That’s what every dictator, autocrat, plutocrat or theocrat has missed. They can round up the opposition, deport dissidents, muzzle up the media, imprison rebels, suppress liberties and occupy every square and street in town for days on end, almost on a whim. But such show of force does not impress capital markets one bit. To the contrary, capital markets do not kowtow to authoritarian regimes, only to strong institutions such as a legislature that enacts well-studied and fair laws, a judiciary that is equitable and independent, armed forces that are confined to their barracks except for regular parades or the occasional wars, and a free press that can criticize without fear of reprisals.

This very same week such lesson was learned (or probably not!) by Erdogan, the strongman of Turkey after a brief, but disastrous visit to the City of London. There, in the confines of closed meetings in paneled rooms with senior bankers, he laid out his views about how the Turkish economy ‘must behave’ under his aegis. The Turkish Lira dropped 15% on that same day. He must have instinctively and naively thought that his previous experiences were a good guide. Dealing with powerful or charismatic figures such as Putin, Ocalan, the Iranian Mullahs, PM Netanyahu, or his nearest neighbor Assad, do not constitute good precedents for handling the markets. With such characters the game is binary. You are either predator or pray. You can get away with an incursion in Syria, with sending a flotilla to Gaza, with downing -then profusely apologizing - some Russian jets, but with bankers and investors there are more minefields than in Raqqa. One must always be on his/her toes for fear of triggering a hidden wired device or a disastrous explosion that cannot be controlled by executive orders.

Investors roam the globe seeking opportunities for investment. Opportunities abound in new sectors of the economy, or in old ones that have been invigorated by deregulation or by innovation. They also come about via discoveries of natural resources, or a breakthrough in research or some other unforeseen technological openings. However, whether in developed or in developing markets, investors demand clarity, no more, to make informed decisions. Investors do not require containment of risk as often taunted by the uninitiated, as risk is part and parcel of any investment transaction. In turn, clarity requires a proper understanding of risk, means for assessing its impact and deciding whether such risk could be mitigated and, most importantly, if it can be compensated by anticipated rewards. Such clarity is doubly required in developing nations where strong institutions are in dire want and where governance is opaque. Uncertainty, not risk, is the enemy of investments. What would the economic outlook be in future years, how much capital flows would be allowed or curbed, are there going to be any restrictions on foreign direct investments? These are the type of questions that are posed by investors and for which dictators -as is the case of strongmen in Turkey, Venezuela, Iran, North Korea, and more lately, unscrupulous politicians in Lebanon, have few if any straight answers.

Turkey was at the crossroads of trade and investment between Europe and Asia for centuries and then, after WWII, it became the bulwark of the NATO alliance keeping the USSR’s activities in check in the Black Sea. Venezuela, was till recently the darling of Big US Oil. Iran under the Shah was the most trusted partner of the West, South of Rome. Beirut was called the Paris then the Switzerland of the Middle East, and the shining example of multiculturalism, till it became a satellite of theocratic Iran.

What went wrong? How did these capitals disintegrate and became extremist in their positions, with an irreconcilable breed of nationalism, populism and religious ideology that have no bearing on the true social or economic welfare of their own citi...