Istanbul's Economic Tension

A lawsuit threatens to undo the pro-Islamic government's record of reform and growth

Q. Sakamaki / Redux

Founding father Mustafa Kemal Ataturk separated mosque and state, and Turkey has looked Westward ever since. Secularism is well entrenched, but an Islam-focused party has led the country since 2002.

Turkey has attracted a lot of attention lately thanks to a series of political crises--from armed forays into neighboring Iraq in pursuit of autonomy-seeking Kurdish militants to an atavistic attempt by Turkish prosecutors to ban the country's own ruling party. The political intrigue has created a speed bump--or maybe a stop sign--for an economy that had been striding with determination toward inclusion in the European Union and recharging its ancient trade links with the Middle East.

Since 2002, annual foreign direct investment in the mainly Muslim but officially secular country of more than 70 million people, which has traditionally served as...

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