via hurriyetdailynews


Thursday, March 17, 2011
GÜL DEMİR/NIKI GAMM
ISTANBUL – Hürriyet Daily News

Capitulations, the historic privileges devoted to foreign traders in the Ottoman Empire starting from the 15th century, is still a hot term and is frequently mentioned during contemporary discussions on foreign investments in Turkey and the country’s foreign trade. A Nov. 26, 2007, article on the Hürriyet Daily News & Economic Review offers a broad perspective and information on the delicate issue

The Galata Tower is seen in this photo behind Istanbul’s Karaköy neighborhood, the historic trade port of the city, where many Genoese and Venetians lived for centuries. The tower itself was built in 1348 by Genoese during the expansion of their colony in Istanbul.

For more than 600 years, agreements between Ottoman Turkish governments and foreign governments controlled trade and economic relations and allowed foreigners to conduct business under the laws of their own country. Known as capitulations, these treaties overshadowed so much of Ottoman economic life that the word is still used today as an example of one-sided economic agreements in which foreigners are favored.

The capitulations signed by the Ottoman government were officially abolished in 1923 but the Turkish Republic was still forced to pay off the debts it owed as a result of agreements signed before 1914. It wasn’t until the Turgut Özal era in the 1980s that the last of the money owed was paid up. But much of today’s debate demonstrates that the wounds still linger.

The one-sided treaties date to before the Ottoman Empire and were used in Arab countries in agreements with foreign states, such as Venice. These served as examples for the Ottoman Turks when they expanded enough in the 14th century to catch the attention of Western trading powers.


Istanbul – Venice line

At the very beginning of the 15th century, Ottoman Sultan Beyazid I agreed to treaties between the Ottomans and Ragusa and Genoa that would permit them to continue trading in the empire under the jurisdiction of their respective consular representatives. Following the conquest of Istanbul 50 years later, Mehmed the Conqueror entered into a treaty with Venice and with Genoa to lower the duties on these two Italian city states’ imports and exports. Both paid the sultan tribute and were allowed to have consular representations. Meanwhile, in 1517, Sultan Selim I granted trading privileges to French merchants in Egypt.

Starting in 1536, a number of agreements between the Ottoman sultan and European powers were concluded. These agreements were called capitulations and were a series of conditions that allowed foreigners to conduct business in the Ottoman Empire under the laws of their own country.

The French were the first to conclude such an agreement – between Süleyman the Magnificent and French King Francis I in February 1536. According to the late historian Stanford Shaw, the Ottoman sultan never signed the agreement but it has always been treated as if he had. Europe was dominated at this time by the Holy Roman Empire under the Hapsburg family of Austria. France was not a part of the Empire and the two groups were inimical to one another. Following a battle between the two in which the French lost and their king was captured, the latter begged the Ottoman sultan for assistance. Since Süleyman was also against the Hapsburgs, he perceived that it would be to the Ottomans’ advantage to the support France and act in tandem with Francis as a counterweight against any moves by the Hapsburgs.

The agreement that was concluded gave the French a special position in the Ottoman Empire, and one writer has pointed out that the empire became a kind of crown colony. The French were granted the right to sail, buy and sell products throughout the empire and other nations wanting to do the same were required to sail under the French flag. The French were also allowed to be tried under French law by the resident French consuls. Moreover, they were granted complete freedom of religion and it was agreed that they would look after Christianity’s holy sites that were under Ottoman rule. A second such capitulation was signed in 1569 and was to last until modern times.

The above conditions are similar to other capitulations negotiated later with other countries although the privileges offered became larger as the Ottoman Empire slowly began to lose its strength after Süleyman. Venice and the British concluded a capitulation with the Ottomans over the ensuing years and these eventually were followed by agreements with old-enemy Austria and Spain. The Austrians were also granted the right to oversee the Christian holy places and gave them an excellent excuse for interfering in the Ottoman Empire’s internal affairs.


Misuse of the capitulations

While the capitulations seemed like a good idea at the time they were concluded and seemed to have worked well at the beginning, they did discriminate against the local Muslim population because they were not protected legally under them. Moreover, they permitted foreign traders to operate within the system that they were accustomed to and made things more predictable in dealings. As USC Professor of Economics and Law and King Faisal Professor of Islamic Thought and Culture Timur Kuran noted in his work on Islam and economic underdevelopment, “…[the capitulations] facilitated mutually beneficial commercial and financial contracts within an evolving global marketplace.”

As the centuries passed, the capitulations became a source of corruption and they began to be seen as anti-Muslim or rather anti-Turkish. In fact Turks were largely blind to the ramifications of the capitulations until the 19th century when they began to travel abroad and more and more foreigners came to the empire.

The very nations with whom these capitulations had been concluded were then supporting the wave of nationalism that began to sweep through the Balkans and Middle East following the French Revolution. While European government officials were not personally interfering in Ottoman internal affairs, the capitulations provided cover for groups like missionaries that wanted to convert Muslims to Christianity.

The Turkish side saw that these capitulations had given the Western powers a say over key economic policies and even forced the empire to abolish various domestic monopolies. As the economic situation became worse for the Ottoman Empire as outflow exceeded income and they lost much of the land they had held, the Western powers demanded more and more. In 1838, for instance, Turks were forced to apply higher duties on exports than on imports, preventing local producers from competing globally.

As the 19th century progressed, the Turks became more and more aware of how they were being exploited. But it was not until after the War of Independence and the signing of the Lausanne Treaty in 1923 that the hated capitulations were finally abolished; despite the victory, however, it was not until 1929 that Turkey regained control of its own customs policies.

In the mid-1980s, the period when Turkey really began its economic reform outward after nearly two centuries of insularity, then-President Turgut Özal declared “capitulations” gone forever. But even if the old capitulations are no longer with us, the legacy remains.


What is a capitulation?

The word capitulation derives from the Latin “capitula,” which refers to the chapters that comprise the text of a treaty.

In international law, if one state permitted another to exercise extraterritorial jurisdiction over its own nationals within the former state’s boundaries, the treaty bringing this about is referred to as a capitulation.

Historically these capitulations were primarily privileges granted to foreign merchants conducting business in lands under Islamic law.

The term is to be distinguished from the military term “capitulation,” an agreement for surrender.

 

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