28th Annual Conference on U.S.-Turkish Relations Keynote Speech

Muhtar Kent, Chairman and Chief Executive Officer, The Coca-Cola Company
Gaylord National Resort
Fort Washington, Maryland
June 1, 2009

Thank you, General Scowcroft, for that kind introduction, and good morning, everyone. It's a great honor to be in Washington and to participate in this extremely important dialogue on U.S. and Turkish relations.

In looking over the agenda and the influential speakers you'll be hearing from over the next few days, it's clear to me that this year's conference is the most timely, relevant and critical in the 28-year history of this esteemed gathering.

From energy sources to economic forces... from science and technology to defense and security -- you will be examining issues that will shape not only our two nations but our world for the next two decades and beyond.

As someone whose entire life has been influenced and shaped by our two wonderful nations, you could say I have a keen interest in promoting strong Turkish-American relations. In fact, you could say I am a child of Turkish-American diplomacy. When the Republic of Turkey was formed in 1923 under the leadership of President Ataturk, the person who became the first Turkish ambassador to Washington carried the name, Muhtar.  He also happened to be my great uncle.

Almost 30 years later, I was born on American soil when my father served as the Turkish Consul General in New York.

In the course of my life, travels and conversations with business and government leaders from around the world, I have come to three basic conclusions about relations between Turkey and America.

1. Turkey needs a strong America.
2. America needs a strong Turkey.
3. The world needs strong American-Turkish relations.

All three of these conclusions are truer today than ever before as we head towards the second decade of the new millennium.  We are on the brink of a paradoxical era of unprecedented challenges and truly breathtaking opportunities.

Indeed, the theme of this year's conference --  Overcoming Challenges in an Era of Change -- could not be more aptly titled.

This morning, I'd like to talk about some of the challenges and opportunities coming our way from a business perspective.

Then I'd like to focus specifically on what businesses in America and Turkey can do to promote stronger ties between our nations.

In setting up this discussion, I am reminded of words Kemal Ataturk once said -- words that are just as relevant to America today as they are to Turkey.  Ataturk proclaimed "Our national sovereignty should be supported by financial independence.  The only power that will propel us to this goal is the economy.  No matter how mighty they are, political and military victories cannot endure unless they are crowned by economic triumphs." 

At the moment, no matter where you live in the world, the thought of any type of economic triumph seems rather elusive.

Earlier this spring, the World Bank and the IMF both told us that the global economy would shrink in 2009.   This would mark the first global contraction since World War II.  In the last 18 months, we've seen 45 percent of the world's wealth wiped off the map.  Most of this has been the burden of middle class populations. Here in the U.S., where this crisis began, per-capita wealth has dropped over 20 percent in recent months.

A consumer survey conducted this year by the Turkish Statistical Institute shows that well over 90 percent of Turkish citizens believe that purchasing a house or car within the next year will not be possible.  

There's no question that it's painful out there.  And despite some recent encouraging words from Chairman Bernanke and many of the central banks around the world, we've still got a ways to go.  We're not out of this dark tunnel yet.  Unemployment in the U.S. and Turkey, for instance, will likely get worse before it gets better.

But this is not a time to panic. We've seen this movie before. Turkey's been through economic crises before, many, many times. 

So, too, has America.  In fact, the mood in the U.S. today reminds me very much of  when I first came to work for The Coca-Cola Company and moved to Atlanta 30 years ago.  An energy crisis and a recession were draining public confidence.  There was widespread fear of losing economic leadership to Japan.  Job losses were mounting.  Detroit was in dire straits. 

But our respective systems didn't collapse, did they? In fact, America and Turkey got stronger... much stronger... and that's because our great nations did what they've always done best. They innovated and reinvented themselves.

America created replaced 40 million antiquated jobs with 80 million new high-paying and high-skilled jobs between 1980 and 2000.  Turkey not only survived the economic crisis of 2001 but quadrupled exports and grew into the world's 16th largest economy… Europe's 7th largest economy ... and the single largest economy from the Adriatic to China.

America's and Turkey's histories of recovery are the result of long-standing national heritages that promote entrepreneurship, innovation and cultural diversity. It's part of the same formula -- the same antidote -- that will ultimately solve our current problems.

There's no doubt in my mind that we can leverage this moment in history to strengthen our businesses and institutions.  And to strengthen relations between Turkey and America.

Like you, I have been troubled in recent years by public opinion polls in both our nations showing a growing disconnect in our relationship. That said, I believe President Obama's uplifting speech to the Turkish National Assembly this past April went a long way in helping rebuild trust and understanding between our two nations. The President said it best in his speech -- "We are stronger when we act together."

As I alluded to at the beginning, the world needs a strong Brand America... and a strong Brand Turkey.   This responsibility does not rest solely with our government leaders but also must reside with our civil institutions and, of course, our business leadership.

My own experiences tell me there is so much more we can do together to strengthen U.S.-Turkish trade and investment.  While on the upswing, is still nowhere near the level it should be given the natural and intellectual resources that are so abundant in our countries.

And this is not just me saying this.  In recent months, I have had in-depth conversations with many government officials on both sides of the ocean. Everyone agrees there is still much more to accomplish. For Turkey and America, I would argue that the stakes have never been higher.

That's because in the course of the next decade, we are going to see some enormous global... economic... political... and social shifts.  These will dramatically impact the way we engage with each other and the rest of the world. Some of these shifts will challenge us... some will play to our great benefit.

In fact, I believe there are four massive forces taking place today that will shape not just Turkey and America but every economy and society in the world over the next decade or so.  I collectively call them the New Equilibrium because they are rebalancing the world.

The first component of the New Equilibrium is the erratic supply and price of energy -- the economic lifeblood of so many of our neighbors and an important part of the Turkish and American economies. While energy prices have been declining and moderating over the last several months, most experts believe the long-term scenario will be much higher prices for crude as pressing demand from emerging economies meets the already huge demand from developed nations. This brings up an endless flood of questions, including...

• How quickly will we see alternative energy innovations commercialize?
• How economically viable will they be?
• What role will Turkey and America together play in bringing these innovations to market?
• The world's response to a future of energy scarcity and higher costs will have a significant impact on our economies.

The second component of the New Equilibrium is food and commodity scarcity. This is being driven partly by the surge in production of bio-fuels like ethanol, and partly by erratic weather and surging demand from growing economies.

This brings us to the third component of this New Equilibrium -- the stunning rate of urbanization taking place around the world.

In 2007, for the first time in history, the world became mostly urban. Over the next 10 years, 650 million more people will flood into the world's urban centers.  That's the equivalent of adding another Istanbul or another Washington-Philadelphia corridor to the planet every 60 days.

This is happening throughout Eurasia, Africa and Latin America and it's posing some significant challenges upon infrastructure, housing markets, transportation systems and education systems, just to name a few areas of stress.

By 2020, more than 75 percent of Turkey's projected 80 million citizens will live in cities.  Istanbul alone will account for 20 percent of the nation's population.

As people flock to cities for jobs and opportunities, we'll continue to see strong growth in the global middle class.  This is the fourth major trend. 

Think about this: Despite declining wealth at the moment, a billion new people are expected to enter the middle class by the year 2020.   That estimate, by the way, is very conservative, even in this environment.  The World Bank and other organizations have even higher growth projections.

The world will become $20 trillion dollars richer -- larger than the current combined GDPs of North America, Turkey and India. By 2020, India is expected to have more millionaires than Australia and Canada combined have people. China's middle-class market will be more populous than all of North America. New middle class consumers in emerging economies will strive for the same things out of life as their counterparts in the developed world. 

The opportunities this poses -- and the corresponding stress it places on our natural resources -- will present one of the greatest paradoxes of our times.

Overall, I believe this paradox will be a positive development for the world.  Among other things, we're going to see more efficient and smaller cars... less air-conditioning... more efficient heating systems... and in general more environmentally-sensitive lifestyles emerge.

The Turkish-American relationship sits in the very nerve center of these developments -- geographically, culturally and economically. At the end of the day, our collective futures will come down to our leadership --

• our national leadership...
• our business leadership...
• our educational leadership...
• our innovation leadership...
• our trade leadership and
• our sustainability and social leadership. 

In this environment, I believe that business in both America and Turkey can -- and must -- play a significant role in helping build and improve relations between our two countries. In the next few minutes I have remaining, I would like to outline three essential ways in which businesses can help do just that.

While there are many things businesses can't control, there are absolutely some cornerstone things we can do to take our Turkish-American relationship to the next level. Our businesses clearly have a role to play in:

1. Promoting investment and small business development.
2. Developing a new generation of globally-minded and cross-culturally astute leaders.
3. Embedding environment, social and  economic sustainability into our business operations.

Let me explain each of these three areas in a little more detail, beginning with promoting investment.

History has proven -- time and again -- that by continuing to invest in our businesses, our people and our institutions during difficult economic times, we can further strengthen our competitiveness for the long term.

Look at what Turkish businesses have accomplished in just the past few years in opening trade to new markets.  They've generated $130 billion dollars in new exports since 2002. Today, more than 1 million Turkish entrepreneurs work abroad -- or four percent of the nation's entire working population.   

Turkish investment in America is on the rise and for good reason.  The U.S., despite the financial crisis, remains the most competitive, transparent, innovative and business friendly nation in the world.  In the last five years alone, Turkish investment in the U.S. has grown nearly 40 percent, particularly in textiles, consumer products, and building and construction materials.

America, of course, is one of Turkey's largest trading partners and sources of foreign direct investment. American companies are some of the largest employers and investors in Turkey.  Currently 600 American companies are now active in Turkey.  Almost 200 of them have arrived since 2003.

Coca-Cola first arrived in Turkey in 1964. Personal biases aside, let me just say Coca-Cola is absolutely bullish on Turkey. The growth we've seen there has been very encouraging.

Early in my career -- in 1985 to be exact -- I was given the assignment of managing our operations in Turkey.   At the time, it was a small and troubled business, with only $55 million dollars in revenue.  Today, it's one of our most successful markets, with over $1 billion dollars in revenue.

In 1996, we launched a joint venture with Anadolu Group and formed Coca-Cola Icecek, an entrepreneurial bottling company.  Since then we have invested more than $600 million dollars in Turkey. 

Today, Coca-Cola Icecek provides 2,500 jobs directly and our supply chain provides economic opportunities for another 25,000 Turkish families. This dynamic public company only three years after its successful IPO on the Istanbul Stock Exchange now is our partner in 10 markets, with Turkey as its home base, serving 316 million consumers.

We cannot overstate the impact that Turkish and American multinational investments have on promoting better relations between our countries. 

I was in Seattle for the Microsoft CEO Summit less than two weeks ago.   There was great excitement over Microsoft's  investments in Turkey, including the recent announcement of a new innovation center in Ankara.  The news, of course, was met with equal enthusiasm in Turkey. Like it is for Coca-Cola and scores of other multinational firms, Turkey is emerging as one of the top 10 markets for Microsoft.

In a multi-polar world, where power and influence now radiate from several nations and regions around the world, the road ahead is going to require shifts in our thinking... shifts in behavior... indeed, shifts in our own view of the world.

How well future leaders understand these new realities... accept them... and prepare for them… will determine their success and the success of our world in the coming years. Developing a new generation of global-minded and cross-culturally sensitive leaders is something we are spending a lot of time on at Coca-Cola today. 

This is the second area I believe all businesses can work on to strengthen our American-Turkish ties, as well as our ties with the rest of the world.

At Coca-Cola, our goal is to groom future leaders who possess a world view.  We need people who can move seamlessly across borders and across cultures and who feel as comfortable working in Ankara as Atlanta. We're looking for people with diverse backgrounds and diverse points of view. 

The next generation of leadership will need to be able to recognize and really harness the power of diversity.   In Atlanta alone, we have over 50 different nationalities represented at our corporate headquarters.  In our field operations it's not uncommon to find Turks in senior positions in Africa... Africans in senior positions in Eurasia... Asians in Australia,  etcetera.

True innovation, we have found, comes from this wonderful fusion of cultures, ideas, beliefs and experiences. We make a point to find young professionals who want to be stretched -- who relish the challenge of working outside their comfort zones, and who are not afraid to make mistakes.Entrepreneurial spirit is key to business success today more than ever before.

Our involvement in leadership development extends beyond our own employees.  We're working with a number of universities around the world to provide management insights into the way we operate globally.  This spring, for instance, we hosted a group of Emory University MBA students in Istanbul, and similar efforts are going on around the world.

A key component of global leadership and cross-cultural understanding is winning the hearts and minds of the consumers and communities we serve.  This brings me to the third area where businesses can really help strengthen Turkish-American ties.

Embedding environmental, economic and social sustainability efforts into our business is essential to running a successful 21st century corporation. We have seen through our own experiences -- time and time again -- that our business in any market is only as healthy and sustainable as the communities we serve. There is a clear and direct relationship between healthy sustainable businesses and healthy sustainable communities.

I'm proud to say that the Coca-Cola system has taken a leadership position in America and in markets around the world on a number of sustainability platforms: from our recycling efforts... to eco-friendly refrigerants and packaging... to water and energy conservation around the world.

In Turkey, for example, we've developed a bottling plant with ionized air rinsing devices that use no water -- dramatically cutting down on the amount of water used per line.

In Turkey, Croatia, Romania and Kazakhstan, we're working with the United Nations Development Program to improve communities' access to safe drinking water and industrial water use along the Danube River and the Black Sea. The project also provides advocacy on water issues in the region.

Coca-Cola Icecek's environmental sustainability efforts have been cited as among the most progressive in Turkey.  Today the company is ranked among the top 5 most admired businesses there.

I think if we do these three things right --

• promote investment,
• develop global-minded leaders and
• drive sustainability

-- we can also help mend the failing reputation of business around the world.

I must say I am deeply troubled -- not surprised, but troubled -- by recent public surveys that show just how far business's reputation has been hurt around the world. The world's financial crisis, coupled with the growing rhetoric from the anti-globalization movement, threaten to promote economic isolationism and protectionism around the world. 

Today, the majority of Europeans, Asians and Americans believe that globalization is a negative force at this very moment. Clearly, we have our work cut out for us. For business leaders in America and Turkey, this is the time to step up and show true leadership.

Almost fifty years ago, President Kennedy issued a famous challenge -- "Ask not what your country can do for you... ask what you can do for your country."

Today, I would argue that the most important responsibility a business has towards the countries it serves is to promote stronger ties with the world community.

If we do this -- and we do it right -- there is no limit to what we can accomplish together.  No limit to the future strength and sustainability of Turkish-American relationships.

Thank you for your time and attention this morning and best wishes for an engaging and productive conference.  Thank you.

# # #