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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: 078 - (27/10/03)

Turkish troops into Iraq
A most important development took place on October 7th. The Turkish parliament voted by 358 to 183 in favour of the deployment of up to 10,000 Turkish troops in Iraq. The parliament had earlier voted narrowly against allowing the US to deploy its forces from bases in Northern Turkey during the war, causing the most serious rift between Washington and Ankara since Turkey joined NATO as a founder member in 1949.
Had Turkey joined the UK in fighting the Iraqi forces in the war in a three-sided coalition, as in the Korean War, it would have changed the nature of the conflict. The war might have been even shorter, but the Turks would have had an excellent opportunity to have entrenched themselves in Northern Iraq, ostensibly defending the Turkish population there, but in reality aiming to curb, if not disrupt, the two Kurdish enclaves. 
There is much less chance of that now. The troops, if deployment goes ahead, would operate in the central Sunni area, far from the Kurdish enclaves.
But many Iraqi leaders are unsettled at the prospect of Turkish troops in Iraq at all. Members of the US-appointed governing council in Baghdad firmly rejected the idea of allowing troops from any neighbouring country in Iraq, not just Turkey, but also Syria, Iran, Jordan, Kuwait and Saudi Arabia. Naturally the Kurdish leaders are to the fore here, above all Jalal Talabani, head of the Patriotic Union of Kurdistan, which has one enclave, and Massoud Barazani, head of the other. 

Implications inside Turkey
Curiously the effective leader of the Turkish Kurdish guerrillas, the former PKK, based in part of the enclaves, has taken a more accommodating line, namely Osman Ocalan, brother of Abdullah Ocalan, arrested three years ago by the Turks and now in prison The former PKK is an organization which had a Marxist-Leninist philosophy and is on the list of terrorist organizations of the US It has renamed itself the Freedom and Democracy Congress, or Kadek. There has been an attempt at moderation of its policy in the last few years, but there are disturbing signs that the partial truce may break down.
The 13-15 million Kurdish minority in Turkey is its biggest geopolitical headache and the major ostensible reason for Turkey being kept out of the EU. There have been two decades of war with the PKK in South-East Turkey, which has rocked the state to its foundations and led to endless human rights abuses. More than 30,000 people have been killed, mostly Kurds. More than two million people have been displaced and thousands of Kurdish villages destroyed.
In 1999 the arrest of Abdullah Ocalan, combined with the outcome of the Kosovo War, led to a change of heart by the PKK. It was then that it toned down its Marxist-Leninism, changed its name and dropped its demand for secession from Turkey. It unilaterally initiated a four-year truce. Kadek now came to demand "full Kurdish cultural and political rights within a democratic framework" in Turkey, Syria, Iran and Iraq. 
The Turkish government has gone some way to recognize the legitimacy of these aspirations, by offering an amnesty in July. But it has specifically excluded Osman Ocalan and the 11-member leadership council. The amnesty did not meet the demand that Kadek be allowed to participate in Turkey's political life.
In September came the decision by Kadek to end the ceasefire on the grounds that the government had not entered into a dialogue and had made only piecemeal reforms for the Kurds. The government may live to rue its intransigence,

US back in the frame
The US Administration knows full well that the Turkish government of Recep Tayyip Erdogan was hoping to bring Turkey into the coalition and almost succeeded, despite overwhelming popular opposition to the war. Support for backing any US initiative in Iraq is still only 15% in opinion polls. It must also have occurred to many in Washington that the Turks decision to stay out proved providential in keeping them from meddling in Northern Iraq. It would be absurd to punish the Turks like the French, although in practice the Americans can hardly punish the French either, except by buying rather less Champagne and so on, while French firms scoop up mega-contracts galore in the Muslim world for their high-profile anti-US stand.
The US has offered US$8.5bn for the troubled economy in loans, so long as the troops are sent to Iraq. Since that is exactly what the generals in Ankara want, it looks to be a sweet deal for all.

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CREDIT RATINGS

Moody's may upgrade Turkey's credit rating

International credit rating agency Moody's declared recently that Turkey's negative outlook could possibly change after the successful completion of required structural reforms following the International Monetary Fund's (IMF) sixth review, which was scheduled to begin on September 25th, New Europe reported. Moody's has marked Turkey's credit rating as B1 and its outlook is negative. 
A Reuters report cited Moody's Turkey analyst, Kristin Lindow, as saying that to achieve recovery with a negative outlook, reforms should be conducted with great care, the 2004 budget draft parameters should be within the limits of promised targets, no more support should be given to the agriculture sector, and no interference with banking regulations. Lindow also reiterated Moody's concern with current trends in inflation, the interest rates' strong dependency on the national currency Turkish lira. 

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FINANCIAL NEWS

Turkey, Israel reach agreement on price of water supply 

Israeli Minister of Infrastructure Yossi Paritzky said on 3rd October that Turkey and Israel reached agreement on the price and amount of Manavgat Brook water to be sold to Israel, and [for] how long it would be sold. Paritzky told a press conference that the agreement would be signed in a few days, Anatolia News Agency has reported. 
Stating that Turkey and Israel were situated in a wide region including East Europe and West Asia, Paritzky said that more than half of oil and one-third of natural gas in the world were produced in that region. 
Paritzky noted that if they united their forces with a common market understanding, it would be for their benefit and it would be a significant progress for their people and the whole world. 
Asked when the water transfer would start, Paritzky hoped it would start soon and said that two countries agreed on principles. Paritzky guessed that the agreement would be signed in a few days and said that they should now deal with the transfer of water. 
Pointing out that transfer of Manavgat water was not easy, Paritzky said that they had built big tankers for transfer of 15m cubic metres of water. Paritzky stated that other methods could be used besides tankers, and a proposal was laid down to carry water by balloons. 
Noting that transfer of water by balloons tied to ships was proposed, Paritzky said that he could not know how they could achieve that when sea conditions were taken into consideration. Stating that they should firstly complete the agreement, Paritzky said that Turkish government wanted a review of some parts of the draft before signing it. Paritzky further said that they seriously thought of setting up an infrastructure corridor between Turkey and Israel. 
Replying to a question about news reports which appeared in Israeli newspapers that an oil pipeline would be set up between Mosul and Haifa, Paritzky said this was an unsubstantiated rumour. Paritzky said the issue appeared in the front pages of the newspaper as Israeli private sector wanted to search for this possibility, and as this reached to press. 
Paritzky said many questions and solutions were brought onto the agenda, but the issue had never been negotiated. He said the regime in Iraq was extremely unstable, and that it seems that it will be difficult to produce oil in the next 10 years. 
Replying to a question about whether or not a pipeline would be constructed to get water from Turkey, Paritzky said the pipeline could not be built only for water, stating that they thought of setting up an infrastructure corridor between Turkey and Israel. He said: "We already have water. We have considered the possibility of also purchasing gas. Electricity could be purchased after this." 
The Israeli minister stressed that they were talking about a very big and expensive project, noting that he personally wanted improvement of relations between Turkey and Israel. 
Guler, in turn, said that Turkey and Israel were discussing a framework agreement on transfer of water to Israel at the moment. 
Replying to questions from reporters, Guler said that he did not discuss the price of water to be sold to Israel in his meeting with Israeli Minister of Infrastructure, Yossi Paritzky.

Turkish minister says IMF welcomes decreasing inflation

State Minister and Deputy Prime Minister Mehmet Ali Sahin said on 3rd October that the International Monetary Fund (IMF) Turkey Desk Chief, Reza Moghadam, told him that Turkish economy was on the right track, and that he expressed pleasure over decreasing interest rates and inflation, Anatolia News Agency has reported. 
Sahin replied to questions from reporters after his meeting with Moghadam. 
Sahin said Moghadam told him a 6.5 per cent primary surplus target was reached, and that this was the success of the government, and stated that financial discipline should be adhered to and structural reforms should continue. 
Sahin said 45,800 public personnel were evaluated to be in redundant positions, adding that there was not a serious deviation in liquidation of them. 
Sahin said they conveyed to the IMF delegation the process in collective bargaining talks, and noted that they told IMF delegation that there would not be any deviation from the budget, and that they would be careful in abiding by financial discipline, yet that inflation was targeted as 12 per cent. 
Sahin said the situation of Vakifbank was discussed at the meeting, and noted that they would make re-evaluations about privatization. 
Sahin said there was no serious problems with the 6th Review, noting that, "the delegation stated that they thought the 6th review would be completed in time."

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FOREIGN ECONOMIC RELATIONS

Turkish-Austrian economic committee discusses bilateral relations, visas

Interior Minister, Abdulkadir Aksu, said recently that the Turkish economy had entered a lasting, stable and irreversible improvement process. 
Addressing the opening of Turkey-Austria Joint Economic Commission (JEC) fourth term meeting, Aksu said that Turkey recorded important developments recently, Anatolia News Agency reported. 
Aksu said that Turkey truly reflected its liberal approach towards international investments by putting into force the Law on Direct Foreign Investments. Aksu stressed that foreign and native investors would have the same rights and obligations with the law and all sorts of profits could be easily transferred abroad. 
"Membership by our country to the EU comes among the top targets of the government," said Aksu noting that seven adjustment laws were prepared and important progress was recorded to meet the political criteria. Aksu stressed that the trade volume between Turkey and Austria which reached US$602m in the first six months of 2003 shows that the figure will exceed US$1bn at the end of the year. 
Noting that Turkey wished to further improve its commercial and economic relations with Austria, Aksu said that "studies continue to revise the agreement on prevention of double taxation. When it is revised, a safe business atmosphere will be ensured for businessmen."
Aksu noted that Austrian firms had to evaluate Turkey as an alternative market, adding that contacts among business circles had to increase. Aksu stressed that the activities of the Austrian Business Council had to be supported and that joint meetings had to be held on regular basis. 
Aksu stated that energy sector constituted one of the most important dimensions of Turkey-Austria cooperation, adding that "Austria is an important transition country within the scope of transmitting natural gas to European markets." 
Pointing out that businessmen who wanted to go to Austria for business had difficulties in getting visas, residence and work permits, Aksu stressed that Turkish transporters also had problems as their transition document quotas were considered invalid in that country. 
Austrian Minister for Economic Affairs and Labour, Martin Bartenstein, said that the basis of the commercial relations between the two countries was fine, but an improvement had to be made particularly in respect of Austria within the scope of double taxation regarding foreign trade. 
Bartenstein said that both sides put forward their intention to hold a joint meeting, adding that the two countries should also cooperate in the field of health. Bartenstein stated that no meetings took place between the two countries within the scope of the agreement on air transportation. These meetings should restart and be taken up within the scope of JEC meetings, he said. 
The guest minister stated that 300,000 Austrian tourists who come to Turkey had visa problems in Turkey, adding that Austria supported the EU membership of Turkey. He stressed that Austria followed the developments resulting from the decisions taken in Copenhagen.

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