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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: 069 - (28/01/03)

Political outlook still uncertain
The Turks are beset by a myriad of problems of late, which are testing the mettle and calibre of the new government of the Justice and Development Party (AKP). "The honeymoon is over," says Tolga Ediz, analyst at Lehman Brothers in London. This judgement came after interest rates had risen and the Turkish lira fell following a disappointing debt auction and the decision to raise spending on pensions by US$2bn without any indication where the money is coming from.
Part of the problem is simply not knowing who is in charge. The premier, Abdullah Gul, is widely seen as a stand-in for AKP's leader, Tayyip Erdogan, who was unable to assume the premiership for a special reason not likely to obtain for long. He was banned from doing so by the Constitutional Court because he was imprisoned for a while in the late 1990s when he was mayor of Istanbul, for publicly reciting a few lines of poetry deemed to be inciteful of religious hatred, a heinous crime in secular post-Ataturk Turkey. Parliament, now dominated by AKP, is in the process of passing legislation permitting this judgement to be rescinded. Erdogan is likely to replace Gul as premier.
The prospect of imminent war in Iraq is one obvious source of uncertainly and perturbation. The Turks cannot but be apprehensive of a conflict that could destabilise their southern frontier, if a new 'Kurdistan' emerges as a consequence. For it would be likely to include a slice of southern Turkey, as well as slices of Syria, Iran and of course Iraq. But as a loyal NATO member, they have to go along with Washington, which is assuring Ankara that territorial changes are not being contemplated.

Cyprus erupts
The Turks have an even more urgent problem on their doorstep - Cyprus. About 70,000 Turkish Cypriots took to the streets on January 14th in Nicosia demanding that their leader, Rauf Denktash, sign a UN peace deal that would enable them to join the EU, along with their estranged Greek compatriots (estranged since the de facto division of the island in 1974 after first the Greeks and then the Turks invaded it). There is little doubt that Ankara is right behind them. It wants an end to the Cypriot problem, a huge embarrassment for Turkey's ambition to join the EU, especially right now as Greece assumes the EU presidency for six months. 
Under the plan, which UN Secretary-General Kofi Annan says must be signed by February 28th, the two communities would be re-united in a federation of two autonomous states with a central government without much power, albeit with a common currency. Cyprus is one of 10 new countries invited to join the EU in November and will sign the treaty of accession in Athens in April; and Brussels is keen that this historic moment sees the island join the EU re-united -so does Ankara.
Opinion polls in the Turkish north of the island show that the vast majority disagree profoundly with their 78-year old leader Denktash and his refusal to accept the UN's proposals. They are eager for a settlement, seeing EU membership as a passport to the outside world. In the two decades since the self-styled Turkish Republic of Northern Cyprus proclaimed independence, the pariah state has been recognised only by Ankara. Turkey has a 30,000-strong army in Cyprus, in of course its north.
The UN plan has hitherto been deemed unacceptable because it would mean returning large tracts of territory to the Greek Cypriots and allowing up to 90,000 refugees - almost half of those who fled the north in 1974 - to reclaim their homes. Mr Denktash's objection to the plan deserves to be considered: "if the Annan plan is implemented as it is, there will be no Turkish Cypriot left on the island within five to 10 years." Denktash is committed to making his case, in talks with the Cypriot president Glafcos Clerides in future. 

IMF rescue package
The new government knows that its future depends on the IMF with which it has the global organisation's largest outstanding agreement for a loan of US$16bn. 
The AKP's election two months ago as Turkey's first single-party government in 15 years was greeted by financial markets with a big vote of confidence. Interest rates tumbled 20 percentage points from a high of 70 per cent in the political turmoil triggered by the previous three-party coalition government's collapse last year. But interest rates were edging back up to nearly 60 per cent.
The shift in market sentiment is mostly to do with investor nervousness over the AKP's economic policies, exacerbated by increasing talk in the international community of imminent war in neighbouring Iraq.
Meanwhile, defending the pension rise, Mr Erdogan said the party was "restoring social peace to Turkey" after a strong showing by ultra-nationalists in the election reflected bitterness following the financial crisis in 2001. While a 6.5 per cent primary surplus target is not incompatible with a more caring social policy, analysts say that Ankara must take tough decisions quickly to cut expenditure elsewhere.
"They've been enjoying more of a honeymoon than anyone expected, but now that it is coming to an end they've got to get going and show they intend to do the right thing," said one Western official. The economic programme has already proved successful, contributing to unexpectedly strong growth of 6.5 per cent last year and lower-than expected inflation at 30 per cent. 
But as Premier Gul conceded, the final test of whether the government can put its money where its mouth is comes at the end of January, when it must produce a budget for 2003. The government took a step in that direction recently when it announced plans to cut spending on medicine, an area known to be plagued by corruption and waste.
Taking on vested interests and corruption in the state bureaucracy - as the government has promised to do - will not be easy.
Further doubts have been raised by Mr Erdogan's stated intention to revise a law, which in theory came into effect on January 1st, to combat corruption in public procurement. The new system is also keenly backed by the EU, World Bank and the IMF. In response to a storm of criticism in the Turkish media, Mr Erdogan said that he only wanted to ensure more access to contracts for small businesses as well as to accelerate tender procedures.
In an interview, Sener Akkaynak, head of the new public procurement board, whose role is to ensure tenders are conducted according to the new rules, countered that the 110-day tender period cited by Mr Erdogan applied only to special and relatively rare contracts involving high technology.
He added that "all over the world," bigger companies with a track record played a prominent role in construction contracts, with smaller companies serving as sub-contractors.

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ENERGY

Russian natural gas reaches Turkey


Natural gas from Russia reached Samsun under the Blue Stream project on 30th December. Officials told the Anatolia News Agency correspondent that gas pressure in the pipeline reached 22 bar after pipeline was filled with natural gas on 28 December and added that the gas pressure should reach 50-56 bar to use natural gas. The procedure is expected to be completed by 15th January 2003 and natural gas will start to flow. A group of people from the Russian Gazprom company will continue its preliminary studies in Samsun. A ceremony will be held in Samsun with participation of Russian President Vladimir Putin in January. 
Andrey Fint Itar-Tass, chairman of the Beregovaya compressor station on coast of Black Sea, said that terminal of Oil Pipeline Transportation Corporation of Turkey (Botas) had started to receive natural gas. 
A delegation from Gazprom went to Samsun to sign an agreement on delivering natural gas in 2003 and to attend the ceremony. Yuri Basarigin, chairman of the Kubangazprom company, went to Samsun with the delegation and said that Russia would deliver 6 bn cu. m. of natural gas to Turkey by the Blue Stream project in 2003 in accordance with the agreement. 
The Blue Stream project was brought onto the agenda within the framework of the agreement regarding transportation of Russian natural gas to Turkey under the Black Sea. Turkey and Russia had signed an agreement on 15th December 1997 and the agreement took effect on April 4, 1998. 
Within the scope of the Blue Stream project, a 501-km long natural gas pipeline was installed between Samsun and Ankara. The 1,200 km pipeline is expected to cost US$3.4bn. A total of 2,100 metres of the 376 km section of the pipeline will pass under the sea. The flow of natural gas will gradually reach 16 bn cu. m. in 2007 in accordance with Natural Gas Purchase Sale Agreement. 
The "Opening valve" ceremony was held in Durusu Gas Measurement Station in Samsun due to starting of flow of natural gas from Russia to Samsun. Samsun Governor Muammer Guler said that Turkey had a historic day and added that Turkey had an alternative energy resource. 

Turkey diversifies oil routes because of Iraq war risk

The Turkish Oil Refineries Corporation (TUPRAS) Director-General, Husamettin Danis, has said that they have reduced the risks of transporting oil by diversifying ways of crude oil transfer against the possibility of a clash in Iraq, Anatolia news Agency has reported.. 
Releasing a statement on 7th January, Danis said that important advantages had been gained with supplementary agreements signed on the basis of free on board (FOB). 
He said that Autonomous Republic of Tatarstan had been included in centres of crude oil resources that were taken under annual contracts from countries like Iran, Saudi Arabia, Libya, Syria and Algeria...

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FOREIGN ECONOMIC RELATIONS

Kazak president, Turkish party leader discuss trade

Justice and Development Party (AKP) leader Recep Tayyip Erdogan was received by President Nursultan Nazarbayev of Kazakstan on 10th January, Anatolia News Agency has reported. 
Speaking to reporters after the meeting, which lasted for one and a half hour, Erdogan said that Turkish businessmen made significant investments in Kazakstan. 
Stating that necessary studies would be made to further improve cooperation in economic and cultural fields, Erdogan said that Turkish businessmen's investments in that region exceeded US$2bn. 
Erdogan noted that trade volume between the two friendly countries could be much increased and added, "Mr Nazarbayev has determination on that issue, we also have determination. Turkey and Kazakstan should record progress on that issue hand in hand." 
When asked if there was a change in foreign policy after AKP came to political power, Erdogan said, "We do not find sufficient foreign policy has been implemented in Turkey so far. We paid visits to the European Union (EU) countries, the United States and Russia just after we came into power. We are continuing our visits with tCentral Asia. We will later proceed to China and Japan which announced 2003 as Turkish Year. We will announce 2003 as Turkish Year." 
Nazarbayev said that they attributed great importance to the relations between the two countries and added that there were not any problems between the two.

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PRIVATISATION

Turkey aims to get US$4bn from privatisation in 2003

State Minister and Deputy Prime Minister Abdullatif Sener announced on 13th January that the privatisation target for 2003 was US$4bn and said that the government was determined to implement the privatisation programme, Anatolia News Agency has reported. 
Sener held a press conference in which he said that the programme was an expression of the determination of the government about privatisation initiatives. 
This was the first time that a government set this such a determined privatisation timetable, put forth a concrete programme and was behind that programme, Sener noted. He stressed that privatisation had always had an important place in Turkey. 
Sener said privatisation, apart from the burden which institutions that were within the scope of privatisation brought on the public, was necessary and indispensable for rationalization of economy, and that it should not be delayed...

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