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Turkey was created in 1923 from the Turkish remnants of the Ottoman Empire. Soon thereafter the country instituted secular laws to replace traditional religious fiats. In 1945 Turkey joined the UN and in 1952 it became a member of NATO. Turkey occupied the northern portion of Cyprus in 1974 to prevent a Greek takeover of the island; relations between the two countries remain strained. Periodic military offensives against Kurdish separatists have dislocated part of the population in southeast Turkey and have drawn international condemnation.

Update No: 059

Turkey's economy contracted by 5.5% in 2001. A financial crisis in the early months of the year saw the currency, the lira, drastically devalued and over 600,000 jobs lost in the manufacturing sector alone.
But the crisis produced the potential saviour, Kemal Dervis, Economy Minister, who on March 14th 2001 announced a recovery programme. An ex-World Bank economist, who lived for over 20 years in the US, he is the ideal man to negotiate with the international institutions.
The Turks, indeed, are the main concern now of the IMF. There are plans for Turkey to receive US$31.5bn in loans from the IMF in the 2000-2004 period. Turkey received US$15bn since the beginning of 2000, while it is expecting more than US$15bn in the 2002-2004 period. These are by far the largest figures in the IMF's portfolio.
The world community has been highly understanding and cooperative with Turkey, the reward no doubt for its fierce pro-Western stance in a region replete with anti-Americanism. As a member of NATO and a candidate for EU membership it has long been aligned decisively with the West.
But the Argentinean debacle is an unnerving portent for foreign investors and others, reminding them of the extreme and precarious indebtedness of the Turks. At the time of Argentine's default in December it had a foreign debt of US$132bn, 46% of GDP. Turkey's foreign debt is US$115bn, 58% of GDP. If one figures in this year's likely contraction of GDP of 8% and the new IMF loans, the debt load mounts to an fearsome 70% of GDP. That does not include domestic debt that the Finance Ministry estimates at 80% of GDP.
Everything will be done to prevent it going bankrupt. There is a huge difference between Turkey and Argentina. Turkey is too pivotal to the West's geopolitical concerns to allow it to implode, especially at a time when its help would be crucial in toppling Saddam Hussain.
When Premier Bulent Ecevit made an official visit to the US in mid-January, with a full panoply of ministers, including the key figure of Dervis, he naturally got the red carpet treatment and plenty of emollient flattery. The IMF Managing Director Horst Koehler no less said that his board would convene in February to offer support to Turkey. Another default on the scale of Argentina is just unthinkable right now.
The country's economic woes are putting off a lot of foreign investors nonetheless. With the Turkish economy shrinking a whole series of deals concerning natural gas, 93% of which consumed in Turkey is imported, are on hold, including gas supplies from Turkmenistan, Egypt, Azerbaijan and Iran.

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Oil production begins in new well in south

Oil production has begun in the Gokici-1 well dug by the Turkish Petroleum Corporation [TPAO] in Diyarbakir's Ergani District. The drilling of the well, which was dug in the Gokici village 20 km from the Ergani District, had begun three months ago, TRT 2 television has reported. High-grade oil was found at 2,500 metres. The drilling head was then removed and replaced by a production head. Oil mixed with mud, which was formed during the drilling work, is being extracted from the well. The villagers of Gokici are pleased that oil was found in an area so close to their village. 
Following the discovery of the oil, which is above Turkish standards and which is of grade 34 according to initial tests, it was decided to dig a second well in the same area. The crude oil to be obtained from the Gokici-1 well, which is expected to produce an average of 250 barrels of oil a day, will be sent to the Batman refinery by tankers. The TPAO is producing an average of 36,500 barrels of crude oil a day from the total of 487 wells in Adiyaman, Batman, and Diyarbakir. 
The high quality of the oil found in Gokici-1 has focused attention on the region. However, reserves are as important as quality in oil production. Gokici is expected to enliven the economy as an oil region with further good news and new wells.

EIB lends Turkey 90m Euros for gas storage facility

The European Investment Bank (EIB) is advancing a 90m Euro loan to the Turkish national oil and gas company for the establishment of Turkey's first major gas storage facility, New Europe has reported quoting the EIB.
This is the first EIB operation under the new "Special Action Programme," which makes available financing for up to 450m Euros during 2001-2004, in favour of a key investment in Turkey's energy sector, the bank said in a press release posted on its website.
The project, which will provide about 1.9 giga cubic metres of working gas capacity, concerns the conversion of two depleted gas fields, one onshore and one offshore, located in the Thrace region near the city of Silivri, some 60km west of Istanbul, into an integrated gas storage facility.
There are currently no gas storage facilities in Turkey, other than storage tanks of limited capacity located at an LNG terminal across the Bosphorus from Istanbul. The main purpose of gas storage is to match season demand fluctuations with supply given an optimal, usually constant level of imports and productions, the EIB said.

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Turkey repays US$6.8bn in foreign debt in February

Turkey repaid a total of US$6.8bn in external debt between 1st-20th February 2002, Anatolia News Agency has reported. 
The Central Bank data show that the Treasury repaid US$487.70m; the Central Bank repaid US$7.47m; US$6.3b was paid to the International Monetary Fund (IMF) and the administrations with general and consolidated budget paid the remaining US$26.76m. 
Turkey has repaid US$7.3bn in external debt since the beginning of 2002. The total external debt repayments in 2001 had been US$13.5bn.

Minister declares economic targets for 2002

State Minister Kemal Dervis has declared that Turkey will definitely attain the targets of 3 per cent growth and 35 per cent inflation rate this year. Dervis met with sector representatives at a meeting of the Production and Finance Consultation Council. Dervis stated that the action plan to be implemented in order to reach these targets will be announced shortly, TRT 2 television has reported.
Dervis said: "Therefore, these two targets, namely 3 per cent growth and 35 per cent inflation rate - maybe not exactly, but around there - must be attained in 2002. There are many problems in this regard. We must work from every aspect. We must especially proceed from the macro to the micro level.
"We must secure coordination, which is also very important. We discussed all these issues. We will prepare an action planshortly. Our colleagues will work through the holiday to produce this plan. Together, we will attach equal importance to these two targets, attain them as two complementary goals, and thus try to make 2002 a happier year for Turkey."

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Cadbury Schweppes to buy Kent for US$96m

Cadbury Schweppes Plc has announced its agreement to purchase at least 51 per cent of Turkish candy maker Kent, for about US$96m, plus assumed debt. Kent has a 66 per cent share of the packaged sugar confectionery market and the second-largest share, at 14 per cent, of the country's chewing gum market, New Europe has reported.
Turkey's confectionery market is valued at some US$905m, with the sugar segment accounting for 34 per cent, AP reported. Expected to close in the spring, the deal includes a majority equity interest in Kent's distribution arm, Birlik, which has a key role in Kent's operations. Birlik is responsible for imports representing one-third of the company's sales volume. Kent products are sold in 66 countries in Europe, the Middle East, and the former USSR.

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