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Update No: 063 - (23/07/02)

The Turks have been in the throes of a political crisis for months, issuing from a severe economic crisis last year that saw the lira collapse and bankruptcies and redundancies decimate the fates of millions. The three-year collation government was already massively unpopular when premier Bulent Ecevit became obviously unfit to carry on earlier this year, being in and out of hospital.

Defections destroy government
In early July the government was rocked by the defections of seven ministers, including a deputy premier and the key figure of Ismail Cem, the foreign minister, who has left to form a new reform party. He and 42 other members of parliament defected from Ecevit's own party, the Democratic Left party, toppling it from top spot as the largest party in parliament, indeed down to being only the third largest.
Then on July 16th came the coup de grace. A wave of further defections from the party convinced Ecevit that he had lost its confidence irrevocably. He agreed to November elections.

Prospects at the elections
The opposition had been clamouring for elections for some time. But they have been precipitated by fissures in and between the government parties themselves.
The other two coalition parties, Motherland and the right-wing National Action party, are not in great shape either. All three by being associated in government at a time of catastrophe have induced a widespread disillusionment with them. The opinion polls put them under the 10% threshold for representation in parliament. They could all three go the way of Solidarity in parliament and disappear!
The defection of Cem and his colleagues is understandable in this context. Cem deems himself indispensable to Turkey, keeping its bid to join the EU on track. For the moment he may be right. Economy Minister, Kermal Dervis, is deemed by many, not least the markets, as being indispensable to keeping confidence in the US$16bn IMF programme in place. They are likely to be right too. When he tendered his resignation at one point, the markets slumped. When he withdrew it, the lira and stock market recovered.
He is likely to join the new reform party in or at the end of the electoral campaign. 
The main imponderable is the likely showing of Justice and Development party (Ak), the only party at the moment with more than 10% in the polls. If this remained the case at the elections, it could be the only party represented in parliament!
Actually, the military, who see themselves as the guarantors of Turkey's secular state, would prevent this from happening, removing them, as they did the previous Islamicist party, Virtue, from prospects of government itself, in 1997. For Ak is their natural successor. The leader of Ak, Recep Tayyip Erdogan, the ex-mayor of Istanbul, denies that the party is Islamicist: "Ak is not a religiously-oriented party, but a party oriented at achieving happiness for the people."
This unfortunately is about the level of vacuity one might expect. Erdogan is not a deep thinker, but in the eyes of many a sort of Robin Hood figure. He might well feel his time has come.
Another opposition party is led by Tensu Ciller, a former premier. But she is less likely to appeal since she practised a different sort of wealth redistribution, not from rich to poor, but from the state coffers to her own and those of her cronies.
All in all, the situation could scarcely be more volatile. Anything could happen. Turkey has yet to evolve a stable political system; nor has it a stable economy. But there is one guarantor that things will not get out of hand - the military.
In practice Ak would not necessarily be a destabilising force as part of a coalition government, the most it can realistically hope for. Erdogan has committed Ak to most of the IMF-backed reforms. He would also pursue human rights reforms. He was himself imprisoned in 1999 for "inciting religious hatred" by reciting a poem comparing minarets to bayonets.
Erdogan is under investigation by public prosecutors for suspected graft during his four and a half year stint as mayor. He must know the limits under which political leaders operate in Turkish democracy.
He is circumspect about whether Ak would support a US-led campaign to topple Saddam Hussein. "You cannot size underwear for an unborn baby," he says. "You should decide on such issues after negotiation."

Quandary over the US and Iraq
Now Turkey faces a quandary. Should it help the Americans in a planned assault with perhaps 250,000 allied troops in the spring? The invasion would be launched from Kuwait, as in 1991, with overwhelming air superiority and the tanks racing across the desert. Turkey would be wholly inappropriate, given the rugged mountainous terrain of Northern Iraq.
But, as one of his lieutenants said to Hitler ahead of his campaign against Russia: "war is like an avalanche; you never know what it might lead to." Indeed, Turkey fears an uprising of the Kurds in the wake of US-UK victory, which could destabilise the situation of Kurdish-populated regions in the Turkish south. The unthinkable possibility of Kurdistan, an independent state carved out of areas of Iraq, Turkey and Iran, opens up.
The Western coalition intends to establish a permanent military force in Iraq for five years, while nation-building goes on. The Iraq people would be offered a choice of government in a plebiscite, so giving Iraq within its present borders a new legitimacy. A massive reconstruction effort would be put in place and a new compliant Iraq be groomed to succeed Saudi Arabia as the West's main oil supplier from the Middle East; it has 100bn barrels or so in the oil reserves. The Iraqi Kurds would be given an incentive to stay part of the new entity and the danger to Turkey averted. 
But all this is pure speculation, premised on the assumption that the US will go ahead next spring. Time will tell here too.
One thing is for sure, that if they do, Turkey as a loyal NATO partner will offer them full support in the form of air bases, while hoping that the US will appreciate its special concerns and interests in the region. The new foreign minister, Gurel, is very pro-American. If still in office at the time there is no question that Turkey would be fully cooperative. 
Asked in an interview recently about Turkish policy in the event of an US offensive, he replied that Ankara and Washington are in a strategic alliance. "We look at the world and the region with the same eyes. Therefore we share the same anxiety related to regional and international developments. But naturally, as a regional state Turkey has certain nuanced differences that set us apart. On this issue the US is the country that understands us best."
There is no doubt this is true. The US Congress has yet to denounce the genocide-denial of the Turks about the massacres of Armenians in the First World War, about which Hitler said: "who remembers about the genocide of the Armenians?" The US-Turkey relationship is one of the strongest alliances in the world.

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BANKING

Capital Intelligence downgrades YKB after Pamukbank buyout

International emerging market rating agency Capital Intelligence has down-graded the domestic strength rating of Yapi ve Kredi (YKB), one of Turkey's largest private banks, to BB from BBB-. The outlook was also placed on negative, while the foreign currency ratings of B long-term ad C short-term were retained.
The agency commented that the move follows the take-over of sister bank Pamukbank, by the Turkish State Deposit Insurance Fund (SDIF). Capital Intelligence believes the move will have negative implications for YKB, New Europe reported.
Turkey's banking regulators took over Pamukbank after rejecting a planned merger between the troubled bank and its sister institution, the Wall Street Journal Europe reported on 20th June.. 
Pamukbank becomes the 20th failing Turkish bank to be taken over by the state's banking regulators during the past five years.

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ENERGY

Iraqi-Turkish talks cover building gas pipeline to Europe

Iraq and Turkey have discussed a venture to build a pipeline for transporting Iraqi gas, Turkish Minister of State, Adeeb Kaidil was quoted as saying by the Iraq News Agency (INA). Issues to be tackled by the 14th session of the join Iraqi-Turkish Committee currently in session in Baghdad "will cover the construction of a pipeline for transporting Iraqi gas to Europe through Turkish territory," Kaidil said.
"The discussions will also cover the possibility of involving Turkish companies in oil exploration operations in Iraq, finding transport links connecting Iraq, Turkey and Syria and exploiting the Saudi-Iraqi border post at Arar for Turkish transit trade to the Arab Gulf states," he added. Kaidil arrived in Baghdad at the head of a large delegation comprising officials and leading businessmen to the new session of the joint Iraqi-Turkish panel, which looks after economic ties and trade between the two countries.
The Iraqi side of the talks is led by Oil Minister, Amer Rasheed, who expressed Iraq's readiness to expand trade exchanges between the two countries, which stood at about US$1.3bn in 2001.

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FOREIGN LOANS

Turkey gets Japanese loan to strengthen Straits bridges 

The Turkish government signed on 5th July a credit agreement of 12.02bn Japanese yen (about US$100m) with Japan for the project for seismic fortification of Bogazici (Bosphorus), Fatih Sultan Mehmet and Halic (Golden Horn) bridges and viaducts on the connection roads in Turkey's Marmara region, Anatolia News Agency has reported. 
Treasury Deputy Undersecretary, Aydin Karaoz, and Japanese Bank of International Cooperation (JBIC) Director, Mitsuyasu Iwata, signed the agreement on behalf of their governments. Housing and Public Works Minister, Abdulkadir Akcan, and Japanese Ambassador, Shigeo Takenaka, also attended the ceremony. 
Akcan stated that the Turkish government, after the disastrous Marmara earthquake of 1999, tried to reconstruct the destroyed buildings and structures, and also strengthen those which survived. He said that the government received help from friendly countries like Japan which have significant experience in dealing with earthquakes. Akcan also remarked that the Japanese government cut down the red tape greatly while giving Turkey this credit and in this way, Turkey would complete the work at least one and a half years earlier. 
Akcan said that the two bridges on Bosphorus were hardly affected at all by the two earthquakes, but added that these bridges still needed strengthening against a possible stronger earthquake. He said that all bridges and viaducts in the country need fortification against earthquakes.

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TOURISM

Turkey surpasses Spain, Greece as tourist attraction

Turkey's, Huseyin Baraner, secretary general of the Tour Operators' Association, has stated that "Turkey has experienced progress in the tourism sector. Although we increased prices, there has been a 20% rise in sales." He added that "Turkey has left Spain and Greece behind in tourism - there has been a 30% decrease in sales in Spain, Greece has experienced a 20% decrease." 
Huseyin Baraner explained that the Ministry of Tourism has been successfully following worthwhile work in the industry. He was also happy to report that "Germans have a great interest in visiting Turkey, and this year there is a lot of competition among the tourist countries in the Mediterranean. The hotel prices in Spain have been reduced and Greece has stepped-up advertising. Despite these efforts, Turkey is the most successful."

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