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  TURKEY

REPUBLICAN REFERENCE

Area (sq.km)
770,760

Population
66,493,970

Capital
Ankara

Currency
Lira

President
Ahmet Necdet Sezer

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Background:
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: 062 - (20/06/02)

Post 9:11 quandary
The Turks are in a quandary. The US's campaign against terrorism and now 'the axis of evil,' including such odd bed-fellows as Iran and Iraq, puts them in the front line neighbouring both. Indeed, they neighbour Syria, Armenia, Georgia, Bulgaria and of course Greece. Truly, Turkey is the point at which Europe meets Asia and the Middle East.
Having ruled many of those countries it has had prickly relations with them all at one time or another. It still does with Armenia, whose trade it embargoes, and in another way with Iraq, having been a staunch ally of the US in the coalition that fought the Gulf War in 1991, but failed to bring down Saddam Hussein, much to his surprise and delight.
The Turkish government and army, the guarantor of the secular state, are perturbed at the idea of another war being launched from their territory. Indeed, the Gulf War lost Turkey billions in trade business since then and still does. The deposition of Saddam would stoke up the Kurdish problem, they fear, risking an independent Kurdistan coveting Turkey's south-eastern regions. The US's habit of fighting wars and then departing from the scene, which might be happening now in Afghanistan, is not reassuring here. The Pentagon top brass are wary of the idea, which might save the day for their Turkish equivalents, very close to them in NATO. Professional soldiers are these days far from keen on using armed force, as is US Secretary of State Colin Powell. The idea might be shelved, even while air sorties and the trade blockade continue.

Problems with Greece
Relations with Greece, on the other hand, are improving, indeed have done so steadily since the earthquakes of 1999, when both rushed to help each other (see Greece). 
But there are limits here, Athens is vetoing an EU defence plan which envisages deployment of a 60,000 EU rapid reaction defence force. The plan, signed in Ankara, involves access to NATO assets, such as transport, communications and logistics. Athens opposes the deal as injurious to its national interests. The rapid reaction force could potentially be used in a conflict in Cyprus or in the Aegean between Turks and Greeks. That must be the fear of the Athens government. Its opposition is threatening the deployment of EU forces in Macedonia, due to take over from the Americans in Amber Fox military mission there in September.
The EU plan would allow Turkey to have a say in the deployment of the defence force as a staunch NATO member in exchange for use of NATO facilities. As a Greek government spokesperson put it: "Our position on the European Security and Defence Policy is clear. There is no room for doubt." Christos Protopappas went on to say: "The Ankara text, as it is, will not be accepted, and of course we will exhaust all means we have at our disposal if necessary." Anyone with knowledge of Greek negotiating tactics will be aware that these are considerable.


Economy recovers
Turkey's economy is in rebound from a terrific crash of its stock market and banking system last year that saw the lira devalued by 40%. Industrial production is reporting gains of 18% over the last year, but only from the trough of the crisis. Inflation at 52% per annum is still a massive cause for concern. 
Economy Minister Kemal Dervis has the confidence of the IMF, and is overseeing a huge US$16m credit package, which should see Turkey though its trade deficit of US$8bn for the year. The problem is that the three-party coalition government, under veteran premier Bulent Ecevit is decidedly shaky. But the challenges ahead, the risk of war with Iraq and the overriding need for economic recovery, are giving it a new leeway. 


Political uncertainty
The illness of the elederly Bulent Ecevit, which made him cancel two meetings in a month, might bring a new government. He has no obvious successor in his own Democratic Left Party nor in the two other parties in the coalition government that unites left-of-centre with far right groupings.
If Ecevit does not complete his term, due to end in spring 2004, there could be early elections with one of the fringe nationalist or religious parties making the running. The leading centrist parties in government and opposition are not in favour with the public in opinion polls, all obtaining barely 10%.
The Virtue party, with its Islamic orientation, could once again top the poll as it did in 1998 with 15%. The impact of 9:11 is impossible to gauge here. A decision by the Islamicists to sink their differences with nationalist groups could change things, but the hostility of the army to Virtue is likely to make other parties wary of them.
A new right-wing reformer, with the accolade of the Wall Street Journal has put in an appearance, Mehmet Alli Bayar, the new leader of Democratic Turkey Party. One fixture in any government is likely to be Kermal Dervis, the guarantor of the reform programme and the US$16bn IMF loan. Continuity is what the markets want and what they are likely to get.

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AUTOMOBILES

BMC drives into Romanian market, opens rep office

BMC has opened its first representative office in Romania with immediate plans to launch a sales campaign on the local market. The Turkish-based truck maker has estimated a sales figure of 50 units for this year, Sinan Kilic, BMC Romanian General Manager informed Business Weekly recently. He also said the company planned to invest more than US$400,000 in a show room, a service unit and promotion activities.

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AVIATION

Turkey, Boeing complete US$1.1bn contract 

The Turkish government and the Boeing Company have agreed to a US$1.1bn contract for four surveillance aircraft. The sophisticated Airborne Warning and Control System radar-tracking planes constitute a major project of Turkey's multibillion US dollar modernisation programme and will assist the NATO-member close a gap in its radar surveillance. 
Following the start of negotiations in 2001, Ankara and Boeing reportedly reached an agreement on the planes, which are based on Boeing's 737-700 aircraft. However, the US State Department and Congress must now give their approval of the contract in a process that could take several months, AP reported. In December 2000 Boeing agreed to a US$1.1bn contract to provide four surveillance airplanes to Australia.

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BANKING

UGBI undergoes name change, will retain operations

Following a decision by majority shareholder, the Turkey-based Garanti Bank, United Garanti Bank International (UGBI) Bucharest branch has changed its name to GarantiBank International Romania. According to Serdar Oghan, country manager of GarantiBank International Romania, the change will not, however, mean a major shift in the bank's strategy.
"It came mainly as an effect of the consolidation in Turkey, through which GarantiBank became the largest private bank, with total assets of around US$12bn," Oghan explained. "The new name is not only easier to pronounce but also specifies that it is the Romanian subsidiary, not the Bucharest subsidiary, as before. This will be better when we start our expansion in other cities in the country," Bucharest Business Weekly quoted him as saying.
"We will also launch products and services for Romanian companies active in internal trade," Oghan stated, adding, "our shareholders are still hesitant after the Turkish crisis, but the Romanian market offers a lot of potential and I am sure we will expand when the time is right."
In the first four months of 2002, GarantiBank International Romania exceeded revenue forecasts by 40%.

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ENERGY

BP, partners plan US$2.9bn pipeline through Turkey 

BP Plc, Europe's biggest oil company, and its partners agreed to build a US$2.9bn pipeline across Turkey to move Caspian Sea oil to world markets, ending more than eight years of debate, wrote Eduard Gismtuallin of Bloomberg. The partners, who include Eni SpA of Italy, Statoil ASA of Norway and Unocal Corp. of the US, have completed all the agreements to start construction and will make a final decision later this month, project director Philip Allison said at a conference in Baku, Azerbaijan. 
The 1,090-mile line, the most expensive of three possible routes, will link fields containing as much as 40bn barrels of oil with the Mediterranean Sea port of Ceyhan. The US backed the Azerbaijan to Turkey route to avoid sending crude through Iran. Turkey opposed a rival pipeline through Russia to the Black Sea, which would increase tanker traffic in the Bosporus strait. "It's a major construction exercise, and it's the biggest pipeline BP has ever built," Allison said. Construction is scheduled to begin in the first quarter of next year and be completed in 2004, he added. 
The pipeline, which will cross mountain passes as high as 7,600 feet, will have the capacity to carry about 1 million barrels of oil a day. The Ceyhan project is budgeted at less than half of what it cost to build the 800-mile Trans-Alaska Pipeline, which opened in 1997 at a cost of US$8bn. 
The Caspian region contains 40bn barrels of oil reserves, equal to about 16 years of Russian production, according to estimates by oil industry consultant WoodMackenzie Ltd. Azerbaijan accounts for about 17 per cent of that figure, while Kazakhstan has about 75 percent. BP is leading a group of investors that plans to spend US$13bn to develop three oil fields in Azerbaijan's sector of the Caspian Sea. The group has increased its estimate of the fields' reserves by 15 per cent to 5.3bn barrels, making Ceyhan economically viable even without oil from other exploration projects, said David Woodward, president of Azerbaijan International Operating Co. Output from the three fields is forecast to rise to 800,000 barrels a day by 2008, from the current 120,00 barrels, meaning other sources of oil aren't necessary to fill the pipeline.
The US government has been pushing for the Ceyhan pipeline since 1994 to reduce the Caspian region's reliance on Russia for its export routes. Oil companies initially opposed the pipeline as "financially unfeasible." After years of pressure by the US, they have come to accept Baku-Ceyhan. "I am not going to say that the project is irreversible until I see the first oil coming out in Ceyhan," Steven Mann, President George W. Bush's special envoy for Caspian energy projects, said June on 3rd. "But I think we're really, really far along on Baku-Ceyhan. We are very close to" final approval. Mann and his predecessors under the Clinton administration have shuttled between the Caspian region's capitals and oil company headquarters over the years to make the project work. 

TotalFinaElf now 100% owner of petroleum products firm

Following the purchase of a 32 per cent stake held by the Turkish Group Oyak and its subsidiary Mais, TotalFinaElf has now acquired 100 per cent ownership of Selyak, a Turkish petroleum products marketing company. Subject to the approval of the Turkish authorities, the transaction will enable TotalFinaElf to go ahead with a merger of the group's two 100 per cent-owned petroleum product marketing subsidiaries, Total Oil Turkiye and Selyak, media reported.
As such, TotalFinaElf will control a network of 500 service stations, representing eight per cent of the gas, oil and lubricants market. Furthermore, TotalFinaElf is active in the liquefied petroleum gas market through its wholly-owned subsidiary Tupgaz, which enjoys a market share of six per cent. The acquisition is in keeping with TotalFinaElf's strategy of developing its refining and marketing activities in the Mediterranean basin.

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FOREIGN ECONOMIC RELATIONS

Ankara, Beijing ready to tap cooperation potential

On the occasion of Turkish Deputy Prime Minister and State Minister, Devlet Bahceli's visit to China recently, Vice Premier, Qian Qichen, said that his country is ready to make joint efforts with Turkey to tap their cooperation potential and further enhance existing cooperative relations.
The two sides exchanged views on bilateral relations as well as other regional and international issues of common concern, and reached a broad consensus, the People's Daily reported. Qian said that friendly and cooperative relations between the two countries have led to sustained development since the forging of diplomatic ties, added to which the frequent exchanges of high-level visits in recent years further demonstrated the common aspiration of the two nations to further consolidate and develop their bilateral ties.
Discussing the current state of economic relations and trade, the Chinese vice premier said the two sides must work hard to explore new means and spheres of cooperation. He also noted that China's Western Development Strategy is providing new opportunities for their cooperation.
Qian pointed out that cooperation between the two countries in the field of tourism was off to a positive start, further stating his belief that, with effort on both sides, the industry holds the promise of even brighter prospects.
The Turkish visitor stated that his country views the development of ties with China to be of great significance, and is willing to strengthen their friendly cooperation in all fields on the basis of mutual respect, equality and reciprocity.
Bahceli expressed admiration for China's economic achievements following its reform and opening-up policy, saying that Turkey also valued China's role in the international community. He underlined that Turkey has consistently adhered to the "One-China" principle and been in favour of the country's reunification.
The Turkish side thanked its Chinese hosts for efforts aimed at promoting bilateral trade and investment, and pledged the willingness of Turkish entrepreneurs to take an active role in China's western development.

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TELECOMMUNICATIONS

Turk Telekom plans on bidding for 65% BTC stake

Turk Telekom plans to submit a bid for a 65% stake in the Bulgarian Telecommunications Company (BTC) as part of a consortium. The Turkish state-owned fixed-line monopoly will submit the bid together with Koc Holding and Sabanci prior to the deadline, Europedoa.net reported. Turk Telekom had earlier expressed interest in purchasing the BTC stake, sending a team to the capital, Sofia. Bulgaria recently extended the deadline to submit bids for its stake in the telecoms monopoly.

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