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TURKEY


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 182,848 147,700 199,300 24
         
GNI per capita
 US $ 2,500 2,530 3,080 95
Ranking is given out of 208 nations - (data from the World Bank)

REPUBLICAN REFERENCE

Area (sq.km) 
770,760

Population 
66,493,970

Capital 
Ankara 

Currency 
Lira 

President 
Ahmet Necdet Sezer 

  

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: 079 - (01/12/03)

Bomb blasts in Istanbul
Istanbul has become the new site of terrorist attacks, with two outrages within a week of each other. On November 15th there was an attack on two synagogues in Istanbul, leaving 50 Jews dead, an act perpetrated by Islamic fundamentalists of Turkish origin. Then five days later came a suicide bombing attack on the UK consulate, killing 27, including Roger Short, the consul, and wounding 400. The killers were from groups trained by al-Qaida in Chechnya and Afghanistan, coming from the largely Kurdish areas of the south-east.
The government has a moderate Islamicist coloration itself, but certainly deplored the deeds. Indeed, it finds them acutely embarrassing. The co-ordination of Turkish and foreign security forces to combat the threat of future attacks is going to be given a massive boost.

No Turkish troops for Iraq after all
The Turkish government has withdrawn its offer to send Turkish troops to Iraq. This is in line with popular sentiment that was running strongly against the war in the spring and has not receded subsequently in its hostility to helping the Americans in their occupation of the country, as it is viewed. 
The idea of Turkish troops in Iraq was highly unpopular in the neighbouring country itself, where memories of the Turkish Ottoman Empire are fresh. Iraq was for centuries a Turkish province and the experience has gravely marked it. The division of the state into three portions, the Kurds, the Sunnis in the centre and the Shi-ites in the south dates from then and was inherited by the British in the aftermath of the First World War.
There is no love lost between the Turks and the Iraqis. But then nor is there between the Turks and the Kurds, who straddle the frontier, four million of them in Iraq and upwards of thirteen million in Turkey. 

The offer of Kurdish help
The one indubitable success story by and large of US intervention in Iraq is the creation of two Kurdish enclaves in the north which are well on the way to self-government and reconstruction. Indeed this has been true for more than a decade, with US and UK air cover to protect their independence from the Saddam regime since 1992. With the regime ousted from Bagdhad the Kurds of Iraq can breathe more freely at last.
This is not the case with the Kurds of Turkey, who are a minority which has long suffered from discrimination. At least this is so, not only in their own eyes, but also those of the Europeans to the north and west of the country with whom the Turks want to be united in the EU.
Kurds of any nationality now look on the US as their benefactor and ally. The new cordiality they feel towards the Americans doubtless explains what would have been unthinkable a year ago, an offer of help from the successor to the Kurdish Workers' Party (PKK), which until its transformation two years ago was run on Leninist lines and engaged in what the US deemed terrorism. The vice-president of the new political organisation of the Kurds, the Congress of Kurdish People, is Osman Ocalan, brother of Abdullah Ocalan, imprisoned in Turkey for the past three years for terrorism, having been reprieved from the death penalty. Osman Ocalan has declared;"The Americans and ourselves have two enemies in common, radical Islam and nationalist Arab chauvinism. That is why, if they ask for it, we are prepared to aid them in controlling the frontier between Iran and Iraq to prevent (the passage across it) of Islamic militants of Ansar al-Islam or any other organisation opposed to the American presence in Iraq."
This offer is disingenuous to say the least. The Kurdish leader is well aware of the delicate state of US-Turkey relations, which would make any acceptance of assistance highly provocative to the Turkish government. Ankara has responded categorically to these overtures to the US as "propaganda which aims only at trying to render oblivion to the crimes of the PKK, the Kadek (a military offshoot of the PKK) and the pseudo-congress which are one and the same terrorist organisation." 
The Americans are certainly behaving gingerly here with good reason. But they have not made any move to disarm the 4,000 heavily armed combatants of the military branch of the ex-PKK, spread in a dozen camps in the mountains of Qandil, which separate for hundreds of miles Iraq from Iran. The Congress, led by Zubeyir Aydar, a Kurdish lawyer who lives in exile in Switzerland, has taken great care to make-over its image. It condemned the recent outrage against the synagogues in Istanbul as "monstrous terrorist acts" and offered condolences to the victims. It has foresworn any ambition to create an independent Kurdistan, the main idea of the old PKK, and does not even demand the immediate release of "President Ocalan," but only an improvement of the conditions of his detention.
It remains to be seen if this mollifies the Americans. General Richard Myers, leading US troops in the area, has made no demands for disarmament, according to Mr Ocalan, the younger brother of the "President." Official links at a subaltern level have been made, say the same sources, and "we hope they lead to something."

The pay-off for the Ceyhan oil route
The Americans have several good reasons for keeping the talks going, even if they do not lead to any official recognition or a removal of the PKK from the US list of "terrorist organisations." The Kurdish militias have not targeted the US troops, indeed keep out of their way. They could do damage to the prospects for an oil pipeline from the Caucusus to the Mediterranean port of Ceyhan on the Turkish coast, one reason for Western bankers to be wary of financing the project so far. It is even in Ankara's interests to keep the Kurdish militias happy to forestall any sabotage of the pipeline.
This is particularly true since various threats to resume the armed struggle have issued from various sources close to the ex-PKK leadership. It is playing a careful game of its own here. Remove any threat and it would remove any motive for conciliation. The tactics of the IRA are being adopted, with a military wing and a sanitised political one putting out different stories. There is probably a co-ordination of policy between them for all that. The Government in Ankara has a difficult task to perform itself. 
Its foreign minister, Abdullah Gul, is a skilled diplomat who knows how to walk across hot coals. He is certainly doing that in this affair.

IMF funds forthcoming
The IMF is continuing its large funding programme of Turkey, the largest in its portfolio at $16.5bn. Another tranche is on the way. This is the more welcome as the March decision of the Turkish parliament not to allow the US to use northern Turkey for the transit of its troops to Iraq saw the loss of a potential $ 20bn or more in aid. 
The economy is in dire straits, even if recent figures are positive. They need to be after a drop in GDP of 9% in 2002. The economy is looking up this year not before time with a 4-5% growth in prospect for next year too. 

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ENERGY

Turkey, Iraq sign electricity cooperation deal


Turkey and Iraq signed on November 12th an electricity cooperation protocol. The protocol, which was signed by Energy and Natural Resources Minister, Hilmi Guler, and Iraqi Electricity Minister, Ayham Al-Samarra'i, aims to develop relations in the field of electricity. According to the protocol, the Energy and Natural Resources Ministry will launch efforts to ensure 1,000 megawatts of electricity for Iraq in 2004, Anatolia News Agency reported.
The protocol envisages an increase in the export of electricity to Iraq to 5,000 megawatts in a short time. Turkey will also provide technical assistance, training, information and experience to Iraq for establishing and operation of the electricity system in Iraq.
The Energy and Natural Resources Ministry will also carry out coordination among Turkish companies, which will work in fields of electricity production, transmission and transfer, which are needed by Iraq.

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FINANCIAL NEWS

Turkish minister outlines implementation of economic reforms

Finance Minister, Kemal Unakitan, said on 4th November that the developments in the Turkish economy were welcomed and appreciated in western Europe, Anatolia News Agency has reported. 
Speaking in a news conference in Brussels where he attended the economy and finance ministers' meeting of EU member and candidate countries, Unakitan said that Turkey had an important political will to join the EU. 
"We adopted the adjustment laws and we will show the same sensitivity in implementing these reforms. We must bring the economic position to the level of the EU. Inflation, budget deficits and issues of borrowing are very important. We must abide by the European criteria, we carry out the stability programme with the IMF in resolution. We must do it even if there is the IMF or not," Unakitan said. 
"We walk on the right way and we will continue on our way," said Unakitan, adding that "privatisation is an important issue. Turkey has a privatisation schedule, and we abide by that... Big privatisation tenders such as State Monopolies of Tobacco and Liquor (TEKEL), Petkim and Turkish Petroleum Inc. (Tupras) will be held. Firstly TEKEL's bid will be concluded. Later National Lotteries and Telecom will be privatised in 2004." 
"We targeted 20 per cent of inflation for the year 2003, we will easily reach that target. The deficit in the budget will be lower than expected. Public deficit need will decrease, the growth rate will be more than the European average, it will be 5 per cent. We target the same rate next year," said Unakitan. 
Unakitan stated that the government attributed importance to political criteria as much as economic criteria, adding that "everybody whom I met in my contacts say that the political and economic changes in Turkey are very pleasing and surprising." 
Referring to the Iraqi issue, Unakitan said that "we had losses at the beginning of the Iraqi war, there was a loss in tourism incomes. There was economic hesitation and stagnation. Shopping ended. 
"There was a rise in inflation due to the increase in oil prices and US dollars. If this had not been the case, the inflation figure would be much less today. We overcame the Iraqi crisis without serious losses." 
Unakitan said, "the better Turkey is administered, the more it would improve day by day", and noted that, "Turkey which has potential, basis, and human rights should leap to the place it deserved. 
"One of the most important issues of Turkey is to increase direct investments. Employment problem is linked with this. We should further better investment atmosphere. Foreign investors should be brought to Turkey. Privatisation is very important in this respect. Foreign investments will come to Turkey in 2004 because of privatisation. 
"Foreign investments will increase when we get a date from the EU. 
"There are European, American and other investors from the far east, who want to enter various sectors including Tekel, Petkim, Tupras, Telekom and the finance sector," he stressed. 
Unakitan said: "Ways are open for Turkey. Let us progress along this route. Economic and political stability is very important. Every country wants to attract foreign investors. This will bring employment, production and exports. We are trying to decrease bureaucratic obstacles. Differences between local and foreign investors are lifted. Regulations should be stable, they should not change continuously." 

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FOREIGN ECONOMIC RELATIONS

Turkish, US, IMF officials discuss US$8.5m loan

State Minister Ali Babacan met on 30th October with US Treasury Secretary, John Snow, and US Federal Reserve Bank Chairman, Alan Greenspan. The US side said it was ready to give the US$8.5bn loan, Anatolia News Agency has reported. 
Recent developments in the Turkish economy were conveyed to the US side during the meeting. 
Turkey's support extended to Afghanistan was also discussed, and US$50m support, which Turkey plans to extend to Iraq, was reviewed at the meeting. 
State Minister Ali Babacan separately met with International Monetary Fund (IMF) First Deputy Managing Director, Anne Krueger, and discussed the sixth review. Steps that would be taken for completion of the sixth review and legal arrangements were discussed. 
It was reported that the IMF was pleased with the course of developments in Turkey, and it was noted the improvement recorded in Turkey was more than expected. 
Babacan also met with German Finance Minister, Hans Eichel, and took up developments in Turkish economy and adjustment to EU. 
The German Finance Minister expressed pleasure over developments in the Turkish economy.

Minister foresees exports to Iraq will exceed US$ 50bn in 2004

State Minister, Kursat Tuzmen, has said that exports will exceed the US$50bn barrier in 2004, NTV television has reported. 
Tuzmen attended a panel meeting held by representatives from EU members and candidate countries on increasing administrative capacity and on customs issues. Disclosing export targets for the end of 2003, he said: "We could barely exceed a US$3bn in our exports in the past. We are now reaching US$3.5bn or US$4bn every month. Therefore, even though we have not seen the November and December figures, I believe that we will all see an export figure of US$44bn or US$45bn this year."
The minister commented on the impact of the rising foreign exchange rate on export targets. 
Tuzmen said: "We hope to exceed the US$50bn barrier in 2004. Once it does that, Turkey will leave behind various psychological barriers too. We went through that when we first exceeded the US$30bn barrier. The US$50bn barrier will be similar. Once we achieve that, then our goal will be to reach exports worth US$100bn by 2010."
According to Tuzmen, the chaos in the region and the US administration's inconsistent attitude had a negative impact on the exports to Iraq. 
He continued: "Had it not been for the war, Turkey would have exported some US$4bn worth of goods to Iraq. That would have been very good for us, for the small-and medium-size companies in southeast Anatolia, eastern Anatolia and central Anatolia. Despite that, however, we are exporting about US$120m worth of goods to Iraq every month. We aim to reach a target of US$1bn this year. This figure is the best that can be achieved under the current conditions. "
Tuzmen announced that the opening of the foreign trade fair in Baghdad has been postponed till February.

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FOREIGN LOANS & AID

World Bank launches new assistance strategy for Turkey

The World Bank is launching a new strategy of assistance for Turkey. Releasing a statement, World Bank said that the programme envisaged support of up to US$4.5bn for the next three years, Anatolia News Agency has reported. 
The statement noted that the World Bank's Board of Executive Directors discussed on 6th November a new Country Assistance Strategy (CAS) for Turkey. It noted that the Turkish private sector might further benefit from loans, investments and advisory services provided by IFC, the World Bank's private sector financing arm, and from guarantees against non-commercial risks, provided by MIGA, another member of the Bank Group. 
Stating that the objective of the World Bank was to help Turkey implement fundamental reforms to reduce economic vulnerability and achieve high and stable growth, the statement said that the World Bank Group would also assist the authorities in addressing some long neglected social and environmental problems as the country prepared for EU membership. 
The statement said that top priority would be given to completion of the public sector reform and stated that the new CAS would support the government's efforts to reform the social security system, further improve the efficiency of public expenditure management and decentralize service delivery and implement municipal reform. It added that strengthening the legal and judiciary system might also benefit from assistance. 
Noting that although the economy had been growing in 2002 and this year, many citizens continued to lack access to basic health and education services, the statement said that the new CAS would continue to support the reform of the education sector at the secondary and post secondary level, assist the authorities in transforming the health sector, and focus on social protection. 
It stressed that the new CAS would support the continuation of financial sector reforms, provide funding to help enterprises increase exports, and strengthen the small and medium size enterprise sector. 
Stating that given Turkey's high seismic risks and history of flooding, improving emergency preparedness and seismic risk mitigation were critical, The new CAS would support the government's efforts in this area, as well as in environmental and a natural resource management that was a high priority for Turkey. 
The statement said that the previous CAS for Turkey covered the 2001-2003 period, and the projects that had been implemented during that period had already yielded positive results on the ground, noting that these included, among others, tangible improvements in basic education, including a substantial increase in girls' school enrolment; physical and psychological rehabilitation following the 1999 earthquakes; strengthened stability of the banking system; improvements in public sector management; modernization of agriculture policies; more effective natural resource management; and improved targeting of social welfare for the poorest. 
It added that during the implementation of CAS, there would be also continued strong collaboration with the World Bank Group's development partners, including the IMF, the EU, members of the UN system, as well as bilateral donors. 
World Bank Country Director for Turkey, Andrew Vorkink, said that the bank would continue to support Turkey's economic reform programme focusing on improvement of public sector and business climate, to help create the conditions for high economic growth and to help prepare it for integration into the EU. 
Stating that the assistance programme attached great importance to human development, Vorkink said that they remained committed to a strong partnership with Turkey in the years to come.

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