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TURKEY


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 237,972 182,848 147,700 21
         
GNI per capita
 US $ 2,790 2,500 2,530 92
Ranking is given out of 208 nations - (data from the World Bank)

Books on Turkey

REPUBLICAN REFERENCE

Area (sq.km) 
780,580

Population 
68,893,918

Capital 
Ankara 

Currency 
Lira 

President 
Ahmet Necdet Sezer 



Update No: 099 - (26/07/05)

Turks respond with real empathy and rally cry after the attacks on London
Following July 7th's deadly terrorist attacks in London, Turkish Prime Minister, Recep Tayyip Erdogan, who was attending a conference in Sun Valley, Idaho, in the US, stated that he condemned the attacks. "I would like to express my great sorrow over these attacks," Erdogan told a press conference. "As you may recall, I emphasized global terrorism recently and made warnings. These attacks are an offence against all of humanity. As the prime minister and son of a country which has lost 40,000 citizens to terrorism, this is deeply saddening."
Erdogan stated that Turkey had long stressed how terrorism has no particular religion, language, race or nation and that it would continue to point this out. He added that the entire world should come together to work to eradicate the roots of terrorism. 
As it so happens, Istanbul was the site of a terrorist attack in October 2003 on the British consulate there, which killed the consul, Roger Short, and over 30 others. It can now be seen as a prelude to the London outrages. It coincided with attacks on American commercial targets in the city.
Following the terror attacks in London, security levels at Istanbul's Ataturk Airport were raised to their highest level. Metal detectors at the entrances to the airport are on their most sensitive settings, and police dogs are now being used to sniff passengers' baggage. Cars entering the premises are also now being checked underneath with mirrors for possible explosives.
Erdogan said "We have always stressed that the fight against terror is something we all have to join into together. I believe especially that our mutual intelligence organizations need to pool their information and knowledge to be better able to support one another against attacks of this kind..."

The EU - whither and whether? 
Other events in Europe have also been seen as negative by Ankara, namely the recent French and Dutch rejection of the EU constitution. This was widely thought to have been a veiled No to Turkish entry, for which negotiations are due to be begun on October 3rd. Given that Tony Blair is now in the EU presidential chair until the New Year and is an enthusiastic supporter of Turkey's bid for entry, they should go ahead.
But will they ever amount to much? The possible next leaders of France and Germany seem to be agreed that Turkey will not become a full member, but be allowed some association.
Speaking at the opening of the Eight Eurasia Economy Summit, European Union Commission Turkey Delegation head Hansjoerg Kretschmer tried to put an optimistic spin on it all. He emphasized that Turkey has made great progress in recent years, adding that giving Ankara a date for EU membership negotiations was a key decision. 
Kretschmer stated that the nation's economy is getting better, with 10% growth and unprecedented low inflation. He also stressed that in order to boost domestic and foreign investment, political and macro-economic stability should be maintained. In his speech, Kretschmer also urged an expanded role for women in Turkish politics, as in other European countries. Also, in order to eliminate disparities in education, all girls should be sent to school, added Kretschmer.

EU summit statement skips reference to Turkey's entry talks 
The situation is still highly ambiguous. A statement by European Union leaders issued on June 17th omitted all references to the launch of planned membership negotiations with Turkey in October. Instead, the draft included a short sentence pointing to the conclusions of a EU summit last year, which sets October 3rd date for the start of Turkish talks, Deutsche Presse-Agentur (dpa) reported. The draft stated that such pledges need to be implemented fully. 
The summit statement also made no mention of Croatia's bid to join the EU. Negotiations with Zagreb were put on hold last March, pending Croatia's full cooperation with the Hague-based international war crimes tribunal on the former Yugoslavia. This had been clearly predicted following warnings to Zagreb.
EU's Luxembourg diplomats said French and Dutch voters had kept the passage on enlargement brief because it was not a subject for discussion at a meeting dominated by the EU budget and the fate of the bloc's constitution following its rejection. They insisted that the move did not signal a change in the EU's policy towards Turkey, adding that promises made last year would be respected. 
However, several EU countries have pointed out that the EU, which took in 10 new member states last year, must now slow down expansion. According to diplomats, talks with Turkey would probably start on schedule; but even optimists stated the talks could last up to 15 years. Opposition to further enlargement and especially Turkish entry into the EU is believed to be one of the factors, which contributed to the French and Dutch rejection of the constitution. Opinion polls show the issue is also unpopular in other EU states. 
Meanwhile, EU newcomer Poland has launched a task force focusing on the future enlargement of the 25 members EU to include Turkey and Ukraine, Poland's Rzeczpospolita daily reported on June 17th. Polish Deputy Foreign Minister Piotr Switalski recently announced that Warsaw would support Ankara but added that it would be quite difficult to accept Turkey and reject Ukraine. 
A Polish foreign ministry official quoted by Rzeczpospolita admitted that despite Poland's continued support for Turkey's EU bid, relations with Ankara became bitter after the Polish parliament passed a resolution honouring some 1.2-1.5 million ethnic Armenians who perished in 1915-23 under Ottoman Turk rule as victims of genocide. Turkey has repeatedly denied the deaths constitute crimes against humanity and vehemently criticised Poland and other European states that passed similar resolutions. It also insists the events are being used as a black mark against its bid for EU entry. 
Ankara is to begin membership negotiations with the bloc in October. However, EU officials have consistently warned that accession talks for the near 70 million-strong country could last well over a decade.

Kilci says Turkey will complete privatisation process this year
The selling off of major ticket items in Turkey's privatisation process will be concluded by the end of the year, Metin Kilci, the director of the Privatisation Board (OIB) announced on May 11th, Anatolia News Agency reported.
He said they aim to complete the privatisation processes of the controversial sale of Turkish Telecom, steel producer, Erdemir, and oil refiner, Tupras, by the end of this year. Kilci said the problems in the privatisation of Turkish Telecom were not due to the withdrawal of the Koc-Sabanci consortium and the Soanish Telefonica. Kilci added that the changing of the contract conditions for mobile phone operator, Avea, which is causing concern among bidders for the Turk Telekom privatisation was not on the agenda.
According to Kilci, this will not have a negative impact on the process. "Avea is not the only reason for the withdrawal from the tender by Spain's Telefonica. We give information to tender participants on Avea. There will be a decision on a partnership with Avea after the privatisation. There will be no surprises regarding the ownership of Avea," Kilci said in an interview with the financial group, CNBC-e TV.
In response to criticisms of selling off profitable state companies, Kilci said that was very natural. According to him, the privatisation of 46.12% of the public shares of the iron and steel producer, Eregli Demir Celik, was justified and that the process of privatisation would start in the near future. The evaluation process at Tupras is continuing and bidders are expected to apply for pre-qualification for 51% of the oil refiner until June 13th, Kilci said. He added that based on current market capitalisation, Erdemir was valued at more than 2.16bn Euro and Tupras at 2.8bn Euro.
Seven to eight companies in the energy sector would also be privatised, Kilci said, adding that the treasury had benefited to the tune of one billion Euro from sell offs in the first quarter of this year. "We are planning to increase this resource for the treasury by the end of the year," he said. No new companies are added to the privatisation portfolio this year but Kilci said they were working on sugar beet refiners, port authorities and insurance firm Basak Sigorta. Restructuring of state tobacco and cigarette concern TEKEL is under way, and a new tender could take place in 2006, if not this year, the OIB chief said. 

IMF agrees to release second loan tranche to Turkey 
The International Monetary Fund (IMF) recently gave, in principle, approval for the latest tranche in a US$10bn loan to be handed over to the Turkish government. IMF Turkey chief Lorenzo Giorgianni commended the Turkish government's economic efforts in the direction of economic health after the deep recession of 2001, which was generated by a political crisis resulting in devaluation and banking and corporate bankruptcies. 
After the recent talks with Turkish economy officials, Giorgianni said the IMF was ready to release the 873.5m Euro if the Turkish parliament passes new bank and tax laws by the end of the month, as promised by Economy Minister Ali Babacan. Turkey is to pass legislation on banking and social security reform before parliament goes into its summer recess at the end of June.
Babacan recently assured that the legislation, which has been in the works for months and is essential for 800m Euro of new IMF funding to be released, would be passed by parliament by the end of June. He stated that parliament is working very hard to pass these laws. "We remain very encouraged with the direction of policies and the prospects for the economy. 
This government's programme has produced the best economic performance in a generation," Giorgianni told Anadolu news agency, adding: "Looking ahead we agreed that continued prudent fiscal and monetary policy implementation is essential to allow further reductions in inflation and interest rates, continued robust growth and progress in reducing the unemployment rate." 
Giorgianni said that in addition to discussions on the need for new banking and tax laws, his team had discussed in length with Turkish officials the need to broaden the tax base, and to increase tax and social security compliance. As part of the social security reforms, the government has withdrawn from an amnesty for debts of social security payments owned by Turkish companies that would cost the treasury billions of lira. So the government has decided to adopt measures that would be in conformity with social and pension laws. 
The overhaul of social security, pensions and taxation to ensure compliance and to widen the tax base so that Turkey's high tax rates can be reduced in due course is essential for a wider restructuring of the economy. 
Giorgianni said that if the legislation were passed then he would advise to release the fund next month. If the legislation is not passed then it could prevent the release of the 800m tranche. 
Babacan said "strategic future plans" for two state-owned banks were almost completed. The two, Halkbank and Ziraat Bank, were big casualties of the 2001 crisis. Turkey has recently posted extremely impressive economic indicators with growth up 6.3 per cent last year and inflation down to single figures after years of runaway prices. Foreign investment has started to flow in quickly and interest rates have dropped considerably. The impressive results are in part thanks to Turkey's strict adherence to policies laid down by the IMF and World Bank, which between them have lent Turkey around US$35bn since 1999.

Italian businessmen home in on Izmir investments 
An Italian business delegation led by five government officials and 28 businessmen from Italy's Anacona province visited Izmir to discuss investments and explore ways to cooperate with Turkey. A sister-city partnership was recently signed between Anacona Governor Enzo Giancarli and Izmir's Mayor Aziz Kocaoglu. Giancarli told Anatolia news agency that his group intends to boost cultural and commercial relations between Anacona and Izmir as both areas are similar. 
The Italian official stressed more on the commercial relations and even highlighted that currently Indesit and Faber, two leading companies from Anacona are operating in the Aegean region. Giancarli said, "We have signed an important protocol with Mayor Kocaoglu. This protocol is no ordinary protocol. We will develop projects and implement them soon." Currently there are 250 major Italian investors in Turkey.

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AVIATION

Enka to build terminal at Moscow's Sheremetyevo airport


Turkish group Enka has agreed with Russia's Aeroflot to build an additional terminal called Sheremetyevo-3 at Moscow's Sheremetyevo Airport by late 2007, Aeroflot spokesperson, Irina Dannenberg, said, Anadolu News Agency reported on June 20th.
Dannenberg refused to comment on the investment of the project but Kommersant daily reported that the price tag will reach 400m Euro. State-controlled Sheremetyevo has been Moscow's main international airport for decades but has faced tougher competition from the privately run Domodedovo airport in recent years.

THY and ST aerospace sign maintenance contract

Turkish Airlines (THY) and Singapore Technologies Aerospace (ST Aerospace) signed a letter of intent to cooperate on the maintenance and repair of passenger jets at Istanbul's Sabiha Goksen Airport by 2007, Anatolia News Agency reported recently. 
THY and ST Aerospace have a 50-50 share in the joint venture. The companies are planning to finish the construction in a year with a 230m Euro investment. The facility is expected to serve planes from Europe, Central Asia and Middle East. The letter was signed between THY board Chairman Candan Karlikekin and general manager Temel Kotil and ST Aerospace Chairman Tay Kok Kiang. ST Aerospace is a leading independent third-party aircraft maintenance, repair, overhaul and engineering specialist, with offices and facilities located in key aviation hubs all over the world.

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DEFENCE

Turkey to buy 17 Sikorsky helicopters 

The Turkish defence industry managing committee has decided to purchase 17 Seahawk naval helicopters including replacement parts and related equipment for its navy from United Technologies Corp's Sikorsky Aircraft unit, Defence Minister, Vecdi Gonul, announced recently, Anatolia News Agency reported.
The deal involves the initial purchase of 12 Seahawks with an option for five more according to the decision, Gonul said, but he refused to reveal any financial terms of the deal. The Turkish armed forces already have eight S-70B Seahawk helicopters. Gonul announced earlier that the ministry had completed the works for determining the needs of the Turkish Armed Forces for the following 10 years. The projects will be based on the use of national industrial opportunities and increasing the domestic added value to the highest level, Gonul elaborated. 20 fire extinguishing helicopters will also be purchased for the forest general directorate. 

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FOREIGN ECONOMIC COOPERATION

Vietnam, Turkey sign cooperation protocol 

Vietnamese Foreign Minister, Nguyen Dy Nien, and Turkish Deputy Prime Minister and Foreign Minister, Abdullah Gul, met recently to discuss a number of key issues, New Europe reported.
The minister signed a protocol on cooperation and on this occasion they also inaugurated the Vietnamese embassy in Ankara. Nien was on a three-day official visit to Turkey, he also met with Interior Minister and Chairman of the Turkish subcommittee for Turkey-Vietnam Joint Committee, Abdulkadir Aksu, Culture and Tourism Minister, Atilla Koc, Industry and Trade Minister, Ali Coskun, and Minister of State in Charge of Trade, Kusad Tuzmen. Nien discussed with the Turkish leaders issues affecting the international arena, concrete measures to boost bilateral ties, including the early conclusion of bilateral negotiations for Vietnam's joining the WTO.

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FOREIGN ECONOMIC RELATIONS

Ankara, Bangkok to boost economic ties 

Thai Foreign Minister, Kantathi Suphamongkhon, accompanied by a delegation, recently attended the luncheon hosted by the Union of Chambers and Commodity Exchanges of Turkey (TOBB). Prior to the meeting, Suphamongkhon said Turkey could prove to be an important partner for Thailand and both countries could benefit from each other's experiences, Anadolu News Agency reported. 
He cited the opportunities for cooperation between the two countries in the construction sector adding that both countries should further encourage small and medium enterprises and sign partnership deals. Meanwhile, TOBB Acting Chairman, Faik Yavuz, said Turkey attaches great importance to enhancement of its commercial and economic relations with Thailand. Yavuz stated that total exports from Turkey to Thailand reached 123.5m Euro last year, while imports from Thailand amounted to 500m Euro. Yavuz added that more trade relations should be established with Thailand and TOBB is ready to launch efforts to this end. Erdal Eren, chairman of the Turkish Contractors' Union, said that Turkey and Thailand could undertake common projects in third countries.

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FOREIGN LOANS

World Bank offers 143.7m Euro for railway restructuring

The World Bank recently approved a 143.7m Euro railway restructuring loan for Turkey. In a statement, the bank said this loan would be utilised to improve the financial viability, productivity and effectiveness of railways operation in the country. Andrew Vorkink, country director for Turkey, stated that the World Bank is pleased to help Turkey in improving productivity and effectiveness of railway operations and to assist (Turkish railways) TCDD in reaching a financially sustainable situation and reducing the fiscal burden. The project will align the Turkish railways competitiveness with European railways, at a period when EU accession negotiations are starting and also contribute to improved rail safety in Turkey, New Europe reported.
The lending instrument for the railway restructuring project is the World Bank's two-phased Adaptable Programme Loan (APL) in two currencies (US$ and Euro). APL's provide phased support for long-term development programmes. They involve a series of loans that build on the lessons learned from the previous loan(s) in the series.
The APL1 with a total cost of US$221.0m of which US$184.7m is financed by the bank would include firstly advisory services to implement the restructuring of the TCDD under current Railway law and to prepare APL2, secondly initial staff adjustment programme, thirdly line capacity increase along Mersin-Toprakkale and Yenice-Bogazkopru corridors, fourthly training for TCDD staff and finally support for improved internal and public communication. The APL2 will involve a cost of US$230m of which US$115m is expected to be Bank financed and would include firstly advisory services to complete the restructuring of the TCDD and assist in the implementation of the new institutional and regulatory set-up resulting from the new laws, secondly support for continuing the staff adjustment programme, thirdly line capacity increase along the Irmak-Zonguldak corridor and finally other components considered necessary to ensure the success of the overall programme.

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TELECOMMUNICATIONS

Alfa Group to buy Turkcell from Cukurova in Q3 

Alfa Group is planning to complete a 3.3bn Euro deal with Cukurova Group on buying a stake in Turkey's leading mobile operator, Turkcell, in the third quarter of the year, Alfa Telecom, which manages the group's telecommunications assets recently said in a press release.
Cukurova Group and Alfa Group are finishing up work on a final agreement for the 3.3bn Euro deal under which Alfa granted Cukurova a US$1.7bn six-year term loan as well as purchasing US$1.6bn of convertible bonds, which gives Alfa the opportunity to take an indirect stake in Turkcell, Anatolia News Agency reported. 
With the exception of specific requirement, the bonds can be converted within 18 months after the issue date, the release said. "The indirect conversion ratio for Alfa Group to Turkcell is expected to be around 13.22 per cent," it read. A number of outside conditions need to be followed in order to implement the agreement, including getting the necessary permission from regulatory agencies. "The parties propose completing the above-mentioned transaction in the third quarter of 2005," the release said. It was reported earlier that Cukurova planned to use the money from the deal to pay off its two million Euro debt to the Turkish government and also purchase 13 per cent of Turkcell, currently owned by Yapi & Kredi Bankasi AS.

Oger to buy Turk Telecom stake

A consortium led by Oger Telecom of Saudi Arabia offered the top bid of US$6.55bn (5.48bn Euro) for a majority stake in state-owned Turk Telekom in a privatisation auction.
Oger's winning bid is to be paid with an initial instalment of 20% of the total price, and then five equal payments. The offer for 55% of the landline telecommunications company values the whole businesses at US$11.9bn.
Oger Telecom is part of the Saudi Oger Group, which is owned by the family of former Lebanese Prime Minister, Rafik Hariri, who was assassinated in February. The Oger-led consortium also includes Telecom Italia SpA and BT Telconsult, the international consulting arm of BT Group PLC.
"It's our first investment in Turkey, and we're very excited for the future," Oger Group's, Muhammad Hariri said.
The sale still must be approved by Turkey's competition agency and the cabinet, said Metin Kilci, head of the government privatisation agency.
Also bidding was a group headed by Dubai-based Emirates Telecommunications Corp, or Etisalat. Bids started at US$5.95bn, rising in increments of US$50m. This was Turkey's seventh attempt in a decade to sell the telecom. Earlier efforts at privatising Turk Telekom ran into resistance from labour unions and even the military, which was concerned about selling a state asset with national security implications to a foreign power.
Turkey's privatisation agency initially considered bids from four consortia, but dropped the offers from groups led by Turkish firms Koc Holding and Turkcell.

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