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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: 072 - (17/04/03)

The Iraq war alarms the Turks
The war in Iraq has posed grave problems for Turkey. The refusal of its parliament to agree to American troop deployment before full hostilities began has jeopardised the relationship with the US, the cornerstone previously of its geopolitical stance in the Middle East, alongside its de facto alliance with the Israelis. Both partners are dangerous allies in the context of modern Middle Eastern geopolitics. The absence of Turkish involvement in the main campaign has at least strengthened Turkey's standing in the Arab world, but left it perilously exposed in a post-war settlement.
Above all the Turks fear an aggrandised, independent Kurdistan, occupying Kirkuk and even Mosul which Ataturk reluctantly handed over to Iraq at its inception, having enough on his plate in dealing with the Greeks and the Allies. The Turks cannot possibly countenance a permanent occupation of Kirkuk, let alone Mosul, by the three and a half million Kurds in Iraq, giving them vital oil fields, which the country at large will need if it is to stand on its own two feet. Colin Powell, US Secretary of State, has assured them that Kurdish troops, who took Kirkuk on April 10th, will withdraw. The prime minister of the Patriotic Union of Kurdistan enclave, Barham Saleh, has promised that the Kurds will remain in Iraq and not attempt to dismember it or rally the 13 million Kurds in Turkey into a common Kurdish state. The US is guaranteeing that a Greater Kurdistan is out of the question, keen to prevent incursions by the Turkish army, although 2,000 Turkish troops are already across the border in places.
Turkey has waged a 15-year war against the Kurds in its south-east, with 30,000 deaths on each side. The war more or less fizzled out in 1999 when the Kurdish leader, Abdullah Ocalan, was captured; he called for his followers to lay down their arms from his prison cell. But not all of them have heeded him, deeming him to have lost his liberty and to be acting under duress, which is after all quite true.
The commander in chief of the Turkish army, General Hilmi Ozkok, is a moderate, tolerant of the Islamicist government and far from gung-ho about Iraq. But it is imperative that the US promise to ensure Kurdish withdrawal is fully honoured, as also the dispatch of US$1bn in aid to the Turks for emergency relief.
It is clear that the US and UK authorities did not think through the postwar situation sufficiently, especially the need to prevent a descent into anarchy, which has cast a dark shadow over the victory of the coalition forces, unleashing lynch law and mobs on the armpage. It was for postwar peace-keeping that extra troops were needed. War is inseparable from a certain amount of blunders and bungling, but the scale of the looting and mayhem should have been averted by firmer action by troops on the ground from the start, as is generally now being acknowledged. The worry is that restive Turkish generals are going to militate for intervention to protect Turcomans in Northern Iraq, provoking a war within the war with the Kurds.

The economy in trouble
While the Iraq crisis is overshadowing everything else, the economy remains in the doldrums. GDP actually fell by 9% in 2002, it is now reckoned, while inflation is still in high single figures, fuelled by a devaluation of the lira and overspending by government. The treasury could certainly have done with the US$24bn credit package foregone because of the adverse vote on US troop deployment. The IMF's US$16bn loan package is all the more valuable in its absence.
But there are economists who are arguing that Turkey needs to wean itself off foreign credit packages, that encourage spending beyond one's means. The one positive thing about the Iraq situation is that commercial relations can now fully resume. Turkey lost something like US$75bn in foregone trade with Iraq over the last twelve years since 1991. A restoration of old ties with it and the development of new commercial avenues should give the right sort of boost to its economy over the next decade.

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Public investment projects drop in past two years 

The state is now acting in a hairsplitting manner regarding its investments, Anatolia News Agency reported, quoting the Turkish Daily News. Public investment projects fell by 23.8 per cent in the past two years. 
The number of projects fell to 3,851 in 2003 from 5,047 in 2001, as a result of rationalism and restrictions brought to project criteria. 
In terms of project costs, the projects increased in value on a dollar basis this year when compared to 2001 because of the devaluation the country faced two years ago. Total project costs rose to US$105.7bn in 2003 from US$86bn in 2001 according to average dollar rate. 
On the other hand, investment funds rose in the past two years on dollar basis thanks to the stabilization of the dollar rate since 2001. The investment funds allocated for projects rose to US$7bn this year from US$5.6bn in 2001. 
As the number of projects dropped, project completion periods also shrank. The average project completion period, which was 10.4 years in 2001, is expected to stand at 8.6 years at the end of 2003. 

IMF's managing head welcomes Turkey's signing of letter of intent EDIT

International Monetary Fund (IMF) Managing Director, Horst Koehler, said on 6th April that the prior actions needed to complete the fourth review had already been completed, Anatolia News Agency has reported. 
IMF Managing Director Koehler issued a statement on Turkey. He said: "The IMF welcomes the Turkish government's signing of a new letter of intent. This letter sets out strong policy commitments in all key areas of the economic programme, including a 6.5 per cent of GNP primary surplus for 2003 and beyond, a set of measures to strengthen the underpinnings of the fiscal accounts, strengthening the independence of the Bank Regulation and Supervision Agency (BRSA), reducing redundant positions in state enterprises and advancing privatisation. 
"Full implementation of these commitments will contribute to a stable macroeconomic environment and bring about fundamental structural reform, thereby helping the government achieve its goals of disinflation, debt reduction, and lasting rapid growth. The focus of the programme thus remains very much on strengthening long term performance and growth prospects," Koehler noted. 
Koehler went on saying: "In this vein, the government has proposed, and the IMF has welcomed, that fund disbursements under the programme be rephased more evenly over the remainder of the programme. Specifically, the revised letter of intent calls for purchases of about US$700m on the occasion of the fourth review (instead of about US$1.6bn in the original programme) and of about US$500m at each of the remaining seven reviews. This is a courageous step that speaks directly to concerns about the authorities' determination to implement the policies spelled out in the letter over the 20 months remaining under the programme. 
"We believe this initiative - together with full implementation of the policy commitments, the government's policy to block discretionary spending to help minimize immediate financing requirements, and other financing prospects - should further strengthen confidence in the Turkish economy," Koehler said. 
Koehler added: "The letter of intent will now be forwarded to the IMF Executive Board. The prior actions needed to complete the fourth review have already been completed. On this basis, a meeting of the board to consider the authorities' request for completion of the fourth review has been scheduled for 18th April 2003."

Turkey's economic growth rate in 2002 put at 7.8 per cent

The State Statistics Institute (SSI) announced on 31st March that the Turkish economy had a growth rate of 7.8 per cent in 2002, Anatolia News Agency has reported. 
The growth rate in the last quarter of 2002 (October, November and December) was 11.5 per cent. SSI announced the temporary results regarding Gross National Product (GNP)on 31st March. GNP was 273.46 quadrillion liras in current prices and 116.16 trillion liras according to 1987 fixed prices, in the year 2002. 
The growth rate in the last quarter of last year was 44.5 per cent in current prices and 11.5 per cent in fixed prices. The economy shrank by 9.4 per cent in 2001.

Turkey repays US$835m in foreign debts in March

Turkey repaid a total of US$835.54m in external debt between 3rd and 26th March 2003, Anatolia News Agency has reported. 
The Central Bank data show that the Treasury repaid US$790.20m; the Central Bank repaid US$20.38m; and the administrations with general and consolidated budget paid the remaining US$24.96m. 
Turkey repaid US$847.51m in external debt in January and US$1.95bn in February. The total external debt repayments in 2002 had been US$17.36bn.

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EU says may grant 1bn euro in 3 years to prepare for accession

The draft of the joint declaration prepared at the end of the 15th Turkey-EU Joint Consultative Committee (JCC) meeting, noted that 1bn euros of donation could be granted to Turkey over the next three years aiming at preparing for Turkey's accession to the EU, Anatolia News Agency has reported. 
The joint declaration draft issued by the two Co-chairmen, Husamettin Kavi and Thomas Etty, was read out by Etty in the closing session of the meeting which started on 7th April. 
Reminding that the committee would prepare a report on the issue as to whether Turkey fulfilled the Copenhagen political criteria or not, the joint declaration draft noted that "if Turkey fulfils the Copenhagen political criteria, the EU will open negotiations with Turkey without delay." 
Stressing that Turkey was making considerable progress and it emphasized the need for effective implementation of the major constitutional reforms in a EU-model spirit, the draft noted that "JCC welcomed the commission's proposal for a revised Accession Partnership with Turkey focusing on the support to Turkey's efforts to meet the Copenhagen criteria." 
JCC cross-examined the latest developments in Turkish agriculture, and the draft noted that "JCC members encouraged Turkish farmers to find opportunities in diversification of the agricultural sector and to strengthen their position and their organizations in order to be completely independent of political interference. 
"The JCC is strongly concerned by regional disparities in Turkey. It recognizes the efforts of Turkey in order to harmonize its regional policies within the EU regional policy standards. JCC underlined that the gradual adoption of the EU standards represents an opportunity to promote a greater and consistent partnership among organized civil society - in particular free, independent and representative economic and social interest groups." 
"Referring to the first meeting of the Economic and Social Council in December 2002, the JCC calls for a more a more effective functioning and regular meeting of this council, what implies a review of its structure and its working methods, to secure an adequate consultation of economic and social partners and interest groups. The social dimension of the economic reconstruction in Turkey should not be forgotten. Economic and Social Council should be totally independent, it should not be an institution of the state." 
The draft which will be finalized soon noted that the 16th meeting of the JCC will be held in Brussels.

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