Best Lamb in a Decade! (and my take on Turkey’s future for investors)

Landed last night in Istanbul, Turkey. And I was hungry. Specifically, I was hungry for lamb.

I last visited Istanbul maybe a decade ago, gathering a variety of research for a book I wrote on global investing, The World is Your Oyster. (By the way, hated that title, but the publisher wanted it, so, you know…) During that trip, I happened upon a rooftop restaurant with stunning views of the Bosphorus Strait and both the Sultan Ahmed and Hagia Sofia mosques. It was there that I had what was to that point the best lamb I’ve ever tasted  – and I am quite the fan of lamb.

Now that I was back in Istanbul, I wanted more Turkish lamb.

The thing about Istanbul is that no matter where you wander in the tourist areas, someone is bound to talk to you, trying to get you to come into their carpet shop or their restaurant – and Istanbul is nothing if not a city chock-a-block with carpet shops and restaurants. So it was that Osman, the proprietor of the Old House Restaurant, called out to me as I went wandering the streets sometime after dark.

It’s Ramadan here at the moment, and the locals don’t eat until just after dark, about 8:30 p.m. or so. Once the fasting is over for the day, the streets and parks around the two mosques begin to teem with families out celebrating a meal. Osman pulled me in with his kind, bearded face. He told me the restaurant has been here since 1960 and that the recipes are all based on his mother’s cooking. I assured him, I would be back before he closed, but first I wanted to go for a stroll around the mosques and have a look at the local handicrafts on display at what is the Ramadan equivalent of a European Christmas market – pop-up, wooden stalls selling everything from hand-blown glass figurines and local honey, to hand-hammered copper tea sets and jewelry.

As promised, I returned to Osman’s eatery about an hour later. He greeted with an exuberant smile and a hearty handshake, as though I was an old friend. He handed me a menu but I didn’t even glance at it. I simply requested that he “bring me your best lamb dish, a side of grape leaves and an Efes,” the local beer.

A few minutes later, he set in front of me a plate of four lamp lollipops, the tips of their bones wrapped in aluminum foil.

I do not exaggerate when I say this was the best lamb I’ve had since my last trip to Turkey. I’ve had a lot of lamb dishes in the intervening years all over the world – a ground lamb flatbread pizza in Bucharest, Romania; a lamb shish in Almaty, Kazakhstan (that left me sick as a dog); quite a nice two-inches-thick lamb chop at a a great little parrilla in Montevideo, Uruguay; and a Spanish take on lamb lollipops at a tapas restaurant Barcelona.

But these lollipops at Osman’s Old House were stunningly good. Perfectly grilled, moist, tender and a unique flavor from a spice that my tongue knows but which my brain cannot place (maybe some kind of cumin/cinnamon mixture?).

Afterward, a glass of hot Turkish tea and a plate of baklava, and I was done.

Just a truly wonderful meal. And I would counsel anyone visiting Istanbul to stop in and see Osman at the Old House Restaurant: Utangaç Sk. No. 23/A, in the Sultanahmet district.

No Longer a Great Investment Opportunity

Separately, on the investing front, I came to Turkey last time because I saw it as a good place to be an investor as the country progressed toward European Union integration. I was certain Europe would ultimately see its way to inviting Turkey to join in the EU, which would be great for Turkish investors. Every country that has joined the E.U. and the eurozone benefits from something called the “convergence” trade. As a country makes changes to meet social, political and economic mandates, the local economy improves and foreign direct investment flows in. Historically, that has proved to be great for investors.

And, if nothing else, adding Turkey to the EU makes sense for two crucial reasons:

  1. Turkey has millions of young, educated workers, and allowing them into the EU would do wonders for helping stanch the EU’s demographic time bomb that will cause a world of hurt for governments and retirees in coming years.
  2. Turkey is the geographic buffer between Europe and the most volatile region on the planet: the Middle East. The country borders Syria, Iraq and Iran. Having Turkey as an EU asset would go a long way toward managing some of the problems in the region

But things have changed dramatically since that last trip.

The Bush/Cheney fiasco in Iraq unleashed a tempest of sectarian violence that Saddam Hussein’s repressive regime had kept on a low simmer. The political vacuum left behind by the U.S. war helped breed the Islamic State and the civil war ravaging Syria … both of which ultimately fueled a Muslim refugee crisis that imperils Europe today, and created the rationale for terrorist bombings that have roiled Europe in recent years. Because of that, Europeans have grown much more cool to the idea of accepting a Muslim state into the EU because of fears that it will mean unfettered travel into and through the Union for tens of millions of additional Muslims.

Moreover, Turkey’s once-secularist political view on life has given way to a more Islamist view. It’s also a country leaning more toward dictatorial rule now that an April referendum passed that gives President Recep Tayyip Erdoğan expansive powers. That, too, is an offshoot in some ways of Islamic State and Syria. Turkey has been hit by a number of terrorist attacks in recent years and, just like Europeans, they’re reacting with fear. In the case of the Turks, they’re closing ranks behind a strong leader they believe will keep the country safe.

The upshot, however, is that Turkey is a far riskier economy today than it was the last time I visited.

The system of constitutional checks and balances is under assault with the new powers Erdoğan gained in the referendum. The central bank isn’t very independent anymore, with Erdoğan “indicating” how he wants central bankers to manage the currency.  And the economy seems less vibrant than the last time I was strolling these same streets.

For that reason, I think Turkey probably has an economic slump to navigate, as well as an existential rethink to confront: What does Turkey want to be – a West-facing economy with all the freedoms and opportunities that affords to build a strong middle class, or an East-facing economy that increasingly adopts a more-strict religious position and which reflexively limits its appeal as European firms scale back their interest?

Until we have a clear answer to that question, Turkey, for me, remains a fabulous place to visit, but not a place I’d put my money to work for the long haul.

 

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