a free service
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: 058
The Turks are the main consideration right now of the IMF. There is no developing country its officials are more concerned about at the moment. There is an
US$19bn emergency package deal, with the IMF agreed to extend another US$10bn in a three-year stand-by accord from December. These are by far the largest
figures in the IMF's portfolio.
The Argentinean debacle is serving to remind foreign investors and others 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 awesome 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 go down the tubes.
The economy contracted by 5.5% in 2001, according to IMF estimates. A financial crisis in the early months of the year saw the currency, the lira, devalued by
over one half against the dollar and over 600,000 jobs lost in the manufacturing sector alone.
The world community has been highly charitable 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 aligned itself decisively with the West.
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 Kemal Dervis,
Economy Minister, 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.
The Turks are in an invidious position in the present world crisis as the only Muslim country in NATO. The government is no friend of terrorists, indeed has
been accused of being over-harsh in its methods to combat them when they are Kurds. The capture of the Kurdish leader Ocalan two years ago and his subsequent
call from prison to his followers for them to desist from violence has helped to defuse the problem. But militants on the ground might have other ideas in
the wake of 11th September.
There is frustration of the Islamicists at the closure of their political party, Virtue, at the hands of the Constitutional Court, the fourth closure of such
a party in 32 years. The generals behind it are determined to keep Turkey a secular state, and clearly consider the prohibition of any religious party as best
way to do it.
The Turks and the Greeks are at last talking to each other in earnest about the issues that divide them, Cyprus and the Aegean. Their foreign minister, Ismail
Cem and George Papandreou, old friends, met in Istanbul on February 12th on the sidelines of a conference.
They discussed the thorny issue of the oil-rich Aegean seabed, which almost brought war in 1987. Fighter jets still engage in dangerous manoeuvres there,
where Ankara disputes Athens claim to an airspace of 10 nautical miles, saying it should be only six.
Cyprus is the most intractable issue in that Turkey is risking its own chances of EU entry in its insistence that Cyprus not be allowed to enter without a
political solution to the division of the island. It is not so much this position itself which is damaging but the threat to back it up with force and annex
the island in the eventuality of premature Cypriot entry. Greece for its part threatens to veto the accession of nine new states to the EU unless Cyprus is
allowed in too. There is no more vexed issue in European politics. Cem and Papandreou to the rescue.
TMSF announced will sell Toprakbank shares
Turkey's Savings Depsit Insurance Fund (TMSF) is selling the shares of Toprakbank, the 19th bank to be brought into state receivership, a TMSF Official
Gazette announcement has stated.
Investors have until February 15th to apply to the TMSF and will be informed by February 21st regarding their eligibility to perform due diligence. Following
the signing of confidentiality agreements, these investors will be allowed to perform due diligence until February 28th. The deadline for bids is April 2nd,
2002, the announcement noted, quoted by the Turkish Daily News.
A consortium involving US-based Templeton Asset Management in January noted its interest in bidding to buy failed Turkish bank Toprabank from receivership.
The Banking Regulation and Supervision Agency (BDDK) took Toprabank into receivership in November 2001.
Contract signed to update battle tanks
Turkey has signed a contract to upgrade its fleet of 162 Leopard main battle tanks. The defence ministry undertook the contract signing together with the
Turkish firm, Aselsan.
The contract also includes the modernisation of Leopard 1A1 and A1A4 tanks. The tanks were originally manufactured in Germany. Officials would not reveal
financial details of the contract, MENL reported. However, industry sources have estimated the upgrade to come in at a cost of more than US$100m. The
upgrade will concentrate on the fire control systems for the Leopard. The project will include the installation, integration and testing of the systems
over a period of two years. The upgrade of the Leopard tank constituted one of the few major weapons projects that staved off a suspension of 32 defence
programmes last March. The suspension affected projects totalling US$19.5bn.
Turkey imports 16bn cubic metres of natural gas in 2001
Turkey imported nearly 16bn cu. m. of natural gas in 2001 and nearly 3bn cu. m. of this gas was consumed at real estates, Anatolia News Agency has
Energy and Natural Resources Minister Zeki Cakan responded on 29th January to a question with notice submitted by Felicity Party (SP) Istanbul deputy Osman
Cakan said that Turkey imported 10,928m cu. m. of gas from Russia, 114m cu. m. of gas from Iran, 3,625m cu. m. of gas from Algeria and 1,197m cu.m. natural
gas from Nigeria in 2001. He stated that 2,769m cu. m. of this import were used in the real estates for heating in five provinces...
Turkey orders gas price cuts
Reacting to a public outcry after a 200 per cent rise in local natural gas prices, Turkey has ordered a price cut of 6 per cent for households and 10 per
cent for business from February, The Financial Times has reported.
The government is using powers available to it under an old-fashioned state monopoly similar to those still to be liberalised in most of the European Union,
which Turkey wants to join.
Turkey's new and first energy regulator, Yusuf Gunay, began a visit to the UK in early February to see the challenges and benefits of the UK-style
liberalisation it is his duty to implement.
The good news for Turkish consumers, stunned by the recent price jump, due in large part to a sharp devaluation of the Turkish lira last year, is that
properly conducted reform is likely, over time, to lower prices, although they can also rise in a liberalised market, when demand peaks.
"The gas saga shows why an energy regulator is badly needed," said Ajay Chhibber, director of the World Bank office in Turkey, which helped devise the energy
Along with electricity liberalisation, Turkey plans from this year the gradual abolition of the monopoly held by Botas, the state-owned gas importer and
Priced in line with oil, gas will continue to be imported though long-term Botas contracts with suppliers such as Russia and Iran.
However, in the name of greater competition, Botas will be required every year to give up 10 per cent of the gas "portfolio" to new private suppliers, until
its share reaches just 20 per cent of the total.
"This is quite an aggressive target," said David Drury, senior associate with Gas Strategies, a UK consultancy.
But in an attempt to tackle the oversupply attached to the existing contracts, the law also bars private sector suppliers from signing additional import deals
with countries with which Turkey already has long-term arrangements.
A more fully-fledged market is foreseen for the supply of natural gas to customers.
New market entrants will be able to compete to supply gas to power plants and to any business that consumes more than 1m cubic metres a year.
Unlike the UK system, residential customers will not be able to choose their supplier, although the regulator has the power to change this by opening up the
new market further.
"The new law sets in place the right framework but the test of whether you get a liberalised market in Turkey will depend on the detailed rules and
regulations drawn up by the regulator," said David Drury at Gas Strategies.
"Because the law does not specify details such as the tariffs, Botas can charge market players for transportation in its pipelines, it could either lead to
competitions or to no competition at all."
FOOD & DRINK
Cadbury eyes Kent for Turkish market entrance
Cadbury Schweppes is looking to enter the Turkish confectionery market through the possible acquisition of a stake in the country's largest sweets
manufacturer, reports New Europe.
The market of dairy milk chocolate has confirmed that it held talks for the purchase of a controlling stake in Turkish confectioner Kent as well as its
distribution arm, Birlik. The British company is eager to increase its exposure to developing markets in efforts to offset a weaker confectionery sales
trend currently being experienced on the home front.
Cadbury noted that discussions with the Tahincioglu family, which founded Kent in 1956, "may or may not lead to an eventual agreement." A company spokeswoman
said the deal would provide Cadbury with the necessary entrance into Turkey's market, thus helping the company achieve its goal of doubling the contribution
in sales in Asia, India and the Middle East.
"It would give Cadbury access to Kent's products, the presence needed to sell its own products in Turkey and a platform from which to export to other Turkic
nations," she said.
Kent, listed in Istanbul, generated sales estimated at US$110m (GBP76m) and volumes of around 27.1m tonnes last year.
The firm's brands include Tofita, Bonibon and Olips sweets and Relax chewing gum.
Turkey to receive total of US$31.5bn in IMF loans between 2000-04
Turkey will have received US$31.5bn in loans from the International Monetary Fund (IMF) between 2000 and 2004, Anatolia News Agency has reported.
Turkey is expecting almost US$16bn in loans between 2002 and 2004 while it has received almost US$5bn worth of loans from the IMF since the beginning of
Turkey has taken US$14,396m from the IMF since 22nd November 2000 and more than half of this money was used in budget financing. Sources said that US$7bn
of a US$10bn of loan to be released for Turkey in 2002 would be used in the budget and the remaining US$3bn will be used to strengthen the Central Bank
Two billion dollars to be released in 2003 and 2004 could be used for the budget or Central Bank reserves according to the needs, the sources noted.
Meanwhile, Turkey will repay the US$6.2bn tranche of the loan it had taken since the beginning of 2000.
The sources noted that this repayment would not be postponed but be paid on time as its costs were high.
MINERALS & METALS
Merger of Turkish steel works reported
Iskenderun Iron and Steel Factories (ISDEMIR) was transferred to ERDEMIR (Eregli Iron and Steel Factories) with a ceremony attended by Deputy Prime Minister
Mesut Yilmaz and State Minister Yilmaz Karakoyunlu on 1st February, Anatolia News Agency has reported.
Speaking at the ceremony, ISDEMIR General Director Necip Ebegil said that ISDEMIR which was set up in 1975 with Soviet technolog,y couldn't adjust to changing
technological and market conditions. With the addition of problems brought about by its status as a State Economic Enterprise (KIT), ISDEMIR lost its chance
ISDEMIR was having problems with adjusting to new age and the only solution was privatisation. In 1998, ISDEMIR was taken under the scope of privatisation and
today it's being privatised. Through the transfer of ISDEMIR to ERDEMIR, ISDEMIR will get rid of its problems and at the same time a very important problem of
the Turkish iron and steel sector will be solved. ISDEMIR will get ready for new investments in the near future. "This was a decision which had to be taken,"
ERDEMIR General Director Sener Macun said ERDEMIR was planning to produce 2m tons of steel sheets a year and they would invest US$270m to increase efficiency
until 2010, raise quality, lower costs and prepare ISDEMIR to produce flat sheets.
Labour Confederation (Hak-Is) Chairman Salim Uslu said "This is a very good example of privatisation in Turkey. For the first time, people are not losing
their jobs in a privatisation act and workers are given free shares."
Privatisation to bring in US$1.7bn in 2002-02-06
A total of US$1.7bn in income from privatisation activities will be generated this year. Karakoyunlu told reporters that privatisation activities of the
Turkish Oil Refineries Corp. (TuPras) and main oil distributor, Petrol Ofisi would be organised in the first quarter of this year, New Europe reported.
"Work on this matter in Turkey and abroad has been finalised. We will privatise Tupras and Petrol Ofisi as of the end of March in accordance with the
information and recommendations to be given by our international and national consultants."
He further noted: "In the second and third quarters, we will continue work on the privatisation of organisation in portfolios. One of these organisations is
paper producer, Seka. The work on the Turkish Airlines (THY) is our programme target, which can be implemented as of the third quarter. We expected to obtain
nearly US$1.7bn of income from privatisation this year."
Turkey looks to charm for attracting F1 racing spot
Turkish authorities have announced their wish to build an auto-racing track near Istanbul in the hopes of securing a spot on the Formula One calendar. Turkish
officials believe a grand prix event would assist in attracting tourism to the country, AP News Agency has reported. Turkey has been unsuccessful in several
recent bids to host the Olympic Games.
"Formula One has immense economic powers, it brings immense tourism revenues," Mumtaz Tachincioglu, head of the Turkish Automobile Federation, commented
recently. "It would be an economic advantage for the country." Turkish auto racing authorities have their eye on an abandoned state-owned coal mine in
Kemerburgaz, located on the outskirts of Istanbul, which they hope to transform into an auto racing track within three years, Tahincioglu informed. He said
the federation needed to raise US$60m to US$70m for the circuit's construction.
TURSAB expresses high hopes for 2002 season
The Turkish Union of Travel Agencies (TRUSAB) Chairman, Basaran Ulusoy, has announced that Turkey expected to receive an income of US$12.5bn in foreign
exchange from tourism by hosting 14.5m tourists this year, New Europe has reported. Such a goal is not unreasonable, Ulusoy explained, considering that it
totalled US$9.5bn last year despite events in the Mediterranean calyx and the US.
Noting TURSAB's optimism for the next tourist season, he continued: "We are hopeful, because we have launched cooperation with neighbouring countries. We have
good relations with Greece, Syria, Iran and Armenia and those are the markets into which we recently entered and we expect a significant amount of tourists
from these countries. We have common destination studies around the Aegean Sea. We are going to organise fairs in partnership. We have established the East
Mediterranean Sea Travelling Agencies Union with Egypt, Israel and Greece. We want to make the Aegean Sea a peaceful sea."
The chairman believes that Turkey needs to invest for 2003 and 2005 - critical years - and that the sector should spend US$1.5bn for the restoration of
hotels, buses, planes and rental cars. "If the tourism sector does not spend that US$1.5bn in Turkey, 2004, 2005 and 2006 could be considered as a loss for
Turkey. In that case, Tunisia, Croatia and Bulgaria will take control of the market.
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