Turkey Olympic bid blighted by currency woes and political unrest

Recep Tayyip Erdogan looked confident and serene as he headed for the aircraft that will take him, via the G20 summit in St Petersburg, to an Olympics meeting in Buenos Aires.

But the Turkish prime minister, who came from a tough district in Istanbul to become the country's most powerful leader in more than a generation, faces a nerve-racking weekend - one that could affect the future course of his rule.

With his home city's bid for the 2020 Olympic Summer Games due to be decided at the meeting in Argentina this Saturday, much more than mere sport is at stake.

Turkey would not only be the first Muslim majority country to host the games; Mr Erdogan has also identified success in the Olympic bid, in which the city is contending against Madrid and Tokyo, as a mark of the country's emergence as a rising power on the world stage.

"It is very important for him to come here and be the captain of the team," Hasan Arat, the chairman of Istanbul's bid, told the Financial Times from Buenos Aires. "This is his great dream."

But after early months in which success seemed all but assured, troubles have come crowding in.

At the end of a turbulent summer that has seen mass protests against his rule and mounting concern about the health of the Turkish economy, Mr Erdogan is looking for a measure of international recognition and a political and economic boost.

Outlining Istanbul's case one more time before he boarded his aircraft on Wednesday, the prime minister spoke not just of the city's historical, cultural and geographical landmarks - but also what has been the bane of many visitors' stays - its often clogged transport infrastructure.

Indeed, Istanbul's bid stands out, not just for its undeniably spectacular ambitions to host the games - which include a projected half a million spectators along the banks of the Bosphorus and a new amphitheatre looking out across the strait at the Blue Mosque and the Old City - but also for the sheer scale of its infrastructure spending.

Istanbul has committed itself to a $19.2bn budget for related urban improvements, as well as the cost of operating the games themselves. According to the city's formal bid book, the lion's share of the funds - more than $10bn - would go to roads and railways and the entire budget has been guaranteed by the government.

"This is the major difference with Tokyo and Madrid: they don't need this kind of infrastructure spending to make the games possible," said Guven Sak, director of Turkey's Economic Policy Research Foundation.

But much has changed since the bid was formally submitted at the start of the year.

Turkey's image has been damaged by the clashes between protesters and police in June - so much so that one minister announced that if Istanbul failed to win the Olympics, it would be the demonstrators' fault.

Since then, accusations of government authoritarianism have continued, while Mr Erdogan has lashed out at a supposed international conspiracy intended to weaken his government, including international media and an interest rate lobby. Most recently, he was condemned by the US for suggesting that Israel engineered this year's Egyptian coup.

Istanbul's bid has also been clouded by a spate of doping scandals - including two-year bans imposed on 31 Turkish athletes last month, Olympic and European champions among them.

Moreover, Turkey's economic prospects have been affected by the general turn away from emerging markets, raising questions about how easy it will be to raise finance for such large infrastructure investments.

Amid the prospect of US Federal Reserve tapering, benchmark bond yields have almost doubled since May 22, while the Turkish lira has fallen more than 10 per cent against the dollar. The economy had already slowed from almost 9 per cent in 2011 to little more than 2 per cent this year.

While a consortium of seven Turkish banks said this week they had agreed a $2.3bn loan to build one showpiece project, a new bridge across the Bosphorus, it may be a challenge to meet the bill for others, such as an airport scheduled to cost more than €30bn and to open in 2018.

But Mr Arat emphasises how far Turkey has already come in what is its fifth attempt to host the games. During its first bid, in 1992, it had no metro line; by 2020 its network is planned to reach 265km.

He cites the Seoul, Barcelona and Beijing Olympics as examples of events that both marked their countries' economic development and transformed the host cities. The hope is that Istanbul can still join that club.

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