovery. Cafes, bars and restaurants are numerous and packed. A gemutlich hum competes for attention with the ceaseless traffic. Gnomes from Zurich number banks are here to understand why the country seems immune to crisis. Either that or they are Swiss football fans here for the World Cup match v Greece tonight at Piraeus. Perhaps the slight grim look on the Swiss faces is more to do with that country's embarassing World Cup loss to Luxembourg rather than the impact of the battered bourses of the world.

October is a good time to come to Greece. The weather is warm but the crowds are thinning out. There are no peak season prices either. Hotels are cheap, clean and competitive. I flew into Thessaloniki on Friday on a quiet British Airways flight from Gatwick. The capital of Macedonia is Greece's second city hugging the Thermaic Gulf some 500km north of Athens and contains a considerable charm of its own. The city is named for the sister of Alexander the Great who married the founder of the city, King Cassander of Macedon. The city subsequently passed through a series of rulers, Romans, Byzantians and Ottomans who all left their mark on the architecture. The Turks captured Thessaloniki in 1430 and turned the city into a religious-coded patchwork of Islamic, Greek and Jewish areas. This uneasy multiculturalism survived until three 20th century tragedies forever changed the town. A great fire destroyed half the city in 1917, and five years later the Turks were expelled creating a refugee crisis across both countries. Finally Hitler's conquest in 1941 doomed the Jewish population. By the end of that war, Thessaloniki was a purely Greek city.

Today, Thessaloniki proudly wears it patchwork past and even more proudly proclaims itself capital of Macedonia (FYROMers need not apply). The former Ottoman prison guarding the eastern entrance to the town is now the White Tower museum and lookout and is the preeminent symbol of the city. Underneath the tower the seafront stretches on for miles in either direction while the remains of the Ottoman walls guard the hills over the old city. Other museums detail the Alexandrine, Roman and Byzantine epochs while the subsequent 400 year Turkish occupation is casually ignored.

They may not like the Turks, but the Thessalonikans do like their food. Cafes and bars radiate out from Aghia Sophia square and hog every available space in the numerous alleys and lanes. This glorification of food was repeated in Volos some 2.5 hours south of Thessaloniki, on a railway branch line out from Larissa. Volos is on the Pagasetic Gulf which, when not sounding like some nasty infection, resembles a lake being surrounded on three sides by high mountains some of which are skiable in the short winter. Though a relatively new city founded in the 19th century, it is one of Greece's most charming towns with many neoclassical buildings peering out on the promenade. Behind the town, Mount Pelion commands the landscape imperiously. The seafront exudes relaxation and demands the consumption of a beer, ouzo or Metaxa, or better still all three.

Although Volos is only 300km north of Athens, it took seven hours to get there by train including a one hour wait in Larissa. There are some serious mountains to contend with in Central Greece but annoyingly the railway line grimly clings on to the side of the mountains while the motorway cuts a swathe through the plain. Why couldn't they have built the railway there too? Eventually the "fast" train rolls lazily into Athen's Larissa station in late afternoon.

There is just enough time to visit the Agora before it closes at 6pm. Situated between the Plaka and the foot of the Acropolis, the agora dates back to the 6th c BC. Here was where ancient Athenians met to discuss public matters. If some international financial crisis was afoot, the leading men (ancient democracy was not asexual) of the era would gather in one of the buildings of the agora to discuss what impact it would have on Athens. There under the cool marble stone, religious gatherings took place, merchants sold their wares and artists displayed their handiwork. Much of the spirit of the agora is retained in the Plaka where a steady stream of hawkers gather around the outdoor diners selling knickknacks of dubious provenance.

Behind the Plaka and the newly built metro lies the glory of Athens: the Acropolis. Greek for "high city", the Acropolis is the Sacred Rock and officially Europe's most pre-eminent cultural site. Rising 150m above sea level, the earliest buildings on the site date from Mycenean times. The Parthenon was built to commemorate the Battle of Marathon in 490 BC but was destroyed ten years later by marauding Persians. During Athens' Golden Age 20 years later, Pericles began an ambitious building program on the sacred rock. He build temples which honoured many of the Greek Gods including Athena herself in the form of Nike ("victory"). The Parthenon was rebuilt as a treasury, also honouring Athena. The building has since served as a Byzantine church and an Ottoman mosque. The Venetians badly damaged the site during their invasion in 1687. The British Earl of Elgin stole many of the Parthenon artefacts in 1801 leading to a squabble over the marbles between Greece and Britain that remains a touchy subject to this date.

There have been several restoration projects since the Greeks regained control of Athens in 1832. The earliest efforts were clumsy and made matters worse. Greece established a Committee for the Conservation of the Acropolis Monuments in 1983. Every item on the rock was meticulously catalogued and the restoration began with the delicate task of repairing the bad re-work. The difficult task has been exacerbated by the pollution which has plagued Athens since the 1960s. Acid rain and car pollutants have eaten into the marble threatening to undermine the whole restoration project. News that the Italians have returned some stolen booty is only partially good news. Some day, the Acropolis museum may be the only place to see the wonders of Pericles' greatest creations.

Sunday, October 05, 2008

Ireland's bankers wake up to the hangover bill

Irish banks are likely to be presented with €2 billion bill for the Government’s bank guarantee announced earlier this week. Irish Central Bank governor John Hurley said the rescue package should not come at a cost to the taxpayer and the banks should pay a substantial fee in return for state coverage. The Department of Finance said it would seek an annual charge of 0.2 percent of the €500 billion banking market which would amount to two billion over two years. The move represents an extraordinary transfer of power from Ireland’s top bankers to the previously pliant administration in the wake of the worldwide financial crisis.

The open Irish economy was always extremely vulnerable to the credit crunch. The 15 year boom was based on easy and flowing access to large amounts of money. But since 2007 the construction industry has been in crisis and consumer spending has waned. It was also only a matter of time before the toxicity of the US money market spread across the Atlantic. Matters moved swiftly in the last two weeks with a series of interlocking events. As the US banking house of cards teetered on the brink of collapse, Ireland announced its second successive quarter of negative growth. The country was officially in recession. Figures from the Irish Central Statistics Office showed the economy had contracted by 2.3 percent in the last 6 months and the exchequer faced a €7 billion shortfall.

Then on Monday last week, Irish banks suffered one of their largest ever one day falls in the wake of US legislators’ failure to agree the original rescue package. The Wall St carnage rippled quickly across the Atlantic and threatened tsunami on Irish banks. The combination of a freefalling share market and the lack of access to international funds had the potential to produce a run on Irish banks. Alarmed bankers privately told the Government that maturity dates on loans needed to fund their business were rapidly approaching and the cupboard was bare. The government moved quickly and by Wednesday had announced emergency legislation to protect the integrity of the local banking system. The extraordinary package guaranteed €400 billion of “deposits, loans and obligations” at six Irish financial institutions, a value some three times the size of Ireland’s total GDP.

The risky manoeuvre had immediate success in reversing the share losses of the Irish banks. Crucially it also ended speculation of a run on the banks, ending the possibility of it becoming a self-fulfilling prophecy. In order to quell speculation the Government was underwriting selfish banking practices, the bill allowed the Government to recoup any financial support provided and also set a higher charge on the state guarantee on financial institutions who engage in risky lending practices.

International reaction to the bill was mixed. The Wall Street Journal hailed the move as one of the most ambitious measures taken by a government since the credit crunch began. The European Commission was dismayed at Ireland’s independent move ahead of the weekend’s continent wide crisis talks in Paris. The possibility of a run on foreign owned banks also remained real as they were deemed out of scope of the rescue package. The Ulster Bank which relies on the Republic for a substantial portion of its business was particularly aggrieved to be left out of the arrangements. They have applied for coverage under the guarantee along with three other internationally owned banks.

The possibility Irish owned banks may not have learnt the sobering new economic lesson was underscored by the revelation Michael Fingleton Jnr (whose father Michael Snr is Irish Nationwide’s CEO) used the bailout to drum up business in the UK. Fingleton sent out an email last week stating the building society was now “the safest place to deposit money in Europe”. While there is now considerable truth in that assertion thanks to the Government’s intervention, this was not the message Taoiseach Brian Cowen wanted to trumpet with the rescue plan. Cowen reacted quickly to describe the email as unacceptable behaviour. “The whole purpose of providing the State guarantee was not to allow for predatory practice,” he said. But predatory practice is exactly what financial institutions thrive on and Cowen will have to tread carefully to ensure that the taxpayer guarantee doesn’t underwrite more of the behaviour the plan was designed to cure. Combined with a recession likely to last until the end of 2009, the results would be toxic both at the bank and the ballot box.