Commercial relations between Turkey and the Middle East have been increasing quite rapidly in the last few years, as well as cooperation and exchange of information and dialogue between public authorities. Global crisis made clear that especially our region is one of the high growth bases in the world, which in turn, constitutes a potential to grow tight commercial and financial relations. Recently, Turkey, Jordan, Lebanon and Syria signed a joint declaration on Thursday to launch an initiative to form a free trade zone and a visa-free zone. These nations will also set up a joint cooperation council. Significant steps have been taken towards developing our commercial relations as witnessed by trade volumes between countries. On the heels of 2001 crisis, the trade volume of Turkey with the Middle East Region was just about USD 6 billion. It reached USD 43 billion just before the financial crisis and stood at USD 29 billion as of 2009. In the same period, the share of Middle East in Turkish trade volume climbed up by 5 percentage points to 12 percent, where as the share of European Union declined by 10 percentage points to 43 percent. Let me give you several country specific examples. Syrian-Turkish economic relations have strengthened rapidly in the past few years, particularly following the implementation of a free trade agreement between the two countries in 2007. All in all, trade volume between Syria and Turkey has doubled since 2006 and reached to 1.75 billion USD in 2009.

Many countries, especially in advanced economies have spent substantial amount of public funds to boost aggregate demand and to revitalize the financial system. Most of these countries have no fiscal resources left to put forward a similar stimulus package, if the world economy experiences another setback. Therefore it is of utmost importance to keep the recovery intact, which is already too fragile. Debt sustainability and fiscal imbalances stand out as the main challenges for many years to come. As the recent developments in the financial markets revealed, deterioration of sovereign creditworthiness can hamper macroeconomic and financial stability. Therefore, ongoing problems especially in some advanced economies, particularly in Europe should be resolved in a quick, effective and credible manner. However, we should also keep in mind that supporting global demand is a global responsibility. It is questionable whether emerging market economies would be able to fulfill the gap in global demand, while advanced countries stay on the sideline to clean up their balance sheets. Neither their share on global economy nor their economic and financial structure would be adequate to play that role. Especially emerging economies that are in deficit, still being in convergence stage, need to raise their production capacity to pay off their external debt accumulated during their catch-up. Therefore, I strongly believe that a holistic approach is a must. While developing any kind of policies, including fiscal tightening or restructuring, one should pay great attention to negative externalities these policies may cause on other economies. In particular, we should avoid beggar-thy-neighbor type of policies.